9. Commitments and Contingencies

a. Operating Leases

As of December 31, 2014, we leased office, manufacturing and laboratory space, under lease agreements expiring in December 2020. Rental payments are recognized as rent expense on a straight-line basis over the term of the lease. In addition to rents due under these agreements, we are obligated to pay additional facilities charges, including utilities, taxes and operating expenses.

PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

As of December 31, 2014, future minimum annual payments under all operating lease agreements are as follows:

Years ending December 31,	Minimum Annual Payments
2015	$	1,887
2016		1,934
2017		1,983
2018		2,032
2019		2,083
Thereafter		2,135
Total	$	12,054

Rental expense totaled approximately $1,864, $3,548 and $2,074 for 2014, 2013 and 2012, respectively. For 2014, 2013 and 2012, amounts paid exceeded rent expense by $3, $164 and $419, respectively, due to the recognition of lease incentives. Additional facility charges, including utilities, taxes and operating expenses, for 2014, 2013 and 2012 were approximately $2,117, $2,330 and $2,845, respectively.

b. Licensing, Service and Supply Agreements

Progenics and its subsidiaries have entered into intellectual property-based license and service agreements in connection with product development programs, and have recognized milestone, license and sublicense fees and supply costs, included in research and development expenses, totaling approximately $498, $567 and $1,170 during the last three years, respectively.

	Paid from inception to December 31, 2014		Future ⁽¹⁾ Commitments		Terms
PSMA LLC agreements with:
Seattle Genetics, Inc.	$	4,501	$	13,800	Milestone and periodic maintenance payments to use ADC technology to link chemotherapeutic agents to monoclonal antibodies that target prostate specific membrane antigen. ADC technology is based in part on technology licensed by SGI from third parties.
Amgen Fremont, Inc. (formerly Abgenix)		1,350		5,750	Milestones and royalties to use XenoMouse^® technology for generating fully human antibodies to PSMA LLC's PSMA antigen.
Former member of PSMA LLC		316		52,197	Annual minimum royalty payments and milestones to use technology related to PSMA.

	Paid from acquisition date to December 31, 2014		Future ⁽¹⁾ Commitments		Terms
MIP agreements with:

University of Zurich and the Paul Scherrer Institute	$	205	$	1,160	Annual maintenance and license fee payments, milestones and royalties in respect of licensed technology related to 1404.
University of Western Ontario		16		335	Annual minimum royalty, administration and milestone payments in respect of licensed technology related to Azedra.

⁽¹⁾ Amounts based on known contractual obligations as specified in the respective license agreements, which are dependent on the achievement or occurrence of future milestones or events and exclude amounts for royalties which are dependent on future sales and are unknown.

PROGENICS PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

(amounts in thousands, except per share amounts or as otherwise noted)

In addition, we are planning to out-license or terminate non-germane Molecular Insight licenses and service agreements, as to which we have paid $151 through December 31, 2014, and have future commitments of $14,425, subject to occurrence of future milestones or events. In February 2015 we have terminated one of Progenics' license agreements in respect of oncology and other products, as to which we paid $909 through December 31, 2014, and had future commitments of $777, subject to occurrence of milestones or events.

c. Consulting Agreements

As part of our research and development efforts, we have from time to time entered into consulting agreements with external scientific specialists. These agreements contain various terms and provisions, including fees to be paid by us and royalties, in the event of future sales, and milestone payments, upon achievement of defined events, payable by us. Certain of these scientists are advisors to Progenics, and some have purchased our Common Stock or received stock options which are subject to vesting provisions. We have recognized expenses with regard to the consulting agreements of $67, $39 and $8 for 2014, 2013 and 2012, respectively. Those expenses include the fair value of stock options granted during 2013, of approximately $17 and $7 for 2014 and 2013, respectively. Such amounts of fair value are included in research and development expense for each year presented (see Note 10).

d. Retirement Agreement

On March 14, 2012, Progenics and company founder Paul J. Maddon entered into an agreement providing for his retirement as Chief Science Officer. In connection with Dr. Maddon's retirement and termination of his employment agreement, Progenics agreed to pay him an amount equal to $1,789 and provide other benefits under the agreement.

e. Related Party Agreement

In December 2012, Progenics entered into a financial advisory agreement with MTS Health Partners, L.P., of which the Company's Board Chair is a Senior Managing Director and partner, on customary terms and conditions, whereby, in 2013, MTS has received monthly retainers totaling $55 during the term of the agreement and $300 for MTS' services in connection with the Molecular Insight acquisition. This agreement was terminated in June 2013.

f. Legal Proceedings

Progenics is a party to a proceeding brought by a former employee complaining that the Company violated the anti-retaliation provisions of the federal Sarbanes-Oxley law by terminating the former employee. The Company believes the former employee's claims are without merit and is contesting the matter vigorously. The federal District Court hearing the case issued in July 2013 an order denying our motion for summary judgment dismissing the former employee's complaint, making it likely that the proceeding will continue to trial. Given the uncertainty attendant to the proceeding, we have accrued amounts in connection with this matter which are not material to these Consolidated Financial Statements.

In the third quarter of 2014, Progenics and Ono, its former licensee of Relistor in Japan, settled all claims between them relating to an arbitration commenced by Progenics in 2013, the parties' October 2008 License Agreement, and the former licensee's development and commercialization of the drug. In connection therewith, the parties exchanged mutual releases and the former licensee paid Progenics $7.25 million, which has been recorded as other operating income.