PAYMENT.
AS NOTED IN SECTION 5.1, WITH
RESPECT TO EACH PHARMACOPEIA FTE, * RESEARCH FUNDING FOR THE COLLABORATION UNDER
THIS SECTION 5.2 SHALL BE PAYABLE QUARTERLY IN ADVANCE ON THE FIRST DAY OF EACH
CALENDAR QUARTER.
PHARMACOPEIA SHALL SEND AN INVOICE THEREFOR TO SCHERING
FIFTEEN (15) BUSINESS DAYS PRIOR TO THE END OF THE PRECEDING QUARTER, AND
SCHERING SHALL PAY SUCH INVOICED AMOUNTS.
IT IS UNDERSTOOD THAT IN THE CASE OF
THE FIRST CALENDAR QUARTER OF THE FIRST YEAR OF THE COLLABORATION, PHARMACOPEIA
SHALL SEND AN INVOICE TO SCHERING 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.
SCHERING 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 SCHERING IS UNABLE TO COMPLETE SUCH PAYMENT, PAYMENT BY
SCHERING ON OR BEFORE THE SEVENTH (7TH) DAY OF JANUARY IN SUCH CALENDAR YEAR
SHALL NOT CONSTITUTE A BREACH OR DEFAULT BY SCHERING.
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 SCHERING.
ANY
OVERPAYMENT OR UNDERPAYMENT
17
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 SCHERING TO PHARMACOPEIA WITHIN FIFTEEN (15) BUSINESS DAYS OF
RECEIVING NOTICE AND INVOICE THEREFOR, OR (II) PHARMACOPEIA SHALL WITHIN THIRTY
(30) DAYS REIMBURSE SCHERING 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 SCHERING 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 SCHERING.
5.3
LEAD COMPOUND MILESTONE.
SCHERING SHALL PAY
TO PHARMACOPEIA A MILESTONE PAYMENT OF * FOR EACH NEW OPTIMIZATION PROGRAM
INITIATED OR AGREED TO BY SCHERING WITH RESPECT TO A SCREENING TARGET BASED UPON
ONE OR MORE LEAD COMPOUND(S) ACCEPTED BY SCHERING 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 SCHERING
NOTIFIES PHARMACOPEIA PURSUANT TO SECTION 2.8.3 THAT IT HAS ACCEPTED ONE