Optnext, Inc. Research And Development Agreement

Exhibit 10.13
RESEARCH AND DEVELOPMENT AGREEMENT by and between HITACHI, LTD. and OPNEXT, INC. Effective as of October 1, 2001


TABLE OF CONTENTS Section 1. Definitions 1 (a) " Affiliate" 1 (b) " Applicable Products" 1 (c) " Average Man-Month Cost" 1 (d) " Base Agreement" 1 (e) " Business" 1 (f) " Business Day" 1 (g) " Clarity Parties" 2 (h) " Commercially Reasonable Efforts" 2 (i) " Confidential Information" 2 (j) " Cure Period" 2 (k) " Dispute Notice" 2 (l) " Effective Date" 2 (m) " Exhibit" 2 (n) " Existing R&D Agreements" 2 (o) " Hitachi R&D IP" 2 (p) " Intellectual Property" 2 (q) " Inventor" 3 (r) " IP License Agreement" 3 (s) " Jointly Developed Intellectual Property" 3 (t) " Licensed Hitachi R&D IP" 3 (u) " Licensed IP" 3 (v) " Losses" 3 (w) " Mark-Up" 3 (x) " Mark-Up Fee" 3 (y) " Minority-Owned Affiliate" 3 (z) " Monthly Cost" 3 (aa) " New Development Costs" 3 (bb) " Old Development Costs" 4 (cc) " OpNext Japan" 4 (dd) " OpNext Japan Agreement" 4 (ee) " OpNext R&D IP" 4 (ff) " Permitted Entities" 4 (gg) " Person" 4 (hh) " Products" 4 (ii) " Project Manager" 4 (jj) " R&D Agreement" 4 (kk) " R&D Plan" 4 (ll) " R&D Procedures" 4 (mm) " R&D Projects" 4 (nn) " R&D Support" 5 (oo) " Related Parties" 5

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(pp) " Statement of Work" 5 (qq) " Subsidiary" 5 (rr) " Total Project Cost" 5 (ss) " Wholly-Owned Subsidiary" 5 Section 2. Research and Development Services 5 (a) Meetings 6 (b) Request and Forecasts 6 (c) Support 6 Section 3. Exclusions from Research and Development Services 6 (a) Hitachi 6 (b) OpNext 6 Section 4. Ownership of Intellectual Property Right 7 (a) OpNext' s R&D Intellectual Property 7 (b) Hitachi' s R&D intellectual Property 7 (c) Jointly Developed Intellectual Property 7 (d) Ownership Determination 8 Section 5. Cross License of Intellectual Property 9 (a) OpNext R&D IP License 9 (b) Hitachi R&D IP License 9 (c) Transfer of Hitachi R&D IP 10 (d) Termination Conditions 10 (e) Range of License 10 Section 6. Covenants to Protect Intellectual Property 11 (a) Notice of Infringement 11 (b) Infringement Suits on Jointly Developed Intellectual Property 11 (c) Infringement of Licensed Hitachi R&D IP 11 Section 7. Inventor Compensation 11 Section 8. Warranties and Limitations 12 (a) Existing R&D Agreements 12 (b) Disclaimer of Warranties 12 (c) Indemnification by Hitachi 12 (d) Indemnification by OpNext 12 (e) IP Infringement Indemnification 12 (f) Patent Infringement 13 (g) Limitation of Liability 13

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Section 9. Expenses 13 Section 10. Termination 13 Section 11. Confidentiality 14 (a) Confidentiality Obligations 14 (b) Exclusions 14 (c) Injunctive Relief 15 (d) Ownership 15 (e) Press Releases and Announcements 15 Section 12. Export Control 15 Section 13. Notices 16 Section 14. Amendment and Waiver 17 Section 15. Assignment 17 Section 16. Counterparts 17 Section 17. Delivery by Facsimile 17 Section 18. Exhibits and Schedules 18 Section 19. Further Assurances 18 Section 20. Governing Law 18 Section 21. Dispute Resolution 18 Section 22. Interpretation 18 Section 23. No Strict Construction 18 Section 24. Recordation 19 Section 25. Relationship of the Parties 19 Section 26. Severability 19 Section 27. Submission to Jurisdiction 19 Section 28. Survival 19 Section 29. Third-Party Beneficiaries 20 Section 30. Entire Agreement 20

