Q. COMMITMENTS AND CONTINGENCIES

Commitments

Our long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to purchases of inventory of our products, research and development service agreements, operating leases and selling, general and administrative obligations, and milestone payments due under our licensing and acquisition agreements.

Operating and Facility Lease Obligations

We have entered into certain operating leases, including certain office equipment and automobiles, which expire through 2017. Expense associated with these operating leases, including previous leases of certain automobiles, amounted to approximately $0.2 million, $(0.3) million and, $0.9 million for 2014, 2013 and 2012, respectively. The net credit for operating lease expense in 2013 is due to the excess of the sales value of certain automobiles we previously leased over the contracted value in connection with the 2013 termination of the automobile leases and the subsequent sales of the automobiles by the leasing companies. Future minimum lease payments associated with all non-cancellable equipment, service and lease agreements, excluding facility-related leases are approximately $0.6 million for 2015.

In June 2013, we entered into a lease agreement with BP Bay Colony LLC (the "Landlord") for the lease of certain real property located at 1100 Winter Street, Waltham, Massachusetts (the "Waltham Premises") for use as our principal executive offices. Beginning in September 2013, the initial term of the lease is five years and two months with one five-year extension term at our option. During the extension period, the base rent will be an amount agreed upon by us and the Landlord. In addition to base rent, we are also required to pay a proportionate share of the Landlord's operating costs.

The Landlord agreed to pay for certain agreed-upon improvements to the Waltham Premises and we agreed to pay for any increased costs due to changes by us to the agreed-upon plans. We record all tenant improvements paid by us as leasehold improvements and amortize these improvements over the shorter of the estimated useful life of the improvement or the remaining life of the initial lease term. Amortization of leasehold improvements is included in depreciation expense.

In addition, in connection with our facility lease for the Waltham Premises, in June 2013 we delivered to the Landlord a security deposit of $0.4 million in the form of an irrevocable letter of credit. This security deposit will be reduced to $0.3 million on the second anniversary of the date the lease commenced. The cash securing this letter of credit is classified on our balance sheet as of December 31, 2014 and 2013 as a long-term asset and is restricted in its use.

In June 2013, we also entered into an Assignment and Assumption of Lease (the "Assignment Agreement") with Shire Human Genetic Therapies, Inc. ("Shire") effecting the assignment to Shire of the right to occupy our former office space located at 100 Hayden Avenue, Lexington, Massachusetts (the "Prior Space"). Under the Assignment Agreement, the assignment to Shire became effective on September 21, 2013, the date of our departure from the Prior Space, and Shire assumed all of our obligations as the tenant of the Prior Space. The Assignment Agreement also provided for the conveyance of furniture and other personal property by us to Shire.

In connection with our acquisition of Lumara Health, we have assumed the lease of certain real property located at 16640 Chesterfield Grove Road, Chesterfield, Missouri (the "St. Louis Premises"), which we are currently using as temporary office space for Lumara Health employees as they relocate to the Waltham Premises. Beginning in September 2013, the initial term of the lease is five years and two months. In addition to base rent, we are also required to pay a proportionate share of the Landlord's operating costs. We are attempting to sublease the St. Louis Premises and if successful, future operating lease commitments will be partially offset by proceeds received from the sublease.

Future minimum payments under our non-cancelable facility-related leases as of December 31, 2014 are as follows (in thousands):

Period	Minimum Lease Payments
Year Ended December 31, 2015	$	1,451
Year Ended December 31, 2016		1,456
Year Ended December 31, 2017		1,462
Year Ended December 31, 2018		1,174

Total	$	5,543

Facility-related rent expense, net of deferred rent amortization, for the Waltham Premises and the Prior Space, as applicable, was $0.8 million, $1.5 million and $1.7 million for 2014, 2013, and 2012. Facility-related rent expense for the St. Louis Premises was less than $0.1 million from November 12, 2014 through December 31, 2014.

Debt Obligations

Our long-term debt obligations reflect our obligations under the Convertible Notes and Term Loan Facility to pay interest on the $540.0 million aggregate principal amount and to make scheduled principal payments on the Term Loan Facility and principal payments at maturity or upon conversion, in the case of the Convertible Notes.

