-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KYOaKLJgmSQFmvknfIQcrQyQla/CLTzyOTw67C4nPdnyIYowt3fjCEDuKl9w4xQR IRJfYaCG6L/YS6pPQStpvw== 0000784961-99-000030.txt : 19991220 0000784961-99-000030.hdr.sgml : 19991220 ACCESSION NUMBER: 0000784961-99-000030 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19991217 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: VDC COMMUNICATIONS INC CENTRAL INDEX KEY: 0000784961 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 061524454 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54351 FILM NUMBER: 99776380 BUSINESS ADDRESS: STREET 1: 75 HOLLY HILL LANE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038695100 MAIL ADDRESS: STREET 1: 75 HOLLY HILL LANE CITY: GREENWICH STATE: CT ZIP: 06831 FORMER COMPANY: FORMER CONFORMED NAME: VDC CORP LTD DATE OF NAME CHANGE: 19960117 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MORAN FREDERICK W CENTRAL INDEX KEY: 0001077661 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O VDC COMMUNICATIONS INC STREET 2: 75 HOLLY HILL LN CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038695100 MAIL ADDRESS: STREET 1: C/O VDC COMMUNICATIONS INC STREET 2: 75 HOLLY HILL LN CITY: GREENWICH STATE: CT ZIP: 06830 SC 13D 1 OMB APPROVAL ------------ OMB Number: 3235-0145 Expires: August 31, 1999 Estimated average burden hours per response ....14.90 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ... )* VDC Communications, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 91821B 10 1 - -------------------------------------------------------------------------------- (CUSIP Number) Frederick W. Moran VDC Communications, Inc. 75 Holly Hill Lane Greenwich, CT 06830 (203) 869-5100 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 27, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.204.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 2 of 7 Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Frederick W. Moran - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) PF - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization U.S.A. - -------------------------------------------------------------------------------- Number of 7. Sole Voting Power Shares Bene- ficially by 2,069,480 Owned by Each ---------------------------------------------------------- Reporting 8. Shared Voting Power Person With 0 ---------------------------------------------------------- 9. Sole Dispositive Power 2,069,480 ---------------------------------------------------------- 10. Shared Dispositive Power 0 - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 2,069,480 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 9.6% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN This statement (the "Statement") relates to the common stock, par value $.0001 per share (the "Common Stock") of VDC Communications, Inc., a Delaware corporation (the "Issuer"). This Statement constitutes an initial filing of Schedule 13D for Frederick W. Moran ("Mr. Moran"). Item 1. Security and Issuer This Statement relates to the Issuer's Common Stock. The address of the Issuer's principal executive office is 75 Holly Hill Lane, 3rd Floor, Greenwich, CT 06830. - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 3 of 7 Pages - -------------------------------------------------------------------------------- Item 2. Identity and Background (a) The name of the person filing this Statement is Frederick W. Moran. (b-c) Mr. Moran's principal occupation is Managing Director of Equity Research for Jefferies & Company, Inc. Mr. Moran's business address and the address of Jefferies & Company, Inc. is 520 Madison Avenue, 12th Floor, New York, NY 10022. Jefferies & Company, Inc.'s principal business is investment banking/securities brokerage. (d) During the last five years, Mr. Moran has not been convicted in any criminal proceeding. (e) During the last five years, Mr. Moran has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Moran is a citizen of the United States of America. Item 3. Source and Amount of Funds or Other Consideration On October 27, 1999, Mr. Moran purchased from Issuer 666,667 shares of Common Stock for $500,000.25. The source of this purchase price was Mr. Moran's personal funds. Mr. Moran's acquisition of the above-referenced shares was part of an overall private placement conducted by the Issuer in October 1999 (the "October Private Placement") in which the Issuer sold 1,333,334 shares of Common Stock in a non-public offering exempt from registration pursuant to Section 4(2), and Rule 506 of Regulation D of the Securities Act of 1933 as follows:
Shareholder Number of Shares Consideration ($) ----------- ---------------- ----------------- Adase Partners, L.P. 140,000 105,000.00 The Lucien I. Levy Revocable Living Trust 10,000 7,500.00 Frederick W. Moran 666,667 500,000.25 Merl Trust 28,000 21,000.00 O.T. Finance, SA 22,000 16,500.00 Alan B. Snyder 266,667 200,000.25 Eric M. Zachs 200,000 150,000.00 ------- ---------- Total 1,333,334 1,000,000.50
The following paragraphs detail certain prior transactions that resulted in the acquisition of certain securities reflected in this Statement. On December 23, 1998, Mr. Moran purchased from Issuer 100,000 shares of Common Stock for $362,500. The source of this purchase price was Mr. Moran's personal funds. Mr. Moran's acquisition of the above-referenced shares was part of an overall private placement conducted by the Issuer in December 1998 (the "December Private Placement") in which the Issuer sold 245,159 shares of Common Stock in a non-public offering exempt from registration pursuant to Section 4(2) and Rule 506 of Regulation D of the Act as follows: - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 4 of 7 Pages - --------------------------------------------------------------------------------
Shareholder Number of Shares Price per Share - ----------- ---------------- --------------- Anne Moran 35,310 $3.625 Anne Moran, IRA 49,379 $3.625 Frederick A. Moran & 41,380 $3.625 Anne Moran Frederick A. Moran, IRA 331 $3.625 Frederick W. Moran 100,000 $3.625 Joan Moran, IRA 248 $3.625 Kent Moran 8,221 $3.625 Luke Moran 9,352 $3.625 Moran Equity Fund, Inc. 938 $3.625 --- TOTAL 245,159
In May 1998, Mr. Moran purchased from Issuer 100,000 shares of Common Stock for $600,000. The source of this purchase price was Mr. Moran's personal funds. Mr. Moran's acquisition of the above-referenced shares was part of an overall private placement conducted by the Issuer in May 1998 (the "May Private Placement"), in which the Issuer sold 583,430 shares of Common Stock in a non-public offering exempt from registration pursuant to Section 4(2) and Rule 506 of Regulation D of the Act as follows:
Shareholder Number of Shares Price Per Share - ----------- ---------------- --------------- Lancer Offshore, Inc. 150,000 $6.00 Lancer Voyager Fund 25,000 $6.00 Anne Moran 39,333 $6.00 Anne Moran Trust 250 $6.00 Anne Moran, IRA 11,667 $6.00 Moran Equity Fund, Inc. 27,000 $6.00 Frederick A. Moran 85,667 $6.00 Frederick A. Moran 23,667 $6.00 & Joan B. Moran Frederick A. Moran Trust 180 $6.00 Frederick W. Moran 100,000 $6.00 Kent Moran 10,000 $6.00 Kent Moran, IRA 333 $6.00 Luke Moran 10,000 $6.00 Luke Moran, IRA 333 $6.00 Alan B. Snyder 100,000 $6.00 ------- TOTAL 583,430
Pursuant to the terms of an Amended and Restated Agreement and Plan of Merger, by and among VDC Corporation Ltd. ("VDC"), a Bermuda company, the Issuer (then known as VDC (Delaware), Inc.), Sky King Communications, Inc., a Connecticut corporation ("Sky King") and the Sky King shareholders (the "Merger Agreement"), as further amended by an Amendment to the Merger Agreement, dated March 6, 1998 (the "Amendment"), Sky King merged with and into the Issuer (the "Merger"). In exchange for their shares of Sky King common stock, Sky King shareholders were issued shares of preferred stock of the Issuer ("Preferred Stock"). As part of the Merger, Mr. Moran was issued 1,422,850 shares of Preferred Stock. In accordance with the terms of the Merger Agreement, all shares of Preferred Stock, including those shares held by Mr. Moran, were converted into shares of Issuer Common Stock upon the merger of VDC with and into the Issuer on November 6, 1998. References to, and descriptions of, the Merger Agreement and the Amendment as set forth in this Item 3 are qualified in their entirety by reference to the copies of the Merger Agreement and the Amendment, included as - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 5 of 7 Pages - -------------------------------------------------------------------------------- Exhibits 1 and 2, respectively, and are incorporated in this Item 3 where such references and descriptions appear. Item 4. Purpose of the Transaction Mr. Moran acquired the shares of Common Stock in the transactions set forth in Item 3 for personal investment. Except as set forth below, Mr. Moran does not have any present plans or proposals which relate to, or would result in: (a) an acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of the assets of the Issuer or any of its subsidiaries; (d) any change in the present Board of Directors (the "Board") or management of the Issuer; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer's business or corporate structure; (g) any changes in the Issuer's charter, bylaws, or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to the Act; or (j) any action similar to those enumerated above. Mr. Moran reserves the right to acquire or sell securities of the Issuer to the extent he deems advisable in light of market conditions and other factors. Item 5. Interest in Securities of the Issuer (a-b) Mr. Moran is the beneficial owner of, and has sole dispositive voting power with respect to, 2,069,480 shares of Common Stock, which shares constitute 9.6% of the issued and outstanding shares of Common Stock (based upon 21,506,917 shares of Common Stock as reported in the Issuer's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). Mr. Moran does not share voting or dispositive power with respect to said shares. (c) Except for the transactions described in Item 3 above, Mr. Moran has not effected any transactions in the securities of the Issuer during the past sixty (60) days. (d) No persons, other than Mr. Moran, have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares owned by Mr. Moran. (e) Not applicable. Item 6. Contracts, Arrangement, Understandings or Relationships with Respect to Securities Holder The information set forth in Item 3 is hereby incorporated by reference. Copies of the Merger Agreement and the Amendment are attached hereto as Exhibit 1 and 2, respectively. On October 27, 1999, Mr. Moran entered into a Securities Purchase Agreement with the Issuer pursuant to which Mr. Moran purchased 666,667 shares of Issuer Common Stock at a price of $.75 per share. Also on October 27, 1999, in connection with the same transaction, Mr. Moran entered into a Registration Rights Agreement with the Issuer. The Registration Rights Agreement provided for piggyback registration rights upon offerings by the Issuer (subject to standard and customary underwriter scale-back provisions and other restrictions) with all registration expenses, subject to certain limitations, to be paid by the Issuer. - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 6 of 7 Pages - -------------------------------------------------------------------------------- On December 23, 1998, Mr. Moran entered into a Securities Purchase Agreement with the Issuer pursuant to which Mr. Moran purchased 100,000 shares of Issuer Common Stock at a price of $3.625 per share. The Securities Purchase Agreement contained registration rights providing that the Issuer shall use reasonable best efforts to file a registration statement within 120 days of closing in which the shares subject to the Securities Purchase Agreement are included (subject to standard and customary underwriter scale-back provisions and other restrictions) with all registration expenses to be paid by the Issuer. On May 27, 1998, Mr. Moran entered into a Securities Purchase Agreement with VDC Corporation Ltd. (predecessor to Issuer)("VDC") pursuant to which Mr. Moran purchased 100,000 shares of VDC common stock at a price of $6.00 per share. The Securities Purchase Agreement contained registration rights providing that the Issuer shall use best efforts to file a registration statement within 90 days of closing in which the shares subject to the Securities Purchase Agreement are included (subject to standard and customary underwriter scale-back provisions and other restrictions) with all registration expenses to be paid by VDC. The descriptions of the above contracts and agreements do not purport to be complete and are qualified in their entirety by reference to the appropriate complete contract or agreement attached as an Exhibit to this Statement. Such Exhibits are incorporated in this Item 6 in their entirety to supplement the appropriate reference or description above. Item 7. Material to Be Filed as Exhibits 1. Amended and Restated Agreement and Plan of Merger, by and among VDC Corporation Ltd., VDC (Delaware), Inc., Sky King Communications, Inc. and the shareholders of Sky King Communications, Inc., dated December 10, 1997. 2. Amendment to Amended and Restated Agreement and Plan of Merger, by and among VDC Corporation Ltd., VDC (Delaware), Inc., Sky King Communications, Inc. and the shareholders of Sky King Communications, Inc., dated March 6, 1998. 3. Securities Purchase Agreement by and between VDC Communications, Inc. and Frederick W. Moran, dated October 27, 1999. 4. Registration Rights Agreement by and between VDC Communications, Inc. and Frederick W. Moran, dated October 27, 1999. 5. Securities Purchase Agreement by and between VDC Communications, Inc. and Frederick W. Moran, dated December 23, 1998. 6. Securities Purchase Agreement by and between VDC Corporation Ltd. and Frederick W. Moran, dated May 27, 1998. Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. December 17, 1999. - -------------------------------------------------------------------------------- Date /s/Frederick W. Moran - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- CUSIP No. 91821B 10 1 Page 7 of 7 Pages - -------------------------------------------------------------------------------- Frederick W. Moran - -------------------------------------------------------------------------------- Name/Title Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations (See 18 U.S.C. 1001) EX-99.1 2 EX-99.1 EXHIBIT 1 AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER BY AND AMONG VDC CORPORATION LTD. VDC (Delaware), INC. AND SKY KING COMMUNICATIONS, INC. Effective Date: December 10, 1997
TABLE OF CONTENTS ARTICLE I: MERGER OF SKY KING WITH AND INTO SUB AND RELATED MATTERS 1 1.1 The Merger. 2 1.2 Conversion of Stock. 3 1.3 Merger Consideration. 4 1.4 Additional Rights; Taking of Necessary Action; Further Action. 6 1.5 Dissenters' Rights. 6 1.6 No Further Rights or Transfers. 6 ARTICLE II: THE CLOSING 6 2.1 Closing Date. 6 2.2 Closing Transactions. 7 ARTICLE III: CERTAIN CORPORATE ACTION 9 3.1 Sky King Corporate Action. 10 3.2 Acquiror Corporate Action. 10 ARTICLE IV: REPRESENTATIONS AND WARRANTIES 10 4.1 Representations and Warranties of Sky King and the Sky King Shareholders. 10 4.2 Representations and Warranties of Acquiror and the Sub. 17 ARTICLE V: AGREEMENTS OF THE PARTIES 21 5.1 Issuance of Securities of Acquiror prior to the Closing. 21 5.2 Anticipated Domestication of Acquiror; Possible Follow-on Merger. 22 5.3 Access to Information. 23 5.4 Confidentiality; No Solicitation. 23 5.5 Interim Operations. 25 5.6 Consents. 28 5.7 Filings. 28 i 5.8 All Reasonable Efforts. 28 5.9 Public Announcements. 28 5.10 Notification of Certain Matters. 29 5.11 Expenses. 29 5.12 Registration Rights. 29 5.13 Documents at Closing. 32 5.14 Prohibition on Trading in Acquiror and Sub Stock. 33 5.15 Anticipated Acquisition of the Principal Assets of PortaCom Wireless, Inc. 33 5.16 Production of Schedules and Exhibits. 34 5.17 Acknowledgment of Approvals. 34 ARTICLE VI: CONDITIONS TO CONSUMMATION OF THE MERGER 34 6.1 Conditions to Obligations of Sky King and the Sky King Shareholders. 35 6.2 Conditions to Acquiror's and the Sub's Obligations. 36 ARTICLE VII: INDEMNIFICATION 38 7.1 Indemnification. 38 ARTICLE VIII: TERMINATION 39 8.1 Termination. 39 8.2 Notice and Effect of Termination. 40 8.3 Extension; Waiver. 40 8.4 Amendment and Modification. 40 ARTICLE IX: MISCELLANEOUS 41 9.1 Survival of Representations and Warranties. 41 9.2 Notices. 41 9.3 Entire Agreement; Assignment. 42 9.4 Binding Effect; Benefit. 42 ii 9.5 Headings. 42 9.6 Counterparts. 42 9.7 Governing Law. 43 9.8 Arbitration. 43 9.9 Severability. 43 9.10 Release and Discharge. 43 9.11 Certain Definitions. 43
iii
EXHIBITS AND SCHEDULES EXHIBITS - -------- Exhibit 1.3(a)(i) Series A Certificate of Designation Exhibit 1.3(a)(ii) Series B Certificate of Designation Exhibit 1.3(c)(ii) Escrow Agreement Exhibit 2.2(a)(ii) Investment Letter Exhibit 2.2(b)(xii) Employment Agreement SCHEDULES - --------- Schedule 4.1(a) Articles of Incorporation and Bylaws of Sky King Communications, Inc. Schedule 4.1(d) Options, etc. - Sky King Communications, Inc. Schedule 4.1(g) Litigation - Sky King Communications, Inc. Schedule 4.1(l) Names and Service Marks - Sky King Communications, Inc. Schedule 4.1(m) Leases and Agreements - Sky King Communications, Inc. Schedule 4.1(n) Conflicting Interests - Sky King Communications, Inc. Schedule 4.1(p) Certain Changes and Events - Sky King Communications, Inc. Schedule 4.2(a) Memorandum of Association and Byelaws of VDC Corporation Ltd. and Articles of Incorporation and Bylaws of VDC (Delaware), Inc. Schedule 4.2(d)(i) VDC Corporation Ltd. Warrants Schedule 4.2(g) Legal Violations of VDC Corporation Ltd. and its Subsidiaries Schedule 4.2(i) Litigation - VDC Corporation Ltd. Schedule 5.5(a)(ix) Acquisitions by Sky King Communications, Inc.