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Section 31. Bankruptcy 20 Section 32. Order of Precedence 20

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List of Exhibits Exhibit A Calculation of Mark-Up FeeExhibit B R&D ProceduresExhibit C Arbitration ProceduresExhibit D List of Permitted EntitiesExhibit E Form of Statement of Work

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RESEARCH AND DEVELOPMENT AGREEMENT THIS RESEARCH AND DEVELOPMENT AGREEMENT is dated as of July ___, 2002, by and between HITACHI, LTD., a corporation existing under the laws of Japan (" Hitachi" ) and OPNEXT, INC., a Delaware corporation and a Subsidiary of Hitachi (" OpNext" ). This Agreement is deemed to be effective as of October 1, 2001 (" Effective Date" ). RECITALS WHEREAS, Hitachi and OpNext Japan, Inc., a corporation existing under the laws of Japan and a Wholly-Owned Subsidiary of OpNext (" OpNext Japan" ) have entered into a Research and Development Agreement dated July 31, 2001 (as amended, supplemented or otherwise modified from time to time, the " OpNext Japan Agreement" ), which provides, inter alia , for Hitachi to provide OpNext Japan with certain research and development support; and WHEREAS, Hitachi and OpNext desire to enter into an agreement, on substantially similar terms and conditions, as applicable, for Hitachi to provide OpNext with certain research and development support. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this R&D Agreement hereby agree as follows: Section 1. Definitions . The following terms, when used herein with initial capital letters, shall have the respective meanings set forth in this Section 1. (a) " Affiliate" of any particular Person shall mean any other Person controlling, controlled by or under common control with such particular Person, where " control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise. (b) " Applicable Products" shall have the meaning set forth in Section 12(i) of this R&D Agreement. (c) " Average Man-Month Cost" shall have the meaning set forth in Exhibit A . (d) " Base Agreement" shall mean this Research and Development Agreement, excluding any Exhibits and Statements of Work. (e) " Business" shall mean Hitachi' s fiber optic component business of designing, developing, manufacturing, marketing, distributing and selling Products operated by Hitachi' s Telecommunications Systems Division as of January 31, 2001 and as operated by OpNext Japan between January 31, 2001 and July 31, 2001. (f) " Business Day" shall mean any day of the year except Saturday, Sunday and any day on which commercial banking institutions are authorized or obligated by law, regulation or executive order to close in New York or Tokyo.

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(g) " Clarity Parties" shall mean, collectively, Clarity Partners L.P., a Delaware limited partnership, Clarity OpNext Holdings I, LLC, a Delaware limited liability company, and Clarity OpNext Holdings II, LLC, a Delaware limited liability company. (h) " Commercially Reasonable Efforts" shall mean diligent and commercially reasonable and expeditious efforts to accomplish a task or objective in a manner that is at least equal to the efforts, quality and resources devoted by a party that such party would apply to its own high priority task or objective under similar circumstances. (i) " Confidential Information" shall mean any information not generally known to the public that is (a) made or disclosed in contemplation of this R&D Agreement or (b) information related to the Business that is disclosed or made available to the receiving party pursuant to this R&D Agreement in each case that is stamped or marked as confidential or, in the case of orally conveyed information, is identified at the time of conveyance as confidential and is followed by confirmation in writing reasonably thereafter, including all of the following: (i) prototypes, files, analyses, techniques, systems, formulae, research, records, documentation, models, data, databases, ideas, inventions, designs, developments, devices, methods and processes (whether or not patentable and whether or not reduced to practice); (ii) know-how; (iii) Licensed IP; (iv) Hitachi R&D IP; (v) OpNext R&D IP; and (vi) other Intellectual Property rights. In addition, Confidential Information shall include the terms and conditions of this R&D Agreement. (j) " Cure Period" shall have the meaning set forth in Section 5(d) of this R&D Agreement. (k) " Dispute Notice" shall have the meaning set forth in Section 21 of this R&D Agreement. (l) " Effective Date" shall have the meaning set forth in the preamble of this R&D Agreement. (m) " Exhibit" shall mean an attachment to this R&D Agreement, as such attachment may be amended from time to time, each one of which is incorporated herein by this reference. (n) " Existing R&D Agreements" shall have the meaning set forth in Section 3(a) of this R&D Agreement. (o) " Hitachi R&D IP" shall have the meaning set forth in Section 4(b) of this R&D Agreement. (p) " Intellectual Property" shall mean all: (i) patents, patent applications, patent disclosures and inventions (including all extensions, reexaminations, reissues, continuations and renewals related thereto); (ii) copyrights (registered or unregistered and all renewals thereof) and copyrightable works and registrations and applications for registration thereof; (iii) mask works and registrations and applications for registration thereof; (iv) computer software, data, databases and documentation thereof; and (v) trade secrets and other confidential information (including ideas, formulas, compositions, inventions (whether patentable or

