WHEREAS, Licensor owns certain Letters Patent of the United States and
other countries relating to oil burning engines under which he desires
to license the Licensee;
WHEREAS, Licensee desires rights under said Letters Patent;
NOW, THEREFORE, for the mutual considerations hereinafter set forth, the
parties have agreed as follows:
1. Licensor warrants that he is the inventor of an oil burning engine,
is the sole owner of United States patent Number 1,628,657, dated May
17, 1927, and United States patent applications, Serial Numbers 46,383
filed July 27, 1925, and 88,409 and 88,411, filed February 15, 1926,
relating to such engines and is joint or sole owner of patents or patent
rights relating to said engines in England, Germany and Sweden.
2. Licensor agrees to furnish the Licensee at cost price but not
exceeding Thirty Dollars ($30.00) cash, as many pump and nozzle units as
are needed for use in building one or more experimental engines.
3. Licensor hereby gives and grants unto Licensee an exclusive license
for the manufacture, within the United States and its dependencies, and
a non-exclusive license for the use and sale, of engines for aircraft,
and a non-exclusive license for the manufacture, use, and sale of
engines for motor vehicles and motor boats, under said United States
patent Number 1,628,657, under all after-acquired patents and under all
patents that may result from said patent applications, and from all
other patent applications pertaining to his present oil burning engine
or reasonable variations thereof, such licenses to extend for the full
life and term of all such patents, provided however, that there is
specially excepted from this grant--stationary engines, tractor engines,
and engines for agricultural purposes.
4. Licensor further hereby permits said Licensee to export to all other
countries and sell and use there, without further royalty, all engines
made by Licensee in the United States under this license.
5. Licensor acknowledges receipt of One Thousand Dollars ($1,000.00) in
payment of a portion of the expenses heretofore incurred by him and as
one of the considerations for this agreement.
6. Licensor agrees to devote all time necessary from this date to
November 1, 1928 to supervision of the design of an engine and
construction thereof at the plant of the Licensee and will in his
absence furnish the services of a competent assistant, the expenses of
Licensor and assistant to be paid for by Licensee at the rate of One
Thousand Dollars ($1,000.00) per month for the first three (3) months,
and Five Hundred Dollars ($500.00) per month thereafter until the
decision in paragraph eight has been made by Licensee.
7. Licensee agrees to build and test at least one experimental aircraft
engine with special Dorner features, and to take all reasonable measures
to reach the stage of final test. All Dorner feature engines made by
Licensee will be marked "Licensed Under Dorner Patents."
8. Within one year after the completion of tests of the aircraft engine
built by Licensee hereunder, or in any event not later than November 1,
1928, Licensee will decide whether it will proceed with the manufacture
of engines hereunder, or not. If Licensee decides in the affirmative
then it will pay Licensor forthwith the sum of Five Thousand Dollars
($5,000.00) as advance on royalties and as minimum royalty for the first
production year. If Licensee decides in the negative for reasons which
are under the influence of Licensor, then Licensee will give Licensor
notice and sufficient time to try to correct possible imperfections, and
the time for final decision will be correspondingly extended. If the
reasons for the negative decision are under the influence of Licensee,
then Licensee will grant to Licensor an oral conference at Detroit and
explain the reasons in detail. In event a negative decision is finally
rendered by Licensee this agreement may be terminated at any time
thereafter upon sixty (60) days' notice in writing to Licensee and both
parties released from all further obligations hereunder.
9. Licensee agrees that if after three (3) years from the date hereof
Licensee is not manufacturing and does not contemplate the manufacture
of, a certain size and type of aircraft engine which Licensor would like
to grant another manufacturer the right to build and which would not
reasonably compete with anything manufactured by Licensee, Licensee will
release such size and type aircraft engine from the exclusiveness of
this license and thereby permit Licensor to grant a license to such
other manufacturer to make, use and sell such engine and such engine
only.
10. Licensee agrees to pay royalty on all engines manufactured and sold
or used under this agreement, based on effective brake horsepower under
normal load, as follows:
On each of the first Five Thousand (5,000) such engines produced
and sold in any one calendar year, the royalty shall be at the rate
of Twenty-five Cents ($.25) per horsepower; and on all over Five
Thousand (5,000) in such calendar year, at the rate of Ten Cents
($.10) per horsepower;
provided that, after a total of Fifty Thousand Dollars ($50,000.00) has
been paid in royalties the royalties shall be reduced one-half (1/2).
11. After the beginning of the second year of production, Licensee
agrees that if the royalties under the above schedule amount to less
than Ten Thousand Dollars ($10,000.00) per year then the royalty shall
be Ten Thousand Dollars ($10,000.00) per year payable in quarterly
instalments of Two Thousand Five Hundred Dollars ($2,500.00) each, or in
other words, the minimum royalty payable shall be Ten Thousand Dollars
($10,000.00) per year.
12. Royalties shall continue only during the life of said patent Number
1,628,657, and when a total of Two Hundred Fifty Thousand Dollars
($250,000.00) has been paid by Licensee to Licensor, all royalties shall
cease and the license hereunder shall be free thereafter.
13. Licensor agrees that Licensee shall have the benefit of any more
favorable royalty rates that may be hereafter granted to or enjoyed by
any other manufacturer of engines other than aircraft engines.
14. Licensee agrees to keep proper books of account showing the number
of engines manufactured and sold or used under this agreement and to
report quarterly to Licensor.
15. In case of suit against the Licensee for infringement of patents by
any of the Dorner features built under this license Licensor agrees to
assist in the defense of any such suit and pay the expenses thereof up
to an amount equal to Ten Percent (10%) of all royalties paid by
Licensee to Licensor hereunder.
16. In event of default of the Licensee in the payment of any of the
sums herein provided for, Licensor may terminate this license agreement
by serving upon the Licensee Sixty (60) days' notice in writing of its
desire and determination so to do and stating the default upon which the
notice is based, and at the expiration of such Sixty (60) days this
license shall thereupon be terminated, provided however that such
termination shall not release the Licensee from obligations already
accrued hereunder and not performed, and provided further that if,
during said Sixty (60) days' notice period, the default named in said
notice shall have been made good then this license to continue as if no
default and notice had been made or given.
17. At the expiration of any one year from November 1, 1929, Licensee
may terminate this agreement upon Sixty (60) days' notice in writing to
Licensor of its desire and determination so to do, provided however,
that such termination shall not release the Licensee from obligations
already accrued hereunder and not performed.
18. In case of differences of opinion regarding any of the terms of this
agreement, the dispute shall be submitted to arbitration. Each party
shall select one arbitrator and if they, after five days, fail to agree
upon a third, the United States Court for the Detroit District shall be
asked to appoint such a third arbitrator, and the decision of a majority
of the arbitrators shall be binding upon both parties.
In witness whereof, we have hereto set our hands and seals at Detroit,
Michigan, on the day and year first above written.
Witnesses--(Signatures):
Hermann Dorner
L. A. Wright
Adolf Widmann
PACKARD MOTOR CAR COMPANY
Alvan Macauley
President
(Seal)
Attest: Milton Tibbetts
Assistant Secretary