iv AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and entered into effective as of December 10, 1997, by and among VDC CORPORATION LTD, a Bermuda Corporation ("Acquiror"), VDC (Delaware), Inc., a Delaware corporation and wholly-owned subsidiary of Acquiror ("Sub"), SKY KING COMMUNICATIONS, INC., a Connecticut corporation ("Sky King"), and those individuals and entities whose names appear on the signature page hereof in their capacity as holders of the outstanding common stock of Sky King (the "Sky King Shareholders"). Recitals WHEREAS, the parties hereto entered into an Agreement and Plan of Merger effective as of the date thereof (the "Original Agreement") pursuant to which Sub shall merger with and into Sky King (the "Merger"); WHEREAS, the parties hereto desire to amend the Original Agreement to (i) amend the voting, conversion and other rights of holders of Sub's Series A Convertible Preferred Stock to be issued as Merger Consideration in the Merger; (ii) provide for the issuance of Sub's Series B Convertible Preferred Stock as part of the Merger Consideration; (iii) change the manner in which the Merger Consideration shall be paid and delivered to the Sky King shareholders; and (iv) amend and restate entirely the Original Agreement; WHEREAS, Acquiror and Sky King have determined that it is in the best interests of their respective shareholders for Sky King to merge with and into Sub upon the terms and subject to the conditions set forth in this Agreement; WHEREAS, the respective Boards of Directors of Acquiror and Sky King have each approved this Agreement and the consummation of the transactions contemplated hereby and approved the execution and delivery of this Agreement; and WHEREAS, for federal income tax purposes, it is intended that this merger shall qualify as a tax-free reorganization under the provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"). NOW, THEREFORE, in consideration of the foregoing premises and representations, warranties and agreements contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that the Amended and Restated Agreement and Plan of Merger shall be as follows: ARTICLE I MERGER OF SKY KING WITH AND INTO SUB AND RELATED MATTERS 1.1 The Merger. (a) Upon the terms and conditions of this Agreement, at the "Effective Time" (as defined herein), Sky King shall be merged with and into the Sub (the "Merger") in accordance with the provisions of the Connecticut Business Corporation Act ("CBCA") and the Delaware General Corporation Law (the "DGCL") and the separate corporate existence of Sky King shall cease, and the Sub shall continue as the surviving corporation under the laws of the state of Delaware with the corporate name "SKY KING COMMUNICATIONS, INC." (the "Surviving Corporation"). (b) The Merger shall become effective as of the filing of a certificate of merger (the "Certificate of Merger") with the Secretary of State of Delaware and Articles of Merger with State Department of Assessments and Taxation, in accordance with the provisions of Section 252 of the DGCL and Section 33-821 of the CBCA, and the confirmation by the Certificate of Merger that the Merger is effective as of such filing date. The date and time when the Merger shall become effective is referred to herein as the "Effective Time." (c) At the Effective Time: (i) the Sub shall continue its existence under the laws of the State of Delaware as the Surviving Corporation; (ii) the separate corporate existence of Sky King shall cease; (iii) all rights, title and interests to all assets, whether tangible or intangible and any property or property rights owned by Sky King shall be allocated to and vested in the Sub as the Surviving Corporation without reversion or impairment, without further act or deed, and without any transfer or assignment having occurred, but subject to any existing liens or other encumbrances thereon, and all liabilities and obligations of Sky King shall be allocated to the Sub as the Surviving Corporation which shall be the primary obligor therefor and, except as otherwise provided by law or contract, no other party to the Merger, other than the Sub as the Surviving Corporation, shall be liable therefor; (iv) the Certificate of Incorporation of the Sub as in effect immediately prior to the consummation of the Merger, other than the name of the Sub which shall be changed to "Sky King Communications, Inc." in connection with the Merger, shall be the Certificate of Incorporation of the Surviving Corporation, until thereafter amended as provided by law and such Certificate of Incorporation; (v) Each of Acquiror, Sub and Sky King shall execute and deliver, and file or cause to be filed with the Secretary of State of the State of Delaware, the Certificate of Merger and with the State 2 Department of Assessments and Taxation, the Articles of Merger, with such amendments thereto as the parties hereto shall deem mutually acceptable; (vi) the Bylaws of Sub, as in effect immediately prior to the consummation of the Merger, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by law and such Bylaws; and (vii) the officers and directors of the Acquiror shall be nominated and elected in accordance with the provisions of Sections 6.1 (g) hereof. 1.2 Conversion of Stock. At the Effective Time, and without any action on the part of the parties hereto, the Sky King Shareholders or any other party: (a) the shares representing 100% of the issued and outstanding common stock of Sky King ("Sky King Common Stock") as of the Closing (the "Closing") (as such term is defined in Section 2.1 below) (other than "Dissenting Shares", as defined herein) shall, by virtue of the Merger and without any action on the part of any holder thereof, be converted into and represent the right to receive, and shall be exchangeable for the merger consideration identified at Section 1.3 hereafter (the "Merger Consideration); (b) each share of capital stock of Sky King held in treasury as of the Effective Time shall, by virtue of the Merger, be canceled without payment of any consideration therefor and without any conversion thereof; (c) each share of common stock of the Sub that is issued and outstanding as of the Effective Time shall continue to represent one share of common stock of the Surviving Corporation after the Merger, which shares, together with the 100 shares of common stock of Sub owned by Acquiror prior to the Effective Time, shall thereafter constitute all of the issued and outstanding shares of capital stock of the Surviving Corporation; (d) Acquiror shall pay all charges and expenses, including those of any exchange agent and the National Association of Securities Dealers, Inc., if any, in connection with the issuance or exchange of the shares in connection with the Merger; (e) from and after the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of shares of Sky King Common Stock (or any warrants or other rights to acquire any of the same) that were outstanding immediately prior to the Effective Time. After the Effective Time, certificates for shares of Sky King Common Stock (or any warrants or other rights to acquire any of the same) that were outstanding immediately prior to the Effective Time shall be canceled and exchanged for the consideration to be received therefor in connection with the Merger as provided in this Agreement; and 3 (f) no fractional shares of stock shall be issued in the Merger, and each holder of Sky King Common Stock entitled to receive as part of the Merger Consideration fractional shares shall receive that number of shares of stock rounded to the nearest whole number. 1.3 Merger Consideration. (a) The Merger Consideration consisting of the total purchase price payable to the holders of 100% of the Sky King Common Stock in connection with the acquisition by merger of Sky King shall consist exclusively of the following: (i) newly issued shares of Sub's Series A Convertible Preferred Stock (the "Series A Stock") which are subject to the following salient features: (1) Conversion Rights. The Series A Stock shall automatically convert into an aggregate of 5,500,000 shares of Sub Common Stock upon the occurrence of the domestication of Acquiror pursuant to Section 5.2 of this Agreement. If the domestication of Acquiror does not occur within one (1) year after the Effective Time, all, but not less than all of the Series A Stock may be convertible at any time thereafter by the holders thereof into, or exchangeable for, 5,500,000 shares of Acquiror Common Stock. The Series A Stock shall also automatically convert into shares of Sub Common Stock upon the occurrence of: (i) a liquidation event, dissolution or winding up of Sub, (ii) the sale of all or substantially all of the assets or business of Sub or (iii) a merger, plan of reorganization or consolidation in which Sub is not the surviving corporation. (2) Voting Rights. Prior to the conversion thereof, the Series A Stock shall have no voting rights. (3) Dividends. The Series A Stock will share pari-passu with all dividends on Sub Common Stock and will otherwise have no dividend rights. The definitive terms of the Series A Stock are set forth within the Certificate of Designation for the Series A Convertible Preferred Stock attached hereto as Exhibit 1.3(a)(i) (the "Series A Certificate of Designation"). The Series A Certificate of Designation shall indicate Acquiror's consent to the terms of the Series A Stock as set forth in this Subsection 1.3(a)(i); and (ii) newly issued shares of Sub's Series B Convertible Preferred Stock (the "Series B Stock"; the Series A Stock and the Series B Stock shall be collectively referred to herein as the "Sub Preferred Stock") which are subject to the following salient features: (1) Conversion Rights. The Series B Stock shall automatically convert into an aggregate of 4,500,000 shares of Sub Common Stock upon the occurrence of the domestication of Acquiror pursuant to Section 5.2 of this Agreement. If the domestication of Acquiror does not occur 4 within one (1) year after the Effective Time, all, but not less than all of the Series B Stock may be convertible at any time thereafter by the holders thereof into, or exchangeable for, 4,500,000 shares of Acquiror Common Stock. The Series B Stock shall also automatically convert into shares of Sub Common Stock upon the occurrence of: (i) a liquidation event, dissolution or winding up of Sub, (ii) the sale of all or substantially all of the assets or business of Sub or (iii) a merger, plan of reorganization or consolidation in which Sub is not the surviving corporation. (2) Voting Rights. Prior to the conversion thereof, the Series B Stock shall have no voting rights. (3) Dividends. The Series B Stock will share pari-passu with all dividends on Sub Common Stock and will otherwise have no dividend rights. The definitive terms of the Series B Stock are set forth within the Certificate of Designation for the Series B Convertible Preferred Stock attached hereto as Exhibit 1.3(a)(ii) (the "Series B Certificate of Designation"). The Series B Certificate of Designation shall indicate Acquiror's consent to the terms of the Series B Stock as set forth in this Subsection 1.3(a)(ii). (b) The Merger Consideration shall be allocated among the holders of 100% of the Sky King Common Stock in the proportion of their share ownership of the outstanding common stock of Sky King as of the date of the Closing. (c) The Merger Consideration shall be paid and delivered in the following manner: (i) At the Closing, shares of Series A Stock convertible into an aggregate of 5,500,000 shares of Sub Common Stock shall be delivered to the Sky King Shareholders; and (ii) At the Closing, Acquiror shall issue in the name of the Sky King Shareholders shares of Series B Stock (the "Escrow Shares") and shall deliver such shares to the Escrow Agent to be held in accordance with the terms and conditions of the Escrow Agreement attached hereto as Exhibit 1.3(c)(ii) and made a part hereto (the "Escrow Agreement"). (d) The shares of Series A Stock to be delivered at the Closing and the shares of Series B Stock released from escrow by the Escrow Agent (as well as shares of Acquiror Common Stock that may be issued pursuant to Section 5.2(b) hereof) shall be fully paid and non-assessable and shall be free and clear of all liens, levies and encumbrances except that all of such Series A Stock, Series B Stock, shares of common stock issuable upon conversion of the Series A Stock, Series B Stock and any shares of Acquiror Common Stock shall be "restricted securities" pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended (the "Act"). 5 1.4 Additional Rights; Taking of Necessary Action; Further Action. Each of Acquiror, Sub, Sky King and Sky King Shareholders, respectively, shall use their best efforts to take all such action as may be necessary and appropriate to effectuate the Merger under the CBCA and DGCL as promptly as possible, including, without limitation, the filing of the Certificate of Merger and the Articles of Merger consistent with the terms of this Agreement. If at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest in Sub as the Surviving Corporation full right, title and possession to all assets, property, rights, privileges, powers and franchises of Sky King, the officers of such corporations are fully authorized in the name of their corporations or otherwise, and notwithstanding the Merger, to take, and shall take, all lawful and necessary action. 1.5 Dissenters' Rights. Each of Sky King and the Sky King Shareholders acknowledge that dissenters' rights are available to each of the Sky King Shareholders pursuant to the CBCA and that (i) Sky King has complied with the provisions of the CBCA in notifying each Sky King Shareholder of the availability of such rights; and (ii) pursuant to the provisions of the CBCA, if the appropriate procedures and guidelines are followed, any dissenting shareholders ("Dissenting Shareholders"), in lieu of the Merger Consideration, shall be entitled to receive the fair value of their shares in accordance with the provisions of the CBCA. 1.6 No Further Rights or Transfers. At and after the Effective Time, the shares of capital stock of Sky King outstanding immediately prior to the Effective Time shall cease to provide any rights to the shareholders of Sky King or the Surviving Corporation, except for the right to surrender the certificate or certificates representing such shares and to receive the Merger Consideration as provided in this Agreement. ARTICLE II THE CLOSING 2.1 Closing Date. Subject to satisfaction or waiver of all conditions precedent set forth in Article VI of this Agreement, the closing of the Merger (the "Closing") shall take place at the offices of Buchanan Ingersoll Professional Corporation., Eleven Penn Center, 1835 Market Street, 14th Floor, Philadelphia, PA 19103, at 10:00 a.m., local time on the later of: (i) the first Business Day following the day upon which all appropriate Acquiror corporate action and Sky King corporate action has been taken in accordance with Article III of this Agreement; or (ii) the day on which the last of the conditions precedent set forth in Article VI of this Agreement is fulfilled or waived, or (b) at such other time, date and place as the parties may agree, but in no event shall such date be later than March 10, 1998, unless such date is extended by the mutual written agreement of the parties. 6 2.2 Closing Transactions. At the Closing, the following transactions shall occur, all of such transactions being deemed to occur simultaneously: (a) Sky King and all holders of the Sky King Common Stock shall take, or shall cause to be taken, the following actions: (i) Each of the holders of Sky King Common Stock (other than Dissenting Shareholders) shall surrender and deliver to the Sub as the Surviving Corporation the certificate or certificates representing all of their shares of Sky King Common Stock; (ii) Each of the holders of Sky King Common Stock (other than Dissenting Shareholders) shall, to the extent necessary to comply with applicable federal and state securities laws (including, if applicable, Rule 145 promulgated under the Act), execute and deliver at the Closing a copy of an investment letter in a form mutually agreed upon by the parties and attached to this Agreement as Exhibit 2.2(a)(ii) ("Investment Letter"); (iii) Any outstanding shareholder agreements relating to Sky King Common Stock shall have been terminated and evidence of such termination satisfactory to Acquiror shall have been delivered to Acquiror; (iv) Sky King and the holders of Sky King Common Stock shall execute and deliver, and file or cause to be filed with the Secretary of State of the State of Connecticut, the Certificate of Merger with such amendments thereto as the parties hereto shall deem mutually acceptable; (v) A certificate shall be executed by Sky King and the holders of Sky King Common Stock to the effect that all representations and warranties made by Sky King and the Sky King Shareholders under this Agreement are true and correct as of the Closing, as though originally given to Acquiror and Sub on said date; (vi) A certificate of good standing shall be delivered by Sky King from the Secretary of State of the State of Connecticut, dated at or about the Closing, to the effect that such corporation is in good standing under the laws of such state; (vii) An incumbency certificate shall be delivered by Sky King signed by all of the officers thereof dated at or about the Closing; 7 (viii) Certified Articles of Incorporation shall be delivered by Sky King dated at or about the Closing and a copy of the Bylaws of Sky King certified by the Secretary of Sky King dated at or about the Closing; (ix) Certified Board and shareholder resolutions shall be delivered by the Secretary of Sky King dated at or about the Closing authorizing the transactions contemplated under this Agreement; (x) Sky King and the holders of Sky King Common Stock shall execute and deliver the Escrow Agreement to Acquiror and the Escrow Agent; and (xi) Each of the parties to this Agreement shall have otherwise executed whatever documents and agreements, provided whatever consents or approvals and taken all such actions as are required under this Agreement. (b) Acquiror and/or Sub shall take, or shall cause to be taken, the following actions: (i) Acquiror shall deliver or shall cause to be delivered to all of the holders of the Sky King Common Stock (other than Dissenting Shareholders) a certificate or certificates representing the number of shares of that portion of an aggregate number of 5,500,000 shares of Series A Stock as such holder is entitled to receive at the Closing in connection with the Merger; (ii) Acquiror shall, on behalf of itself and the Sky King Shareholders, deliver or shall cause to be delivered to the Escrow Agent certificates representing 4,500,000 shares of Series B Stock; (iii) Acquiror and the Sub shall execute and deliver, and file or cause to be filed with the Secretary of the State of Delaware, the Certificate of Merger with such amendments thereto as the parties hereto shall deem mutually acceptable; (iv) Sub shall receive from the Secretary of State of Delaware a final Certificate of Merger; (v) The Acquiror's Board of Directors will be reconstituted to consist of a maximum of five (5) members. Each of the existing members of Acquiror's Board of Directors will tender his resignation and nominate to the Board two (2) individuals consisting of designees of the holders of the Sub Preferred Stock and one (1) designee of the former Acquiror Board members ("VDC Designee"). The newly constituted Board of Directors will hold office in accordance with the DGCL and will appoint executive officers in accordance with the DGCL; 8 (vi) A certificate for each of the Acquiror and the Sub shall be executed by their respective Presidents to the effect that all of the respective representations and warranties of the Acquiror and Sub under this Agreement are true and correct as of the Closing, as though originally given to Sky King on said date; (vii) A certificate of good standing shall be delivered by Sub from the Secretary of State of the State of Delaware, dated at or about the Closing, stating that Sub is in good standing under the laws of such state; (viii) A certificate of good standing shall be delivered by Acquiror from the Commonwealth of Bermuda, dated at or about the Closing, stating that Acquiror is in good standing under the laws of such commonwealth; (ix) An incumbency certificate shall be delivered by each of Acquiror and Sub signed by all of their respective officers dated at or about the Closing; (x) Certified Certificates of Incorporation shall be delivered by Acquiror and Sub dated at or about the Closing, and a copy of the Bylaws of Acquiror and Sub certified by the respective Secretary of Acquiror and Sub dated at or about the Closing; (xi) Certified Board resolutions shall be delivered by the respective Secretary of the Acquiror and Sub dated at or about the Closing authorizing the transactions contemplated under this Agreement; (xii) Acquiror will deliver an Employment Agreement to each of Frederick A. Moran and James C. Roberts upon the terms and conditions identified upon Exhibit 2.2(b)(xii) to this Agreement; (xiii) A Certificate of Designation shall be filed with the Secretary of State of Delaware in accordance with the DGCL, designating the terms of the Sub Preferred Stock; (xiv) Acquiror shall execute and deliver the Escrow Agreement to Sky King and the Escrow Agent; and (xv) Each of the parties to this Agreement shall have otherwise executed whatever documents and agreements, provided whatever consents or approvals and taken all such actions as are required under this Agreement. ARTICLE III CERTAIN CORPORATE ACTION 9 3.1 Sky King Corporate Action. Sky King shall cause to occur all corporate action necessary to effect the Merger and to consummate the other transactions contemplated hereby. 3.2 Acquiror Corporate Action. Acquiror and the Sub shall cause to occur all corporate action necessary on behalf of either of them to effect the Merger and to consummate the other transactions contemplated hereby. ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of Sky King and the Sky King Shareholders. As a material inducement to Acquiror and Sub to execute this Agreement and consummate the Merger and other transactions contemplated hereby, Sky King and the Sky King Shareholders, jointly and severally, hereby make the following representations and warranties to Acquiror and Sub. The representations and warranties are true and correct in all material respects at this date, and will be true and correct in all material respects on the Closing as though made on and as of such date. (a) Corporate Existence and Power. Sky King is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Connecticut, and has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any of the foregoing would not have a Material Adverse Effect. Sky King is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. True, correct and complete copies of the Articles of Incorporation and Bylaws of Sky King as amended to date are attached hereto as Schedule 4.1(a) and are made a part hereof. There are currently no subsidiaries of Sky King. (b) Due Authorization. This Agreement has been duly authorized, executed and delivered by Sky King and the Sky King Shareholders and constitutes a valid and binding agreement of Sky King and the Sky King Shareholders, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and other similar laws relating to, limiting or affecting the enforcement of creditors' rights generally or by the application of equitable principles. As of 10 the Closing all corporate action on the part of Sky King required under applicable law in order to consummate the Merger will have occurred. (c) No Contravention. Neither the execution and delivery of the Agreement nor the consummation of the transactions contemplated thereby will: (i) conflict with or result in any violation of any provision of the Articles of Incorporation or Bylaws of Sky King; or (ii) conflict with or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of a right or obligation or loss under, any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Sky King and the Sky King Shareholders or their properties or assets, or result in the creation or imposition of any mortgage, lien, pledge, charge or security interest of any kind ("Encumbrance") on any assets of Sky King, except such as is not reasonably likely to have a Material Adverse Effect or prevent Sky King or the Sky King Shareholders from consummating the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Sky King in connection with the execution and delivery of this Agreement by Sky King and the Sky King Shareholders or the consummation by Sky King and the Sky King Shareholders of the transactions contemplated hereby, except the filing of the Articles of Merger with the States of Delaware and Connecticut. (d) Capitalization and Share Ownership. The authorized capital stock of Sky King will upon the Closing consist of no more than 2,000 shares of common stock ("Sky King Common Stock"). There are currently outstanding approximately 1,692 shares of Sky King Common Stock. The outstanding shares of capital stock of Sky King have been duly authorized and validly issued and are fully paid and nonassessable and free of preemptive rights. Except as described on Schedule 4.1(d) hereto, there are outstanding (A) no shares of preferred stock or other voting securities of Sky King, (B) no securities of Sky King convertible into or exchangeable for shares of capital stock or voting securities of Sky King and (C) no options, warrants or other rights to acquire from Sky King, and no obligation of Sky King to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Sky King, and there are no agreements or commitments to do any of the foregoing. There are no voting trusts or voting agreements applicable to any capital stock of Sky King. The Sky King Common Stock to be surrendered in the Merger will be owned of record and beneficially by the Sky King Shareholders, free and clear of all liens and encumbrances of any kind and nature, and have not been sold, pledged, assigned or otherwise transferred. There are no agreements (other than this Agreement) to sell, pledge, assign or otherwise transfer such securities. (e) Financial Statements. Within fifteen (15) days after the execution hereof, Sky King will provide Acquiror with unaudited annual and interim financial statements (the "Financial Statements") such that would comply with Regulation S-X of the Securities Exchange Act of 1934 if such Financial Statements were provided on an audited basis. Such Financial Statements will have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods reported upon and fairly present in all material respects the financial position of Sky King 11 as of the date thereof and the results of operations for the periods then ended (subject to normal year-end adjustments). On or before the Closing, Sky King shall deliver audited Financial Statements to the Acquiror (the "Audited Financial Statements") covering the same periods as the Financial Statements, that reflect no material negative adjustments or differences from the Financial Statements. (f) No Contingent Liabilities. Except as set forth in the Financial Statements, at the Closing, Sky King shall have no liabilities, whether related to tax or non-tax matters, known or unknown, due or not yet due, liquidated or unliquidated, fixed or contingent, determined or determinable in amount or otherwise and, to the knowledge of Sky King after due inquiry, there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, except as and to the extent reflected on: (i) the Financial Statements; (ii) this Agreement or any Schedule or Exhibit hereto; or (iii) liabilities incurred since the date of the Financial Statements solely in the ordinary course of business and as accurately reflected on the books and records of Sky King; provided, however, that no liability shall be incurred from and after the date hereof which is in contravention of any negative covenant contained herein and applicable to Sky King. (g) Litigation. Except as described on Schedule 4.1(g) hereto, there is no action, suit, investigation or proceeding (or, to the knowledge of Sky King, any basis therefor) pending against, or to the knowledge of Sky King threatened, against or affecting Sky King or any of its properties before any court or arbitrator or any governmental body, agency or official that (i) if adversely determined against Sky King, would have a Material Adverse Effect or (ii) in any manner challenges or seeks to prevent, enjoin, alter or materially delay the Merger or any of the other transactions contemplated by the Agreement. (h) Taxes. Sky King has timely filed all tax returns required to be filed by it, and will timely file when due all tax returns required to be filed by it between the date hereof and the Closing. Sky King has paid in a timely fashion or will pay when due in a timely fashion, all taxes required to be paid in respect of the periods covered by such returns, and the books and the financial statements of Sky King reflect, or will reflect, adequate reserves for all taxes payable by Sky King which have been, or will be, accrued but are not yet due. Sky King is not delinquent in the payment of any material tax, assessment or governmental charge. No deficiencies for any taxes have been proposed, asserted or assessed against Sky King, Sky King and the Sky King Shareholders are not aware of any facts which would constitute the basis for the proposal or assertion of any such deficiency and there is no action, suit, proceeding, audit or claim now pending or threatened against Sky King. All taxes which Sky King is required by law to withhold and collect have been duly withheld and collected, and have been timely paid over to the proper authorities to the extent due and payable. For the purposes of this Agreement, the term "tax" shall include all federal state, local and foreign income, property, sales, excise and other taxes of any nature whatsoever. Neither Sky King nor any member of any affiliated or combined group of which Sky King is or has been a member has granted any extension or waiver of the limitation period applicable to any tax returns. There are no Encumbrances for taxes upon the assets of Sky King, except Encumbrances for current taxes not yet due. There are no tax sharing or tax allocation agreements to which Sky King is now or ever has been a party. Sky King will not be required under Section 481(c) of the Code, of 1986, to include any material adjustment in 12 taxable income for any period subsequent to the Merger. Sky King (a) has not been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was Sky King) and (b) has no liability for the taxes of any person (other than Sky King) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. (i) Compliance with Laws. Sky King is not in violation of, and has not violated, any applicable provisions of any laws, statues, ordinances or regulations, other than as would not be reasonably likely to have a Material Adverse Effect or constitute a felony. No such laws, statutes, ordinances or regulations require or are reasonably expected to require capital expenditures by Sky King that are reasonably likely to have a Material Adverse Effect. Without limiting the generality of the foregoing, Sky King has all licenses, permits, certificates and authorizations needed or required for the conduct of Sky King's business as presently conducted and for the use of its properties and premises occupied by it, except where the failure to obtain a licenses, permit, certificate or authorization would not have a Material Adverse Effect. (j) Investment Banking Fees. There is no investment banker, broker, finder or other similar intermediary which has been retained by, or is authorized by, Sky King or the Sky King Shareholders to act on its or their behalf who might be entitled to any fee or commission from Sky King, the Sky King Shareholders, Acquiror or the Sub or any of their respective affiliates upon consummation of the transactions contemplated by this Agreement. (k) Personal Property. Sky King has good and valid title to all of its personal property, tangible and intangible, reflected on the Financial Statements and to all other personal property owned by it, free and clear of any Encumbrance. Sky King is the owner of all of its personal property now located in or upon its leased premises and of all personal property which is used in the operation of its business. All such equipment, furniture and fixtures and other tangible personal property is in good operating condition and repair and none require any repairs other than normal routine maintenance to maintain such property in good operating condition and repair. All inventory as reflected on the Financial Statements is useable in the ordinary course of business free from material defects. Sky King owns no motor vehicles. (l) Intellectual Property; Intangible Property. The corporate names of Sky King and the trade names and service marks listed on Schedule 4.1(l) are the only names and service marks which are used by Sky King in the operation of its business (the "Names and Service Marks"). Sky King has not done business and has not been known by any other name other than by its Names and Service Marks. Sky King owns and has the exclusive right to use all intellectual property presently in use by it and necessary for the operation of its business as now being conducted, which intellectual property includes, but is not limited to, patents, trademarks, trade names, service marks, copyrights, trade secrets, customer lists, inventions, formulas, methods, processes and other proprietary information. There are no outstanding licenses or consents granting third parties the right to use any intellectual property owned by Sky King. No royalties or fees are payable by Sky King to any third party by reason of the use of any of its intellectual property. Sky King has received no notice of any adversely held patent, invention, trademark, copyright, service mark or trade name of any person, or any claims of any other person relating 13 to any of the intellectual property subject hereto, and to the knowledge of Sky King, there is no reasonable basis for any such charge or claim. There is no presently known threatened use or encroachment of any such intellectual property. (m) Contracts, Leases, Agreements and Other Commitments. Sky King is not a party to or bound by any oral, written or implied contracts, agreements, licenses, leases, employment agreements, powers of attorney, guaranties, surety arrangements or other commitments, except for the following (which are hereinafter collectively called the "Corporation Agreements"): (i) The leases and agreements described on Schedules 4.1(m); and (ii) Agreements involving a maximum possible liability or obligation on the part of Sky King of less than Twenty-Five Thousand Dollars ($25,000) in the aggregate. The Corporation Agreements constitute all of the agreements and instruments which are necessary and desirable to operate the business as currently conducted by Sky King. True, correct and complete copies of each Corporation Agreement described and listed under Subsection 4.1(m) will be made available to Acquiror within fifteen (15) days after the date hereof. The term "Corporation Agreement" excludes purchase orders entered into in the ordinary course for personalty or inventory which may be returned to the vendor without penalty. All of the Corporation Agreements are valid, binding and enforceable against the respective parties thereto in accordance with their respective terms. Following the Merger, the Surviving Corporation shall become entitled to all rights of Sky King under such of the Corporation Agreements as if the Surviving Corporation were the original party to such Corporation Agreements. All parties to all of the Corporation Agreements have performed all obligations required to be performed to date under such Corporation Agreements, and no party is in default or in arrears under the terms thereof, and no condition exists or event has occurred which, with the giving of notice or lapse of time or both, would constitute a default thereunder. The consummation of this Agreement and the Merger will not result in an impairment or termination of any of the rights of Sky King under any Corporation Agreement. None of the terms or provisions of any Corporation Agreement materially adversely affects the business, prospects, financial condition or results of operations of Sky King. (n) Conflicting Interests. Except as set forth on Schedule 4.1(n), no director, officer, employee or Sky King Shareholder, and no relative or affiliate of any of the foregoing (i) sells or purchases goods or services from Sky King or has any pecuniary interest in any supplier or client of any of the foregoing or in any other business enterprise with which Sky King conducts business or with which any of the foregoing is in competition, or (ii) is indebted to Sky King except for money borrowed and as set forth on the Financial Statements. (o) Environmental Protection. Neither Sky King nor the Sky King Shareholders have been notified by any governmental authority, agency or third party, and Sky King and the Sky King Shareholders have no knowledge, of any violation by Sky King of any Environmental Statute (as defined below). All registrations by Sky King with, licenses from or permits issued by governmental agencies pursuant to environmental, health and safety laws are in full force and 14 effect. The term "Environmental Statutes" means all statutes, ordinances, regulations, orders and requirements of common law concerning discharges to the air, soil, surface water or groundwater and concerning the storage, treatment or disposal of any waste or hazardous substance. There is no hazardous substance at any premises currently or previously occupied by Sky King. Sky King has not received any notice or any request for information, notice of claim, demand or other notification that it may be potentially responsible with respect to any investigation or clean-up of any threatened or actual release of hazardous substances. All hazardous wastes and substances have been stored, treated, disposed of and transported in conformance with all requirements applicable to such hazardous substances and wastes. (p) Absence of Certain Changes or Events. Except as and to the extent set forth on the Financial Statements, to the extent contained in this Agreement, or as set forth on Schedule 4.1(p), there has not been (i) any material adverse change in the business, assets, properties, results of operations, financial condition or prospects of Sky King; (ii) any entry by Sky King into any material commitment or transaction which is not in the ordinary course of business; (iii) any change by Sky King in accounting principles or methods except insofar as may be required by a change in generally accepted accounting principles; (iv) any declaration, payment or setting aside for payment of any dividends or other distributions (whether in cash, stock or property) in respect of capital stock of Sky King or any Subsidiary, or any direct or indirect redemption, purchase or any other type of acquisition by Sky King of any shares of its capital stock or any other securities for an aggregate sum in excess of $5,000; (v) any agreement by Sky King, whether in writing or otherwise, to take any action which, if taken prior to the date of this Agreement, would have made any representation or warranty in this Section 4.1 untrue or incorrect; (vi) any acquisition of the assets of Sky King, other than in the ordinary course of business and consistent with past practice and in excess of $5,000 in the aggregate; or (vii) any execution of any agreement with any executive officer of Sky King providing for his or her employment, or any increase in the compensation or in severance or termination benefits payable or to become payable by Sky King to its officers or key employees, or any material increase in benefits under any collective bargaining agreement or in benefits under any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, insurance or other plan or arrangement or understanding (whether or not legally binding) providing benefits to any present or former employee of Sky King. Since the date of the Financial Statements, there has not been and there is not threatened, any material adverse change in financial condition, business, results of operations or prospects of the business or any material physical damage or loss to any of the properties or assets of the business or to the premises occupied in connection with the business, whether or not such loss is covered by insurance. (q) Investment Intent. (i) Except with respect to the registration rights granted to the Sky King Shareholders pursuant to the terms of this Agreement, the shares of Sub Preferred Stock are not being registered under the Act on the basis of the statutory exemption provided by Section (4)2 thereof, relating to transactions not involving a public offering, and the Acquiror's reliance on the statutory exemption thereof is based in part on the representations contained in this Agreement; 15 (ii) The Sky King Shareholders represent (a) that they have reviewed such quarterly, annual and periodic reports of the Acquiror (the "Reports") as have been filed with the Securities and Exchange Commission (the "SEC") and that they have such knowledge and experience in financial and business matters that they are capable of utilizing the information set forth therein concerning Acquiror to evaluate the risk of investing in the Acquiror; (b) that they have been advised that the shares of Sub Preferred Stock or Acquiror Common Stock to be issued to each of them by the Acquiror constitute "restricted securities" as defined in Rule 144 promulgated under the Act and accordingly, have not been and will not be registered under the Act, except as otherwise provided in this Agreement, and therefore, the Sky King Shareholders may not be able to sell or otherwise dispose of such shares except if such shares are subject to an effective registration statement filed with the SEC, in compliance with Rule 144 or otherwise pursuant to an exemption from registration under the Act; (c) that the shares of Sub Preferred Stock or Acquiror Common Stock are being acquired by them for their own benefit and on their own behalf for investment purposes and not with a view to, or for sale or resale in connection with, a public offering or distribution thereof; (d) that the shares of Sub Preferred Stock or Acquiror Common Stock so issued will not be sold (I) without registration thereof under the Act (unless such shares are subject to registration or in the opinion of counsel acceptable to the Acquiror, an exemption from such registration is available), or (II) in violation of any law; and (e) that the certificate or certificates representing the shares of Sub Preferred Stock or Acquiror Common Stock to be issued will be imprinted with a legend in form and substance substantially as follows: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION, UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON AN OPINION LETTER OF COUNSEL FOR THE COMPANY OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION." and Acquiror is hereby authorized to notify its transfer agent of the status of the shares of Sub Preferred Stock or Acquiror Common Stock, and to take such other action including, but not limited to, the placing of a "stop-transfer" order on the transfer agent's books and records to ensure compliance with the foregoing. (iii) Sky King and the Sky King Shareholders have been afforded the opportunity to review and are familiar with the Reports and have based their decision to invest solely on the information contained therein, and the information contained within this Agreement and the associated exhibits and schedules, and have not been furnished with any other literature, prospectus or other information except as included in the Reports or this Agreement; 16 (iv) The Sky King Shareholders are able to bear the economic risks of an investment in the shares of Sub Preferred Stock or Acquiror Common Stock and that their overall commitment to their investments which are not readily marketable is not disproportionate to their net worth; and (v) The Sky King Shareholders understand that no federal or state agency has approved or disapproved the shares of Sub Preferred Stock or Acquiror Common Stock, passed upon or endorsed the merits of the transfer of such shares set forth within this Agreement or made any finding or determination as to the fairness of such shares for investment. (r) Statements And Other Documents Not Misleading. Neither this Agreement, including all exhibits and schedules and other closing documents, nor any other financial statement, document or other instrument heretofore or hereafter furnished by Sky King or the Sky King Shareholders to Acquiror or Sub in connection with the Merger or the other transactions contemplated hereby, contains or will contain any untrue statement of any material fact or omit or will omit to state any material fact required to be stated in order to make such statement, information, document or other instruments, in light of the circumstances in which they are made, not misleading. There is no fact known to Sky King or the Sky King Shareholders which may have a Material Adverse Effect on the business, prospects, financial condition or results of operations of Sky King or of any of its properties or assets which has not been set forth in this Agreement as an exhibit or schedule hereto. 4.2 Representations and Warranties of Acquiror and the Sub. As a material inducement to Sky King and the Sky King Shareholders to execute this Agreement and to consummate the Merger and the other transactions contemplated hereby, Acquiror and Sub hereby make the following representations and warranties to Sky King and the Sky King Shareholders. (a) Corporate Existence and Power. Acquiror is a corporation duly incorporated, validly existing and in good standing under the laws of Bermuda, and the Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each of Acquiror and the Sub has all corporate powers and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted, except where the failure to have any of the foregoing would not have a Material Adverse Effect on their respective businesses. Each of Acquiror and the Sub is duly qualified to do business and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect. Acquiror owns all of the issued and outstanding shares of capital stock of the Sub, and there are no other rights orobligations of Acquiror or the Sub to issue any other shares of capital stock of the Sub. The Sub has conducted no business activity other than in connection with the transactions contemplated by this Agreement. True, complete and correct copies of the Memorandum of Association and Byelaws of Acquiror and the Articles of Incorporation and Bylaws of Sub, 17 each as amended to date, are attached hereto as Schedule 4.2(a) and are made a part hereof. (b) Due Authorization. This Agreement has been duly authorized, executed and delivered by Acquiror and the Sub and constitutes a valid and binding agreement of Acquiror and the Sub, enforceable in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, moratorium, and other similar laws relating to, limiting or affecting the enforcement of creditors' rights generally or by the application of equitable principles. As of the Closing all corporate action on the part of Acquiror and the Sub required under applicable law in order to consummate the Merger will have occurred. (c) No Contravention. Neither the execution and delivery of the Agreement nor the consummation of the transactions contemplated thereby will: (i) conflict with or result in any violation of any provision of the Memorandum of Association or Byelaws of Acquiror or the Articles of Incorporation or Bylaws of Sub or (ii) conflict with or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of an right or obligation or to loss or a benefit under, any provision of the Memorandum of Association or Byelaws of Acquiror or the Articles of Incorporation or Bylaws of Sub or any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Acquiror or its properties or assets, or result in the creation or imposition of any Encumbrance on any asset of Acquiror, except, only as to clause (ii) above, such as is not reasonably likely to have a Material Adverse Effect or prevent Acquiror or Sub from consummating the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic or foreign, is required by or with respect to Acquiror or the Sub in connection with the execution and delivery of this Agreement by either of them or the consummation by either of them of the transactions contemplated hereby, except the filing of the Certificate of Merger with the Secretary of the State of Delaware. (d) Capitalization. As of the Closing, Acquiror shall have outstanding no more than that number of shares of common stock equal to 3,700,000 less the number of Surrendered Shares (as such term is defined in Section 5.15(b)(i)(A) below), if any, in addition to those shares discussed at Section 5.1, as well as no more than 750,000 Warrants identified upon Schedule 4.2(d)(i). All outstanding shares of capital stock of Acquiror have been duly authorized and validly issued and are fully paid and nonassessable and free of preemptive rights. The shares of Sub Preferred Stock to be issued in the Merger will be duly authorized, validly issued, fully paid and nonassessable. Except as otherwise set forth herein, there will be outstanding (A) no shares of capital stock or other voting securities of Acquiror, (B) no securities of Acquiror convertible into or exchangeable for shares of capital stock or voting securities of Acquiror and (C) no options, warrants or other rights to acquire from Acquiror, and no obligation of Acquiror to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Acquiror and there are no agreements or commitments, to do any of the foregoing. 18 (e) SEC Filings. (i) Upon request Acquiror will make available to Sky King copies of its periodic reports filed pursuant to the Securities Exchange Act of 1934, as well as its proxy or information statements relating to meetings of, or actions taken without a meeting by the stockholders of Acquiror held since 1994 and all of its other reports, statements, schedules and registration statements filed with the SEC since inception, other than pre-effective amendments to such registration statements. The documents referred to in the preceding sentence are sometimes referred to herein as the "SEC Documents." (ii) As of its filing date, to the knowledge of Acquiror, each such SEC Documents did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (f) Financial Statements. The financial statements contained within the SEC Documents fairly present in all material respects the results of operations, retained earnings and changes in financial position, as the case may be, of the Acquiror at and for the periods set forth therein (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material to the Acquiror, taken as a whole, in amount or effect), in each case in accordance with generally accepted accounting principles consistently applied during the periods involved, except as may be noted therein. The books and records, financial and other, of the Acquiror are, to the knowledge of the Acquiror, in all material respects complete and correct and have been maintained in accordance with good business and accounting practices. (g) No Violations. Except as described on Schedule 4.2(g) hereto, neither Acquiror or any of its Subsidiaries has received any written notice from any governmental entity having jurisdiction over it or over any of the real property leased by it of any violation by Acquiror or any of its Subsidiaries of any law, regulation or ordinance relating to zoning, environmental matters, local building or fire codes or similar matters relating to any of the real property leased by Acquiror or any of its Subsidiaries. (h) No Contingent Liabilities. Except as set forth in the financial statements referred to in Section 4.2(f) above, as of the Closing, Acquiror and each of its Subsidiaries shall have no liabilities, whether related to tax or non-tax matters, known or unknown, due or not yet due, liquidated or unliquidated, fixed or contingent, determined or determinable in amount or otherwise and, to the knowledge of Acquiror after due inquiry, there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability except as and to the extent reflected on: (i) the SEC Documents; (ii) this Agreement or any Schedule or Exhibit thereto; or (iii) liabilities incurred since the date of the most recent SEC Document solely in the ordinary course of business (or in connection with the transactions contemplated hereby) and as accurately reflected on the books and records of Acquiror; provided however, that no liability shall be incurred from and after the date hereof which is in contravention of any negative covenant contained herein and applicable to Acquiror. 19 (i) Litigation. Except as set forth in any of the SEC Documents or Schedule 4.2(i), there is no action, suit, investigation or proceeding (or, to the knowledge of Acquiror, any basis therefor) pending against, or to the knowledge of Acquiror threatened, against or affecting Acquiror, any of its Subsidiaries or any of their properties before any court or arbitrator or any governmental body, agency or official that (i) if adversely determined against Acquiror, would have a Material Adverse Effect on Acquiror and its Subsidiaries, taken as a whole, or (ii) in any manner challenges or seeks to prevent, enjoin, alter or materially delay the Merger or any of the other transactions contemplated by the Agreement. (j) Taxes. (i) Acquiror and each of its Subsidiaries have timely filed all tax returns required to be filed by them, and will timely file when due all tax returns required to be filed by them between the date hereof and the Closing. Acquiror and each of its Subsidiaries have paid in a timely fashion or will pay when due in a timely fashion, all taxes required to be paid in respect of the periods covered by such returns, and the books and the financial statements of Acquiror and each of its Subsidiaries reflect, or will reflect, adequate reserves for all taxes payable by Acquiror and each of its Subsidiaries which have been, or will be, accrued but are not yet due. Acquiror and each of its Subsidiaries are not delinquent in the payment of any material tax, assessment or governmental charge. No deficiencies for any taxes have been proposed, asserted or assessed against Acquiror and each of its Subsidiaries, Acquiror and each of its Subsidiaries are not aware of any facts which would constitute the basis for the proposal or assertion of any such deficiency and there is no action, suit, proceeding, audit or claim now pending, or to Acquiror's knowledge, threatened against Acquiror and each of its Subsidiaries. All taxes which Acquiror and each of its Subsidiaries are required by law to withhold and collect have been duly withheld and collected, and have been timely paid over to the proper authorities to the extent due and payable. For the purposes of this Agreement, the term "tax" shall include all federal state, local and foreign income, property, sales, excise and other taxes of any nature whatsoever. Neither Acquiror or any of its Subsidiaries nor any member of any affiliated or combined group of which Acquiror is or has been a member has granted any extension or waiver of the limitation period applicable to any tax returns. There are no Encumbrances for taxes upon the assets of Acquiror or any of its Subsidiaries, except Encumbrances for current taxes not yet due. There are no tax sharing or tax allocation agreements to which Acquiror or any of its Subsidiaries is now or ever has been a party. Acquiror will not be required under Section 481(c) of the Code, to include any material adjustment in taxable income for any period subsequent to the Merger. Neither Acquiror nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was Acquiror or a Subsidiary of Acquiror) and (b) has no liability for the taxes of any person (other than Acquiror or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise. (ii) For federal income tax purposes, the Merger shall constitute a tax-free reorganization under the provisions of Section 368 of the Code, provided, however, that the Sky King Shareholders recognize and acknowledge that receipt of shares of Acquiror Common Stock (rather than Sub 20 Preferred or Common Stock) will not qualify as a tax-free reorganization at the time of the receipt of such shares of Acquiror Common Stock. (k) Compliance with Laws. To the best knowledge of Acquiror and Sub, neither Acquiror nor any of its Subsidiaries is in violation of, or has violated, any applicable provisions of any laws, statutes, ordinances or regulations, which taken as a whole would be reasonably likely to have a Material Adverse Effect on Acquiror and its Subsidiaries, or which would constitute a felony. No such laws, statutes, ordinances or regulations require or are reasonably expected to require capital expenditures that are reasonably likely to have a Material Adverse Effect on Acquiror and its Subsidiaries, taken as a whole. Without limiting the generality of the foregoing, Acquiror and Sub have all licenses, permits, certificates and authorizations needed or required for the conduct of Acquiror's or Sub's business as presently conducted and for the use of its properties and premises occupied by it, except where the failure to obtain a license, permit, certificate or authorization would not have a Material Adverse Effect. (l) Investment Banking Fees. Acquiror has retained and agreed upon the Closing hereof to pay an investment banking firm a stock fee in the amount equal to 5.00% of the Merger Consideration, or 500,000 shares of Acquiror Common Stock, for arranging this transaction. (m) Statements and Other Documents Not Misleading. Neither this Agreement, including all exhibits and schedules and other closing documents, nor any other financial statement, document or other instrument heretofore or hereafter furnished by Acquiror or Sub to Sky King and the Sky King Shareholders in connection with the Merger or the other transactions contemplated hereby, or any information furnished by Acquiror and Sub taken as a whole contains or will contain any untrue statement of any material fact or omit or will omit to state any material fact required to be stated in order to make such statement, information, document or other instruments, in light of the circumstances in which they are made, not misleading. There is no fact known to Acquiror and Sub taken as a whole which may have a Material Adverse Effect on the business, prospects, financial condition or results of operations of Acquiror and Sub taken as a whole or of any of their properties or assets which has not been set forth in this Agreement as an exhibit or schedule hereto. ARTICLE V AGREEMENTS OF THE PARTIES 5.1 Issuance of Securities of Acquiror prior to the Closing. Between the date hereof and the Closing, Acquiror contemplates that it may be caused to issue up to 5,300,000 additional shares of Acquiror Common Stock in connection with certain acquisition transaction (the "Acquisition Transaction") that is presently being evaluated or are under contract as set forth in Section 5.15. No investment banker, broker, finder or other similar intermediary has been retained by, or is authorized by, Acquiror to act on its behalf who might be entitled to any fee or commission from 21 Acquiror or any of its affiliates in connection with the Acquisition Transaction or the transactions contemplated thereby. 