EXHIBIT No. 641 [Memorandum of J. E. Wild, American Bosch Corporation, on discussion with Robert Bosch G.m.b.H., dated June 28, 1939] To Messrs. HESS, BEHN, WILD, GOTTLIEB, ROSENTHAL. DISCUSSION WITH ROBERT BOSCH G.m.b.H. RE REDUCTION OF DIESEL ROYALTIES PAID BY AMERICAN BOSCH TO BOSCH Bosch Representatives: Messrs. Fellmeth, Rassbach, K. M. Wild, Dipper INTRODUCTORY REMARKS Our manufacturing agreement No. 1 with Bosch provides that we pay to Bosch a royalty of 5 percent of the net sales price of the fuel-injection equipment manufactured by American Bosch, with some exceptions as provided for. In view of the competitive situation, and also in view of the considerable payments made already, an effort was to be made to have Bosch agree to a lower royalty rate or, if possible, to a one-time cash payment in lieu of royalties. DISCUSSIONS Bosch was not willing to listen to a one-time cash payment in lieu of royalties and rejected flatly an offer of $25,000 to $35,000 cash payment on the basis that this figure represented about the payment in royalties for one normal business year. Even if Bosch had been willing to do so, there was no doubt in the mind of these people that the authorities would object and that it would seriously reflect on Bosch. They indicated, however, willingness to discuss reduction of the royalty rate, provided we could bring enough evidence to justify this request. Subsequently, information obtained by cable from American Bosch was submitted, showing total cost and selling, price of typical units of fuel-injection equipment. A comparison of total cost of like or similar units at Bosch brought out the rather surprising fact that our total cost is about 21⁄2 times that of Bosch. Making due allowance for smaller quantities, higher wages paid in the United States of America and possibly higher cost of selling, this discrepancy was not considered sufficiently explained and Bosch requested that a specialist be sent from Springfield to Stuttgart to compare the cost of manufacturing item for item and the various items of expense which are added to the manufacturing cost. (Due to the different costing system of Bosch, this needs a competent man.) It was held by Bosch that we must not only bring out the difference in cost, but the analysis must bear out that our cost is genuine and that everything is done by American Bosch to effect a low total cost. Additional data, such as a description and the financial strength of the competition, the business outlook, also past history of the Diesel business of American Bosch and its profits, will be necessary to put Bosch in a position to help us. The authorities are known to employ first-rate specialists who scrutinize carefully every evidence. On the premise that the investigation proves that our request is justified, three possibilities were discussed, one of which may be selected by American Bosch for submittal by Bosch to the authorities. (1) The present royalty rate of 5 percent is retained for pumps of C, L and E size. Pumps of smaller size to carry a royalty rate of 21⁄2 percent. Hesselman multistroke pumps to carry a royalty rate of 1 percent. A cash payment of about $20,000 is requested before the new rates go into effect. (2) In order to make it possible for us to avoid a cash payment, an alternate proposal was agreed upon, namely: For pumps of C, D, and E size, the royalty rate will be raised to 7% percent. (3) If none of these two proposals is agreeable to American Bosch, then it is thought that a considerable reduction of royalty rate may be possible, if American Bosch be willing to have Bosch acquire a second licensee in the United States of America for the manufacture of Bosch pumps. In view of the complications which such a step might bring, this proposal was not discussed beyond its initial conception. Considerable discussion was had on the fact that American Bosch is manufacturing fuel-injection equipment also of its own design and that American Bosch thought that it should pay less or no royalty for such devices. Bosch rejected that flatly on the basis that in most devices it cannot be clearly established, what the contribution of each company consisted of. A further suggestion that we abrogate the present agreement and negotiate a separate royalty arrangement for each separate fuel injection device was considered entirely impractical. Bosch feels very strongly that complete benefits from the manufacturing agreement can be had only, if the free flow of information is maintained. In order to help American Bosch in the Hesselman multistroke pump situation, but at the same time follow the intent of the manufacturing agreement, Bosch was willing to accept a very low rate of royalty. It was not considered necessary to discuss further details until the cost analysis was finished. Also my request to include the C size in the lower royalty bracket was considered a detail which could be