Patent License Agreement

Patent License Agreement (re: Product Liability)

[This patent royalty license agreement is to be used to create a disposable corporation. It's purpose is to limit liability arising from spurious product liability litigation. The use of a disposable corporation requires the production and marketing of a device or process which is subject to US patent protection.]

Patent License (royalty) Agreement

Comes now, the Company (SSH), a ______ State corporation, and Mr. Jones personally, the patent holder, and contract and agree as follows:

1. Effective as of the date set out below, for good and valuable consideration as set out below in paragraph 3, the patent holder non-exclusively licenses SSH to produce and market a Device now subject to protection by U.S. Patent Application 10/_______, titled "The Device". This license is for both domestic and foreign sales.

2. SSH agrees to apply its efforts exclusively to the production and marketing of said Device and to avoid any other contractual obligations with regard to the production or sale of any other product unless agreed to in writing in advance by the patent holder.

3. SSH agrees to pay the patent holder, no less frequently than quarterly, one hundred and ten per cent (110%) of all net income as patent royalties for said license. Any unpaid sums due the patent holder bear interest at ten per cent (10%) simple interest, calculated quarterly, from the time they were due and payable.

4. SSH can terminate this agreement only pursuant to a court order. SSH can not assign or pledge this agreement. Whenever possible, SSH will prepay all costs and expenses and will not borrow funds or establish lines of credit. Whenever possible, SSH will utilize third party contracts for the manufacture and marketing of said Device. SSH will seek and obtain a general liability insurance policy for its operations.

5. In the event that SSH is unable to produce or market said Device due to actual or prospective litigation, bankruptcy or insolvency, the patent holder may, at its sole option, terminate this license. Said termination however does not affect the sums then due under this license. SSH waives all rights to notice, demand, presentment and all other legal remedies and defenses, including the statute of limitations, with regard to the collection of sums, including interest, payable to the patent holder under this agreement.

6. This license extends to and includes all product engineering drawings and specifications, work-in-progress, tooling and dies, and marketing materials and information and all good will including the use of the name "The X Device" which is specifically reserved by the patent holder as a trade mark. Termination of this agreement causes immediate reversion of said good will and of all right, title and interest in said trade mark to the patent holder. Said product engineering drawings and specifications, work-in-progress, tooling and dies, and marketing materials and information are owned by the patent holder and will upon termination of this agreement be transferred to the patent holder with all deliberate speed but in any case within two weeks of termination of this agreement. SSH will post a notice of the existence of these ownership interests in a conspicuous location at its place of business.

7. Upon termination of this agreement, SSH will cease operations and will windup and terminate its business affairs in the most economical fashion possible. Whenever possible third party contracts will be honored.

8. SSH will use its best efforts to manufacture and market the Device. All sums held by SSH and payable to the patent holder are held in trust, however all provisions of the Universal Trustees Act, as enacted in the state of ________, with regard to management and control of said funds are waived by the patent holder.

9. SSH agrees that the patent holder is not a joint venturer, a partner or a participant in the conduct of its affairs and/or in the production, testing and marketing of said Device. SSH shall retain a professional safety engineer to independently test and evaluate said Device and shall insure that said Device complies with all relevant state and federal statutes and with all requirements to render said Device safe for the marketplace.

WHEREFORE, the parties affix their signatures in agreement to the foregoing:

Date: ________, 200___

Mr. Jones, patent holder: ________________

Mr. Jones, Pres., The Company (SSH): ________________

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