AGREEMENT FOR ASIC DESIGN AND DEVELOPMENT BY AND BETWEEN POLITECNICO DI MILANO AND CHECK-CAP, LTD Agreement For ASIC Design And Development

---

---

 

 

 

 

 

 

	(a)	Politecnico di Milano —Department of Electronics Engineering and Information Science, and Check Cap LLC, an affiliate of Check Cap Ltd, have previously entered into a certain Agreement for Asic Design and Development, dated December 21, 2007 (the “Previous Agreement”) which has terminated in accordance with the Termination Letter attached hereto as Exhibit A; and

 

 

 

	(b)	Check Cap intends to entrust Polo di Como with a research in the field of design and development of a CCA-2 Application Specific Integrated Circuit (the “CCA-2 ASIC”) as more fully specified herein, in continuation of the research and development process that has been made under the Previous Agreement.
	(c)	As far as Polo di Como is concerned, the decree of the Republic’s President No. 382 dated 11/7/80 allows, according to art. 66, the performance of research and consultancy activities established through private law agreements or conventions;
	(d)	This set of rules is completed by the current Regulation concerning Performances on commission of Politecnico di Milano issued with Rectorial Decree No. 7/AG dated 28/01/2005.

 

 

 

 

 

	1.1.	This programme consists of (i) a design of the CCA-2 ASIC, based on improvements to the latest version of the ASIC designed under the Previous Agreement, which are detailed in Exhibit B attached hereto, and in accordance with the specifications provided to Polo di Como by Check Cap from time to time, and (ii) the delivery of 30 samples of the CCA-2 ASIC as bare chips (the “Samples”). The final CCA-2 ASIC and the Samples, collectively, the “Deliverables”.
	1.2.	Polo di Como shall deliver to Check Cap specifications, performance data, and any other documentation or information that would reasonably accompany or is reasonably necessary for Check-Cap to manufacture the CCA-2 ASIC independently of any assistance by Polo di Como after the end of this Agreement. Check Cap declares to have verified the possibility to manufacture the CCA-2 ASIC chip Samples at the foundry austriamicrosystems ▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇. Nothing herein shall limit Check Cap, following the end of this Agreement, from manufacturing the final CCA-2 ASIC at any foundry, as shall be determined at Check Cap’s sole discretion.

 

 

 

	1.3.	Progress Reports. Polo di Como will provide Check-Cap with written progress reports every two months, as requested by Check-Cap, starting two months after the date hereof and ending on the date of Check-Cap’s final acceptance of the CCA-2 ASIC and receipt of all Deliverbles. Each report shall indicate progress as follows:
			(a)   Status of progress toward the next scheduled task, according to the tasks set forth in Exhibit C attached hereto:
			(b)   Short description of problems in meeting such task, if any;
			(c)   Proposed recovery method to meet the next task, if necessary;
			(d)   Probability of meeting the next task;
			(e)   Any changes in Polo di Como’s estimate of time required for meeting the next task with respect to the schedule attached hereto as Exhibit C, and
			(f)   Any changes in Polo di Como’s estimate of recurring manufacturing costs for the CCA-2 ASIC.
			In addition, the parties shall have a regularly scheduled conference call, organized and paid by Check Cap, that will take place following receipt of each progress report, or more often if necessary if, for example, a task has been compromised.
	1 .4.	The responsibility for the performance of the programme will be given to ▇▇▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who, in case of necessity, will be able to use external professional services, according to the provisions of the Regulation concerning Performances on commission of Politecnico di Milano.

