COLLABORATION, PHARMACOPEIA SHALL SEND AN
INVOICE TO SPL AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE.
EACH INVOICE
WILL INDICATE THE NUMBER OF PHARMACOPEIA FTES TO BE ASSIGNED TO THE
COLLABORATION FOR SUCH QUARTER AND ANY ADJUSTMENT FROM THE PRIOR QUARTER AS
DETERMINED IN ACCORDANCE WITH SECTION 5.2.4.
SPL WILL USE COMMERCIALLY
REASONABLE EFFORTS DURING EACH CALENDAR YEAR DURING THE TERM OF THE
COLLABORATION TO PAY ITS FIRST CALENDAR QUARTER COLLABORATION FUNDING PAYMENTS
TO PHARMACOPEIA ON OR BEFORE THE FIRST (1ST) DAY OF JANUARY; PROVIDED, HOWEVER,
THAT IN THE EVENT SPL IS UNABLE TO COMPLETE SUCH PAYMENT, PAYMENT BY SPL ON OR
BEFORE THE SEVENTH (7TH) DAY OF JANUARY IN SUCH CALENDAR YEAR SHALL NOT
CONSTITUTE A BREACH OR DEFAULT BY SPL.
5.2.4
QUARTERLY ADJUSTMENT.
AT THE CONCLUSION OF EACH
QUARTER, PHARMACOPEIA WILL CALCULATE THE ACTUAL NUMBER OF FTES PROVIDED BY
PHARMACOPEIA DURING THAT QUARTER AND CALCULATE ANY DIFFERENCE BETWEEN THE ACTUAL
NUMBER OF FTES PROVIDED BY PHARMACOPEIA AND THE NUMBER PREPAID BY SPL.
ANY
OVERPAYMENT OR UNDERPAYMENT SHALL BE REFLECTED AS A CREDIT OR ADDITIONAL CHARGE,
AS THE CASE MAY BE, IN THE NEXT QUARTERLY INVOICE AS PER SECTION 5.2.3, AND IN
THE EVENT THAT NO FURTHER QUARTERLY PAYMENTS ARE DUE UNDER THIS SECTION 5.2,
THEN (I) ANY UNDERPAYMENT SHALL BE PAID BY SPL TO PHARMACOPEIA WITHIN FIFTEEN
(15) BUSINESS DAYS OF RECEIVING NOTICE AND INVOICE THEREFOR, OR (II)
PHARMACOPEIA SHALL WITHIN THIRTY (30) DAYS REIMBURSE SPL FOR ANY OVERPAYMENT.
FOR PURPOSES OF CLARITY AND AVOIDANCE OF DOUBT, THE PARTIES ACKNOWLEDGE AND
AGREE THAT NOTHING IN THIS SECTION 5.2.4 SHALL BE CONSTRUED AS OBLIGATING SPL TO
PAY FOR ANY PHARMACOPEIA FTES ACTUALLY WORKING IN THE COLLABORATION DURING A
GIVEN YEAR OF THE COLLABORATION IN EXCESS OF THE NUMBER OF FTES SPECIFICALLY
PROVIDED FOR IN SECTION 2.2 DURING SUCH YEAR, UNLESS SUCH INCREASED FTE SUPPORT
IS AGREED TO IN ADVANCE IN WRITING BY SPL.
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5.3
LEAD COMPOUND MILESTONE.
SPL SHALL PAY TO
PHARMACOPEIA A MILESTONE PAYMENT OF *FOR EACH NEW OPTIMIZATION PROGRAM INITIATED
OR AGREED TO BY SPL WITH RESPECT TO A SCREENING TARGET BASED UPON ONE OR MORE
LEAD COMPOUND(S) ACCEPTED BY SPL IN ACCORDANCE WITH SECTION 2.8 THAT ARE HITS
ARISING FROM SCREENING PROGRAMS CONDUCTED BY PHARMACOPEIA.
NO SUCH MILESTONE
SHALL BE PAYABLE WITH RESPECT TO ANY OPTIMIZATION PROGRAMS INITIATED OR AGREED
TO BASED UPON LEAD COMPOUNDS WHICH ARE SCHERING COMPOUNDS.
SUCH MILESTONE
PAYMENT SHALL BE DUE WITHIN THIRTY (30) DAYS AFTER SPL NOTIFIES PHARMACOPEIA
PURSUANT TO SECTION 2.8.3 THAT IT HAS ACCEPTED ONE OR MORE PHARMACOPEIA
COMPOUNDS AS LEAD COMPOUNDS.
THE MILESTONE PAYMENT UNDER THIS SECTION 5.3 SHALL
ONLY BE PAYABLE *FURTHER, IT IS UNDERSTOOD AND AGREED THAT ALL AMOUNTS PAYABLE
UNDER THIS SECTION 5.3 ARE IN ADDITION TO ANY MILESTONE PAYMENTS THAT MAY BE DUE
TO PHARMACOPEIA UNDER THE CORRESPONDING PROVISIONS OF THE US AGREEMENT.
FOR THE
AVOIDANCE OF DOUBT, IT IS UNDERSTOOD AND AGREED THAT, FOR EACH NEW OPTIMIZATION
PROGRAM CONDUCTED BY PHARMACOPEIA, PHARMACOPEIA SHALL BE ENTITLED TO RECEIVE THE
MILESTONE PAYMENT UNDER