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unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, operating, maintenance and safety materials and drawings, test procedures, test data, sources of materials and supplies, financial and marketing plans and customer and supplier lists and information). Intellectual Property, as referred to in this R&D Agreement, refers to rights throughout the world, including any equivalent of any of the foregoing in any jurisdiction or under any laws, regulations or treaties. (q) " Inventor" shall have the meaning set forth in Section 7 of this R&D Agreement. (r) " IP License Agreement" shall mean the intellectual property license agreement between Hitachi and OpNext Japan dated July 31, 2001 (as amended, supplemented or otherwise modified from time to time). (s) " Jointly Developed Intellectual Property" shall mean all Intellectual Property resulting from an R&D Project under this R&D Agreement in accordance with Section 4(c)(ii) hereof, and shall exclude Hitachi R&D IP, OpNext R&D IP and Licensed IP. (t) " Licensed Hitachi R&D IP" shall have the meaning set forth in Section 5(b) of this R&D Agreement. (u) " Licensed IP" shall have the meaning set forth in Section 3(a) of the IP License Agreement. (v) " Losses" shall have the meaning set forth in Section 8(c) of this R&D Agreement. (w) " Mark-Up" shall have the meaning set forth in Exhibit A . (x) " Mark-Up Fee" shall mean the fee that Hitachi will charge to OpNext for Hitachi' s past investment in Hitachi R&D IP and Jointly Developed Intellectual Property that Hitachi agrees to transfer to OpNext as described in Section 4(c)(iii) and shall be determined in accordance with the formula set forth in Exhibit A . (y) " Minority-Owned Affiliate" shall mean any entity, that a party, directly or indirectly, at any time, owns or controls twenty percent (20%) to fifty percent (50%) of the voting equity shares or securities convertible into such shares. (z) " Monthly Cost" shall have the meaning set forth in Exhibit A . (aa) " New Development Costs" shall mean all of the costs related to a particular R&D Project incurred after commencement of such R&D Project, including operating expenses and charges for the use of any tangible property made available for use in the R&D Project but shall not include the consideration for the use of any existing or underlying Intellectual Property owned or controlled by either party that is used for such R&D Project.