5.2 Anticipated Domestication of Acquiror; Possible Follow-on Merger. (a) Acquiror shall use diligent efforts to domesticate by merger or other permissible means into Sub within one (1) year after the Closing. Upon Acquiror's domestication into Sub, the Series A Stock will automatically convert into shares of Sub Common Stock such that the holders thereof will at that time own the same percentage of outstanding Sub Common Stock as they would have owned in Acquiror had they originally received an aggregate of 5,500,000 shares of Acquiror Common Stock upon the Closing, and the Series B Stock will automatically convert into shares of Sub Common Stock such that the holders thereof will at that time own the same percentage of outstanding Sub Common Stock as they would have owned in Acquiror had they originally received an aggregate of 4,500,000 shares of Acquiror Common Stock upon the Closing. Upon the domestication of Acquiror into Sub, the number of shares of common stock resulting from the conversion of the Escrow Shares by the Escrow Agent as of such conversion date shall be held in escrow as Escrow Shares pursuant to the terms of the Escrow Agreement. (b) If the domestication of Acquiror described in Section 5.2(a) above does not occur within one (1) year from the Effective Date, the Series A Stock may, at the discretion of the holders thereof, be converted into, or exchangeable for, an aggregate of 5,500,000 shares of Acquiror Common Stock, and the Series B Stock may, at the discretion of the holders thereof, be converted into, or exchangeable for, an aggregate of 4,500,000 shares of Acquiror Common Stock. Upon such discretionary conversion, the number of shares of common stock resulting from the conversion of the Escrow Shares as of such conversion date shall be held in escrow by the Escrow Agent as Escrow Shares pursuant to the terms of the Escrow Agreement. (c) Acquiror and Sub covenant and agree that as to Sub, prior to the domestication of Acquiror described in Section 5.2 hereof: (i) Dividends; Changes in Stock. Sub shall not and shall not propose to (a) split, combine or reclassify any of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock; or (b) redeem, repurchase or otherwise acquire any shares of its capital stock or (c) otherwise change its capitalization. (ii) Issuance of Securities. Except as contemplated by this Agreement, Sub shall not sell, issue, pledge, authorize or propose the sale or issuance of, pledge or purchase or propose the purchase of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other convertible securities. (iii) Sale of Stock by Acquiror. Acquiror shall not sell, pledge or authorize or propose the sale, pledge or purchase of, the shares of common stock of Sub owned by Acquiror prior to the Effective Time. 22 (d) Sky King and the Sky King Shareholders acknowledge that they have been advised that this domestication may not occur until a Registration Statement on Form S-4 is filed with, and declared effective by, the SEC. 5.3 Access to Information. At all times prior to the Closing or the earlier termination of this Agreement in accordance with the provisions of Article VIII, and in each case subject to Section 5.4 below, each of the parties hereto shall provide to the other parties (and the other parties' authorized representatives) full access during normal business hours and upon reasonable prior notice to the premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to such party (including without limitation all written proprietary and trade secret information and documents, and other written information and documents relating to intellectual property rights and matters), and will cooperate with the other party in conducting its due diligence investigation of such party. 5.4 Confidentiality; No Solicitation. (a) Confidentiality of Acquiror-Related Information. With respect to information concerning Sky King that is made available to Acquiror pursuant to the terms of this Agreement, Acquiror agrees that, except in connection with the private placement and other securities purchase agreements associated therewith, it shall hold such information in strict confidence, shall not use such information except for the sole purpose of evaluating the Merger and related transactions and shall not disseminate or disclose any of such information other than to its directors, officers, employees, shareholders, affiliates, agents and representatives who need to know such information for the sole purpose of evaluating the Merger and the related transactions (each of whom shall be informed in writing by Acquiror of the confidential nature of such information and directed by Acquiror in writing to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Article VIII, Acquiror shall immediately return all such information, all copies thereof and all information prepared by Acquiror based upon the same; provided, however, that one copy of all such material may be retained by Acquiror's outside legal counsel for purposes only of resolving any disputes under this Agreement. The above limitations on use, dissemination and disclosure shall not apply to information that (i) is learned by Acquiror from a third party entitled to disclose it; (ii) become known publicly other than through Acquiror or any party who received the same through Acquiror, provided that Acquiror has no knowledge that the disclosing party was subject to an obligation of confidentiality; (iii) is required by law or court order to be disclosed by Acquiror; or (iv) is disclosed with the express prior written consent thereto of Sky King or the Sky King Shareholders. Acquiror shall undertake all necessary steps to ensure that the secrecy and confidentiality of such information will be maintained in accordance with the provisions of this paragraph (a). Notwithstanding anything contained herein to the contrary, in the event a party is required by court order or subpoena to disclose information which is otherwise deemed to be confidential or subject to the confidentiality obligations hereunder, prior to such disclosure, the disclosing party shall: (i) promptly notify the non-disclosing party and, if having received a court order or subpoena, deliver a copy of the same to the non-disclosing party; (ii) 23 cooperate with the non-disclosing party, at the expense of the non-disclosing party in obtaining a protective or similar order with respect to such information; and (iii) provide only such of the confidential information as the disclosing party is advised by its counsel is necessary to strictly comply with such court order or subpoena. (b) Confidentiality of Sky King-Related Information. With respect to information concerning Acquiror that is made available to Sky King and the Sky King Shareholders pursuant to the provisions of this Agreement, Sky King and the Sky King Shareholders agree that they shall hold such information in strict confidence, shall not use such information except for the sole purpose of evaluating the Merger and the related transactions and shall not disseminate or disclose any of such information other than to their directors, officers, employees, shareholders, affiliates, agents and representatives who need to know such information for the sole purpose of evaluating the Merger and the related transactions (each of whom shall be informed in writing by Sky King or the Sky King Shareholders of the confidential nature of such information and directed by such party in writing to treat such information confidentially). If this Agreement is terminated pursuant to the provisions of Article VIII, Sky King and the Sky King Shareholders agree to return immediately all such information, all copies thereof and all information prepared by either of them based upon the same; provided, however, that one copy of all such material may be retained by Sky King's outside legal counsel for purposes only of resolving any disputes under this Agreement. The above limitations on use, dissemination and disclosure shall not apply to information that (i) is learned by Sky King or the Sky King Shareholders from a third party entitled to disclose it; (ii) becomes known publicly other than through Sky King, the Sky King Shareholders or any party who received the same through Sky King or the Sky King Shareholders, provided that Sky King or the Sky King Shareholders have no knowledge that the disclosing party was subject to an obligation of confidentiality; (iii) is required by law or court order to be disclosed by Sky King; or (iv) is disclosed with the express prior written consent thereto of Acquiror. Sky King or the Sky King Shareholders agree to undertake all necessary steps to ensure that the secrecy and confidentiality of such information will be maintained in accordance with the provisions of this paragraph (b). Notwithstanding any thing contained herein to the contrary, in the event a party is required by court order or subpoena to disclose information which is otherwise deemed to be confidential or subject to the confidentiality obligations hereunder, prior to such disclosure, the disclosing party shall: (i) promptly notify the non-disclosing party and, if having received a court order or subpoena, deliver a copy of the same to the non-disclosing party; (ii) cooperate with the non-disclosing party at the expense of the non-disclosing party in obtaining a protective or similar order with respect to such information; and (iii) provide only such of the confidential information as the disclosing party is advised by its counsel is necessary to strictly comply with such court order or subpoena. (c) Nondisclosure. Neither Sky King, the Sky King Shareholders, the Sub nor Acquiror shall disclose to the public or to any third party the existence of this Agreement or the transactions contemplated hereby or any other material non-public information concerning or relating to the other party hereto, other than with the express prior written consent of the other parties hereto, except as may be required by law or court order or to enforce the rights of such disclosing party under this Agreement, in which event the contents of any proposed disclosure shall be discussed with the other party before release; provided, however, that notwithstanding anything to the contrary 24 contained in this Agreement, any party hereto may disclose this Agreement to any of its directors, officers, employees, shareholders, affiliates, agents and representatives who need to know such information for the sole purpose of evaluating the Merger, and to any party whose consent is required in connection with the Merger or this Agreement. The parties anticipate issuing a mutually acceptable, joint press release announcing the execution of this Agreement and the consummation of the Merger. (d) No Solicitation. In consideration of the substantial expenditure of time, effort and money to be undertaken by Acquiror in connection with the transactions contemplated by this Agreement, neither the Sky King Shareholders, Sky King nor any affiliate thereof will, prior to the earlier of the Closing or ninety (90) days after the termination of this Agreement, directly or indirectly, through any officer, director, agent or otherwise: (i) solicit, initiate or encourage the submission of inquiries, proposals or offers from any person or entity relating to any acquisition or purchase of assets of or any equity interest in Sky King or any affiliate thereof or any tender offer (including a self-tender offer), exchange offer, merger, consolidation, business combination, sale of a substantial amount of assets or sale of securities, liquidation, dissolution or similar transaction involving Sky King or its affiliates (a "Transaction Proposal"); (b) enter into or participate in any discussions or negotiations regarding a Transaction Proposal, or furnish to any other person or entity any information with respect to the business, properties or assets of Sky King or its affiliates in connection with a Transaction Proposal; or (c) otherwise cooperate in any way with, or assist or participate in, facilitate or encourage any effort or attempt by any other person to do or seek a Transaction Proposal. Sky King or the Sky King Shareholders shall promptly notify Acquiror if any such proposal or offer, or any inquiry or contact with any person or entity with respect thereto is made. 5.5 Interim Operations. During the period from the date of this Agreement and continuing until the Closing: (a) Interim Operations of Sky King. Sky King agrees (except as expressly contemplated by this Agreement, including any Exhibits and Schedules hereto, or to the extent that Acquiror shall otherwise consent in writing) that as to Sky King: (i) Ordinary Course. Sky King shall carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization, keep available the services of its present officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it; (ii) Dividends; Changes in Stock. Sky King shall not and shall not propose to (a) declare, set aside or pay any dividend, on, or make other distributions in respect of, any of its capital stock, (b) split, combine or reclassify any of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock (c) redeem, repurchase or otherwise acquire any shares of its capital stock or (d) otherwise change its capitalization. 25 (iii) Issuance of Securities. Except as contemplated by this Agreement, Sky King shall not sell, issue, pledge, authorize or propose the sale or issuance of, pledge or purchase or propose the purchase of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other convertible securities. (iv) Governing Documents. Sky King shall not amend its certificate of incorporation or its Bylaws. (v) No Dispositions. Sky King shall not sell, lease, pledge, encumber or otherwise dispose of or agree to sell, lease, pledge, encumber or otherwise dispose of, any of its assets that are material to its business or any other assets except in the ordinary course of business consistent with prior practice. (vi) Indebtedness. Sky King shall not incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities of Sky King or guarantee any debt securities of others other than in the ordinary course of business consistent with prior practice. (vii) Benefit Plans; Etc. Sky King shall not adopt or amend in any material respect any collective bargaining agreement or Employee Benefit Plan (as defined herein). (viii) Executive Compensation. Sky King shall not grant to any executive officer any increase in compensation or in severance or termination pay, or enter into any employment agreement with any executive officer. (ix) Acquisitions. Except as set forth on Schedule 5.5(a)(ix), Sky King shall not acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or subdivision thereof, or make any investment by either purchase of stock or securities, contributions to capital, property transfer or, except in the ordinary course of business, purchase of any property or assets, of any other individual or entity. (x) Tax Elections. Sky King shall not make any material tax election or settle or compromise any material federal, state, local or foreign tax liability. (xi) Waivers and Releases. Sky King shall not waive, release, grant or transfer any rights of material value or modify or change in any material respect any Corporation Agreement other than in the ordinary course of business and consistent with past practice. (xii) Other Actions. Sky King shall not enter into any agreement or arrangement to do any of the foregoing. Sky King shall not take any action, or fail to take any action, that is reasonably likely to result in any of the representations and warranties of Sky King set forth in this Agreement becoming untrue in any material respect. (b) Interim Operations of Acquiror and Sub. Acquiror and Sub jointly and severally agree (except as expressly contemplated by this Agreement, including any Exhibits and Schedules hereto, or to the extent that Sky King and the Sky King Shareholders shall otherwise consent in writing or to the extent required to permit Acquiror to meet its obligations under Section 5) that: 26 (i) Ordinary Course. Acquiror shall carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent with such business, use all reasonable efforts to preserve intact its present business organization (provided that such obligation shall not relate to the officers and employees of Acquiror or any of its Subsidiaries including the Sub) and preserve its relationships with customers, suppliers and others having business dealings with it. The Sub shall conduct no business activity other than in connection with the transactions contemplated by this Agreement in connection with the Merger. (ii) Dividends; Changes in Stock. Neither Acquiror nor the Sub shall (and shall not propose to) (a) declare or pay any dividend, on, or make other distributions in respect of, any of its capital stock, (b) split, combine or reclassify any of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (c) repurchase or otherwise acquire any shares of its capital stock or (d) otherwise change its capitalization. (iii) Issuance of Securities. Except as provided for in Article V, neither Acquiror nor the Sub shall sell, issue, pledge, authorize or propose the sale or issuance of, pledge or purchase or propose the purchase of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other convertible securities. (iv) No Dispositions. Acquiror shall not sell, lease, pledge, encumber or otherwise dispose of, or agree to sell, lease, pledge, encumber or otherwise dispose of, any of its assets that are material to its business, or any other assets except in the ordinary course of business consistent with prior practice. (v) Indebtedness. Neither Acquiror nor the Sub shall incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities of others other than in the ordinary course of business consistent with prior practice. (vi) Benefit Plans, Etc. Neither Acquiror nor the Sub shall adopt or amend in any material respect any collective bargaining agreement or Employee Benefit Plan (as defined herein). (vii) Executive Compensation. Neither Acquiror nor the Sub shall grant to any executive officer any increase in compensation, or enter into any employment agreement with any executive officer, other than any of the same the material terms of which have been disclosed to Sky King on or before the date hereof. Other Actions. Neither Acquiror nor the Sub shall enter into any agreement or arrangement to do any of the foregoing. Neither Acquiror nor the Sub shall take any action, or fail to take any action, that is reasonably likely to result in any of their representations and warranties set forth in this Agreement becoming untrue in any material respect. 27 5.6 Consents. Acquiror, Sub, Sky King and the Sky King Shareholders shall cooperate and use their best efforts to obtain, prior to the Closing, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts as are necessary for the consummation of the transactions contemplated by this Agreement; provided, however, that no loan agreement or contract for borrowed monies shall be repaid and no contract shall be amended materially to increase the amount payable thereunder or otherwise to be materially more burdensome in order to obtain any such consent, approval or authorization without first obtaining the written approval of the other parties hereto. 5.7 Filings. Acquiror, the Sub, Sky King and the Sky King Shareholders shall, as promptly as practicable, make any required filing, and any other required submissions, under any law, statute, order rule or regulation with respect to the Merger and the related transactions and shall cooperate with each other with respect to the foregoing and any shareholder of the Acquiror who has an obligation to file a Schedule 13D shall do so prior to the Closing. 5.8 All Reasonable Efforts. Subject to the terms and conditions of this Agreement and to the fiduciary duties and obligations of the boards of directors of the parties hereto to their respective shareholders, as advised by their counsel, each of the parties to this Agreement shall use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations, or to remove any injunctions or other impediments or delays, legal or otherwise, as soon as reasonable practicable, to consummate the Merger and the other transactions contemplated by this Agreement. 5.9 Public Announcements. Acquiror, the Sub, Sky King and the Sky King Shareholders shall consult with each other before issuing any press release or otherwise making any public statements with respect to the Merger, this Agreement or the other transactions contemplated by this Agreement and shall not issue any other press release or make any other public statement without prior consultation with the other parties, except as may be required by law or, with respect to Acquiror, by obligations pursuant to any listing agreement with an national securities exchange. 28 5.10 Notification of Certain Matters. Sky King and the Sky King Shareholders shall give prompt notice to Acquiror, and Acquiror and the Sub shall give prompt notice to Sky King and the Sky King Shareholders, of (a) the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which would cause any of their representations or warranties in this Agreement to be untrue or inaccurate in any material respect, as to Sky King and the Sky King Shareholders, at or prior to the Closing, and, as to Acquiror and Sub, as of the Closing and (b) any material failure of Sky King and the Sky King Shareholders, on the one hand, or Acquiror or the Sub, on the other hand, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by them under this Agreement; provided, however, that the delivery of any notice pursuant to this Section shall not limit or otherwise affect the remedies available to the party receiving such notice under this Agreement as expressly provided in this Agreement. 5.11 Expenses. Except as otherwise expressly provided herein, all costs and expenses incurred in connection with the Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses whether or not the Merger is consummated. 5.12 Registration Rights. (a) Registrable Securities (i) Promptly after the domestication of Acquiror into a Delaware corporation by virtue of merging with and into Sub and the corresponding conversion of Sub Preferred Stock into shares of Sub Common Stock, Sub shall use its best efforts to prepare and file with the SEC, and use its best efforts to have declared effective, a registration statement (the "Registration Statement") registering under the Act and the securities statutes and regulations of certain states as provided herein, for resale at market, the shares of Sub Common Stock then to be held by the Sky King Shareholders (the "Registrable Securities") and thereafter, subject to the terms and conditions of this Agreement, Sub shall use its best efforts to keep such Registration Statement effective for a period of three (3) years. The Registration Statement may also include other securities of Sub, whether on behalf of Sub or certain other selling stockholders. Restrictions on the resale of the Registrable Securities are identified at Section 5.12(j). From time to time, Sub shall amend or supplement such Registration Statement and the prospectus contained therein as and to the extent necessary to comply with the Act and any applicable state securities statute or regulation. (ii) In the event that the Acquiror is not domesticated by merger into the Sub within one year from the Effective Date, and if thereafter the holders of Sub Preferred Stock elect to exchange such shares of Sub Preferred Stock for shares of Acquiror Common Stock, in the manner and to the extent provided for in the Series A and Series B Certificates of Designation, then the Acquiror shall register the resale of the shares of Acquiror Common Stock received by the holders of the Sub Preferred Stock in the manner discussed in this Section 5.12 as if the obligations of Sub were 29 those of Acquiror. In that event, the terms "Registrable Securities" and "Sub Common Stock" as used in this Section 5.12 shall refer to those shares of Acquiror Common Stock received by the holders of Sub Preferred Stock. (b) Sub shall pay all expenses of the Sub relating to such registration, other than brokerage or underwriting discounts or commissions, if any. (c) It shall be a condition precedent to the obligations of Sub to take any action pursuant to this Section 5.12 that each of the holders of Registrable Securities whose shares are so to be registered shall furnish to Sub in a timely fashion such information regarding such holder, such holder's Registrable Securities and such other factual information as shall be reasonably required to effect the registration of such shares. (d) To the maximum extent permitted by law, Sub shall indemnify and hold harmless each such holder of Registrable Securities from and against any and all claims, damages or liabilities, joint or several, to which such holder becomes subject under the Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse each such holder for any legal or other expenses reasonably incurred by such holder in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplement by Sub) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statement therein not misleading in the circumstances in which they were made, unless such untrue preliminary or amended preliminary prospectus or prospectus in reliance upon and in conformity with information furnished in writing to Sub in connection therewith by such holder expressly for use therein. Promptly after receipt by any such holder of notice of the commencement of any action in respect of which indemnity may be sought against Sub, such holder shall notify Sub in writing of the commencement thereof, and, subject to the provisions of this Section 5.12, Sub shall assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to such holder), and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against Sub. Sub shall not be liable to indemnify any such holder for any settlement of any such action effected with Sub's prior written consent. Sub shall not, except with the approval of each party being indemnified under this Section 5.12, consent to entry of any judgment or enter into any settlement of any claim or litigation in connection with which provisions of this Section 5.12 have been applied which does not include an unconditional term thereof the giving by such claimant or plaintiff to the parties being so indemnified of a release from all liability in respect to such claim or litigation. (e) Each holder whose shares of Registrable Securities are registered pursuant to the provisions of this Section 5.12 shall indemnify and hold harmless Sub, each of its directors and each of its officers from and against any and all claims, damages or liabilities, joint or several, to which 30 they or any of them may become subject under the Act or under any other statute or at common law or otherwise, and, except as hereinafter provided, will reimburse Sub and each director and officer for any legal or other expenses reasonably incurred by them or any of them in connection with investigating or defending any actions, whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the registration statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading in the circumstances in which they were made, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing to Sub in connection therewith by such holder expressly for use therein. Promptly after receipt of notice of the commencement of any action in respect of which indemnity may be sought against such holder, Sub shall notify such holder in writing of the commencement thereof, and such holder shall, subject to the provisions of this Section 5.12, assume the defense of such action (including the employment of counsel, who shall be counsel reasonably satisfactory to Sub) and the payment of expenses insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against such holder. Such holder shall not be liable to indemnify Sub, any director, officer or other person for any settlement of any such action effected without such holder's consent. Such holder shall not, except with the approval of the parties being indemnified under this Section 5.12, consent to entry of any judgment or enter into any settlement of any claim or litigation in connection with which provision of this Section 5.12 have been applied which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the parties being so indemnified of a release from all liability in respect to such claim or litigation. The liability of any such holder under this Section 5.12 shall be limited to the aggregate price at which such holder's shares of Sub Common Stock is sold. (f) In connection with its obligations to register the Registrable Securities as provided in this Section 5.12, Sub shall have no obligation: (i) to assist or cooperate in the offering or disposition of such shares; (ii) except as expressly provided in this Section 5.12, to indemnify or hold harmless the holders of such securities being registered or any underwriter designated by such holders; (iii) to obtain a commitment from an underwriter relative to the sale of such shares; or (iv) to include such Registrable Securities within an underwritten offering of Sub conducted on a firm basis. (g) If in the opinion of a lead or managing underwriter retained by Sub to conduct an underwriting on a firm basis, the resale of such Registrable Securities covered by the registration statement would have an adverse effect upon the completion of an underwritten sale of securities, on behalf of Sub, then, in that event, the holders of the Registrable Securities to be included in such registration statement do hereby agree to the restrictions upon resale requested by a managing underwriter. (h) In connection with its obligations to register the Registrable Securities as provided in this Section 5.12, Sub shall also: 31 (i) furnish to each holder of shares of Registrable Securities that are registered or to be registered pursuant to the provisions of this Section 5.12, such copies of each preliminary and final prospectus and any and all supplements and such other documents as such holder may reasonably request to facilitate the public offering of the shares of Registrable Securities; (ii) use its best efforts to register or qualify such Registrable Securities covered by such registration statement under the applicable securities or "Blue Sky" laws of such jurisdiction in the United States as such holder may reasonably request (not to exceed an aggregate of 10 such jurisdictions); provided, however, that Acquiror shall not be obligated to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to the service of process in suits other than those arising out of the offer or sale of the securities covered by the registration statement in any jurisdiction where it is not then so subject; and (iii) furnish to each such holder upon request a copy of all documents filed and all correspondence from and to the SEC in connection with any such offering. (i) The registration and other rights granted to the holders of Registrable Securities in this Section 5.12 may not be assigned or transferred by such holder without the prior written consent of Sub thereto. (j) The Registrable Securities shall be subject to the following restrictions upon resale: (i) With respect to Sky King Shareholders other than principal shareholders of Sky King (over 10% shareholders) or individuals who become directors or officers of Acquiror or Sub, resale shall be limited to: 25% of the holder's Sub Common Stock no earlier than six (6) months following the Closing; an additional 25% of the holder's Sub Common Stock no earlier than twelve (12) months following the Closing; and the remaining 50% of the holder's Sub Common Stock no earlier than eighteen (18) months following the Closing. (ii) With respect to all principal (over 10%) shareholders of Sky King and individuals who become directors or officers of Acquiror or Sub, no resales shall commence until eighteen (18) months after the Closing. 