Common use of Replacement Decision Clause in Contracts

Replacement Decision. On a Research Program-by-Research Program basis, at any time prior to commencement of those Research Activities designated in the applicable Research Plan for such Research Program to be commenced after completion of the first in vivo experiment set forth in such Research Plan for a Compound that is the subject of such Research Program, subject to Section 2.6.3 (Occupied MoAs), ▇▇▇▇▇▇▇ may elect to (a) change the Mechanism of Action for the Target that is the subject of such Research Program or (b) replace the Target that is the subject of such Research Program with a new target and Mechanism of Action (such new Mechanism of Action pursuant to the foregoing clause (a) or new target and Mechanism of Action pursuant to the foregoing clause (b), each, a “Replacement Target MoA,” and such decision, a “Replacement Decision”). If, as of the Replacement Decision, Morphic or its Affiliates have assigned FTEs to perform Development or Commercialization activities related to the potential Replacement Target MoA that is the subject of such Replacement Decision pursuant to a detailed written plan and allocated resources to the performance of such activities in accordance with an associated budget (and Morphic is at such time actively performing such Development or Commercialization activities with respect to such potential Replacement Target MoA), but at such time Morphic or its Affiliates have not identified a compound that modulates the applicable target via the applicable Mechanism of Action and shown that such candidate has activity in one or more in vitro functional cell-based assays against such a target via a Mechanism of Action, then Morphic shall provide written notice to ▇▇▇▇▇▇▇ describing: (a) all of its out-of-pocket costs with respect to the acquisition and Development to-date of such potential Replacement Target MoA; and (b) all existing agreements to which Morphic and its Affiliates have entered into with respect to such potential Replacement Target MoA that are in existence as of the effective date of such Replacement Decision. Following receipt of such notice, the Parties will discuss in good faith any potential allocation of costs and any potential allocation of obligations under such existing agreements described in such notice with respect to such potential Replacement Target MoA, provided, however, that in no event will ▇▇▇▇▇▇▇ be responsible for any financial or other obligations of Morphic to any Third Party under or related to the CMCC License Agreement with respect to such potential Replacement Target MoA. If, following receipt of such notice, ▇▇▇▇▇▇▇ elects to proceed with the applicable Replacement Target MoA, then (i) to the extent agreed in writing by the Parties, such Replacement Target MoA will be subject to all existing agreements to which Morphic and its Affiliates have entered into with respect to such potential Replacement Target MoA that (A) are in existence as of the effective date of such Replacement Decision and (B) have been disclosed to ▇▇▇▇▇▇▇, (ii) ▇▇▇▇▇▇▇ shall reimburse Morphic for the amount of such costs agreed in writing by the Parties and (iii) any Research Program for which ▇▇▇▇▇▇▇ rendered a Replacement Decision shall become a Terminated Program and the program of Research Activities undertaken for the Replacement Target MoA shall be a Research Program. If pursuant to a Replacement Decision, ▇▇▇▇▇▇▇ replaces the Target that is, at such time, the subject of a Research Program with a different target that is not the subject of any Research Program under this Agreement, then such replaced Target shall be removed from this Agreement as a “Target” and the terms and conditions of this Agreement (including Section 2.13 (Exclusivity)) shall no longer apply with respect to such replaced Target. If, however, following receipt of such notice described above, the Parties cannot agree on the allocation of costs and obligations under such existing agreement described in such notice with respect to such potential Replacement Target MoA, then there will not be a Replacement Decision with respect to such potential Replacement Target MoA.