MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING ("IVIOU") is entered into this L,qbday of July 2016 by and among ViVA Compliance Technologies Uganda (VCT Uganda} Limited,a limited liability
company organized under the laws of the Republic of Uganda,("VCT"}, ViVA Consulting Group, Limited.,a company organized under the laws of the British Virgin Islands {"ViVA Holdings", and together with VCT, "ViVA"),and World Compliance Technologies DMCC,a company organized under the laws of the United Arab Emirates {"WCT"; each of VCT, ViVA Holdings and WCT is referred to individually as a "Party" and collectively as the "Parties").
RECITALS
WHEREAS, ViVA Holdings is an international development company focused on privately financed projects as well as public private partnerships for various systems, including on-line compliance and ID assurance systems for government, quasi-government, and public agencies;
WHEREAS,WCT is a technology solutions company that provides,among other things, bespoke and turnkey on-line compliance,ID assurance, and biometrics solutions and its technology solution sets include land registration and transaction management systems,e-gate systems and e-passport systems and related operations and maintenance services;
WHEREAS, WCT and ViVA collaborated in 2015 and 2016 to secure the award of a contract from the Buganda Land Board of the Kingdom of Buganda ("Buganda Land Board") for purposes of providing and operating an electronic registration and validation system as it relates to title to land on His Majesty the Kabaka of Buganda's land (the "BLB Project");
WHEREAS,in connection with the process of submission of the proposal to secure the BLB Project,the Parties verbally agreed as follows: (1) the Parties would contribute expertise and resources to market and seek an award of the BLB Project utilizing VCT,a wholly owned subsidiary of ViVA Holdings,as the primary contractor, (2) WCT's technology solution set would be the primary platform for implementing the BLB Project, and (3) if the Parties were successful
in sec uring the BLB Project, (a) ViVA's primary role would be the ensure successful funding is available to carry out the BLB Project {the "Financing") and conduct program management activities related to the BLB Project and (b) WCT would be responsible for all technology design, deployment1 operations and maintenance of the BLB Project.
WHEREAS, VCT was awarded a contract for the BLB Project on January 4, 2016, as evidenced by an agreement between the Buganda Land Board and VCT (the "BlB Agreement"};
WHEREAS,each Party has invested considerable time,finances and other resources as it relates to their respective roles for the BlB Project order to secure the BLB Agreement and otherwise
ensure a successful implementation ofthe BLB Agreement in a timely manner;
WHEREAS, while WCT has willingly built the technology solution at risk, the Parties have not finalized the contract between VCT and WCT for provision of technical services nor has ViVA yet secured the necessary funding; and
WHERE.l\S,while WCT and VCT continue to negotiate and execute the wcr Subcontract (as defined below) and while ViVA continues to seek necessary funding, ViVA a nd wcr wish to continue to work together towards a successful launch of the BLB Project and are entering into
this Memorandum of Understanding (MOU) to set forth their mutua l intention regarding their respective rights, obligations a nd duties as they relate to the BLB Agreement.
NOW, THEREFORE,in consideration of the mutual unde rstandings and agreements set forth herein, the Parties hereto hereby agree as follows:
1) QpJ r.ations. Each of wcr and the ViVA hereby represent, warrant a nd covenant as follows as it relates to the continued operations (collectively,the "Operations"):
a) VCT
i) VCT has completed the hiring process in order to retain the services of eight (8) qualified local staff to be trained and to support the BLB Project service centers in Buganda and otherwise consistent with the hiring guidelines and job descriptions
previously developed by VCT with WCT's input.
ii) VCT has completed the hiring process of a qualified local project manager to be
based in Buganda.
iii) VCT has negotiated and entered into an agreement with 24Media for the purposes of providing marketing services in support of the BLB Agreement.
iv) VCT will keep accounts payable current, including any payment obligations to the
vendors set forth in Section l(a)(i)- (iii).
v) VCT will provide business and operations efforts at a level commersurate with its role as the prime contractor, in good workmanlike and professional manner,and otherwise to meet the requirements of the BLB as set forth in the BLB Agreement.
b) WCT
i) WCT has procured adequate equipment (the "Equipment") in order to operationalize the first service center under the BLB Agreement (the "First Service Center"). WCT vvill consign any such Equipment to ViVA and ViVA will be responsib le to clearing all such Equipment through customs. For the avoidance of doubt, unless and until the Initial Payment (as defined below) is received by WCT, legal title and
ownership of all Equipment shalf remain with WCT.
ii) WCT shall send all personnel on-site necessary to install the Equipment and successfully test the funct ionality of the First Service Center.
