JOINT VENTURE AGREEMENT between THARAWAT HOLDINGS COMPANY and HCI VIOCARE CLINICS UK LIMITED Privileged and Confidential

 

THIS JOINT VENTURE AGREEMENT (the "Agreement") is dated July 19, 2017 (the "Effective Date").

PARTIES

each referred to individually as "Party" and collectively as "Parties".

PREAMBLE:

Whereas, the Parties have agreed to associate themselves as founders in a limited liability company (hereinafter referred to as the ("Company")) to be incorporated in accordance with the laws of the Kingdom of Saudi Arabia for the purposes of owning, managing and franchising a chain of full service prosthetic, orthotic and diabetic foot rehabilitation clinics ("Clinics" and each a "Clinic") throughout the Territory, as defined hereunder, or any other locations where the Parties mutually agree.

And Whereas, it is the intention of the Parties to set forth certain understandings to regulate this relationship as shareholders/owners of the Company and the respective rights and obligations of each towards the other including among other things, (i) the allocation of profits, losses, credits and distributions of cash flow and other proceeds of the Company (ii) the respective rights, obligations and interests of the members towards each other and to the Company; and (iii) certain other matters.

NOW, THEREFORE, in consideration of the mutual promises and undertakings of the Parties hereto, and other good and valuable consideration the receipt of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereto agree as follows.

For purposes of this definition, a person is deemed to control another person if the former person possesses directly or indirectly the power to direct or cause the direction of the management of the other person, whether through the ownership of more than 50% of the total voting interest of the other person or by contract or otherwise.

"Applicable Law" means any applicable law, regulation, decree, directive, order, ordinance,

judicial decision or rule of the Kingdom of Saudi Arabia.

"Board of Directors" or "Board" means the board of directors of the Company as provided for in Clause 6 below.

"Business" or "Company Business" means the business of the Company as set out in Clause 2.4 below.

"Business Plan" means the Company's business plan as datelined in Annex II to this Agreement.

"Companies Law" means the Saudi Arabia Companies Law enacted by Royal Decree No M3 dated 28/1/1437H (i.e. 10/11/2015G), as amended or replaced from time to time.

"Director" means any director on the Board of Directors, as appointed in accordance with

Clause 6.1.

"Initial Investment" means the Company's Initial Investment as detailed in Clause 3.1 below. For the avoidance of doubt, the Initial Investment shall comprise of (a) the Registered Capital and (b) the Initial Loan.

"Initial Loan" means the initial loan which will be provided by Tharawat to the Company after incorporation, and as further detailed in Clause 3.3 i 3.2iv below.

"Intellectual Property" means in relation to any Party, on a worldwide basis, all registered or unregistered trademarks, trade names, patents, copyrights, trade secrets, designs, rights of publicity, knowhow, mask work rights, utility models and other industrial or intangible property rights of a similar nature of that Party, all grants and registrations worldwide in connection with the foregoing and all other rights with respect thereto existing other than pursuant to grant or registration; all applications for any such grant or registration, all rights of priority under international conventions to make such applications and the right to control their prosecution, and all amendments, continuations, divisions and continuations-in-part of such applications; and all corrections, reissues, patents of addition, extensions and renewals of any such grant, registration or right.

"Member(s)" includes any of the Parties for so long as they hold any shares in the Company and any other person, natural or legal, that acquires and holds shares in the Company in accordance with the provisions of this Agreement.

"Registered Capital" means the Company's registered capital as detailed in Clause 3.2 below.

"SAGIA" Saudi Arabian General Investment Authority

"Territory" means the countries of the Gulf Cooperation Council, (which include the kingdom of Saudi Arabia, Qatar, Kuwait, United Arab Emirates, Sultanate of Oman and Kingdom of Bahrain), and Iran , Iraq , Jordan, Syria, Lebanon, Yemen and Palestine.

The formation of the Company shall be evidenced by:

The name of the Company shall be Viocare Clinics Middle East or any other name agreed by the Parties and approved in accordance with the Applicable Law.

