PATENT LICENSING AGREEMENT

 

                                                                   Exhibit 10.1

 

                            PATENT LICENSING AGREEMENT

 

      This Agreement is made as of January 21, 2003, between Americhip, Inc, a

Michigan corporation, having a place of business at 12933 W Eight Mile Road,

Detroit, MI 48235 ("Licensor"), and Americhip Ventures, Inc., a Michigan

corporation, having a place of business at 12933 W. Eight Mile Road, Detroit, MI

48235 ("Licensee").

 

      WHEREAS, Licensor is the owner of the entire right, title, and interest in

certain inventions forming the subject matter of United States Letters Patent

Nos. 5,200,593 and 5,384,446 in the name of Edward Rutkowski, entitled "Method

for controlling the length of metal chips," granted on April 6, 1993 and January

24, 1995, respectively, including any patents issuing therefrom, any divisionals

or continuation applications, and any reissues or extensions. (These rights are

referred to in this Agreement as the "Licensed Patents.")

 

      WHEREAS, Licensee wishes to obtain rights under the Licensed Patents as

set forth herein and subject to the terms and conditions set forth herein.

 

      NOW THEREFORE, in consideration of the mutual promises set forth herein,

and intending to be legally bound thereby, the parties agree as follows:

 

                                   ARTICLE I

                                   THE GRANT

 

1.1    Licensor grants to Licensee a nonexclusive license under the Licensed

      Patents to make, use, and sell products covered by the Licensed Patents in

      the United States, its territories, and its possessions ("License"). If

      Licensee if successful on or before March 31, 2003 in raising capital in

      an amount of Six Million Dollars (US $6,000,000.00) available for funding

      development and production of products covered by the Licensed Patents,

      then this license shall become exclusive for the duration thereof.

 

                                   ARTICLE II

                          PAYMENT IN LIEU OF ROYALTIES

 

2.1    As consideration for the License and in lieu of royalties, Licensee shall

      make the following payments:

 

(A)    To Dave Howard: US$1,000,000.00, payable at the rate of $10,000.00 on or

      before the first day of each calendar month, with interest accruing on

      any unpaid principal at the greater of (i) five percent (5.0%); and (ii)

      the prime rate plus 1% as reported in the Wall Street Journal on the first

      business day following each July 1 and January 1 (not to exceed the

      maximum rate allowed by law), until paid in full. Licensee may, from time

      to time, prepay any or all of this amount without penalty; provided,

      however, that any prepayment will be credited against unpaid principal and

      will not reduce the amount of future monthly payments.

 

(B)    To Edward Rutkowski: US$1,000,000.00, payable at the rate of $10,000.00 on

      or before the first day of each calendar month, with interest accruing on

 

 

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       any unpaid principal at the greater of (i) five percent (5.0%); and (ii)

      the prime rate plus 1% as reported in the Wall Street Journal on the first

      business day following each July 1 and January 1 (not to exceed the

      maximum rate allowed by law), until paid in full. Licensee may, from time

      to time, prepay any or all of this amount without penalty; provided,

      however, that any prepayment will be credited against unpaid principal and

      will not reduce the amount of future monthly payments.

 

(C)    To Marc Walther: US$1,000,000.00, payable at the rate of $10,000.00 on or

      before the first day of each calendar month, with interest accruing on any

      unpaid principal at the greater of (i) five percent (5.0%); and (ii) the

      prime rate plus 1% as reported in the Wall Street Journal on the first

      business day following each July 1 and January 1 (not to exceed the

      maximum rate allowed by law), until paid in full. Licensee may, from time

      to time, prepay any or all of this amount without penalty; provided,

      however, that any prepayment will be credited against unpaid principal and

      will not reduce the amount of future monthly payments.

 

(D)    All payments pursuant to this Section 2.1 will be made in equal amounts to

      each person.