adjusted. Also the rates for nozzles, governors, etc., would follow the above rates. If prompt action was taken on our part then it was held likely that the new rates could be made retroactive to July 1, 1939. Bosch is earnest in its willingness to cooperate with us. However, it finds itself on the defensive before the authorities when it comes to making changes in an agreement, in which it has to give up rights or income from a foreign country. For that reason, the Bosch men feel that they have to probe deeply into the merits of our case before submitting the request. IMPORTANT References, actual or implied, to "Government" or "authorities" must not be made in communications with Bosch. J. E. WILD. EXHIBIT No. 642 [Letter from D. P. Hess, president. American Bosch Corporation, Springfield, Mass., to J. E. Wild, American Bosch Corporation, London, England, dated May 2, 1939] Mr. J. E. WILD, Care of Grosvenor House, London, England. MAY 2, 1939. DEAR J. E.: I wired you today, as per copy enclosed, and am sending this letter to the Grosvenor House so that I can bring you more up to date. We have recently received from Stuttgart a license agreement covering the manufacture of generators, which is simply impossible for us to sign. I will explain more of this when you get here, but if this type of license agreement is to cover our activities wherein we manufacture products designed in Stuttgart, we are just out of luck. One of the features specifies that we must buy 20 percent of our products from Germany, which as you know is fast becoming a definite impossibility. All in all. I am deeply disappointed with this type of agreement, and it is therefore no use for you to try to make a deal with them regarding a supercharger. I did not cable this to you for very obvious reasons, but Carl Behn thinks it is very important for you to see Centric at the following address: Centric Super Chargers, Ltd. Bow Lane, Preston, Lance, England. and see what kind of an arrangement you can work out covering the manufacture of their superchargers in this country. Along this line I would very definitely tell you that we would make no arrangement covering a minimum royalty for a minimum amount of sales, on the theory that if their device is efficient, we have sufficient reputable standing to convince them we would do our very best to merchandise it. We have also received some very disturbing news from out in the field, which emanates from Washington, along the line that we are much too closely tied up with a German company to handle any Government business. As you know, we have had this report before, but the last two sources were absolutely unimpeachable, and both Carl and I are seriously concerned with it. In fact, one statement was made to the effect that our vice president in charge of engineering was in Germany getting instructions as to how we were to proceed. This is one reason why I want you to cut your visit short, just as much as possible, and in the meantime we have discontinued sending all reports-both sales and engineering-to Stuttgart. If you get an opportunity you might explain this, verbally, to either Rassbach or Fischer, but I would not mention it to anyone else, nor would I discuss it in any manner in telephone conversations to Germany. In addition to the above features emanating from Washington, the last letter I received from Campbell had a copy of the Espionage Act attached to it, which may or may not mean anything. Campbell also has cautioned us again about discussing our Government work with anyone else. Personally I am satisfied we can no longer send Teichert to Wright Field or any other Government department. This, I am afraid, also affects Schwarzmann, as you can readily understand. Business, generally speaking, has been fairly good, although at this moment it is definitely declining. Our shipments for April were $355,000, which should keep us in the black, but our incoming orders amounted to only $265,000, which is the lowest they have been since last August. Most of this is due to lack of Ford orders, which were $50,000 lower than our average for the first quarter. We had news today, however, that Ford is definitely going to make approximately 80,000 cars during May, and if we get our share of this business it will be decidedly helpful. Last month was the best month in the shipment of magnetos that we have had since early 1937. Hope you and Mrs. Wild are having a very nice visit, and give my kindest regard to all of the men at C. A. V.-Bosch. Sincerely yours, President. P. S.