5.13 Documents at Closing. Each party to this Agreement agrees to execute and deliver at the Closing those documents identified in Section 2.2 which are required to be executed and delivered by such party. 32 5.14 Prohibition on Trading in Acquiror and Sub Stock. Sky King and the Sky King Shareholders acknowledge that the United States securities laws prohibit any person who has received material non-public information concerning the matters which are the subject matter of this Agreement from purchasing or selling the securities of the Acquiror or Sub, or from communicating such information to any person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Acquiror or Sub. Accordingly, the Sky King Shareholders agree that they will not purchase or sell any securities of the Acquiror or Sub, or communicate such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell securities of the Acquiror or Sub, until no earlier than 72 hours following the dissemination of a Current Report on Form 8-K to the SEC announcing the Closing pursuant to this Agreement. 5.15 Anticipated Acquisition of the Principal Assets of PortaCom Wireless, Inc. (a) Acquiror has entered into an Asset Purchase Agreement with PortaCom Wireless, Inc. ("PortaCom") to purchase from PortaCom all of its interest in and to 2,000,000 shares of the common stock and 4,000,000 warrants of Metromedia Asia Corporation (the "PortaCom Transaction") in consideration for 5,300,000 shares of Acquiror Common Stock and up to $700,000 in immediately available funds. A copy of the Asset Purchase Agreement shall be attached as an Exhibit to this Agreement. Acquiror will continue to take whatever reasonable measures are necessary to complete the PortaCom Transaction. Sky King has been advised that there can be no assurances that the PortaCom Transaction will be completed timely, if at all, since a closing thereunder is dependent upon PortaCom shareholder and regulatory approvals, as well as securing certain waivers from Metromedia Asia Corporation ("MAC") permitting transfer of the MAC shares and warrants. (b) In connection with the PortaCom Transaction, Acquiror has agreed to advance amounts up to $700,000 to PortaCom (the "PortaCom Advances") to be applied by PortaCom against certain of its outstanding indebtedness. Towards that end, as of the date of the Closing hereof, Acquiror must have funded at least $300,000 of the PortaCom Advances. In recognition of the possibility that Acquiror may need to fund up to $400,000 of the PortaCom Advances after the Closing hereof, the parties hereto agree as follows: (i) In the event that on the date of the Closing, Acquiror has not advanced all of the PortaCom Advances to PortaCom, then: (A) On or before the Closing, one or more shareholders of Acquiror shall voluntarily surrender to Acquiror, without payment therefor, that number of shares of Acquiror Common Stock (the "Surrendered Shares") valued at the amount of the remainder of the PortaCom Advances (the "Remaining PortaCom Advances"). For the purposes of this paragraph, the shares of Acquiror Common Stock shall be valued at $3.00 per share; and 33 (B) From the date of the Closing and until the date of the closing of the PortaCom Transaction, Acquiror shall use diligent efforts to sell the Surrendered Shares in one or more private placement transactions (the "Private Placement Transactions") in order to, and only to the extent required to, secure cash proceeds sufficient to satisfy the obligation to advance the Remaining PortaCom Advances to PortaCom. (1) If and to the extent that Acquiror fails to receive the entire amount of the Remaining PortaCom Advances through the Private Placement Transactions by the date of the closing of the PortaCom Transaction, then Acquiror shall make any such remaining payment out of its then-existing cash assets. Thereafter, Acquiror shall be entitled to sell any remaining Surrendered Shares to reimburse itself for funds expended in connection with the payment of the Remaining PortaCom Advances or retain any remaining Surrendered Shares in its treasury. (2) In the event that Acquiror receives through the Private Placement Transactions more than the amount of the Remaining PortaCom Advances, then Acquiror shall deliver to the former holder(s) of the Surrendered Shares (in the proportion of their shares so surrendered), any such excess amount. (3) In the event that Acquiror raises sufficient funds from the Private Placement Transactions to pay or advance the entire amount of the Remaining PortaCom Advances before all of the Surrendered Shares are sold through the Private Placement Transactions, then Acquiror shall, for no consideration therefor, re-issue to the former holder(s) of the Surrendered Shares (in the proportion of their shares so surrendered), any such remaining Surrendered Shares. 5.16 Production of Schedules and Exhibits. Within fifteen (15) days of the execution of this Agreement each of the parties hereto shall produce to the other parties, to the extent not previously done, all of the Schedules and Exhibits required to be produced pursuant to this Agreement. The Schedules and Exhibits produced subsequent to the execution of this Agreement, shall be given such force and effect as though such Schedules and Exhibits were produced upon execution of this Agreement. 5.17 Acknowledgment of Approvals. By virtue of their respective signatures to this Agreement, Acquiror, Sub, Sky King and the Sky King Shareholders acknowledge their approval of this Agreement and their consent to the consummation of the transactions identified herein. ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER 34 6.1 Conditions to Obligations of Sky King and the Sky King Shareholders. The obligations of Sky King and the Sky King Shareholders to consummate the Merger and the other transactions contemplated to be consummated by it at the Closing are subject to the satisfaction (or waiver by Sky King and the Sky King Shareholders) at or prior to the Closing (or at such other time prior thereto as may be expressly provided in this Agreement) of each of the following conditions: (a) Acquiror shall have sold, transferred or otherwise disposed of all of its present assets and shall as of the Closing have assets consisting of at least: (i) $1 million in cash or other liquid assets; and (ii) notes receivable of not less than $4 million with maturities on or before 1 August, 1999. (b) Acquiror shall have settled and/or satisfied all outstanding obligations or liabilities so that as of the Closing Acquiror shall have no obligations or liabilities except trade payables incurred in connection with this transaction, those in connection with the PortaCom Transaction and those in the ordinary course, which in the aggregate shall not exceed $250,000. Notwithstanding anything to the contrary contained in the foregoing sentence, if Acquiror has not advanced the entire amount of the PortaCom Advances to PortaCom on or before the date of the Closing, then on or before the date of the Closing, Acquiror shall have (i) advanced a minimum of $300,000 of the PortaCom Advances to PortaCom and (ii) satisfied the provisions of Section 5.15(b)(i)(A). (c) On or before the Closing, Acquiror shall have secured general releases from each of its directors and officers agreeing to release Acquiror from any and all claims, liabilities, obligations and demands in connection with the transactions contemplated by this Agreement. (d) The representations and warranties of Acquiror and the Sub set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time. (e) Each of Acquiror and the Sub shall have complied in a timely manner and in all material respects with the respective covenants and agreements set out in this Agreement. (f) The Merger shall have been approved by Sky King and the Sky King Shareholders in accordance with the provisions of the CBCA. (g) On or before the Closing, the officers and directors of Acquiror shall have tendered their immediate resignations from office and shall have in conjunction therewith reconstituted the Board of Directors to consist of a maximum of five (5) members and shall have nominated to Acquiror's Board of Directors two (2) individuals designated by the holders of the Sub Preferred Stock and the VDC Designee shall have been designated by the Acquiror's Board of Directors (as such Board was constituted immediately prior to the Closing). 35 (h) Sky King and the Sky King Shareholders shall be reasonably satisfied that the Merger results in a tax-free reorganization under Section 368 of the Code. (i) Acquiror shall enter into Employment Agreements with each of Frederick A. Moran and James Roberts substantially in accordance with the terms contained within Exhibit 2.2(b)(xii). (j) Acquiror shall have executed and delivered the Escrow Agreement to Sky King and the Escrow Agent. (k) There shall be delivered to Sky King and the Sky King Shareholders an officer's certificate of Acquiror and Sub to the effect that all of the respective representations and warranties of Acquiror and Sub set forth herein are true and complete in all material respects as of the Closing, and the Acquiror and Sub have complied in all material respects with their covenants and agreements set forth herein that are required to be complied with by the Closing. (l) Sky King shall have completed prior to the Closing, to its satisfaction, a due diligence review of the financial condition, results of operations, properties, assets, liabilities, business and prospects of Acquiror. (m) All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filings with, and all necessary consents or approvals of, all federal, state and local governmental authorities and agencies, as are required under this Agreement, applicable law or any applicable contract or agreement (other than as contemplated by this Agreement) to complete the Merger shall have been secured. (n) No statute, rule, regulation, executive order, decree, injunction or restraining order shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or governmental authority that prohibits or restricts the consummation of the Merger or the related transactions. 6.2 Conditions to Acquiror's and the Sub's Obligations. The obligations of Acquiror and the Sub to consummate the Merger and the other transactions contemplated to be consummated by it at the Closing are subject to the satisfaction (or waiver by Acquiror) at or prior to the Closing (or at such other time prior thereto as may be expressly provided in this Agreement) of each of the following conditions: (a) On or before the Closing, Sky King shall have secured general releases from each of its directors, officers, consultants, employees and shareholders agreeing to: (i) release Sky King, Acquiror and Sub from any and all claims, liabilities, obligations and demands; (ii) terminate any employment agreements; and (iii) terminate any shareholder agreements. 36 (b) On or before the Closing, Sky King shall have secured the resignation of each of its directors and officers except George Finn who will remain the President of Sky King. (c) Acquiror shall have executed employment agreements with Frederick A. Moran and James Roberts substantially in accordance with the terms contained within Exhibit 2.2(b)(xii). (d) No Sky King Shareholder shall have filed with Sky King, prior to the Sky King shareholder meeting at which a vote is to be taken with respect to a proposal to approve this Agreement, a written notice of intent to demand payment for his shares if the proposed action is effectuated, as required by Section 33-861 of the CBCA in order for such shareholder to perfect the right to dissent from such proposed action. (e) The representations and warranties of Sky King and the Sky King Shareholders set out in this Agreement shall be true and correct in all material respects at and as of the time of the Closing as though such representations and warranties were made at and as of such time. (f) Sky King and the Sky King Shareholders shall have complied in a timely manner and in all material respects with its covenants and agreements set out in this Agreement. (g) There shall be delivered to Acquiror and Sub an officer's certificate of Sky King to the effect that all of the representations and warranties of Sky King set forth herein are true and complete in all respects as of the Closing, and that Sky King has complied in all material respects with covenants and agreements set forth herein required to be complied with by the Closing, and there shall be delivered to Acquiror and Sub a certificate signed by the Sky King Shareholders to the effect that the representations and warranties of the Sky King Shareholders set forth herein are true and correct in all material respects and that the Sky King Shareholders have complied in all material respects with their covenants and agreements set forth herein required to be complied with by Closing. (h) Sky King and the Sky King Shareholders shall have executed and delivered the Escrow Agreement to Acquiror and the Escrow Agent. (i) Acquiror and Sub shall have completed prior to the Closing, to their satisfaction, a due diligence review of the financial condition, results of operations, properties, assets, liabilities, businesses and prospects of Sky King. (j) All director, shareholder, lender, lessor and other parties' consents and approvals, as well as all filings with, and all necessary consents or approvals of, all federal, state and local governmental authorities and agencies, as are required under this Agreement, applicable law or any applicable contract or agreement (other than as contemplated by this Agreement) to complete the Merger shall have been secured. 37 (k) No statute, rule, regulation, executive order, decree, injunction or restraining order shall have been enacted, entered, promulgated or enforced by any court of competent jurisdiction or governmental authority that prohibits or restricts the consummation of the Merger or the related transactions. (l) Acquiror's and Sub's Board of Directors, and shareholders to the extent necessary, shall have approved the Merger in accordance with the DGCL. (m) The Board of Directors and Sky King Shareholders shall have approved the Merger in accordance with the CBCA. ARTICLE VII INDEMNIFICATION 7.1 Indemnification. (a) Sky King Shareholders. The Sky King Shareholders shall indemnify, defend and hold harmless Acquiror and Sub from and against any and all demands, claims, actions or causes of action, judgments, assessments, losses, liabilities, damages or penalties and reasonable attorneys' fees and related disbursements (collectively, "Claims") incurred by Acquiror or Sub which arise out of or result from a misrepresentation, breach of warranty, or breach of any covenant of Sky King or the Sky King Shareholders contained herein or in the Schedules annexed hereto or in any deed, exhibit, closing certificate, schedule or any ancillary certificates or other documents or instruments furnished by Sky King or the Sky King Shareholders pursuant hereto or in connection with the transactions contemplated hereby or thereby. (b) Acquiror and Sub. Acquiror and Sub shall indemnify, defend and hold harmless Sky King and the Sky King Shareholders from and against any and all Claims, as defined at Subsection 7.1(a) above, incurred by Sky King and/or the Sky King Shareholders which arise out of or result from a misrepresentation, breach of warranty or breach of any covenant of Acquiror and Sub contained herein or in the Schedules annexed hereto or in any deed, exhibit, closing certificate, schedule or any ancillary certificates or other documents or instruments furnished by Acquiror or the Sub pursuant hereto or in connection with the transactions contemplated hereby or thereby. (c) Methods of Asserting Claims for Indemnification. All claims for indemnification under this Agreement shall be asserted as follows: (i) Third Party Claims. In the event that any Claim for which a party (the "Indemnitee") would be entitled to indemnification under this Agreement is asserted against or sought to be collected from the Indemnitee by a third party the Indemnitee shall promptly notify the other party (the "Indemnitor") of such Claim, specifying the nature thereof, the applicable 38 provision in this Agreement or other instrument under which the Claim arises, and the amount or the estimated amount thereof (the "Claim Notice"). The Indemnitor shall have thirty (30) days (or, if shorter, a period to a date not less than ten (10) days prior to when a responsive pleading or other document is required to be filed but in no event less than ten (10) days from delivery or mailing of the Claim Notice) (the "Notice Period") to notify the Indemnitee (a) whether or not it disputes the Claim and (b) if liability hereunder is not disputed, whether or not it desires to defend the Indemnitee. If the Indemnitor elects to defend by appropriate proceedings, such proceedings shall be promptly settled or prosecuted to a final conclusion in such a manner as to avoid any risk of damage to the Indemnitee; and all costs and expenses of such proceedings and the amount of any judgment shall be paid by the Indemnitor. If the Indemnitee desires to participate in, but not control, any such defense or settlement, it may do so at its sole cost and expense. If the Indemnitor has disputed the Claim, as provided above, and shall not defend such Claim, the Indemnitee shall have the right to control the defense or settlement of such Claim, in its sole discretion, and shall be reimbursed by the Indemnitor for its reasonable costs and expenses of such defense. (ii) Non-Third Party Claims. In the event that the Indemnitee should have a Claim for indemnification hereunder which does not involve a Claim being asserted against it or sought to be collected by a third party, the Indemnitee shall promptly send a Claim Notice with respect to such Claim to the Indemnitor. If the Indemnitor does not notify the Indemnitee within the Notice Period that it disputes such Claim, the Indemnitor shall pay the amount thereof to the Indemnitee. If the Indemnitor disputes the amount of such Claim, the controversy in question shall be submitted to arbitration pursuant to Section 9.8 hereafter. ARTICLE VIII TERMINATION 8.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Closing: (a) by mutual written consent of the board of directors of Acquiror, the Sub, Sky King and the Sky King Shareholders: (b) by any of Acquiror, the Sub, Sky King or the Sky King Shareholders: (i) if the Closing shall not have occurred on or before March 31, 1998; provided, however, that the right to terminate this Agreement under this Section 8.1(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before that date; or 39 (ii) if any court of competent jurisdiction, or any governmental body, regulatory or administrative agency or commission having appropriate jurisdiction shall have issued an order, decree or filing or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and non-appealable. (c) by Sky King and the Sky King Shareholders if any of the conditions specified in Section 6.1 have not been met and the sole remedy of Sky King and the Sky King Shareholders in that event, shall be either to waive such failure and proceed to close hereunder, or to terminate this Agreement in which event neither Sky King and the Sky King Shareholders nor Acquiror shall have any claim or action against the other; or (d) by Acquiror and Sub if any of the conditions specified in Section 6.2 have not been met and the sole remedy of Acquiror and Sub in that event, shall be either to waive such failure and proceed to close hereunder, or to terminate this Agreement in which event neither Acquiror and the Sub nor Sky King and the Sky King Shareholders shall have any claim or action against the other. 8.2 Notice and Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 8.1, written notice thereof shall forthwith be given to the other party or parties specifying the provision pursuant to which such termination is made, and this Agreement shall forthwith become void and have no effect without any liability on the part of any party or its directors, officers or shareholders, except for the provisions of this Section 8.2 and Sections 5.4, 5.9 and 5.11, which shall survive any termination of this Agreement. Nothing contained in this Section 8.2 shall relieve any party from any liability for any breach of this Agreement provided that the sole remedy available to Sky King and the Sky King Shareholders for any breach of this Agreement by Acquiror or Sub shall be as set forth in Section 7.1 hereof. 8.3 Extension; Waiver. Any time prior to the Closing, the parties may (a) extend the time for the performance of any of the obligations or other acts of any other party under or relating to this Agreement; (b) waive any inaccuracies in the representations or warranties by any other party or (c) waive compliance with any of the agreements of any other party or with any conditions to its own obligations. Any agreement on the part of any other party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 8.4 Amendment and Modification. This Agreement may be amended, whether before or after the vote of the Sky King Shareholders or shareholders of Acquiror, by written agreement of Acquiror, the Sub, Sky King and the Sky King Shareholders; 40 provided, however, that after the approval, if any, of this Agreement by the Sky King Shareholders, no such amendment shall reduce or change the consideration to be received by any Sky King Shareholder in connection with the Merger as set out in Section 1.3 hereof or shall otherwise adversely affect the rights under this Agreement of the Sky King Shareholders without the approval of such adversely affected shareholders. This Agreement may not be amended except by an instrument in writing signed on behalf of Acquiror, the Sub, Sky King and the Sky King Shareholders. ARTICLE IX MISCELLANEOUS 9.1 Survival of Representations and Warranties. The respective representations and warranties of Acquiror, the Sub, Sky King and the Sky King Shareholders shall not be deemed waived or otherwise affected by any investigation made by any party. Each representation and warranty shall survive the Closing through all applicable statutes of limitations. 9.2 Notices. All notices requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date if delivered personally, or upon the second business day after it shall have been deposited by certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows (or at such other address or facsimile number for a party as shall be specified by like notice): (a) if to Sky King at: Fred Moran, Chairman Sky King Communications, Inc. 25 Doubling Road Greenwich, CT 06830 Facsimile: (203) 869-1430 with a copy to: George Finn, President Sky King Communications, Inc. 25 Doubling Road Greenwich, CT 06830 Facsimile: (203) 869-1430 41 if to Acquiror or the Sub at: Graham Ferguson Lacey VDC Corporation Ltd. Bishopscourt, Kirk Michael Isles of Man British Isles with a copy to: Stephen M. Cohen, Esquire Buchanan Ingersoll Professional Corporation Eleven Penn Center 1835 Market Street, 14th Floor Philadelphia, PA 19103 Facsimile: (215) 665-8760 9.3 Entire Agreement; Assignment. This Agreement, including all Exhibits and Schedules hereto, constitutes the entire Agreement among the parties with respect to its subject matter and supersedes all prior agreements and understandings, both written and oral, among the parties or any of them with respect to such subject matter and shall not be assigned by operation of law or otherwise. 9.4 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns. Nothing in this Agreement is intended to confer on any person other than the parties to this Agreement or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.5 Headings. The descriptive headings of the sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. 9.6 Counterparts. This Agreement may be executed in two or more counterparts and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 42 9.7 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the laws that might otherwise govern under principles of conflicts of laws applicable thereto. 9.8 Arbitration. If a dispute arises as to the interpretation of this Agreement, it shall be decided finally in an arbitration proceeding conforming to the Rules of the American Arbitration Association applicable to commercial arbitration then in effect at the time of the dispute. The arbitration shall take place in Philadelphia, Pennsylvania. The decision of the Arbitrators shall be conclusively binding upon the parties and final, and such decision shall be enforceable as a judgment in any court of competent jurisdiction. The parties shall share equally the costs of the arbitration. 9.9 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.10 Release and Discharge. By virtue of their execution of this Agreement, as of the Closing and thereafter, any and all Sky King directors, officers and shareholders hereby agree to release, remise and forever discharge Sky King from and against any and all debts, obligations, liabilities and amounts owing from Sky King prior to the Closing, and Sky King is not obligated to take any action or make any payments to third parties on behalf of the Sky King Shareholders. 9.11 Certain Definitions. As used herein: (a) "Act" means the Securities Act of 1933, as amended; (b) "Affiliate" shall have the meanings ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended to date (the "Exchange Act"); 43 (c) "Business Day" shall mean any day other than a Saturday, Sunday or a day on which federally chartered financial institutions are not open for business in the City of Philadelphia; (d) "Dissenting Shares" shall mean the shares of Sky King Common Stock held by the Dissenting Shareholders, as such term is defined in Section 1.5; (e) "Employee Benefit Plan" means any employee benefit plan (as defined in ss. 3(3) of the Employee Retirement Income Security Act of 1974, as amended, or any employment contract, employee loan, incentive compensation, profit sharing, retirement, pension, deferred compensation, severance, termination pay, stock option or purchase plan, guaranteed annual income plan, fund or arrangement, payroll incentive, policy, fund, agreement or arrangement, non-competition or consulting agreement, hospitalization, disability, life or other insurance plan, or other employee fringe benefit program or plan, or any other plan, payroll practice, policy fund agreement or arrangement similar to or in the nature of the foregoing, oral or written; (f) "Escrow Agent" means that person or entity mutually agreed upon by the parties hereto to act as escrow agent to hold, safeguard and disburse the Escrow Shares (as such term is defined in Section 1.3) pursuant to the terms and conditions of this Agreement; (g) "Knowledge" shall mean the actual current knowledge of the executive management of the party to this Agreement to whom knowledge is ascribed together with the knowledge such executive management should reasonably be expected to have in the performance of its duties and responsibilities; (h) "Material Adverse Effect" shall mean any adverse effect on the business, condition (financial or otherwise) or results of operation of the relevant party and its subsidiaries, if any, which is material to such party and its subsidiaries, if any, taken as a whole; (i) "Person" means any individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or institution thereof; and (j) "Subsidiary" shall mean, when used with reference to an entity, any corporation, a majority of the outstanding voting securities of which is owned directly or indirectly, or a majority of the board of directors of which may be elected, by such entity. IN WITNESS WHEREOF, Acquiror, Sub, Sky King and the Sky King Shareholders have caused this Agreement to be signed by their respective officers hereunto duly authorized, effective as of the date first written above.