 

                                  ARTICLE III

                    LIABILITY, INSURANCE AND INDEMNIFICATION

 

3.1    As between Licensee and Licensor, and except for gross negligence and/or

      willful misconduct, Licensor shall not be liable to Licensee or to

      Licensee's employees, agents, or customers or to any other person

      whomsoever, for any injury to person or damage to property arising out of,

      or in connection with, Licensee's use of the License. Licensee hereby

      agrees to indemnify Licensor and hold Licensor harmless from any loss,

      expense, including reasonable attorney expenses, or claims arising out of

      such damage or injury.

 

3.2    Licensee shall procure and maintain throughout the term of this Agreement

      a policy or policies of insurance, at its sole cost and expense, insuring

      both Licensor and Licensee against all claims, demands or actions arising

      out of, or in connection with, Licensee's use of the License, the limits

      of such policy or policies to be in an amount not less than $1,000,000.00

      in respect of injuries to or death of any one person, and in an amount not

      less than $5,000,000.00 in respect of any one accident or disaster, and in

       an amount not less than $1,000,000.00 in respect of property damaged or

      destroyed, and to be written by insurance companies reasonably

      satisfactory to Licensor. In addition, Licensee shall provide products

      liability and completed operations coverage in an amount not less than

      $1,000,000.00. Licensee shall obtain a written obligation on the part of

      each insurance company to notify Licensor in writing at least ten (10)

      days prior to cancellation of such insurance. If Licensee should fail to

      comply with the foregoing requirements relating to insurance, Licensor

      may, but is not required to, obtain such insurance and Licensee shall pay

      to Licensor on demand as additional fee hereunder the premium cost thereof

      plus interest at the maximum contractual rate (but in no event to exceed

      one and one-half percent (1 1/2%) per month) from the date of payment by

      Licensor until repaid by Licensee.

 

 

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3.3    Licensee agrees to maintain and keep in force, during the term thereof,

      all employee's compensation insurance required under applicable Worker's

      compensation Acts (Worker's Compensation).

 

                                  ARTICLE IV.

                           ASSIGNMENT AND SUBLICENSING

 

4.1    Licensee shall not assign or in any manner transfer this Agreement or

      interest therein, or sublicense the License or any part thereof, or grant

      any license, concession or other right with regards to the License without

      the prior written consent of Licensor; and any such assignment shall make

      this agreement voidable at the option of Licensor. Consent by Licensor to

      one or more assignments shall not operate as a waiver of Licensor's rights

      as to any subsequent assignments and/or subassignments. Licensor hereby

      consents to the reorganization whereby Licensee's common stock will be

      exchanged for stock in Southborrough Ventures, Inc., having the right to

      cast in excess of a majority of all votes entitled to be cast by

      shareholders of Southborrough Ventures, Inc.

 

4.2    If at any time during the primary term of this Agreement or any renewal or

      extension thereof, the person or persons who own or control, directly or

      indirectly, a majority of either the outstanding voting shares or all

      outstanding shares of capital stock of Licensee at the time of the

      execution of this Agreement (and/or Southborrough Ventures, Inc. after the

      stock exchange referenced in Paragraph 6.1) cease to own a majority of

      such shares or voting rights (except as the result of transfers by devise

      or descent), the loss of a majority of such shares or voting rights shall

      be deemed as assignment of this Agreement by Licensee and therefore

      subject in all respects to the provisions of Section 6.1 above.

 

4.3    Notwithstanding any assignment, Licensee shall at all times remain fully

      responsible and liable for the payment of the payments herein specified

      and for compliance with all of its other obligations under this Agreement

      (even if future assignments occur subsequent to the assignment by

      Licensee, and regardless of whether or not Licensor's approval has been

       obtained for such future assignments.) Moreover, in the event that the

      fees due and payable by a sublicensee (or a combination of the fees

      payable under such subassignment plus any bonus or other consideration

      therefor or incident thereto) exceed the fees payable under this Agreement

      or if with respect to a permitted assignment, permitted license or other

      transfer by Licensee permitted by Licensor, the consideration payable to

      Licensee by the assignee, licensee or other transferee exceeds the fee

      payable under this Agreement, then Licensee shall be bound and obligated

      to pay Licensor all such excess fee and other excess consideration within

      ten (10) days following receipt thereof by Licensee from such assignee,

      license