-Do not mention anything about generator agreement to anyone in Europe. EXHIBIT No. 643 [Letter from D. P. Hess, president, American Bosch Corporation, Springfield, Mass., to Martin Steins, Robert Bosch G. m. b. H., Stuttgart, Germany, dated December 7, 1938] DECEMBER 7, 1938. Mr. MARTIN STEINS, Robert Bosch G. m. b. H., Stuttgart, Germany. DEAR MR. STEINS: Thank you very kindly for your letter of November 23 enclosing copies of correspondence with Willys Borghoff, Rio de Janeiro and Robert Bosch S. A., Buenos Aires, regarding Timken service in South America. It so happens that this subject is even of greater importance now, because Timken is finding it difficult to sell their products here in the United States without adequate service in South America. Very truly yours, EXHIBIT NO. 644 President. [Telegram from D. P. Hess, president, American Bosch Corporation, Springfield, Mass., to J. E. Wild, Stuttgart, Germany, dated May 8, 1939] MAY 8, 1939. JULIUS WILD, Magnetbosch Stuttgart: Cannot agree Lavalette allowing any service representative to handle Timken pumps. Timken trying very hard to get our representatives throughout world handle their equipment, as lack of this service very serious factor for them. HESS. EXHIBIT No. 645 [Undated draft of option between the Dayton Liquid Meter Co., Dayton, Ohio, and American Bosch Corporation, Springfield, Mass.] THIS OPTION AGREEMENT, made this day of June 1941, by and between THE DAYTON LIQUID METER COMPANY, an Ohio corporation with its principal office and place of business at Dayton, Ohio (hereinafter referred to as "METER"), JESSE E. HOUSER, WILLIAM A. HANCOCK, and LEWIS T. Rowe, all of Dayton, Ohio (hereinatfer collectively referred to as the "INVENTORS") and AMERICAN BOSCH CORPORATION, a New York corporation with its principal office and place of business at Springfield, Massachusetts (hereinafter referred to as "AMERICAN BOSCH"). WITNESSETH THAT: WHEREAS, METER and the INVENTORS, jointly and severally, represent that METER is the owner of the entire right, title and interest in, and to certain inventions (hereinafter referred to as the "Inventions") which are the subject matter of the applications for Letters Patent of the United States, Canada, and Great Britain which are listed on a schedule hereto attached and made a part hereof as "Exhibit A"; and WHEREAS, AMERICAN BOSCH, subject to certain investigations to be made by it with respect to the Inventions and the patent situation relating thereto, is desirous of acquiring certain rights for the manufacture, use, and sale of articles embodying the Inventions; and WHEREAS, METER is desirous of granting to AMERICAN BOSCH such rights, NOW THEREFORE, in consideration of the premises and of the sum of One Thousand Dollars ($1,000), the receipt whereof is hereby acknowledged, IT IS AGREED as follows: 1. METER and the INVENTORS, jointly and severally, certify and warrant that 'METER is the owner of the entire right, title, and interest in and to the Inventions and the applications for Letters Patent of the United States, Canada, and Great Britain, the serial numbers and dates of filing of which are set forth on "Exhibit A"; and METER and the INVENTORS, jointly and severally, further certify, warrant, and covenant that METER will be the owner of the entire right, title, and interest in and to the Letters Patent to be issued upon said applications, or any divisions, continuations, renewals, extensions, and reissues thereof. METER and the INVENTORS, jointly and severally, further certify and warrant that METER has the sole right to grant licenses under the Inventions and said applications for Letters Patent and under the Letters Patent to be issued thereon, or any divisions, continuations, renewals, extensions, and reissues thereof. 2. METER grants to AMERICAN BOSCH the exclusive option, for a period of six (6) months from the date of this Option Agreement, to secure from METER the License Agreement attached hereto and made a part hereof as “Exhibit B." 3. METER and the INVENTORS, jointly and severally, agree to deliver to AMERICAN BOSCH, within ten (10) days from the date of this Option Agreement, a sample liquid pump and copies of all necessary drawings, specifications, and technical data to enable AMERICAN BOSCH to instal, operate, and test such sample liquid pump and to construct, operate, and test such additional sample liquid pumps as AMERICAN BсSCH may deem necessary or desirable for the purposes of its investigation. In order to aid and facilitate AMERICAN BOSCH in its investigation, METER and the INVENTORS further agree, jointly and severally, to supply AMERICAN BOSCH with all reports, information, and data, relating to the Inventions coming into the possession of either METER or the INVENTORS during the option period. 4. During the option period, AMERICAN BOSCH shall have the right to make and use articles embodying the Inventions, but only for experimental purposes, and AMERICAN BOSCH shall not have the right to sell any such articles. 