1 Principally, the laws of Saudi Arabia permits the issuance of an investment license for foreign investors in the medical sectors within certain conditions. We are currently in touch with SAGIA to confirm these requirements for the company

Except as otherwise provided in Clause 12, all debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company (including under a judgment, decree or order of a court), and no Member (and no Affiliate of any Member) shall be obligated or liable for any such debt, obligation or liability of the Company solely by reason of being a Member (or an Affiliate of a Member).

The Members shall not transfer or pledge any or all of their membership interest in the Company within the first 5 (five) years after the commercial registration of the Company without the prior consent of the other Members, which consent shall not be unreasonably withheld.

Upon the lapse of the term specified in Clause 4.1, should any Member (hereinafter called the "Selling Member") desire to sell all or any part of its interest in the Company (the "Offered Interest"), then the Selling Member shall grant the other Member(s) the priority right to purchase the Offered Interest in proportion to their membership interest in the Company and at the then current market value specified by an independent auditor mutually selected by the Members. In the event that the other Member(s) does (do) not exercise such right of priority within 30 (thirty) days of the date on which the value was set and advised to the other Member(s), then the Selling Member shall have the right to sell the Offered Interest to any third party at the same price and on the same terms offered to the other Members, provided that such third party abides by Clause 4.3 below. The procedures set by the Companies Law in relation to the sale of a Member's interest shall govern any sale of a Member's interest in the Company.

No sale or pledge of a Member's interest in the Company may be made to any third party unless such third party enters into an agreement with the remaining Members, in form and substance satisfactory to the remaining Members, pursuant to which the third party shall become a party hereto and agrees to be bound by the terms and conditions hereof. The remaining Members shall not unreasonably withhold their acceptance of such agreement.

Meetings of the Members of the Company shall be held in  the manner and at the times prescribed by the Companies Law.

 

$1,000,000 (One Million US Dollars) in total, whether provided at once or on several installments the total amount of which accumulate to 1,000,000 (One Million US Dollars) or more (excluding trade debt, accounts payable or equipment leases incurred in the ordinary course of the Company's business), execution of any promissory/order note, evidence of indebtedness, guaranty or the like not authorized and duly approved in an operating budget, or approval or effectuation of the prepayment, modification or refinancing of any such financing;

Each Party shall have the right to remove each or any of its respective designated Directors at any time, with or without cause. In the event of the death, disability, resignation or removal of any Director, the Party that had designated such Director shall have the right to designate his successor.

The Board of Directors shall elect a chairman from the Directors, provided however that the charming must be at all times a Director who is designated by Tharawat.

The meetings of the Board of Directors shall be held in the manner and at the times agreed by the Directors provided, however, that the Board of Directors shall meet at least 4 (four times) during each fiscal year. At every Board meeting, the presence of three (3) Directors shall constitute a quorum. Except for the Reserved Matters and as otherwise expressly provided in this Agreement, the resolutions and all Company Business shall be made by the simple majority of the Board of Directors. In the event the votes for a resolution are tied, the chairman shall have a casting vote.

Each Party ("Representing Party") hereby represents, warrants and covenants to the other Party

the following:

Safe for expense and costs incurred by the Parties for the purposes of negotiating and executing this Agreement, expenses incurred by the Parties for and on behalf of the Company for the purposes of registering the Company duly, after the date of signature of this Agreement and prior to the commercial registration of the Company, shall be billed to and be an expense of the Company up to actual expenses

After commercial registration, expenses reasonably incurred by the Parties for and on behalf of the Company shall be billed to and be an expense of the Company up to approved financial budget

The Parties hereto hereby acknowledge that all trade, business and technical information regarding the Company as may exist from time to time (and which came into the possession of a Party hereto prior to the date hereof or which may come into the possession of a Party hereto after the date hereof), including, inter alia, prices, marketing, sales and other data, technology, trade secrets, the identity and requirements of customers and prospective customers of the Company, the Company's methods of doing business and all information relating to the Business, operations and marketing operations of the Company ("Company Confidential Information"), constitute valuable confidential information of the Company. The Parties hereto, or any of their Affiliates, employees or agents, shall not use or discuss any Company Confidential Information for any purpose, except on behalf of the Company and then only to such extent as may be authorized by the Company, or disclose any Company Confidential Information to any other person, firm or corporation, except to the extent required in carrying out, on behalf of the Company, their functions as Members or Directors of the Company.

