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 (½).