Attest: VDC CORPORATION LTD. 44 By:____________________________ By: /s/ Graham Ferguson Lacey -------------------------------- Graham Ferguson Lacey, President Attest: VDC (DELAWARE), INC. By:____________________________ By: /s/ Andrew Panzo -------------------------------- Andrew Panzo, President [signatures continue onto next page] Attest: SKY KING COMMUNICATIONS, INC. By:____________________________ By: /s/ Frederick A. Moran -------------------------------- Frederick A. Moran, Chairman Attest: By: /s/ James Roberts -------------------------------- By:____________________________ James Roberts, Chief Operating Officer Witness SKY KING SHAREHOLDERS _____________________________________ /s/ Frederick W. Moran -------------------------------- Name:________________________________ Signature Address:______________________________ Name: Frederick W. Moran _____________________________________ Address: :_____________________________ --------------------------------------- Ownership Percentage: 14.2% Witness _____________________________________ /s/ Clayton E. Moran -------------------------------- Name:________________________________ Signature Address:______________________________ Name: Clayton E. Moran _____________________________________ Address:_____________________________ ------------------------------------- Ownership Percentage: 14.2% Witness _____________________________________ /s/ Kent F. Moran -------------------------------- Name:________________________________ Signature Address:______________________________ Name: Kent F. Moran _____________________________________ Address:_____________________________ ------------------------------------- 45 Ownership Percentage: 13.0% [signatures continue onto next page] 46 Witness _____________________________________ /s/ Luke F. Moran -------------------------------- Name:________________________________ Signature Address:______________________________ Name: Luke F. Moran _____________________________________ Address:_____________________________ Ownership Percentage: 13.0% Witness _____________________________________ /s/ Frederick A. Moran -------------------------------- Name:________________________________ Signature (Frederick A. Moran) Address:______________________________ _____________________________________ /s/ Joan B. Moran -------------------------------- Name:________________________________ Signature (Joan B. Moran) Address:______________________________ Name: Frederick A. and Joan B. Moran _____________________________________ Address: 25 Doubling Road Greenwich, CT 06830 Ownership Percentage: .83% Witness /s/ George Finn -------------------------------- _____________________________________ Signature Name:________________________________ Name: George Finn Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .55% Witness /s/ James C. Roberts, Trustee -------------------------------- _____________________________________ Signature Name:________________________________ Name: Roberts Family Trust Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: 27.5% [signatures continue onto next page] 47 Witness /s/ Henry Jacobs -------------------------------- _____________________________________ Signature Name:________________________________ Name: Henry Jacobs Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .72% Witness /s/ Leon G. Cooperman -------------------------------- _____________________________________ Signature Name:________________________________ Name: Watchung Road Associates, L.P. Address:______________________________ By: Leon G. Cooperman, General Partner _____________________________________ Address:_____________________________ ------------------------------------- Ownership Percentage: 1.1% Witness /s/ Wayne Perry -------------------------------- _____________________________________ Signature Name:________________________________ Name: Wayne Perry Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .66% Witness /s/ David Wheeler -------------------------------- _____________________________________ Signature Name:________________________________ Name: David Wheeler Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .07% [signatures continue onto next page] 48 Witness /s/ Charles Glazer -------------------------------- _____________________________________ Signature Name:________________________________ Name: Charles Glazer Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .27% Witness /s/ Robert de Rose -------------------------------- _____________________________________ Signature Name:________________________________ Name: Robert de Rose IRA Address:______________________________ Address:_____________________________ - ------------------------------------- ------------------------------------- Ownership Percentage: .27% Witness /s/ Jack Daniels -------------------------------- _____________________________________ Signature Name:________________________________ Name: Daniels Tech, LLC Address:______________________________ By: Jack Daniels, Managing Partner _____________________________________ Address:_____________________________ Ownership Percentage: .11% [signatures continue onto next page] Witness /s/ Jose Carvalho Soares -------------------------------- _____________________________________ Signature Name:________________________________ Name: Jose Carvalho Soares Address:______________________________ Address: Rua Carlos Benedetti 78 _____________________________________ Nilopolis - Rio de Janeiro Brazil Cep 26535 Ownership Percentage: .8% [signatures continue onto next page] 49 Witness /s/ Vicki Walters, Trustee -------------------------------- _____________________________________ Signature Name:________________________________ Name: Capital Growth Trust Address:______________________________ Vicki Walters, Trustee _____________________________________ Address: 2028 Ryans Run Road Lansdale, PA 19446 Ownership Percentage: 6.0 % Witness /s/ Harold Chaffe -------------------------------- _____________________________________ Signature Name:________________________________ Name: Godwin Finance Ltd. Address:______________________________ Name: Harold Chaffe _____________________________________ Title: Financial Controller Address: Whitehill House Newby Road Industrial Estate Newby Road Hazel Grove Stockport, Cheshire England SK7 5DA Ownership Percentage: 3.6% Witness /s/ Bruno DiSpirito -------------------------------- _____________________________________ Signature Name:________________________________ Name: Gibralt Holdings Ltd. Address:______________________________ By: Bruno DiSpirito _____________________________________ Title: Vice President Address: 1177 Hastings Street Suite 2000 Vancouver, British Columbia V6E 2K3 Ownership Percentage: 3.0%
50 Schedule 4.1(m) --------------- Lease between Sky King Communications, Inc. as lessee and D. Loschiava, trustee, as lessor for a residence located at 71 Long Meadow, Riverside, CT for James C. Roberts. The term of the lease is from February 1998 through June 1998, and the monthly rental payment is $4,150. 51 Schedule 4.1(p) --------------- 1. Lease between Sky King Communications, Inc. as lessee and D. Loschiava, trustee, as lessor for a residence located at 71 Long Meadow, Riverside, CT for James C. Roberts. The term of the lease is from February 1998 through June 1998, and the monthly rental payment is $4,150. 2. Sky King Communications, Inc. paid James C. Roberts a $25,000 sign-on bonus in January 1998 after he became Sky King's Chief Operating Officer in December 1997. 52 Schedule 4.2(d)(i) ------------------ VDC Corporation Ltd. Warrants -----------------------------
Number of Warrants Expiration Date Exercise Price - ------------------ --------------- -------------- 455,000 June 30, 1998 $4 per share 250,000 September 30, 1998 $4 per share 45,000 June 30, 1998 $5 per share
53 Schedule 4.2(g) --------------- None 54 Schedule 5.5(a)(ix) ------------------- Sky King Communications, Inc. plans to acquire Blue Sky International LLC and the Sakalin Telecom Group of companies. 55 EX-99.2 3 EX-99.2 EXHIBIT 2 AMENDMENT TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER THIS AMENDMENT TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Amendment"), is made and entered into as of March 6, 1998, by and among VDC CORPORATION LTD., a Bermuda corporation ("Acquiror"), VDC (DELAWARE), INC., a Delaware corporation and wholly-owned subsidiary of Acquiror ("Sub"), SKY KING COMMUNICATIONS, INC., a Connecticut corporation ("Sky King"), and those individuals and entities whose names appear on the signature page hereof in their capacity as holders of the outstanding common stock of Sky King (the "Sky King Shareholders"). R E C I T A L S: ---------------- WHEREAS, the parties hereto have entered into an Amended and Restated Agreement and Plan of Merger effective as of December 10, 1997 (the "Merger Agreement") pursuant to which Sub shall merge with and into Sky King (the "Merger"); WHEREAS, the parties hereto desire to amend the Merger Agreement in the manner set forth herein effective as of the date hereof; and WHEREAS, any capitalized term used but not defined herein shall have the meaning ascribed to such term in the Merger Agreement. NOW, THEREFORE, in consideration of the foregoing premises and agreements contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that the Merger Agreement is hereby amended as follows: 1. Section 6.1(a)(i) of the Merger Agreement is amended to require that Acquiror shall have assets at the Closing consisting of at least $600,000.00 in cash or other liquid assets and the right to receive $370,000.00 in immediately available funds from Tasmin Limited by March 13, 1998. In the event the remaining funds are not timely received from Tasmin Limited, the Acquiror may draw upon such number of Investment Banking Shares as are necessary to satisfy any such deficiency in funding to the extent of Investment Banking Shares at the rate of $2.00 per share. Assets available at Closing will also include approximately 50,000 shares of the Common Stock of PortaCom that were acquired for approximately $30,000. 2. Wayne Perry, a Sky King Shareholder, shall be deemed to have not given any of the representations and warranties of Sky King and the Sky King Shareholders set forth in Article IV of the Merger Agreement. 3. Schedule 4.2(d)(i) to the Merger Agreement is hereby amended and restated in its entirety by the following Schedule: Schedule 4.2(d)(i) ------------------ VDC Corporation Ltd. Warrants -----------------------------
Number of Warrants Exercise Price Expiration Date ------------------ -------------- --------------- 45,000 $5.00 Aug. 30, 1998 85,000 $4.00 Aug. 30, 1998 41,110 $4.00 Aug. 30, 1998 90,909 $4.00 Aug. 30, 1998 90,909 $4.00 Aug. 30, 1998 9,890 $4.00 Aug. 30, 1998 250,000 $4.00 Aug. 30, 1998 30,000 $4.00 Aug. 30, 1998 100,000 $4.00 Aug. 30, 1998 145,728 $4.00 Aug. 30, 1998 50,000 $4.00 Aug. 30, 1998 ------ 938,546
4. Paragraph 5.15 of the Merger Agreement shall be amended to provide that Acquiror has funded at least $240,000 of the PortaCom Advances. Subparagraph (i)(A) of Paragraph 5.15 shall be amended to provide that the Investment Banking Shares shall serve as an escrow fund for the payment of the Remaining PortaCom Advances or that the Remaining PortaCom Advances may be satisfied upon the early collection of outstanding subscriptions receivable. See Paragraph 5 below. The remainder of Paragraph 5.15 shall remain in full force and effect. 5. Paragraph 4.2(L) of the Merger Agreement provides that the Acquiror has agreed to pay an investment banking fee in stock equal to 5% of the Merger Consideration or 500,000 shares of Acquiror Common Stock for arranging this transaction (the "Investment Banking Shares"). This Amendment will confirm that the Investment Banking Shares will be paid through the issuance by Acquiror following the transaction of 500,000 shares of Common Stock to the following persons: FAC Enterprises, Inc. - 185,000 shares; KAB Investments, Inc. - 185,000 shares; SPH Investments, Inc. - 70,000 shares; and SPH Equities, Inc. - 60,000 shares. Notwithstanding the above, the Investment Banking Shares will not be distributed at the Closing, and instead, will be subject to offset in the following manner: (i) to the extent the Remaining PortaCom Advances are not satisfied by the early collection of outstanding subscriptions receivable, the Investment Banking Shares will serve as an escrow fund upon which the Acquiror will be able to draw from these shares in order to sell shares in one or more private placement transactions in order to, and to the extent necessary, to secure cash proceeds sufficient to satisfy the obligation to advance the Remaining PortaCom Advances identified within Subparagraph 5.15(b)(i)(A) of the Merger Agreement. To the extent the Remaining PortaCom Advances are satisfied, then, with the exception of Investment Banking Shares that are otherwise serving as an escrow fund under Paragraph 1 hereof, the remaining Investment Banking Shares may be issued in the manner identified above. 2 6. Notwithstanding anything to the contrary in the Merger Agreement, the Merger shall become effective as of the filing of a Certificate of Merger with the Secretary of State of the State of Connecticut in accordance with Section 38-821 of the CBCA and a Certificate of Merger with the Secretary of State of the State of Delaware in accordance with Section 252 of the DGCL; and confirmation that both Certificates of Merger have become effective as of such filing date; and at such time the Merger shall be deemed completed and such time shall be referred to herein as the "Effective Time." 7. Except as otherwise set forth herein, the terms of the Merger Agreement shall remain in full force and effect. 8. This Amendment may be executed in two or more counterparts and delivered via facsimile, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9. This Amendment shall be governed by and construed in accordance with the laws of Bermuda, without regard to the laws that might otherwise govern under principles of conflicts of laws applicable thereto. IN WITNESS WHEREOF, Acquiror, Sub, Sky King and the Sky King Shareholders have caused this Amendment to be signed by their respective officers hereunto duly authorized, effective as of the date first written above. VDC CORPORATION LTD. By: /s/ Graham Ferguson Lacey ----------------------------- Graham Ferguson Lacey, President VDC (DELAWARE), INC. By: /s/ Andrew Panzo --------------------- Andrew Panzo, President [Signatures continue on next page] 3 SKY KING COMMUNICATIONS, INC. By: /s/ Frederick A. Moran --------------------------- Frederick A. Moran, Chief Executive Officer By: /s/ James Roberts ---------------------- James Roberts, Chief Operating Officer SKY KING SHAREHOLDERS (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Frederick W. Moran (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Clayton F. Moran (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Kent F. Moran (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Luke F. Moran (*) /s/ Frederick A. Moran ---------------------------- Signature (Frederick A. Moran) (*) /s/ Frederick A. Moran ---------------------------- Signature (Joan B. Moran) Name: Frederick A. and Joan B. Moran [Signatures continue on next page] 4 (*) /s/ Frederick A. Moran ---------------------------- Signature Name: George Finn (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Roberts Family Trust (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Henry Jacobs (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Watchung Road Associates, L.P. By: Leon G. Cooperman, General Partner (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Wayne Perry (*) /s/ Frederick A. Moran ---------------------------- Signature Name: David Wheeler (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Charles Glazer (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Robert de Rose IRA By: Cowen & Co., Trustee [Signatures continue on next page] 5 (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Daniels Tech, LLC By: Jack Daniels, Managing Partner (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Jose Carvalho Soares (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Capital Growth Trust By: Vicki Walters, Trustee (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Godwin Finance Ltd. By: Harold Chaffe, Financial Controller (*) /s/ Frederick A. Moran ---------------------------- Signature Name: Gibralt Holdings Ltd. By: Bruno DiSpirito Title: Vice President (*) By Power of Attorney granted to Frederick A. Moran. 6 EX-99.3 4 EX-99.3 EXHIBIT 3 VDC COMMUNICATIONS, INC. ---------- Securities Purchase Agreement ---------- Shares of Common Stock at $0.75 per Share ---------- October 27, 1999 CONFIDENTIAL - ------------ SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement" or the "Securities Purchase Agreement") is entered into as of the 27th day of October, 1999, by and between VDC Communications, Inc., a Delaware corporation ("VDC" or the "Company"), and the investor whose name appears at the end of this Agreement ("Purchaser" or "Subscriber"). R E C I T A L S: ---------------- The Company wishes to obtain additional working capital and the Purchaser desires to provide such working capital to the Company through the purchase of certain shares of the Company's common stock, $.0001 par value per share (the "Common Stock"), being privately offered by the Company. NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Sale and Purchase of Shares. Subject to the terms and conditions hereof, the Company agrees to issue and sell, and the Purchaser agrees to purchase that number of shares of Common Stock (the "Shares") identified on the signature page hereof at a purchase price of $0.75 per share. The total purchase price is set forth on the signature page hereof (the "Purchase Price"). The Purchase Price is payable upon subscription in cash, check or wire transfer. If paying by check, the check should be made payable to "VDC Communications, Inc." and delivered to VDC Communications, Inc. at 75 Holly Hill Lane, Greenwich, Connecticut, 06830. No broker, investment banker or any other person will receive from the Company any compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares hereunder. 2. Description of the Shares. (a) Restricted Securities. The Shares shall be "restricted securities" as that term is defined under Rule 144 of the Securities Act of 1933, as amended (the "Act"), and may not be offered for sale or sold or otherwise transferred in a transaction which would constitute a sale thereof within the meaning of the Act unless (i) such security has been registered for sale under the Act and registered or qualified under applicable state securities laws relating to the offer and sale of securities; or (ii) exemptions from the registration requirements of the Act and the registration or qualification requirements of all such state securities laws are available and the Company shall have received an opinion of counsel that the proposed sale or other disposition of such securities may be effected without registration under the Act and would not result in any violation of any applicable state securities 2 laws relating to the registration or qualification of securities for sale, such counsel and such opinion to be satisfactory to the Company. (b) Voting Rights; Dividends. Holders of Common Stock of the Company have equal rights to receive dividends when, as, and if declared by the Board of Directors out of funds legally available therefor. Holders of Common Stock of the Company have one vote for each share held of record and do not have cumulative voting rights. (c) Liquidation; Redemption. Holders of Common Stock of the Company are entitled upon liquidation of the Company to share ratably in the net assets available for distribution, subject to the rights, if any of holders of any preferred stock of the Company then outstanding. Shares of Common Stock of the Company are not redeemable and have no preemptive or similar rights. All outstanding shares of Common Stock of the Company are fully paid and nonassessable. (d) Restriction Upon Resale. The Subscriber hereby agrees that the Shares shall be subject to restrictions upon the transfer, sale, encumbrance or other disposition of the Shares. See "Understanding of Investment Risks" and "Registration Rights". 3. Shares Offered in a Private Placement Transaction. The Shares offered by this Securities Purchase Agreement are being offered as a non-public offering pursuant to Section 4(2) and Regulation D of the Act ("Regulation D"). 4. Binding Effect of Securities Purchase Agreement; The Closing. This Securities Purchase Agreement shall not be binding on the Company unless and until an authorized executive officer of the Company has evidenced acceptance thereof by executing the signature page at the end hereof. The Company may accept or reject this Securities Purchase Agreement in its sole discretion if the Purchaser does not meet the suitability standards established herein, or for any other reason. A closing (the "Closing") will occur contemporaneously with the execution of this Agreement by all parties hereto. 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) Accredited Investor. The Purchaser has such knowledge and experience in business and financial matters such that the Purchaser is capable of evaluating the merits and risks of purchasing the Shares. The Purchaser is either an "accredited investor" as that term is defined in Rule 501 of Regulation D of the Act or a "qualified institutional buyer" as that term is defined in Rule 144A of the Act, and represents that he satisfies the suitability standards identified in Section 10 hereof; 3 (b) Loss of Investment. The Purchaser('s) (i) overall commitment to investments which are not readily marketable is not disproportionate to his net worth; (ii) investment in the Company will not cause such overall commitment to become excessive; (iii) can afford to bear the loss of his entire investment in the Company; and (iv) has adequate means of providing for his current needs and personal contingencies and has no need for liquidity in his investment in the Company; (c) Special Suitability. The Purchaser satisfies any special suitability or other applicable requirements of his state of residence and/or the state in which the transaction by which the Shares are purchased occurs; (d) Investment Intent. The Purchaser hereby acknowledges that the Purchaser has been advised that this offering has not been registered with, or reviewed by, the Securities and Exchange Commission ("SEC") because this offering is intended to be a non-public offering pursuant to Section 4(2) and Regulation D of the Act. The Purchaser represents that the Purchaser's Shares are being purchased for the Purchaser's own account and not on behalf of any other person, for investment purposes only and not with a view towards distribution or resale to others. The Purchaser agrees that the Purchaser will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Shares unless they are registered under the Act or unless in the opinion of counsel an exemption from such registration is available, such counsel and such opinion to be satisfactory to the Company. The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon the Purchaser's investment intention; (e) State Securities Laws. The Purchaser understands that no securities administrator of any state has made any finding or determination relating to the fairness of this investment and that no securities administrator of any state has recommended or endorsed, or will recommend or endorse, the offering of the Shares; (f) Authority; Power; No Conflict. The execution, delivery and performance by the Purchaser of the Agreement are within the powers of the Purchaser, have been duly authorized and will not constitute or result in a breach or default under, or conflict with, any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Purchaser is a party or by which the Purchaser is bound, and, if the Purchaser is not an individual, will not violate any provision of the charter documents, Bylaws, indenture of trust, operating agreement, or partnership agreement, as applicable, of the Purchaser. The signatures of the Purchaser on the Agreement are genuine, and the signatory, if the Purchaser is an individual, has legal competence and capacity to execute the same, or, if the Purchaser is not an individual, the signatory has been duly authorized to execute the same; and the Agreement constitutes the legal, valid and binding obligations of the Purchaser, enforceable in accordance with its terms; (g) No General Solicitation. The Purchaser acknowledges that no general solicitation or general advertising (including communications published in any newspaper, magazine or other broadcast) has been received by 4 him and that no public solicitation or advertisement with respect to the offering of the Shares has been made to him; (h) Advice of Tax and Legal Advisors. The Purchaser has relied solely upon the advice of his own tax and legal advisors with respect to the tax and other legal aspects of this investment; (i) Broker Fees. The Purchaser is not aware that any person, and has been advised that no person, will receive from the Company any compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares; (j) Access to Information. Purchaser has had access to all material and relevant information concerning the Company, its management, financial condition, capitalization, market information, properties and prospects necessary to enable Purchaser to make an informed investment decision with respect to its investment in the Shares. Purchaser has carefully read and reviewed, and is familiar with and understands the contents thereof and hereof, including, without limitation, the risk factors referenced in this Agreement. See "Understanding of Investment Risks." Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Company concerning the terms and conditions of the acquisition of the Shares and the present and proposed business and financial condition of the Company, and has had all such questions answered to its satisfaction and has been supplied all information requested; (k) Review of Reports. The Purchaser acknowledges that it has been provided with an opportunity to review: (i) a copy of the Company's Annual Report on Form 10-K for the year ended June 30, 1999; (ii) a copy of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, as amended; (iii) a copy of the Company's Registration Statement on Form S-1 (SEC File Number 333-80107); and (iv) all other recent reports filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (collectively, the "Reports"). (l) Understanding the Nature of Securities. The Purchaser understands and acknowledges that: (i) The Shares have not been registered under the Act or any state securities laws and are being issued and sold in reliance upon certain exemptions contained in the Act; (ii) The Shares are "restricted securities" as that term is defined in Rule 144 promulgated under the Act; (iii) The Shares cannot be sold or transferred without registration under the Act and applicable state securities laws, or unless the Company receives an opinion of counsel reasonably acceptable to it 5 (as to both counsel and the opinion) that such registration is not necessary; and (iv) The Shares and any certificates issued in replacement therefor shall bear the following legend, in addition to any other legend required by law or otherwise: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF EXEMPTION FROM REGISTRATION, UNDER THE ACT and any applicable state securities laws, BASED ON AN OPINION LETTER OF COUNSEL SATISFACTORY TO THE COMPANY." (m) Information Provided. The Purchaser has, on or before the date of the Closing, been afforded the opportunity to review and is familiar with the Reports and has based his decision to invest solely on the information contained therein, and the information contained within this Agreement and the associated exhibits and schedules, and has not been furnished with and is not relying upon any other literature, prospectus or other information except as included in the Reports or this Agreement. 6. Indemnification. The Purchaser shall indemnify and hold harmless the Company and the Company's officers, directors and employees from and against any and all loss, damage or liability (including attorneys' fees), due to, or arising out of, a breach or inaccuracy of any representation or warranty contained in Section 5. 7. Understanding of Investment Risks. Any investment in the Shares should not be made by a Purchaser who cannot afford the loss of his entire Purchase Price. The Purchaser acknowledges that the Shares offered hereby have not been approved or disapproved by the Securities and Exchange Commission, or any state securities commissions, nor has the Securities and Exchange Commission or any state securities commission passed upon the adequacy or accuracy of this Securities Purchase Agreement or any exhibit hereto. Prior to making an investment in the Shares, the Purchaser has fully considered, among other things, the financial and other information set forth in the Reports as well as the risk factors enumerated in the Company's Form 10-K for the year ended June 30, 1999, and acknowledges that such information has been considered prior to making this investment decision. 8. Registration Rights. The Company has agreed to advise the Purchaser by written notice prior to the filing of a registration statement under the Act (excluding registration on Forms S-8, S-4 or any successor forms thereto), covering securities of the Company to be offered and sold to the public generally (whether on behalf of the Company or selling security holders) 6 and shall, upon the request of the Purchaser given at least five (5) calendar days prior to the filing of such registration statement, include in any such registration statement such information as may be required to permit the public resale of the Shares; provided, however, that in the event the resale of the Shares has not been previously included within a registration statement, the Company shall in any event file a registration statement under the Act within one year of the Closing, the purpose of which is to register the resale of the Shares. The registration rights associated with the Shares are described more particularly and are subject in full to the terms of a Registration Rights Agreement between the parties and dated the date hereof (the "Registration Rights Agreement"). The Company is currently working on a registration statement on Form S-1 (the "Current S-1"); Further, the Company shall use reasonable efforts to include the Shares in the Current S-1; provided, however, that an explicit condition precedent to the inclusion of the Shares in the Current S-1 is that the Purchaser shall immediately return or provide to the Company, or return or provide upon such other schedule as the Company shall provide in writing, any document or information requested by the Company in connection with or associated with the inclusion of the Shares in the Current S-1. This paragraph shall serve as written notice prior to the filing of a registration statement in accordance with the terms of the Registration Rights Agreement. The Company's obligation to register the Shares extends only to the inclusion of the Shares in a registration statement which covers the public resale thereof. In all events, the Company shall have no obligation: (i) to assist or cooperate in the offering or disposition of such Shares; (ii) to obtain a commitment from an underwriter relative to the sale of such Shares; or (iii) to include such Shares within an underwritten offering of the Company. The Company shall assume no responsibility for the manner of sale, timing of sale, or sales price relating to the resale of the Shares. 