Each Party agrees that with respect to any confidential:

(collectively, "Member Confidential Information"), it shall take such reasonable steps, and shall cause all of its Affiliates to take such steps, as may be required, to prevent the duplication, disclosure or unauthorized use thereof anywhere in the world, except with the prior written approval of the furnishing Party.

All information and data provided by Viocare or any of its Affiliates to Tharawat up until the date of signing this Agreement mutually agreed and considered as confidential and governed by the provisions of sub-clauses 9.1 and 9.2 herein and the non-disclosure agreement dated May 31st, 2016 signed between Tharawat and HcI Viocare Technologies Ltd of Scotland.

 

 

The obligations of confidentiality set forth in Clause 9.1 above with respect to Company Confidential Information and Clause 9.2 above with respect to Member Confidential Information shall not apply if the Party that wishes to disclose such information without violating such Clauses 9.1 or 9.2, as the case may be, can document that such information or data:

This Clause 9 (Confidentiality) shall remain in full force and effect between the Parties and shall survive the termination of this Agreement.

In the event that any Party exercises its right to terminate this Agreement as a result of the bankruptcy of any Member, the marshaling or assignment of its assets for the benefit of creditors or other similar events (the "Bankrupt Member"), the remaining Members in the Company shall have the right to purchase, pro rata their interest in the Company, the interest of the Bankrupt Member in the Company at such interest's current market value as determined by a "big four" audit firm acceptable to the remaining Members.

Upon the termination of this Agreement for any reason:

To the maximum extent permitted by Applicable Law, the Company shall indemnify, defend and hold harmless all Members and their respective Affiliates, directors, officers, the employees and agents of the Company, the Administrative Member and the Tax Matters Partner (each, an "Indemnified Party") from and against any and all losses, claims, demands, costs, damages, liabilities, joint and several, expenses of any nature (including attorneys' fees and disbursements), judgments, fines, settlements, penalties, and other expenses actually and reasonably incurred by the Indemnified Party in connection with any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative, or investigative, in which the Indemnified Party may be involved, or threatened to be involved, as a party or otherwise, by reason of the fact that the Indemnified Party is or was a Member or Director or is or was an employee or  agent of the Company, including  Affiliates of the foregoing, arising  out of or incidental to the activities of the Company, provided, (a) the Indemnified Party's conduct did not constitute willful misconduct or recklessness, (b) the action  is  not based  on breach of this Agreement, (c) the Indemnified Party acted in good faith and in a manner the Indemnified Party reasonably believed to be in, or not opposed to, the best interests of the Company and within the scope of such Indemnified Party's authority, and (d) with respect to a criminal action or proceeding, the Indemnified Party had no reasonable cause to believe the Indemnified Party's conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, or upon a plea of no contest or its equivalent, shall not, in and of itself, create a presumption or otherwise constitute evidence that the Indemnified Party acted in a manner contrary to that specified above.

Subject to the limitation of damages and liabilities (Clause 12.3), each Member shall indemnify the Company and the other Members individually in respect of and hold the Company and the other Members individually harmless against all losses, claims, demands, liabilities and cost of any nature (including reasonable attorney fees) incurred or suffered by the Company or the other Members individually resulting from or related to any facts attributable to a Member, which if true, would constitute a breach of, inaccuracy in, or failure to perform by such Member of any covenants or representations of that Member contained in this Agreement.

In no event shall any Party be liable to the other Party under the terms and conditions of this Agreement for any claims or demands exceeding actual damages, including loss of profits, or any incidental, special, exemplary, punitive, or consequential damages.

Subject to  Clause 13.4 below, the Company shall be responsible for obtaining  quotes and placing, as approved by the Board of Directors, insurance for the Company.

When performing services as a subcontractor to the Company, each Member shall maintain insurance coverage sufficient to meet the requirements of the prime contract under which the subcontract services by the Member to the Company are being performed. The subcontractor Member shall be responsible for all insurance and deductible costs associated with its insurance and shall be solely responsible for any uninsured losses arising out of its subcontract services. The subcontractor Member shall add the Company and other Member as additional insured's to the applicable insurance policies with respect to the services being performed for the Company.