5. METER and the INVENTORS, jointly and severally, agree, during the option period, to make to AMERICAN BOSCH full and complete disclosure of the subject matter and status of all applications for Letters Patent listed on "Exhibit A" or filed during the option period, and to instruct the attorneys of METER, including its patent attorneys, to give such assistance as may be reasonably required by the attorneys of AMERICAN BOSCH in order to enable them to form an opinion with respect to the value of the patent protection probably obtainable on the Inventions and with respect to the question of possible infringement upon patent rights of third parties. Within ten (10) days after the date of this Option Agreement, METER will cause to be sent to AMERICAN BOSCH (a) true and complete copies of the pending applications listed on "Exhibit A" and of all correspondence with the patent offices with respect thereto, and (b) any reports or informa tion in the possession of METER, the INVENTORS, or the attorneys of METER, with respect to the questions whether the Inventions embody patentable subject matter or infringe or may be held to infringe, the patent rights of third parties. 6. AMERICAN BOSCH agrees to pursue its technical and patent investigation of the Inventions promptly and diligently, and to notify METER in writing as promptly as it reasonably can do so of its election to exercise or not to exercise the option granted by this Option Agreement. AMERICAN BOSCH further agrees to furnish promptly to METER, copies of all written reports prepared for AMERICAN BOSCH with reference to the construction, installation, operation, and tests of the sample liquid pump to be delivered to AMERICAN BOSCH pursuant to this Option Agreement or of any additional sample liquid pumps which may be constructed by AMERICAN BOSCH pursuant hereto. 7. METER and the INVENTORS, jointly and severally, agree that, in the event AMERICAN BOSCH elects to exercise the option granted by this Option Agreement, and notifies METER in writing to such effect prior to the termination of the option period, METER and the INVENTORS will execute and deliver to AMERICAN BOSCH the License Agreement, a copy of which is hereto attached as "Exhibit B," subject to the delivery to METER of a counterpart of such License Agreement duly executed· by AMERICAN BOSCH. AMERICAN BOSCH agrees that, in the event it elects not to exercise the option granted by this Option Agreement, it will likewise notify METER in writing to such effect prior to the termination of the option period. 8. AMERICAN BOSCH agrees that, in the event it elects not to exercise the option granted by this Option Agreement, it will return to METER all samples, designs, blueprints, drawings, specifications, reports, material, or other data obtained by it from METER or the INVENTORS, will deliver to METER any additional samples constructed by AMERICAN BOSCH, and, except as provided in Section 9 hereof, will not thereafter, or during the option period, disclose to any persons other than its own officers, employees, and attorneys, and will hold as confidential, any information obtained from METER or the INVENTORS pursuant to this Option Agreement. AMERICAN BOSCH further agrees that, in such event, it will not use any construction or method of operation set forth in the applications for Letters Patent listed on "Exhibit A" hereto; PROVIDED, HOWEVER, that (a) AMERICAN BOSCH is not to be deemed, by reason of having entered into this Option Agreement, to have admitted the validity of any Letters Patent now or hereafter owned or controlled by METER or the INVENTORS, and (b) AMERICAN BOSCH is not to be precluded from using any construction or method of operation which may coincide with, or be similar to, a construction or method of operation set forth in one or more of the applications for Letters Patent listed on "Exhibit A" hereto, unless AMERICAN BOSCH shall have acquired knowledge of such construction or method of operation from such applications or from METER or the INVENTORS, and shall not, either previously or subsequently, have acquired knowledge of such construction or method of operation from some source other than such applications or METER or the INVENTORS. 9. METER and the INVENTORS agree that, if AMERICAN BOSCH should deem it necessary or advisable to obtain the consent or approval of Robert Bosch G. m. b. H., of Stuttgart, Germany, with whom AMERICAN BOSCH has certain contractual relations, to the execution by AMERICAN BOSCH of the License Agreement annexed hereto as "Exhibit B," AMERICAN BOSCH may furnish to Robert Bosch G. m. b. H. such information as may be necessary or appropriate in order to obtain such consent or approval. 10. AMERICAN BOSCH agrees that in the event that, during the option period, it or any of its employees should make any improvement on the liquid pump which is the subject matter of the Inventions, it will grant to METER a free, divisible, nonexclusive license under any patent or patents issued with respect to such improvement in the United States, Canada, Newfoundland, Cuba, Mexico, or the Republic of Panama. 11. This Option Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of the day and year first above written. |