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(bb) " Old Development Costs" shall mean all of the costs incurred prior to commencement of a particular R&D Project for development of any existing or underlying Intellectual Property owned or controlled by either party that is used for such R&D Project, including operating expenses and charges for the use of any tangible property made available for use in developing such existing or underlying Intellectual Property. (cc) " OpNext Japan" shall have the meaning set forth in the first recital of this R&D Agreement. (dd) " OpNext Japan Agreement" shall have the meaning set forth in the first recital of this R&D Agreement. (ee) " OpNext R&D IP" shall mean: (i) Intellectual Property that can be clearly identified as that resulting from R&D Projects (excluding any Hitachi R&D IP and Licensed IP) for which OpNext has paid one-hundred percent (100%) of the New Development Costs; and (ii) Jointly Developed Intellectual Property under Section 4(c)(ii) or Hitachi owned Intellectual Property under Section 4(c)(i) that Hitachi has agreed to transfer to OpNext and OpNext has paid a Mark-Up Fee to Hitachi in accordance with Section 4(c)(iii) and Exhibit A . (ff) " Permitted Entities" shall have the meaning set forth in Section 5(a) of this R&D Agreement. (gg) " Person" shall mean any individual, corporation, partnership, limited liability company, business trust, association, joint stock company, trust, unincorporated organization, joint venture, firm or other entity or a government or any political subdivision or agency, department or instrumentality thereof. (hh) " Products" shall mean, collectively, transmitters, receivers, transceivers, laser diode modules, photo diode modules, parallel optical interconnectors, lasers, photodiodes, modulators, amplifier modules, optical switches and optical wave guides. (ii) " Project Manager" shall have the meaning set forth in Exhibit B . (jj) " R&D Agreement" shall mean, collectively, the Base Agreement, including any Exhibits and Statements of Work (as amended, supplemented or otherwise modified from time to time). (kk) " R&D Plan" shall mean the plan prepared jointly by Hitachi and OpNext and which, at a minimum, includes the information set forth in Section 4 of Exhibit B . (ll) " R&D Procedures" shall mean the procedures set forth in Exhibit B , which may be amended from time to time based upon the parties' mutual agreement. (mm) " R&D Projects" shall mean research and development projects undertaken by OpNext and/or its Affiliates (other than OpNext Japan) and/or by Hitachi on behalf of OpNext after the Effective Date.

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(nn) " R&D Support" shall mean research and development support provided by Hitachi to OpNext. (oo) " Related Parties" shall have the meaning set forth in Section 8(c). (pp) " Statement of Work" shall mean a statement of work in substantially the form set forth in Exhibit E for each R&D Project for which Hitachi will provide R&D Support setting forth additional terms and conditions relating to such R&D Project. (qq) " Subsidiary" shall mean, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the limited liability company, partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing director or general partner of such limited liability company, partnership, association or other business entity. (rr) " Total Project Cost" shall have the meaning set forth Exhibit A. (ss) " Wholly-Owned Subsidiary" shall mean, with respect to any Person, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, one-hundred percent (100%) of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Wholly-Owned Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, all of the limited liability company, partnership or total ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more other Wholly-Owned Subsidiaries of that Person or a combination thereof. Section 2. Research and Development Services . During the term of this R&D Agreement, OpNext may request Hitachi to provide R&D Support for an R&D Project. To the extent such R&D Project is directly related to the Business, Hitachi will provide R&D Support, as requested, to OpNext and the parties will execute an applicable Statement of Work for such R&D Project. If OpNext requests R&D Support for an R&D Project that is not directly related to the Business, Hitachi agrees to negotiate with OpNext in good faith regarding such request; provided , however , if the parties cannot agree as to such R&D Project or an applicable Statement of Work, Hitachi shall have no further obligation with respect to such specific request. Each Statement of

