11. COMMITMENTS AND CONTINGENCIES

Lease Obligations

The Company’s corporate headquarters are located in temporary office space leased through June 30, 2013 in Cambridge, Massachusetts. The monthly rent is approximately $33,000 per month. In February 2013, the Company entered into a new lease in Cambridge, Massachusetts for additional temporary office space. The monthly rent is $7,700, excluding occupancy costs, and expires after 12 months.

The Company also leases laboratory and office space in Corvallis, Oregon. Monthly base rent at the Corvallis, Oregon facility is approximately $72,000 per month, excluding other occupancy costs, and is subject to an annual increase of 3%. In addition, the Company leases the land in Corvallis, Oregon upon which the industrial building owned by the Company is built. The Corvallis, Oregon land lease is approximately $700 per month and is subject to an annual increase of 1.5%.

In May 2012, the Company exercised a one-time option to terminate the lease for its office and laboratory space in Bothell, Washington effective May 31, 2013. For the exercise of this option, the Company paid the landlord a one-time termination fee of $210,000 in May 2012. The base rent for this facility is approximately $46,000 per month, excluding other occupancy costs. In January 2013, the lease was amended to terminate on approximately March 31, 2013.

Rent expense and occupancy costs under all leases totaled $2,552,000, $2,498,000 and $1,821,000 for 2012, 2011 and 2010, respectively.

The following table lists the locations, expiration dates and the square footage of the Company’s principal leased properties as of December 31, 2012:


Location of Property	Square Footage		Lease Expiration Date
Cambridge, Massachusetts		1,742	June 2013
Bothell, Washington		19,108	March 2013
Corvallis, Oregon		53,000	December 2020
Corvallis, Oregon land lease		N/A	February 2042

At December 31, 2012, the aggregate non-cancelable future minimum payments under leases were as follows:


	Year ending December 31,
	(in thousands)
2013	$	1,863
2014		1,780
2015		1,821
2016		1,455
2017		1,498
Thereafter		4,946

Total minimum lease payments	$	13,363

Royalty Obligations

The Company has license agreements for which it is obligated to pay minimum royalties if the Company does not terminate the relevant agreement. The notice period to terminate these agreements is six months or less. Royalty payments under these agreements were $141,000, $94,000 and $100,000 for 2012, 2011 and 2010, respectively.

The Company is also obligated to pay royalties upon the net sales of DMD products. The royalty rates are in the low single-digit percentages for both inside and outside the United States. In addition, the Company is obligated to pay Charley’s Fund a mid single-digit percentage royalty on the net sales of any exon 50 skipping product developed pursuant to the agreement with Charley’s Fund up to a maximum of $3.4 million (see “Note 9—Significant Agreements”).

The commercialization of other products in early stage development may require the payment of milestones or royalties upon commercialization.

Milestone Obligations

The Company has license agreements for which it is obligated to pay development milestones as a product candidate proceeds from the filing of an Investigational New Drug application through approval for commercial sale. During 2012, 2011 and 2010, the Company’s milestone payments were inconsequential.

Litigation

As of December 31, 2012, the Company was not a party to any material legal proceedings with respect to itself, its subsidiaries, or any of its material properties. In the normal course of business, the Company may from time to time be named as a party to various legal claims, actions and complaints, including matters involving employment, intellectual property, effects from the use of therapeutics utilizing its technology, or others. It is impossible to predict with certainty whether any resulting liability would have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Purchase Commitments

In the Company’s continuing operations, it has entered into long-term contractual arrangements from time to time for the provision of goods and services. The following table presents noncancelable contractual obligations arising from these arrangements as of December 31, 2012:


	Year Ending December 31,
	(in thousands)
2013	$	2,095
2014		0
2015		0
2016		0
2017		0
Thereafter		0

Total purchase commitments	$	2,095

Subsequent to year end December 31, 2012, the Company entered into an agreement for $20.8 million in January 2013 for the manufacturing of subunits that will be delivered in 2013 and the first quarter of 2014.