Purchase Commitments

During 2014, we entered into various agreements with third parties for which we had remaining purchase commitments of approximately $4.8 million as of December 31, 2014. These agreements principally related to certain purchase orders for the production of our products, certain outsourced commercial activities, manufacturing commitments, our information technology infrastructure, and other operational activities.

Contingent Consideration Related to Business Combinations

In connection with our acquisition of Lumara Health in November 2014, we agreed to pay up to an additional $350.0 million based on the achievement of certain sales milestones. Due to the contingent nature of these milestone payments, we cannot predict the amount or timing of such payments. See Note C, "Business Combinations," for more information on the Lumara Health acquisition and related milestone payments.

Other Funding Commitments

As of December 31, 2014, we had several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditures were to clinical research organizations ("CROs"). The contracts with CROs are generally cancellable, with notice, at our option. We have recorded accrued expenses in our consolidated balance sheet of approximately $1.9 million representing expenses incurred with these organizations as of December 31, 2014, net of any amounts prepaid to these CROs.

Severance Arrangements

We have entered into employment agreements or other arrangements with most of our executive officers and certain other employees, which provide for the continuation of salary and certain benefits and, in certain instances, the acceleration of the vesting of certain equity awards to such individuals in the event that the individual is terminated other than for cause, as defined in the applicable employment agreements or arrangements.

Indemnification Obligations

As permitted under Delaware law, pursuant to our certificate of incorporation, by-laws and agreements with all of our current directors, executive officers, and certain of our employees, we are obligated to indemnify such individuals for certain events or occurrences while the officer, director or employee is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is not capped. Our director and officer insurance policy limits our initial exposure to $1.0 million and our policy provides significant coverage. As a result, we believe the estimated fair value of these indemnification obligations is likely to be immaterial.

We are also a party to a number of other agreements entered into in the ordinary course of business, which contain typical provisions and which obligate us to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. Our aggregate maximum potential future liability under such indemnification provisions is uncertain. Except for expenses we incurred related to the Silverstrand class action lawsuit, described below, filed against us in March 2010, we have not incurred any expenses as a result of such indemnification provisions. Accordingly, we have determined that the estimated aggregate fair value of our potential liabilities under such indemnification provisions is not significant, and we have not recorded any liability related to such indemnification.

Contingencies

Legal Proceedings

We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonably estimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. For the matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. In addition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible, we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to that effect.

Silverstrand Class Action

A purported class action complaint was originally filed on March 18, 2010 in the U.S. District Court for the District of Massachusetts, entitled Silverstrand Investments et. al. v. AMAG Pharm., Inc., et. al., Civil Action No. 1:10-CV-10470-NMG, and was amended on September 15, 2010 and on December 17, 2010. The second amended complaint, filed on December 17, 2010 alleged that we and our former President and Chief Executive Officer, former Chief Financial Officer, the then-members of our Board, and certain underwriters in our January 2010 offering of common stock violated certain federal securities laws, specifically Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, and that our former President and Chief Executive Officer and former Chief Financial Officer violated Section 15 of such Act, respectively, by making certain alleged omissions in a registration statement filed in January 2010. The plaintiffs sought unspecified damages on behalf of a purported class of purchasers of our common stock pursuant to our common stock offering on or about January 21, 2010. After litigating the class action lawsuit for several years, on September 12, 2014, we and the other defendants entered into a stipulation of settlement with the lead plaintiffs (on behalf of themselves and each of the class members) to resolve the class action securities lawsuit. Pursuant to the stipulation of settlement, and in exchange for a release of all claims by the class members and certain other persons, and dismissal of the lawsuit with prejudice, we agreed to cause our insurer to pay eligible class members and their attorneys a total of $3.75 million. On October 2, 2014, the U.S. District Court preliminarily approved the settlement, and potential class members were notified of the proposed settlement and the procedures by which they could seek to recover from the settlement fund, object to the settlement or request to be excluded from the settlement class and on January 30, 2015, the stipulation of settlement was approved by the U.S. District Court. The U.S. District Court entered final judgment on February 2, 2015. Any appeals of the settlement are due by March 4, 2015. We have recorded the $3.75 million settlement amount in prepaid and other current assets and a corresponding amount in accrued expenses on our consolidated balance sheet as of December 31, 2014, as the settlement amount will be fully covered by our insurance carrier. There was no impact to our consolidated statement of operations for the year ended December 31, 2014.