iii) Following the delivery and installation of the Equipment, WCT, together with Viva, will conduct non-commercia l soft-launch activities strictly for testing pur poses in order to confirm the system's ability to go-live on a commercial-basis as contemplated by the BLB Asreement (the "Soft Launch").
iv) Other than as set forth herein, WCT shall be under no obligation to (a) proceed with any additional work related to the BLB Agreement or (b) go live on a commercial- basis with the First Service Center unless and until (i) WCT receives from Viva the
Phase 1.1Milestone payment (the "Initial Payment") as set forth on Exhibit 1 attached hereto {the "Payment Schedule");and (ii) WCT and VCT have executed and
delivered an agreement related to wcrs provision of technology solutions and services for the BLB Project (the "Wcr Subcontract"). The Parties agree that the WCT Subcontract must contain (a) implementation period pricing consistent with
the amounts set forth in Xxxxx 0, Xxxxx 0, and Final Closeout of the Payment Schedule, (b) an implementation period milestone schedule (''Milestone Schedule) that is linked to the Payment Schedule and as set forth on Exhibit 2, (c) an O&M pricing schedule (the "O&M Pricing") covering at least 4 years of services after implementation and including the timing of such payments and any fixed and
variable charges depending on volume of subscribers and applicants, which will be
mutually agreed upon and set forth in the WCT Subcontract and (d) a provision providing for WCT's entitlement to share BLB Project profits with ViVA Holding in a ratio of 25% (WCT) /75% (ViVA Holding), the parameters (including allowable project cost deductions and allowable WCT contract expenses) of which will be mutually agreed upon and set forth in the WCT Subcontract.
2) .YIVAJ?ay meflts tg__W I
a) ViVA shall use its best efforts to obtain sufficient funding to provide payment surety to WCT for the scope of work encompassed by the Xxxxx 00 Xxxxx 0, and Final Closeout payments (the "Implementation Period"). ViVA shall provide weekly status updates to
WCT on its financing related activities.
b) If ViVA has not made the Initial Payment by August 31, 2016 (the "Initial Payment
Deadline"), WCT may, within 90 days of the Initial Payment Deadline (the end of such
90-day period, including any extensions as provided below, the "Election Date''), notify
ViVA of WCT's intent to either (i) purchase 100% ownership and control of the BLB Project through transfer of 100% of the equity in VCT to the legal entity chosen by WCT (the uTransfer and Assignment") or (ii) terminate all work in support of the BLB Project,
including termination of all W CT software and systems applications in support thereof
{the weT Termination"). If WCT does not provide such notice by the Election Date, t
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ConfidentiaI Final- 7.27.16
WCT shall be deemed to have elected the WCT Termination. The Election Date may be extended by mutual consent of both Parties.
3) Transfer and Assignment. If WCT elects the Transfer and Assignment as provided
above:
a) WCT and ViVA shall work together to complete the Transfer and Assignment within thirty (30) days of the Election Date (such actual date of the Transfer and Assignment being referred to as the "Transfer and Assignment Date") pursuant to an agreement that would provide comprehensive and customary representations, V.larranties, covenants and indemnification obligations.
b) No la ter than such Transfer and Assignment Date,WCT shall: (i) pay ViVA an
amount equal to (x) one-third of ViVA's reasonably docu mented out of pocket costsl, including direct labor, subcontracts, l egal agreements, and expenses i ncu rred in securing the BLB Project and implementing the BLB Agreement ("ViVA Costs"), plus (y) all payments made by ViVA to \VCT toward the Initial Payment through such Transfer and Assignrnent Date; and (ii) provide ViVA wi th a bindi ng and irrevocable commitment ("Commitment") to pay ViVA the remaining two-thi rds of the ViVA Costs. Th e sched ule of addit ional payments wou ld be one-th ird at the end of month three after th e Transfer and Assignm en t Date, and the final one-third at the en d of month six af ter the Transfer and Assignment Date, If, on such T ransfer and
Assign ment Date, WCT fai ls either to (A) pay the amounts set forth in (x) and (y) above or (B) p rovide th e Commitment, Vi VA vv-i!l be u nd er n o o bligation to complete the Transfe r and Assignment, a nd WCT shall be deemed to have elected the WCT Termination. In connection \".rith the Transfer a nd i\ssignment, WCT agrees to
pledge the shares ofVCTU to ViVA as collateral until all Transfer and Asstgmnent
payments a re made. If WCT has elected the Transfer a nd Assignment, and the entire
Transfer and Assignment, includ in g all payments due, bas not been completed in
1 f{S of j ul y 31, the total amount of the Transfe and Assign men t Paymentis projected to be $610,00 0 p lus the payment of an y fees paid to WCT tow