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Work shall be separately executed by the parties, and shall be attached to this R&D Agreement as a Schedule to Exhibit E . Hitachi will provide R&D Support for each R&D Project set forth in a Statement of Work in accordance with the R&D Procedures and the other terms and conditions set forth herein. Hitachi will provide such R&D Support consistent with the following: (a) Meetings . Hitachi and OpNext will hold quarterly joint review meetings to determine and update the R&D Plan for R&D Projects. (b) Request and Forecasts . Based on the R&D Plan developed in accordance with the R&D Procedures, OpNext will require assistance on a binding basis from Hitachi on specific R&D Projects for the upcoming twelve (12) month period. OpNext will also provide Hitachi with a non-binding forecast of R&D Projects that OpNext expects to request from Hitachi for the twelve (12) month period following such twelve (12) month period. Hitachi and OpNext will update such forecasts during the quarterly meetings described in Section 2(a) above. (c) Support . Hitachi will be obligated to use Commercially Reasonable Efforts to provide continuous R&D Support for the R&D Projects in accordance with the specific binding requests (to be performed in the upcoming twelve (12) month period) from OpNext and for all specific non-binding projects that OpNext forecasts to be requested from Hitachi on a binding basis within the twelve (12) month period following the end of such twelve (12) month period. Hitachi will use Commercially Reasonable Efforts to be able to support the balance of the non-binding forecast. Section 3. Exclusions from Research and Development Services . (a) Hitachi . Nothing contained in this R&D Agreement shall limit in any way Hitachi' s ability to continue to conduct research and development activities for other Hitachi business units, including its Affiliates and Subsidiaries, including any fiber optical component business ( e.g. , semiconductors and cable) subject to the Nonsolicitation or Noncompetition provision in Section 12 of the Stockholders' Agreement between OpNext and each of Hitachi and the Clarity Parties dated July 31, 2001 (as amended, supplemented or otherwise modified from time to time); provided , however , the terms and conditions of this R&D Agreement shall be subject to the terms and conditions of any existing agreements related to the governmental R&D projects, the joint R&D projects with national and public universities or private universities, the R&D projects requested by other Hitachi Subsidiaries or the joint R&D projects with any other agency or organization (collectively, the " Existing R&D Agreements" ). Prior to the commencement of any R&D Project, Hitachi shall disclose to OpNext any restrictions contained in the Existing R&D Agreements related to such R&D Project. Hitachi shall use Commercially Reasonable Efforts to obtain consents from applicable parties to the Existing R&D Agreements and from applicable parties to any future R&D agreements so as to avoid limiting or restricting the R&D Projects for which Hitachi agrees to provide R&D Support pursuant to a Statement of Work. (b) OpNext . Nothing in this R&D Agreement shall in any way limit OpNext' s ability to conduct its own, or utilize other third parties to conduct on its behalf, research and development projects.

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Section 4. Ownership of intellectual Property Right . (a) OpNext' s R&D Intellectual Property . OpNext will solely own all right, title and interest, throughout the world in and to OpNext R&D IP. OpNext shall have the right to apply, in its own name and at its own expense, for Intellectual Property protection in the OpNext R&D IP and, if requested, Hitachi shall cooperate with OpNext in any reasonable manner in obtaining such protection, including obtaining signatures of Hitachi Inventors and/or officials on official papers. (b) Hitachi' s R&D Intellectual Property . Hitachi will solely own all Intellectual Property rights that result from all of its other research and development projects, including the Intellectual Property referenced in Section 4(c)(i), excluding Jointly Developed Intellectual Property and/or OpNext R&D IP (" Hitachi R&D IP" ). Hitachi shall have the right to apply, in its own name and at its own expense, for Intellectual Property protection in the Hitachi R&D IP and, if requested, OpNext shall cooperate with Hitachi in any reasonable manner in obtaining such protection, including obtaining signatures of OpNext Inventors and/or officials on official papers. (c) Jointly Developed Intellectual Property . All right, title and interest in and to Jointly Developed Intellectual Property, other than OpNext R&D IP and Hitachi R&D IP, shall be determined in accordance with this Section 4(c). (i) Hitachi Owned . If the R&D Project is jointly funded by OpNext and Hitachi, unless (ii) or (iii) below applies, the resulting Intellectual Property will be treated as Hitachi R&D IP in accordance with Section 4(b) and will be solely owned by Hitachi. (ii) Jointly Owned . (1) If the R&D Project is jointly funded by the parties and either: (a) OpNext contributes fifty percent (50%) or more of the New Development Costs to the R&D Project; or (b) OpNext contributes less than fifty percent (50%) of the New Development Costs to the R&D Project but the parties determine through good faith negotiations that OpNext contributed to the R&D Project in some other fashion, and in both (a) and (b) above the resulting Intellectual Property can clearly be identified with reasonable certainty as that resulting from such R&D Project, then such Intellectual Property shall be deemed Jointly Developed Intellectual Property and shall be owned jointly by the parties and either party may practice such Jointly Developed Intellectual Property without an accounting or compensation to, or the consent of, the other party. Except as set forth in Section 4(c)(iii) below, if either party desires to license any of its rights to the Jointly Developed Intellectual Property herein to a third party, it shall obtain the prior written consent of the other party hereto. Each party shall have the right to apply, in both parties' names, for Intellectual Property protection in the Jointly Developed Intellectual Property, subject to the following: (i) the parties shall agree on the proper way and strategy for proceeding with all protection of the Jointly Developed Intellectual Property in accordance with the R&D Procedures; (ii) all expenses incurred in obtaining and maintaining Intellectual Property protection in the Jointly Developed Intellectual Property shall be equally shared by the parties; and (iii) in the event that one (1) of the parties elects not to seek or maintain patent or other Intellectual Property protection for any Jointly Developed Intellectual