Makena Securities Litigation

On October 19, 2011, plaintiff Frank Julianello filed a complaint against Lumara Health (then-named K-V Pharmaceutical Company (“K-V Pharmaceutical”,) and certain individual defendants, in the United States District Court for the Eastern District of Missouri (the "Court"), alleging violations of the anti-fraud provisions of the federal securities laws on behalf of all purchasers of the publicly traded securities of Lumara Health between February 14, 2011 and April 4, 2011. The complaint alleges class members were damaged by paying artificially inflated stock prices due to Lumara Health's purportedly misleading statements regarding Makena related to access and exclusivity. On October 31, 2011, plaintiff Ramakrishna Mukku filed a complaint against Lumara Health, in the United States District Court for the Eastern District of Missouri, alleging violations of the anti-fraud provisions of the federal securities laws on behalf of all purchasers of the publicly traded securities of Lumara Health between February 14, 2011 and April 4, 2011. The complaint alleges class members were damaged by paying artificially inflated stock prices due to Lumara Health's purportedly misleading statements regarding Makena related to access and exclusivity. On November 2, 2011, plaintiff Hoichi Cheong filed a complaint against Lumara Health, in the United States District Court for the Eastern District of Missouri, on behalf of purchasers of the securities of Lumara Health, who purchased or otherwise acquired K-V Pharmaceutical securities between February 14, 2011 and April 4, 2011, seeking to pursue remedies under the Exchange Act. The complaint alleges class members were damaged by purchasing artificially inflated stock prices due to Lumara Health's purportedly misleading statements regarding Makena related to access and exclusivity. On March 8, 2012, the Julianello, Mukku and Cheong cases were consolidated and the consolidated action is now styled In Re K-V Pharmaceutical Company Securities Litigation, Case No. 4:11-CV-1816-AGF. On May 4, 2012, the Court appointed Lori Anderson as Lead Plaintiff in the matter. On April 22, 2013, the individual defendants moved to dismiss the complaint and oral argument was held before the Court on November 26, 2013 LumaraHealth joined in the motion to dismiss on February 10, 2014. On March 27, 2014, the Court entered an order granting Lumara Health's motion to dismiss the class action complaint without prejudice to the Plaintiffs' ability to file a second amended complaint with respect to a limited issue of whether Lumara Health's statements about Lumara Health's financial assistance program for Makena were materially false or misleading. On April 16, 2014, the Plaintiff's filed a motion to reconsider asking the Court to reconsider its order restricting the scope of Plaintiff's ability to amend its complaint. The Court denied Plaintiff's motion to reconsider and entered a judgment granting Lumara Health's motion to dismiss on June 6, 2014. On July 1, 2014, Plaintiffs filed a Notice of Appeal with the Eighth Circuit Court of Appeals and briefs have been submitted to the Court. The Court of Appeals has set March 12, 2015 as the date for oral argument.

European Patent Organization Appeal

In July 2010, Sandoz GmbH ("Sandoz") filed with the European Patent Office (the "EPO") an opposition to a previously issued patent which covers ferumoxytol in EU jurisdictions. In October 2012, at an oral hearing, the Opposition Division of the EPO revoked this patent. In December 2012, our notice of appeal of that decision was recorded with the EPO, which also suspended the revocation of our patent. On May 13, 2013, we filed a statement of grounds of appeal and on September 27, 2013, Sandoz filed a response to that statement. We filed a reply to that response on March 17, 2014 and oral proceedings for the appeal is scheduled for June 16, 2015. In the event that we withdraw our appeal or that do not experience a successful outcome from the appeals process, under EU regulations ferumoxytol would still be entitled to eight years of data protection and ten years of market exclusivity from the date of approval, which we believe would create barriers to entry for any generic version of ferumoxytol into the EU market until sometime between 2020 and 2022. This decision had no impact on our revenues for the year ended December 31, 2014. However, any future unfavorable outcome in this matter could negatively affect the magnitude and timing of future revenues. We do not expect to incur any related liability regardless of the outcome of the appeal and therefore have not recorded any liability as of December 31, 2014. We continue to believe the patent is valid and intend to vigorously appeal the decision.

We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, we are not aware of any material claims against us at December 31, 2014. We expense legal costs as they are incurred.