 

 

 

 

 

 

	3.1.	For the performance of the research programme, according to Section 1, Check-Cap undertakes to pay to Polo di Como an amount of €44,182 plus €8,836 for VAT with tax rate at 20% (the “Consideration”).
	3.2.	The Consideration will be paid in three (3) installments as follows:
		3.2.1.	€10,000 +  €2,000 for VAT with tax rate at 20%, upon signing the contract
		3.2.2.	€20,000 +  €4,000 for VAT with tax rate at 20%, on December 10th, 2009, subject to the successful completion of WP 100, 200, 210, 220 and 300 as detailed in Exhibit C;
		3.2.3.	€14,182 +  €2,836 for VAT with tax rate at 20%, upon the delivery of the CCA-2 ASIC chip Samples to Check Cap’s (i.e. completion of WP 400, 500, 600, 610, 620 and 630 as detailed in Exhibit C).

 

 

 

	3.3.	In addition to the Consideration due under paragraph 3.1, provided that the project was successfully completed, and INSTEAD OF ANY ROYALTIES DUE UNDER THE PREVIOUS AGREEMENT. Polo di Como shall be entitled to royalty payments totaling €200,000 (Two Hundreds Thousands Euros) payable at the rate of €0.5 for each CCA-2 ASIC incorporated into a Check Cap product which is sold by Check-Cap. Royalty payments under this Section 3.3 shall be payable quarterly. After payment of €200,000 no further royalties shall be due or payable.
	3.4.	Any payment shall be made against the submission of an appropriate pro-forma invoice by Polo di Como to Check Cap.
	3.5.	The amounts due under this Section 3 will be paid by Check-Cap to Polo di Como, bank account No. 1600X69 at Banca Popolare di Sondrio – Agenzia n.21 ▇▇▇ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ (ABI : 05696, CAB : 01620, CIN: T, IBAN : ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇)
	3.6.	Polo di Como will open a research grant of € 21,000.00 for this research programme.
	3.7.	Polo di Como will make use of Europractice Consortium, of which Politecnico di Milano is member, in order to complete the project. Polo di Como predicts to assign € 7200 + € 1440 for VAT with a tax rate of 20%, out of the Consideration paid to Polo di Como by Check Cap according to Section 3.1 above, to the Europractice finalized to the project’s activities. To avoid any doubt, any work made or services provided by the Europractice Consortium shall be considered as work or services performed by Polo di Como, and the terms of this Agreement shall apply to any such work or services provided by the Europractice Consortium, including, without limitation, the terms of Sections 4 and 8 below.

 

	4.1	Politecnico shall have no rights to any Check-Cap technology, trade secrets, related intellectual property rights, patents (including continuations, continuations in part, and reissues) or know-how in existence prior to the date of this Agreement whether or not used in the design and manufacture of the CCA-2 ASIC.

 

 

	4.2.	Check-Cap shall have no rights, other than as licensed under this Agreement or under the Previous Agreement, to any Politecnico’s technology, trade secrets, related intellectual property rights, patents (including continuations, continuations in part, and reissues) or know-how in existence prior to the date of this Agreement, whether or not used in the design and manufacture of the CCA-2 ASIC.
	4.3.	In case the results of the research which is the subject of this Agreement are protectable with industrial property rights, whether such inventions were developed by Politecnico’s staff alone or together with Check Cap’s staff, Check-Cap shall be immediately informed by Politecnico di Milano. Check Cap shall express, through written communication, its interest in each of such inventions. In case Check-Cap is interested in filing a patent with respect to any such invention, the following terms shall apply to such invention:
		4.3.1.	Politecnico and Check Cap shall be the joint owners of such invention, each having 50% of the ownership interest in the invention.
		4.3.2.	To the extent that the invention is patentable, Check-Cap is entitled to the right to write and file the patent as the joint owner thereof, together with Politecnico; It is hereby clarified that Check-Cap may decide, in its sole discretion, whether or not to file the patent, and in which jurisdictions.
		4.3.3.	Politecnico and Check-Cap shall be indicated as assignees, and shall indicate the names of their respective inventors;
		4.3.4.	Politecnico shall grant Check-Cap an exclusive perpetual, world-wide, transferable and sub-licensable, royalty free license (except for the payments made pursuant to Section 4.3.6 below) for Politecnico’s share of ownership in the invention, for all usage and purpose;