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Property in any particular country or not to share equally in the expenses thereof with the other party, the other party shall have the right to seek or maintain such protection at its sole expense in such country and shall have full control over the prosecution and maintenance thereof even though title to any patent or other Intellectual Property protection issuing therefrom shall be jointly owned by the parties. (2) To the extent OpNext shares the costs of its proportion of the joint funding as described in (1) above, with any Wholly-Owned Subsidiary of OpNext for an R&D Project, OpNext shall have the right to license any Jointly Developed Intellectual Property arising from such R&D Project and the right to sublicense any Hitachi R&D IP associated with such Jointly Developed Intellectual Property, to such Wholly-Owned Subsidiary of OpNext; provided , however , the following conditions are met: (i) OpNext obtains Hitachi' s reasonable prior consent; and (ii) such Wholly-Owned Subsidiary of OpNext abides by the terms and conditions of this R&D Agreement. Notwithstanding the foregoing, if any such license invokes any Japanese tax issues then Hitachi shall not be obliged to consent to such license to such Wholly-Owned Subsidiary of OpNext without entering into a separate agreement with such Wholly-Owned Subsidiary of OpNext under reasonable terms and conditions to be agreed upon between the relevant parties to address such tax issues. Notwithstanding the foregoing, such Wholly-Owned Subsidiary of OpNext shall not have any ownership rights in such Jointly Developed Intellectual Property. (iii) OpNext Owned . (1) If OpNext desires and Hitachi agrees in its reasonable discretion, OpNext may purchase the Intellectual Property resulting from an R&D Project that is either owned by Hitachi under Section 4(c)(i) or jointly owned by the parties under Section 4(c)(ii), but excluding other Hitachi R&D IP and Licensed IP, by reimbursing Hitachi for any New Development Costs incurred by Hitachi in such R&D Project and paying a Mark-Up to Hitachi in accordance with the formula set forth in Exhibit A hereto. (2) If OpNext desires and Hitachi agrees in its reasonable discretion, OpNext may purchase the Intellectual Property resulting from an R&D Project that is either owned by Hitachi under Section 4(c)(i) or jointly owned by the parties under Section 4(c)(ii), including the other Hitachi R&D IP and Licensed IP on which such Intellectual Property is based or derived, by paying a Mark-Up Fee. For the purposes of determining such Mark-Up Fee, the parties shall consider the extent of Hitachi' s New Development Costs, Hitachi' s Old Development Costs and the fair market value of such technology (other than Licensed IP). (d) Ownership Determination . Prior to the commencement of an R&D Project, the Hitachi and OpNext Project Managers shall discuss in good faith the ownership of the Intellectual Property resulting from such R&D Project based upon the principles listed above. If the parties' Project Managers cannot agree on the ownership of the Intellectual Property, the management of both parties shall discuss in good faith the ownership of the Intellectual Property resulting from such R&D Project. If the management is unable to come to an agreement on such ownership issues (including clear identification of the Intellectual Property resulting from such R&D Project, New Development Costs, Old Development Costs, OpNext' s non-monetary

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contribution to the R&D Project and the Mark-Up Fee, if applicable), the parties shall refer solely this issue to arbitration pursuant to the arbitration procedures set forth in Exhibit C hereto. In the event that it is impractical to resolve the disputed issue prior to the commencement of the R&D Project ( e ...