Any losses, expenses (including deductible costs) or damages for insurance claims not covered by the insurance required herein shall be allocated, if reasonably possible, directly to the contract under which the losses, expenses or damages occurred.

The Company shall obtain and maintain in effect such policies of insurance with terms and limits of coverage as the Board of Directors deems appropriate, including, (i) any insurance required by contracts entered into by the Company; (ii) any insurance required by Applicable Law; and

(iii) such additional Company insurance as the Board of Directors may determine is appropriate and is customary and ordinary for an organization of this size. Company placed insurance policy(ies) shall provide that each Member shall be an additional insured on these policies. The cost of insurance purchased by the Company is to be borne by the Company.

The Board of Directors shall cause the Company to prepare, submit to the Members for approval and thereafter file all required tax and Zakat returns in compliance with the Applicable Law for each tax year of the Company.

Subject to Clause 15.2, if a Member (the "Breaching Member") commits a material breach of any of the provisions of this Agreement and, if the breach is capable of remedy, fails to remedy it within 30 (thirty) days ("Remedy Period") after being given a written notice containing full particulars of the breach and requiring it to be remedied then, the other Member(s) (the "Non- Breaching Member(s)") shall be entitled, at any time within 30 (thirty) days after the expiration of the Remedy Period to give final written notice to the Breaching Member either:

For the purposes of Clause 15.1, a breach shall be considered capable of remedy if the Party in breach can comply with the provision in question in all respects other than as to the time of performance (provided that time of performance is not of the essence).

The rights given by this Clause 15 (Consequences of Breach) shall not prejudice any other right or remedy of the Non-Breaching Member(s) under this Agreement or otherwise.

In the event of any failure or delay in the performance of this Agreement by any Party due to war, civil commotion, labor  dispute, fire, natural  disaster,  government embargoes or trade restrictions, or any other cause whatsoever beyond the reasonable control of such Party (each hereinafter called a "Force Majeure Event"), the Party so affected shall not be liable for such failure or delay or for the results thereof. Upon the occurrence of any Force Majeure Event, the Party being affected shall, without delay, notify in writing the other Party of the nature and effects of such Force Majeure Event, and the Parties shall meet and discuss appropriate or necessary actions to be taken to deal with the situation.

This Agreement shall be governed by and construed in accordance with the law of England and Wales.

This Agreement shall inure to the benefit of and be binding upon the respective Parties and their successors and permitted assigns and transferees hereunder. Except as expressly provided herein, none of the Parties shall assign or transfer all or any part of this Agreement or any of its rights and/or obligations hereunder to any third party without the prior written consent of the other Party.

The failure of any Party at any time to require performance by the other Party of any provision hereof shall in no way affect the right of such Party to require such performance at any time thereafter nor shall the waiver by any Party of a breach of any provision hereof constitute a waiver of any succeeding breach of the same or any other provision or constitute a waiver of the provision itself.

Notwithstanding any other provision of this Agreement, no Party shall in any circumstances be liable to the other Party for special, incidental, consequential, exemplary or punitive damages, or for goodwill, loss of profits, loss of data or loss of use damages.

This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

If any provision of this Agreement is held to be invalid under the governing law set out in Clause 17.3, the same shall not affect the remaining provisions of this Agreement, which shall continue in full force and effect. [If a provision of this Agreement is held invalid, the Parties shall negotiate and mutually agree on a legal provision that, to the greatest extent possible, achieves the Parties' original commercial intention of the invalid provision.

Each Party is and shall be considered for all purposes to be an independent entity in relation to the other Party or Parties under this Agreement and shall not hold itself out as a partner, employee or agent of any other Party. As an independent entity, each Party is solely responsible for its employees and agents. Unless explicitly stated in writing by the Parties, (i) nothing herein shall be construed to grant any Party authority to bind any other Party, or to create or assume, directly or indirectly, any express or implied obligation on behalf of any other Party; (ii) no Party shall incur any liability whatsoever on behalf of any other Party, nor in any way pledge the credit of any other Party; and (iii) no Party has any authority whatsoever under this Agreement to commence any legal proceeding in the name of or on behalf of any other Party.