9. Representations and Warranties of the Company. The Company hereby represents and warrants to Purchaser as follows: (a) Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement, and is duly qualified and licensed to do business as a foreign corporation in such other jurisdictions as is necessary to enable it to carry on its business, except where failure to do so would not have a material adverse effect on its business; (b) Corporate Power and Authority. The execution and delivery of this Agreement and the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company. No other corporate act or proceeding on the part of the Company is necessary to authorize this Agreement. When duly executed and delivered by the parties hereto, this Agreement will constitute a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other 7 similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law. 10. IMPORTANT CONSIDERATIONS: SUITABILITY STANDARDS - WHO SHOULD INVEST. INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT. A substantial number of state securities commissions have established investor suitability standards for the marketing within their respective jurisdictions of restricted securities. Some have also established minimum dollar levels for purchases in their states. The reasons for these standards appear to be, among others, the relative lack of liquidity of securities of such programs as compared with other securities investments. Investment in the Shares involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in their investments. The Company has adopted as a general investor suitability standard the requirement that each Subscriber for Shares represents in writing that the Subscriber: (a) is acquiring the Shares for investment and not with a view to resale or distribution; (b) can bear the economic risk of losing his entire investment; (c) his overall commitment to investments which are not readily marketable is not disproportionate to his net worth, and an investment in the Shares will not cause such overall commitment to become excessive; (d) has adequate means of providing for his current needs and personal contingencies and has no need for liquidity in this investment in the Shares; (e) has evaluated all the risks of investment in the Company; and (f) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Company or is relying on his own purchaser representative in making an investment decision. In addition, all of the Subscribers for Shares must be: (1) extremely sophisticated investors with substantial net worth and experience in making investments of this nature; and (2) "accredited investors," as defined in Rule 501 of Regulation D under the Act, by meeting any of the following conditions: (i) he or she has an individual income in excess of $200,000 in each of the two most recent years or joint income with his or her spouse in excess of $300,000 in each of those years, and he or she reasonably expects an income in excess of the aforesaid levels in the current year, or 8 (ii) he or she has an individual net worth, or a joint net worth with his or her spouse, at the time of his or her purchase, in excess of $1,000,000 (net worth for these purposes includes homes, home furnishings and automobiles), or (iii) he or she otherwise satisfies the Company that he or she is an accredited investor, as defined in Rule 501 under the Act. Other categories of investors included within the definition of accredited investor include the following: certain institutional investors, including certain banks, whether acting in their individual or fiduciary capacities; certain insurance companies; federally registered investment companies; business development companies (as defined under the Investment Company Act of 1940); Small Business Investment Companies licensed by the Small Business Administration; certain employee benefit plans; private business development companies (as defined in the Investment Advisers Act of 1940); tax exempt organizations (as defined in Section 501(c)(3) of the Internal Revenue Code) with total assets in excess of $5,000,000; entities in which all the equity owners are accredited investors; and certain affiliates of the Company. A partnership Subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its partners are accredited investors. A corporate subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the investor suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its shareholders are accredited investors. Corporate subscribers must have net worth of at least three (3) times the amount of their investment in the Shares. The suitability standards referred to above represent minimum suitability requirements for prospective purchasers and the satisfaction of such standards by a prospective purchaser does not necessarily mean that the Shares are a suitable investment for such purchaser. The Company may, in circumstances it deems appropriate, modify such requirements. The Company may also reject subscriptions for whatever reasons, in its sole discretion, it deems appropriate. Securities Purchase Agreements may not necessarily be accepted in the order in which received. Purchasers who are residents of certain states may be required to meet certain additional suitability standards. THE ACCEPTANCE OF A SUBSCRIPTION FOR SHARES BY THE COMPANY DOES NOT CONSTITUTE A DETERMINATION BY THE COMPANY THAT AN INVESTMENT IN THE SHARES IS SUITABLE FOR A PROSPECTIVE INVESTOR. THE FINAL DETERMINATION OF THE SUITABILITY OF INVESTMENT IN THE SHARES MUST BE MADE BY THE PROSPECTIVE INVESTOR AND HIS OR HER ADVISERS. 9 11. State Law Considerations. (a) For Residents of All States. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER'S SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND THE APPLICABLE STATES SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE INVESTOR MUST RELY ON THE INVESTOR'S OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES. (b) Florida Residents. Pursuant to Section 517.061(11) (a) (5) of the Florida statute, when sales are made to five or more persons in Florida, Florida investors have a three day right of rescission. If a Florida resident has executed a Securities Purchase Agreement, he may elect, within three business days after signing the subscription agreement, to withdraw from the Agreement and to receive a full refund and return (without interest) of any money paid by him. A Florida resident's withdrawal will be without any further liability to any person. To accomplish such withdrawal, a Florida resident need only send a letter or telegram to the Company at the address set forth in this Agreement indicating their intention to withdraw. Such letter or telegram must be sent and postmarked prior to the end of the aforementioned third business day. If a Florida resident sends a letter, it is prudent to send it by certified mail, return receipt requested, to insure that it is received and also to evidence the time and date when it is mailed. Should a Florida resident make this request orally, he should ask for written confirmation that his request has been received. (c) New Jersey Residents. Neither the Attorney General of the State nor the Bureau of Securities has passed on or endorsed the merits of this Securities Purchase Agreement. The filing of the Securities Purchase Agreement with the Bureau of Securities does not constitute approval of the issue or the 10 sale thereof by the Bureau of Securities or the Department of Law and public safety of the State of New Jersey. Any representation to the contrary is unlawful. (d) New York Residents. This Securities Purchase Agreement has not been filed with or reviewed by the Attorney General of the State of New York prior to its issuance and use. The Attorney General of the State of New York has not passed on or endorsed the merits of this Agreement. Any representation to the contrary is unlawful. This Agreement does not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements made. In light of the circumstances under with they were made, not misleading, it contains a fair summary of the material terms of documents purported to be summarized herein. 12. Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by certified mail, return receipt requested (provided that facsimile notice shall be deemed received on the next business day if received after 5:00 p.m. Eastern Standard Time), or (c) on the next business day, if sent by a nationally recognized overnight delivery service, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to the Company: VDC Communications, Inc. 75 Holly Hill Lane Greenwich, CT 06830 Attention: Frederick A. Moran Chairman & C.E.O. Facsimile: (203) 552-0908 with a copy to: VDC Communications, Inc. 75 Holly Hill Lane Greenwich, CT 06830 Attention: Louis D. Frost, Esq. VDC Corporate Counsel Facsimile: (203) 552-0908 11 If to Purchaser: to the address set forth at the end of this Agreement or to such other addresses as may be specified in accordance herewith from time to time. 13. Survival of Representations and Warranties. Representations and warranties contained herein shall survive the execution and delivery of this Agreement. 14. Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto, provided that this Agreement and the interests herein may not be assigned by either party without the express written consent of the other party. 15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut without regard to the principles of conflict of laws. 16. Arbitration. All controversies arising out of or related to this Agreement shall be determined by binding arbitration applying the laws of the State of Connecticut. Any arbitration between the parties shall be conducted at the Company's offices in Greenwich, Connecticut, or at such other location designated by the Company, before the American Arbitration Association (the "AAA"). The decision of the arbitrator(s) shall be final and binding upon the parties and judgment may be obtained thereon by either party in a court of competent jurisdiction. Each party shall bear the cost of preparing and presenting its own case. The cost of the arbitration, including the fees and expenses of the arbitrator(s), shall be shared equally by the parties hereto unless the award otherwise provides. Nothing in this section will prevent either party from resorting to judicial proceedings if interim injunctive relief under the laws of the State of Connecticut from a court is necessary to prevent serious and irreparable injury to one of the parties, and the parties hereto agree that the state courts in Stamford, Connecticut and the United States District Court in the District of Connecticut in Bridgeport, Connecticut shall have exclusive subject matter and in personam jurisdiction over the parties for purposes of obtaining interim injunctive relief. 17. Sections and Other Headings. The section and other headings contained in this Agreement are for the convenience of reference only, and do not constitute part of this Agreement or otherwise affect any of the provisions hereof. 18. Pronouns. Whenever the context of this Agreement may require, any pronoun will include the corresponding masculine, feminine and neuter form, and the singular form of nouns and pronouns will include the plural. 19. Counterpart Signatures. This Agreement may be executed in multiple counterparts each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by exchange of facsimile copies showing the signatures 12 of the parties, and those signatures need not be affixed to the same copy. The facsimile copies showing the signatures of the parties will constitute originally signed copies of the Agreement requiring no further execution. 20. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. 21. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. 22. Construction. This Agreement and any related instruments will not be construed more strictly against one party then against the other by virtue of the fact that drafts may have been prepared by counsel for one of the parties, it being recognized that this Agreement and any related instruments are the product of negotiations between the parties and that both parties have contributed to the final preparation of this Agreement and all related instruments. 23. Agreement Read and Understood. Both parties hereto acknowledge that they have had an opportunity to consult with an attorney, and such other experts or consultants as they deem necessary or prudent, regarding this Agreement and that they, or their designated agents, have read and understand this Agreement. 24. United States Dollars. All dollar amounts stated herein refer to and are payable solely in United States Dollars. IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed. Purchaser: 666,667 Shares/$500,000.25 /s/ Frederick W. Moran - -------------------------- ---------------------- Number and dollar amount Frederick W. Moran of Shares purchased - Purchase Price 13 Address/Residence of Purchaser: ------------------------------- ------------------------------- ------------------------------- Social Security Number: ------------- Accredited Investor Certification (Place initials on the appropriate line(s)) (i) I am a natural person who had individual income - ----- of more than $200,000 in each of the most recent two years or joint income with my spouse in excess of $300,000 in each of the most recent two years and reasonably expect to reach that same income level for the current year ("income", for purposes hereof, should be computed as follows: individual adjusted gross income, as reported (or to be reported) on a federal income tax return, increased by (1) any deduction of long-term capital gains under Section 1202 of the Internal Revenue Code of 1986 (the "Code"), (2) any deduction for depletion under Section 611 et seq. of the Code, (3) any exclusion for interest under Section 103 of the Code and (4) any losses of a partnership as reported on Schedule E of Form 1040); or (ii) I am a natural person whose individual net worth - ----- (i.e., total assets in excess of total liabilities), or joint net worth with my spouse, will at the time of purchase of the Shares be in excess of $1,000,000; or (iii) The Purchaser is an investor satisfying the - ----- requirements of Section 501(a)(1), (2) or (3) of Regulation D promulgated under the Securities Act, which includes but is not limited to, a self-directed employee benefit plan where investment decisions are made solely by persons who are "accredited investors" as otherwise defined in Regulation D; or (iv) The Purchaser is a "qualified institutional buyer" - ----- as that term is defined in Rule 144A of the Securities Act; or (v) The Purchaser is a trust, which trust has total - ----- assets in excess of $5,000,000, which is not formed for the specific purpose of acquiring the Shares offered hereby and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Shares; or (vi) I am a director or executive officer of the - ----- Company; or 14 (vii) The Purchaser is an entity (other than a trust) - ----- in which all of the equity owners meet the requirements of at least one of the above subparagraphs. Agreed and Accepted by VDC COMMUNICATIONS, INC. By: /s/ Frederick A. Moran ------------------------ Frederick A. Moran Chairman & C.E.O. Dated: 10/29/99 ---------- 15 EX-99.4 5 EX-99.4 EXHIBIT 4 REGISTRATION RIGHTS AGREEMENT ----------------------------- This Registration Rights Agreement (this "Agreement") is dated as of October 27, 1999 by and between VDC COMMUNICATIONS, INC., a Delaware corporation (the "Company"), and the undersigned (the "Holder" or the "Investor"). W I T N E S S E T H: -------------------- WHEREAS, simultaneously with the execution and delivery of this Agreement, the Investor is purchasing from the Company, pursuant to the Securities Purchase Agreement dated the date hereof (the "Purchase Agreement"), certain shares of the Company's Common Stock (the "Securities"); WHEREAS, all capitalized terms not hereinafter defined shall have that meaning assigned to them in the Purchase Agreement; and WHEREAS, the Company desires to grant to the Holder the registration rights set forth herein with respect to the Securities. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. (a) "Closing" shall mean the closing provided for in the Purchase Agreement. (b) "Common Stock" shall mean the common stock of the Company, par value $.0001 per share. (c) "Company" shall mean VDC Communications, Inc. (d) "Offering" shall mean that private placement transaction pursuant to which the Company shall offer shares of Common Stock upon terms and conditions set forth in the Purchase Agreements. (e) "Person" means an individual, a partnership (general or limited), corporation, limited liability company, joint venture, business trust, cooperative, association or other form of business organization, whether or not regarded as a legal entity under applicable law, a trust (inter vivos or testamentary), an estate of a deceased, insane or incompetent person, a quasi-governmental entity, a government or any agency, authority, political subdivision or other instrumentality thereof, or any other entity. (f) "Principal Market" means the OTC Electronic Bulletin Board, the Nasdaq National Market, the Nasdaq Small Cap Stock Market, the American Stock Exchange or the New York Stock Exchange, whichever is at the time the principal trading exchange or market for the Common Stock. (h) "Registration Statement" shall mean the Registration Statement of the Company filed with the SEC pursuant to the provisions of Section 3 of this Agreement which covers the resale of the Securities on Form S-1, SB-2 or any other appropriate form then permitted by the SEC to be used for such registration and the sales contemplated to be made thereby under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such Registration Statement, including any pre-and post- effective amendments thereto, in each case including the prospectus contained therein, all exhibits thereto and all materials incorporated by reference therein. (i) "Restricted Stock" shall mean the Securities that may be issued to the Holder pursuant to the Purchase Agreement, and any additional shares of Common Stock or other equity securities of the Company issued or issuable after the date hereof in respect of any such Securities (or other equity securities issued in respect thereof) by way of a stock dividend or stock split, in connection with a combination, exchange, reorganization, recapitalization or reclassification of Company securities, or pursuant to a merger, division, consolidation or other similar business transaction or combination involving the Company; provided that: as to any particular shares of Restricted Stock, such securities shall cease to constitute Restricted Stock (i) when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of thereunder, or (ii) when and to the extent such securities are permitted to be distributed pursuant to subparagraph (k) of Rule 144 (or any successor provision to such Rule) promulgated under the Securities Act or are otherwise freely transferable to the public without further registration under the Securities Act. (j) "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar or successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at any relevant time. (k) "SEC" shall mean the United States Securities and Exchange Commission. (l) "Trading Day" means a day on which the Principal Market on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not listed or admitted to trading on any national securities exchange, any day other than a Saturday, Sunday, or a day on which banking institutions in the State of Connecticut are authorized or obligated by law or executive order to close. 2. Restrictions on Transfer. The Holder acknowledges and understands that prior to the registration of the Restricted Stock as provided herein, the Restricted Stock and the Securities are "restricted securities" as defined in Rule 144 promulgated under the Securities Act. The Holder understands that no disposition or transfer of the Restricted Stock or the Securities may be made by the Holder in the absence of (i) an opinion of counsel to the Holder, reasonably satisfactory to the Company and prepared at Holder's expense, that such transfer may be made without registration under the Securities Act or any applicable state securities laws; or (ii) such security has been registered for sale under the Securities Act and registered or qualified under applicable state securities laws relating to the offer and sale of securities. 2 3. Registration Rights. (a) Piggyback Registration Rights. The Company shall advise the Holder by written notice prior to the filing of a Registration Statement under the Securities Act (excluding registration on Forms S-8, S-4, or any successor forms thereto), covering securities of the Company to be offered and sold (whether by the Company or any stockholder thereof) and shall, upon the request of the Holder given at least five (5) calendar days prior to the filing of such Registration Statement, include in any such Registration Statement such information as may be required to permit an offering of the Restricted Stock. The Holder shall promptly furnish such information as may be reasonably requested by the Company in order to include such Restricted Stock in the Registration Statement. In the event that any registration pursuant to this Section 3 shall be, in whole or in part, an underwritten public offering of Common Stock on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, the Company shall include in such registration (i) first, the securities the Company proposes to sell, and (ii) second, the Restricted Stock and any other registrable securities eligible and requested to be included in such registration to the extent that the number of shares to be registered will not, in the opinion of the managing underwriters, adversely affect the offering of the securities pursuant to clause (i), pro rata among the holders of such registrable securities, including the Holder of the Restricted Stock, on the basis of the number of shares eligible for registration which are owned by all such holders. Notwithstanding the foregoing, the Company may withdraw any registration statement referred to in this Section 3 without thereby incurring liability to the holders of the Restricted Stock. (b) Shelf Registration. In the event that the Restricted Stock is not otherwise included within a Registration Statement filed pursuant to Section 3(a) above, the Company shall use reasonable efforts to prepare and file, not later than twelve (12) months following the Closing of the Offering, a Registration Statement with the SEC and use reasonable efforts to have such Registration Statement declared effective promptly for the purpose of facilitating the public resale of the Restricted Stock. (c) Notwithstanding anything to the contrary contained herein, the Company's obligation in Section 3(a) and 3(b) above shall extend only to the inclusion of the Restricted Stock in a Registration Statement filed under the Securities Act. The Company shall have no obligation to assure the terms and conditions of distribution, to obtain a commitment from an underwriter relative to the sale of the Restricted Stock or to otherwise assume any responsibility for the manner, price or terms of the distribution of the Restricted Stock. Furthermore, the Company shall not be restricted in any manner from including within the Registration Statement or the distribution, issuance or resale of any of its or any other securities. 3 4. Registration Procedures. Whenever it is obligated to register any Restricted Stock pursuant to this Agreement, the Company shall: (a) prepare and file with the SEC a Registration Statement with respect to the Restricted Stock in the manner set forth at Sections 3(a) or 3(b) hereof and use reasonable efforts to cause such Registration Statement to remain effective for that period identified in Section 4(g) hereafter; (b) prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for the period specified in Section 4(g) below and to comply with the provisions of the Securities Act with respect to the disposition of all Restricted Stock covered by such Registration Statement in accordance with the Holder's intended method of disposition set forth in such Registration Statement for such period; (c) furnish to the Holder and to each underwriter, if any, such number of copies of the Registration Statement and the prospectus included therein (including each preliminary prospectus), as such person may reasonably request in order to facilitate the public sale or other disposition of the Restricted Stock covered by such Registration Statement; (d) use reasonable efforts to register or qualify the Restricted Stock covered by such Registration Statement under the securities or blue sky laws of such jurisdictions as the Holder, or, in the case of an underwritten public offering, the managing underwriter shall reasonably request; provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) promptly notify the Holder under such Registration Statement and each underwriter, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required or necessary to be stated therein in order to make the statements contained therein not misleading in light of the circumstances under which they were made; (f) make available for inspection by the Holder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by the Holder, underwriter, attorney, accountant or agent in connection with such Registration Statement; (g) for purposes of Sections 4(a) and 4(b) above, the period of distribution of Restricted Stock shall be deemed to extend until the earlier of: (A) in an underwritten public offering of all of the Restricted Stock, the period in which each underwriter has completed the distribution 4 of all securities purchased by it; (B) in any other registration, the earlier of the period in which all shares of Restricted Stock covered thereby shall have been sold or two (2) years from the effective date of the first Registration Statement filed by the Company with the SEC pursuant to this Agreement. (h) if the Common Stock of the Company is listed on any securities exchange or automated quotation system, the Company shall use reasonable efforts to list (with the listing application being made at the time of the filing of such Registration Statement or as soon thereafter as is reasonably practicable) the Restricted Stock covered by such Registration Statement on such exchange or automated quotation system; (i) enter into normal and customary underwriting arrangements or an underwriting agreement and take all other reasonable and customary actions if the Holder sells its shares of Restricted Stock pursuant to an underwriting (however, in no event shall the Company, in connection with such underwriting, be required to undertake any special audit of a fiscal period in which an audit is normally not required); (j) notify the Holder if there are any amendments to the Registration Statement, any requests by the SEC to supplement or amend the Registration Statement, or of any threat by the SEC or state securities commission to undertake a stop order with respect to sales under the Registration Statement; and (k) cooperate in the removal of any restrictive legends from the shares of Restricted Stock in connection with the resale of such shares covered by an effective Registration Statement. 5. Expenses. (a) For the purposes of this Section 5, the term "Registration Expenses" shall mean: all expenses incurred by the Company in complying with Sections 3 and 4 of this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, "blue sky" fees, fees of the National Association of Securities Dealers, Inc. ("NASD"), fees and expenses of listing shares of Restricted Stock on any securities exchange or automated quotation system on which the Company's shares are listed and fees of transfer agents and registrars. The term "Selling Expenses" shall mean: all underwriting discounts and selling commissions applicable to the sale of Restricted Stock and all accountable or non-accountable expenses paid to any underwriter in respect of the sale of Restricted Stock. (b) Except as otherwise provided herein, the Company will pay all Registration Expenses in connection with the Registration Statements filed pursuant to Section 3 of this Agreement. All Selling Expenses in connection with any Registration Statements filed pursuant to Section 3 of this Agreement shall be borne by the participating Holder in proportion to the number of shares sold by each. 5 6. Obligations of Holder. (a) In connection with each registration hereunder, each selling Holder will promptly furnish to the Company in writing such information with respect to such seller and the securities held by such seller, and the proposed distribution by him or them as shall be reasonably requested by the Company in order to assure compliance with federal and applicable state securities laws, as a condition precedent to including such seller's Restricted Stock in the Registration Statement. Each selling Holder also shall agree to promptly notify the Company of any changes in such information included in the Registration Statement or prospectus as a result of which there is an untrue statement of material fact or an omission to state any material fact required or necessary to be stated therein in order to make the statements contained therein not misleading in light of the circumstances then existing. (b) In connection with each registration pursuant to this Agreement, the Holder whose shares are included therein will not effect sales thereof until notified by the Company of the effectiveness of the Registration Statement, and thereafter will suspend such sales after receipt of telegraphic or written notice from the Company to suspend sales to permit the Company to correct or update a Registration Statement or prospectus. At the end of any period during which the Company is obligated to keep a Registration Statement current, the Holder included in said Registration Statement shall discontinue sales of shares pursuant to such Registration Statement upon receipt of notice from the Company of its intention to remove from registration the shares covered by such Registration Statement which remain unsold, and such Holder shall notify the Company of the number of shares registered which remain unsold immediately upon receipt of such notice from the Company. 7. Information Blackout and Holdbacks. (a) At any time when a Registration Statement effected pursuant to Section 3 relating to Restricted Stock is effective, upon written notice from the Company to the Holder that the Company has determined in good faith that sale of Restricted Stock pursuant to the Registration Statement would require disclosure of non-public material information, the Holder shall suspend sales of Restricted Stock pursuant to such Registration Statement until such time as the Company notifies the Holder that such material information has been disclosed to the public or has ceased to be material or that sales pursuant to such Registration Statement may otherwise be resumed. (b) Notwithstanding any other provision of this Agreement, each Holder of Restricted Stock shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the thirty (30) days prior to the commencement of any primary offering to be undertaken by the Company of shares of its own common stock (the "Primary Offering"), which may also include other securities, and ending one hundred and twenty (120) days after completion of any such Primary Offering, unless the Company, in the case of a non-underwritten offering, or the managing underwriter, in the case of an underwritten Primary Offering, otherwise agrees. 6 8. Indemnification (a) The Company agrees to indemnify, to the extent permitted by law, each Holder of Restricted Stock, its officers and directors and each Person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses caused by any untrue statement of material fact contained in any Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished to the Company by such Holder for use therein or by such Holder's failure to deliver a copy of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished such Holder with a sufficient number of copies of the same. (b) In connection with any Registration Statement in which a Holder of Restricted Stock is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from: (i) any untrue or alleged untrue statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, (but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished by such Holder); or (ii) any disposition of the Restricted Stock in a manner that fails to comply with the permitted methods of distribution identified within the Registration Statement; provided that the obligation to indemnify (if there shall be more than one Holder) shall be individual, not joint and several, for each Holder and shall be limited to the net amount of proceeds received by such Holder from the sale of Restricted Stock pursuant to such Registration Statement. (c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person's right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such 7 indemnified party and any other of such indemnified parties with respect to such claim. (d) The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities. The Company also agrees to make such provisions, as are reasonably requested by any indemnified party, for contribution to such party in the event the Company's indemnification is unavailable for any reason. 9. Miscellaneous Provisions. (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut without regard to principles of conflicts of laws. (b) Counterparts. This Agreement may be executed in multiple counterparts each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may also be executed and delivered by exchange of facsimile copies showing the signatures of the parties, and those signatures need not be affixed to the same copy. The facsimile copies showing the signatures of the parties will constitute originally signed copies of the Agreement requiring no further execution. (c) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the written consent of the Company and the Holder. (d) Notices. All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by certified mail, return receipt requested (provided that facsimile notice shall be deemed received on the next business day if received after 5:00 p.m. Eastern Standard Time), or (c) on the next business day, if sent by a nationally recognized overnight delivery service, in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties) (i) if to the Company to: VDC Communications, Inc. 75 Holly Hill Lane Greenwich, CT 06830 Attn: Frederick A. Moran Chief Executive Officer Telephone: (203) 869-5100 8 Facsimile: (203) 552-0908 (ii) if to the Holder, to the address identified on the books and records of the Company (e) Successors and Assigns; Holders as Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the parties and their respective successors and assigns, and the agreements of the Company herein shall inure to the benefit of the Holders and their respective successors and assigns. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Entire Agreement; Survival; Termination. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. (h) Construction. This Agreement and any related instruments will not be construed more strictly against one party then against the other by virtue of the fact that drafts may have been prepared by counsel for one of the parties, it being recognized that this Agreement and any related instruments are the product of negotiations between the parties and that both parties have contributed to the final preparation of this Agreement and all related instruments. (i) Arbitration. All controversies arising out of or related to this Agreement shall be determined by binding arbitration applying the laws of the State of Connecticut. Any arbitration between the parties shall be conducted at the Company's offices in Greenwich, Connecticut, or at such other location designated by the Company, before the American Arbitration Association (the "AAA"). The decision of the arbitrator(s) shall be final and binding upon the parties and judgment may be obtained thereon by either party in a court of competent jurisdiction. Each party shall bear the cost of preparing and presenting its own case. The cost of the arbitration, including the fees and expenses of the arbitrator(s), shall be shared equally by the parties hereto unless the award otherwise provides. Nothing in this section will prevent either party from resorting to judicial proceedings if interim injunctive relief under the laws of the State of Connecticut from a court is necessary to prevent serious and irreparable injury to one of the parties, and the parties hereto agree that the state courts in Stamford, Connecticut and the United States District Court in the District of Connecticut in Bridgeport, Connecticut shall have exclusive subject matter and in personam jurisdiction over the parties for purposes of obtaining interim injunctive relief. (j) Agreement Read and Understood. Both parties hereto acknowledge that they have had an opportunity to consult with an attorney, and such other experts or consultants as they deem necessary or prudent, regarding 9 this Agreement and that they, or their designated agents, have read and understand this Agreement. (k) Binding Effect. This Agreement shall not be binding on the Company unless and until an authorized executive officer of the Company has evidenced acceptance thereof by executing the signature page at the end hereof. IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed. ATTEST: VDC COMMUNICATIONS, INC. /s/ Clayton F. Moran By:/s/ Frederick A. Moran - -------------------- ---------------------- Frederick A. Moran Chief Executive Officer WITNESS: /s/ unreadable /s/ Frederick W. Moran - -------------- ---------------------- Frederick W. Moran 10 EX-99.5 6 EX-99.5 EXHIBIT 5 VDC COMMUNICATIONS, INC. ---------- Securities Purchase Agreement ---------- 100,000 Shares of Common Stock at $3.625 per Share ---------- December 23, 1998 CONFIDENTIAL - ------------ SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as of the 23rd day of December, 1998, by and between VDC Communications, Inc., a Delaware corporation ("VDC" or the "Company"), and the investor whose name appears at the end of this Agreement ("Purchaser" or "Subscriber"). R E C I T A L S: ---------------- The Company wishes to obtain additional working capital and the Purchaser desires to provide such working capital to the Company through the purchase of certain shares of the Company's common stock, $.0001 par value per share (the "Common Stock"), being privately offered by the Company. NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Sale and Purchase of Shares. Subject to the terms and conditions hereof, the Company agrees to issue and sell, and the Purchaser agrees to purchase, 100,000 shares of Common Stock at a purchase price of $3.625 per share. The purchase price is payable upon subscription in cash, check or wire transfer. If paying by check, the check should be made payable to "VDC Communications, Inc." and delivered to VDC Communications, Inc. at 75 Holly Hill Lane, Greenwich, Connecticut, 06830. No broker, investment banker or any other person will receive from the Company any compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares. 2. Description of the Shares. (a) Restricted Securities. The shares of Common Stock of the Company being offered hereby (the "Shares") shall be "restricted securities" as that term is defined under Rule 144 of the Securities Act of 1933, as amended (the "Act") and may not be offered for sale or sold or otherwise transferred in a transaction which would constitute a sale thereof within the meaning of the Act unless (i) such security has been registered for sale under the Act and registered or qualified under applicable state securities laws relating to the offer and sale of securities; or (ii) exemptions from the registration requirements of the Act and the registration or qualification requirements of all such state securities laws are available and the Company shall have received an opinion of counsel that the proposed sale or other disposition of such securities may be effected without registration under the Act and would not result in any violation of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and such opinion to be satisfactory to the Company. 2 (b) Voting Rights; Dividends. Holders of Common Stock of the Company have equal rights to receive dividends when, as, and if declared by the Board of Directors out of funds legally available therefor. Holders of Common Stock of the Company have one vote for each share held of record and do not have cumulative voting rights. (c) Liquidation; Redemption. Holders of Common Stock of the Company are entitled upon liquidation of the Company to share ratably in the net assets available for distribution, subject to the rights, if any of holders of any preferred stock of the Company then outstanding. Shares of Common Stock of the Company are not redeemable and have no preemptive or similar rights. All outstanding shares of Common Stock of the Company are fully paid and nonassessable. (d) Restriction Upon Resale. The Subscriber hereby agrees that the Shares shall be subject to restrictions upon the transfer, sale, encumbrance or other disposition of the Shares. See "Understanding of Investment Risks" and "Registration Rights". 3. Shares Offered in a Private Placement Transaction. The Shares offered by this Securities Purchase Agreement are being offered as a non-public offering pursuant to Section 4(2) and Regulation D of the Act ("Regulation D"). 4. Binding Effect of Securities Purchase Agreement; The Closing. This Securities Purchase Agreement shall not be binding on the Company unless and until an authorized executive officer of the Company has evidenced acceptance thereof by executing the signature page at the end hereof. The Company may accept or reject this Securities Purchase Agreement in its sole discretion if the Purchaser does not meet the suitability standards established herein, or for any other reason. A closing (the "Closing") will occur contemporaneously with the execution of this Agreement by all parties hereto. 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) Accredited Investor. The Purchaser has such knowledge and experience in business and financial matters such that the Purchaser is capable of evaluating the merits and risks of purchasing the Shares. The Purchaser is either an "accredited investor" as that term is defined in Rule 501 of Regulation D of the Act or a "qualified institutional buyer" as that term is defined in Rule 144A of the Act, and represents that he satisfies the suitability standards identified in Section 9 hereof; (b) Loss of Investment. The Purchaser(`s) (i) overall commitment to investments which are not readily marketable is not disproportionate to his net worth; (ii) investment in the Company will not cause such overall commitment to become excessive; (iii) can afford to bear the loss of his entire investment in the Company; and (iv) has adequate means of providing for his current needs and personal contingencies and has no need for liquidity in his investment in the Company; 3 (c) Special Suitability. The Purchaser satisfies any special suitability or other applicable requirements of his state of residence and/or the state in which the transaction by which the Shares are purchased occurs; (d) Investment Intent. The Purchaser hereby acknowledges that the Purchaser has been advised that this offering has not been registered with, or reviewed by, the Securities and Exchange Commission ("SEC") because this offering is intended to be a non-public offering pursuant to Section 4(2) and Regulation D of the Act. The Purchaser represents that the Purchaser's Shares are being purchased for the Purchaser's own account and not on behalf of any other person, for investment purposes only and not with a view towards distribution or resale to others. The Purchaser agrees that the Purchaser will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Shares unless they are registered under the Act or unless in the opinion of counsel an exemption from such registration is available, such counsel and such opinion to be satisfactory to the Company. The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon the Purchaser's investment intention; (e) State Securities Laws. The Purchaser understands that no securities administrator of any state has made any finding or determination relating to the fairness of this investment and that no securities administrator of any state has recommended or endorsed, or will recommend or endorse, the offering of the Shares; (f) Authority; Power; No Conflict. The execution, delivery and performance by the Purchaser of the Agreement are within the powers of the Purchaser, have been duly authorized and will not constitute or result in a breach or default under, or conflict with, any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Purchaser is a party or by which the Purchaser is bound, and, if the Purchaser is not an individual, will not violate any provision of the charter documents, Bylaws, indenture of trust or partnership agreement, as applicable, of the Purchaser. The signatures on the Agreement are genuine, and the signatory, if the Purchaser is an individual, has legal competence and capacity to execute the same, or, if the Purchaser is not an individual, the signatory has been duly authorized to execute the same; and the Agreement constitutes the legal, valid and binding obligations of the Purchaser, enforceable in accordance with its terms; (g) No General Solicitation. The Purchaser acknowledges that no general solicitation or general advertising (including communications published in any newspaper, magazine or other broadcast) has been received by him and that no public solicitation or advertisement with respect to the offering of the Shares has been made to him; (h) Advice of Tax and Legal Advisors. The Purchaser has relied solely upon the advice of his own tax and legal advisors with respect to the tax and other legal aspects of this investment; (i) No Broker Fees. The Purchaser is not aware that any person, and has been advised that no person, will receive from the Company any 4 compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares other than as declared herein; (j) Access to Information. Purchaser has had access to all material and relevant information concerning the Company, its management, financial condition, capitalization, market information, properties and prospects necessary to enable Purchaser to make an informed investment decision with respect to its investment in the Shares. Purchaser has carefully read and reviewed, and is familiar with and understands the contents thereof and hereof, including, without limitation, the risk factors described in this Agreement. See "Understanding of Investment Risks." Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Company concerning the terms and conditions of the acquisition of the Shares and the present and proposed business and financial condition of the Company, and has had all such questions answered to its satisfaction and has been supplied all information requested; (k) Review of Exchange Act Reports. The Purchaser acknowledges that it has been provided with an opportunity to review: (i) a copy of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, which is attached hereto as Exhibit "A"; (ii) a copy of the Company's Registration Statement on Form S-4, in accordance with which VDC Bermuda LTD., a Bermuda company merged with and into the Company, which is attached hereto as Exhibit "B"; and (iii) all other relevant reports filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934. (l) Understanding the Nature of Securities. The Purchaser understands and acknowledges that: (i) The Shares have not been registered under the Act or any state securities laws and are being issued and sold in reliance upon certain exemptions contained in the Act; (ii) The Shares are "restricted securities" as that term is defined in Rule 144 promulgated under the Act; (iii) The Shares cannot be sold or transferred without registration under the Act and applicable state securities laws, or unless the Company receives an opinion of counsel reasonably acceptable to it (as to both counsel and the opinion) that such registration is not necessary; and (iv) The Shares and any certificates issued in replacement therefor shall bear the following legend, in addition to any other legend required by law or otherwise: 5 "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER." 6. Understanding of Investment Risks. Any investment in the Shares should not be made by a Purchaser who cannot afford the loss of his entire Purchase Price. The Purchaser acknowledges that the Shares offered hereby have not been approved or disapproved by the Securities and Exchange Commission, or any state securities commissions, nor has the Securities and Exchange Commission or any state securities commission passed upon the adequacy or accuracy of this Securities Purchase Agreement or any exhibit hereto. Prior to making an investment in the Shares, the Purchaser has fully considered, among other things, the financial and other information set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (a copy of which is attached hereto as Exhibit "A"), and acknowledges that such information have been considered prior to making this investment decision. 7. Registration Rights. The Company agrees that within one hundred twenty (120) days of the Closing, it will use its reasonable best efforts to prepare and file with the Securities and Exchange Commission, and use its reasonable best efforts to have declared effective thereafter, a Registration Statement on Form S-1 or other equivalent form pursuant to which the Company shall register the public resale of the Shares. The Company shall have the right to include within such Registration Statement any other securities on behalf of the Company or security holders. The expenses of such registration shall be borne by the Company. Notwithstanding the foregoing, the Company may: (A) delay filing the Registration Statement and may withhold efforts to cause the Registration Statement to become effective, if the Company determines in good faith that such registration rights might (i) interfere with or affect the negotiation or completion of any transaction that is being contemplated by the Company (whether or not a final decision has been made to undertake such transaction) at the time the right to delay is exercised, or (ii) involve initial or continuing disclosure obligations that might not be in the best interest of the Company's stockholders, and (B) not include the Shares in a Registration Statement covering an underwritten offering to the extent that the inclusion of the Shares would, in the opinion of the managing underwriter of such an offering, adversely affect such an offering or the market for the Company's securities. In the event that the Shares are not included in the Registration Statement in accordance with the provisions of clause (B) above, the Company agrees to register the Shares promptly after the completion of the underwritten offering described in clause (B) as may be permitted by the managing underwriter of such an offering. If, after the Registration Statement becomes effective, the Company advises the holders of registered Shares that the Company considers it appropriate for the Registration Statement to be amended, 6 the holders of such Shares shall suspend any further sales of their registered Shares until the Company advises them that the Registration Statement has been amended. Each holder of Shares whose shares are registered pursuant to the Registration Statement set forth herein shall indemnify and hold harmless the Company, each of its directors and each of its officers from and against any and all claims, damages or liabilities, joint or several, to which they or any of them may become subject, including all legal and other expenses, arising out of or in connection with any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the Registration Statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading in the circumstances in which they were made, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder expressly for use therein. The liability of any such holder shall be limited to the aggregate price at which such holder's Shares of the Company is sold. In connection with the registration rights, the Company shall have no obligation: (i) to assist or cooperate in the offering or disposition of such Shares; (ii) to indemnify or hold harmless the holders of the securities being registered; (iii) to obtain a commitment from an underwriter relative to the sale of such Shares; or (iv) to include such Shares within an underwritten offering of the Company. 8. Representations and Warranties of the Company. The Company hereby represents and warrants to Purchaser as follows: (a) Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the State of Delaware with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement, and is duly qualified and licensed to do business as a foreign corporation in such other jurisdictions as is necessary to enable it to carry on its business, except where failure to do so would not have a material adverse effect on its business; (b) Corporate Power and Authority. The execution and delivery of this Agreement and the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company. No other corporate act or proceeding on the part of the Company is necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. When duly executed and delivered by the parties hereto, this Agreement will constitute a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law; 7 (c) Noncontravention. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not, to the best of the Company's knowledge and belief, (i) permit the termination or acceleration of the maturity of any material indebtedness or material obligation of the Company; (ii) permit the termination of any material note, mortgage, indenture, license, agreement, contract, or other instrument to which the Company is a party or by which it is bound or the Certificate of Incorporation or Bylaws of the Company; (iii) except as expressly provided in this Agreement and except for state "blue sky" approvals that may be required and those consents and waivers which already have been obtained by the Company, require the consent, approval, waiver or authorization from or registration or filing with any party, including but not limited to any party to a material agreement to which the Company is a party or by which it is bound, or any regulatory or governmental agency, body or entity except where failure to obtain such consent, approval, waiver or authorization would not have a material adverse effect on the Company's business; (iv) result in the creation or imposition of any lien, claim or encumbrance of any kind or nature on any material properties or assets of the Company; or (v) violate in any material aspect any statue, law, rule, regulation or ordinance, or any judgment, decree, order, regulation or rule of any court, tribunal, administrative or governmental agency, body or entity to which the Company or its properties is subject except where such violation would not have a material adverse effect on the Company's business. 9. IMPORTANT CONSIDERATIONS: SUITABILITY STANDARDS - WHO SHOULD INVEST. INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT. A substantial number of state securities commissions have established investor suitability standards for the marketing within their respective jurisdictions of restricted securities. Some have also established minimum dollar levels for purchases in their states. The reasons for these standards appear to be, among others, the relative lack of liquidity of securities of such programs as compared with other securities investments. Investment in the Shares involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in their investments. The Company has adopted as a general investor suitability standard the requirement that each Subscriber for Shares represents in writing that the Subscriber: (a) is acquiring the Shares for investment and not with a view to resale or distribution; (b) can bear the economic risk of losing its entire investment; (c) its overall commitment to investments which are not readily marketable is not disproportionate to its net worth, and an investment in the Shares will not cause such overall commitment to become excessive; (d) has adequate means of providing for its current needs and personal contingencies and has no need for liquidity in this investment in the Shares; (e) has evaluated all the risks of investment in the Company; and (f) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Company or is relying on its own purchaser representative in making an investment decision. 8 In addition, all of the Subscribers for Shares must be: (1) extremely sophisticated investors with substantial net worth and experience in making investments of this nature; and (2) "accredited investors," as defined in Rule 501 of Regulation D under the Act, by meeting any of the following conditions: (i) he or she has an individual income in excess of $200,000 in each of the two most recent years or joint income with his or her spouse in excess of $300,000 in each of those years, and he or she reasonably expects an income in excess of the aforesaid levels in the current year, or (ii) he or she has an individual net worth, or a joint net worth with his or her spouse, at the time of his or her purchase, in excess of $1,000,000 (net worth for these purposes includes homes, home furnishings and automobiles), or (iii) he or she otherwise satisfies the Company that he or she is an accredited investor, as defined in Rule 501 under the Act. Other categories of investors included within the definition of accredited investor include the following: certain institutional investors, including certain banks, whether acting in their individual or fiduciary capacities; certain insurance companies; federally registered investment companies; business development companies (as defined under the Investment Company Act of 1940); Small Business Investment Companies licensed by the Small Business Administration; certain employee benefit plans; private business development companies (as defined in the Investment Advisers Act of 1940); tax exempt organizations (as defined in Section 501(c)(3) of the Internal Revenue Code) with total assets in excess of $5,000,000; entities in which all the equity owners are accredited investors; and certain affiliates of the Company. A partnership Subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its partners are accredited investors. A corporate subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the investor suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its shareholders are accredited investors. Corporate subscribers must have net worth of at least three (3) times the amount of their investment in the Shares. The suitability standards referred to above represent minimum suitability requirements for prospective purchasers and the satisfaction of such standards by a prospective purchaser does not necessarily mean that the Shares are a suitable investment for such purchaser. The Company may, in circumstances it deems appropriate, modify such requirements. The Company may also reject subscriptions for whatever reasons, in its sole discretion, it deems appropriate. Securities Purchase Agreements may not necessarily be accepted in the order in which received. Purchasers who are residents of certain states may be required to meet certain additional suitability standards. 9 THE ACCEPTANCE OF A SUBSCRIPTION FOR SHARES BY THE COMPANY DOES NOT CONSTITUTE A DETERMINATION BY THE COMPANY THAT AN INVESTMENT IN THE SHARES IS SUITABLE FOR A PROSPECTIVE INVESTOR. THE FINAL DETERMINATION OF THE SUITABILITY OF INVESTMENT IN THE SHARES MUST BE MADE BY THE PROSPECTIVE INVESTOR AND HIS OR HER ADVISERS. 10. State Law Considerations for Residents of All States. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OFTHE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE DESCRIPTION OF BUSINESS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. 11. Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed first class postage prepaid, registered or certified mail, to the following addresses: If to the Company: VDC Communications, Inc. 75 Holly Hill Lane Greenwich, CT 06830 Attention: Frederick A. Moran Chairman & C.E.O. 10 In the case of Purchaser: To the address set forth at the end of this Agreement or to such other addresses as may be specified in accordance herewith from time to time. Unless specified otherwise, such notices and other communications shall for all purposes of this Agreement be treated as being effective upon being delivered personally or, if sent by mail, five days after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid. 12. Survival of Representations and Warranties. Representations and warranties contained herein shall survive the execution and delivery of this Agreement. 13. Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto, provided that this Agreement and the interests herein may not be assigned by either party without the express written consent of the other party. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction of incorporation of the Company without regard to the principles of conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction of the courts located in the jurisdiction of incorporation of the Company with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. 15. Sections and Other Headings. The section and other headings contained in this Agreement are for the convenience of reference only, and do not constitute part of this Agreement or otherwise affect any of the provisions hereof. 16. Counterpart Signatures. This agreement may be signed in counterparts and all counterparts together shall become effective only when the counterpart(s) have been executed and delivered by and on behalf of the Company and the Purchaser. 17. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. 18. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. 11 19. United States Dollars. All dollar amounts stated herein refer to and are payable solely in United States Dollars. IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed by their duly authorized officers. Purchaser: Frederick W. Moran 100,000 Shares/$362,500.00 - -------------------------- Number and dollar amount /s Frederick W. Moran of Shares purchased - --------------------- Purchase Price Name (Signature) Address/Residence of Purchaser: ------------------------------------ ------------------------------------ Social Security No.: ---------------- Accredited Investor Certification (Place initials on the appropriate line(s)) (i) I am a natural person who had individual - ---- income of more than $200,000 in each of the most recent two years or joint income with my spouse in excess of $300,000 in each of the most recent two years and reasonably expect to reach that same income level for the current year ("income", for purposes hereof, should be computed as follows: individual adjusted gross income, as reported (or to be reported) on a federal income tax return, increased by (1) any deduction of long-term capital gains under Section 1202 of the Internal Revenue Code of 1986 (the "Code"), (2) any deduction for depletion under Section 611 et seq. of the Code, (3) any exclusion for interest under Section 103 of the Code and (4) any losses of a partnership as reported on Schedule E of Form 1040); (ii) I am a natural person whose individual net - ---- worth (i.e., total assets in excess of total liabilities), or joint net worth with my spouse, will at the time of purchase of the Shares be in excess of $1,000,000; (iii) The Purchaser is an investor satisfying the - ---- requirements of Section 501(a)(1), (2) or (3) of Regulation D promulgated under the Securities Act, which includes but is not limited to, a self-directed employee benefit plan where investment decisions are made solely by persons who are "accredited investors" as otherwise defined in Regulation D; 12 (iv) The Purchaser is a "qualified institutional - ---- buyer" as that term is defined in Rule 144A of the Securities Act; (v) The Purchaser is a trust, which trust has - ---- total assets in excess of $5,000,000, which is not formed for the specific purpose of acquiring the Shares offered hereby and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Shares; (vi) I am a director or executive officer of the - ---- Company; or (vii) The Purchaser is an entity (other than - ---- a trust) in which all of the equity owners meet the requirements of at least one of the above subparagraphs. Agreed and Accepted by VDC COMMUNICATIONS, INC. By: /s Frederick A. Moran --------------------- Frederick A. Moran Chairman & C.E.O. Dated: 12-23-98 -------- 13 EX-99.6 7 EX-99.6 EXHIBIT 6 VDC CORPORATION LTD. ----------------------------------------------------------- Form of Securities Purchase Agreement ----------------------------------------------------------- 100,000 Shares of Common Stock at $6.00 per Share ------------------------------------------------------------- May 27, 1998 CONFIDENTIAL - ------------ SECURITIES PURCHASE AGREEMENT THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as of the 27th day of May, 1998, by and between VDC Corporation Ltd., a Bermuda corporation ("VDC" or the "Company"), and the investor whose name appears at the end of this Agreement ("Purchaser" or "Subscriber"). R E C I T A L S: ---------------- The Company wishes to obtain additional working capital and the Purchaser desires to provide such working capital to the Company through the purchase of certain shares of the Company's common stock, $2.00 par value per share (the "Common Stock"), being privately offered by the Company. NOW, THEREFORE, in consideration of the premises hereof and the agreements set forth herein below, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Sale and Purchase of Shares. Subject to the terms and conditions hereof, the Company agrees to issue and sell, and the Purchaser agrees to purchase, 100,000 shares of Common Stock at a purchase price of $6.00 per share. The purchase price is payable upon subscription in cash, check or wire transfer. If paying by check, the check should be made payable to "VDC Corporation Ltd." and delivered to VDC Corporation Ltd. at 27 Doubling Road, Greenwich, CT 06830. No broker, investment banker or any other person will receive from the Company any compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares. 2. Description of the Shares. (a) Restricted Securities. The shares of Common Stock of the Company being offered hereby (the "Shares") shall be "restricted securities" as that term is defined under Rule 144 of the Securities Act of 1933, as amended (the "Act") and may not be offered for sale or sold or otherwise transferred in a transaction which would constitute a sale thereof within the meaning of the Act unless (i) such security has been registered for sale under the Act and registered or qualified under applicable state securities laws relating to the offer and sale of securities; or (ii) exemptions from the registration requirements of the Act and the registration or qualification requirements of all such state securities laws are available and the Company shall have received an opinion of counsel that the proposed sale or other disposition of such securities may be effected without registration under the Act and would not result in any violation of any applicable state securities laws relating to the registration or qualification of securities for sale, such counsel and such opinion to be satisfactory to the Company. (b) Voting Rights; Dividends. Holders of Common Stock of the Company have equal rights to receive dividends when, as, and if declared by the Board of Directors out of funds legally available therefor. Holders of Common Stock of the Company have one vote for each share held of record and do not have cumulative voting rights. (c) Liquidation; Redemption. Holders of Common Stock of the Company are entitled upon liquidation of the Company to share ratably in the net assets available for distribution, subject to the rights, if any of holders of any preferred stock of the Company then outstanding. Shares of Common Stock of the Company are not redeemable and have no preemptive or similar rights. All outstanding shares of common stock of the Company are fully paid and nonassessable. (d) Restrictions Upon Resale. The Subscriber hereby agrees that the Shares shall be subject to restrictions upon the transfer, sale, encumbrance or other disposition of the Shares. See "Understanding of Investment Risks" and "Registration Rights". 3. Shares Offered in a Private Placement Transaction. The Shares offered by this Securities Purchase Agreement are being offered as a non-public offering pursuant to Section 4(2) and Regulation D of the Act ("Regulation D"). 4. Binding Effect of Securities Purchase Agreement; the Closing. This Securities Purchase Agreement shall not be binding on the Company unless and until an authorized executive officer of the Company has evidenced acceptance thereof by executing the signature page at the end hereof. The Company may accept or reject this Securities Purchase Agreement in its sole discretion if the Purchaser does not meet the suitability standards established herein, or for any other reason. A closing (the "Closing") will occur contemporaneously with the execution of this Agreement by all parties hereto. 5. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) Accredited Investor. The Purchaser has such knowledge and experience in business and financial matters such that the Purchaser is capable of evaluating the merits and risks of purchasing the Shares. The Purchaser is either an "accredited investor" as that term is defined in Rule 501 of Regulation D of the Act or a "qualified institutional buyer" as that term is defined in Rule 144A of the Act, and represents that he satisfies the suitability standards identified in Section 9 hereof; (b) Loss of Investment. The Purchaser('s) (i) overall commitment to investments which are not readily marketable is not disproportionate to his net worth; (ii) investment in the Company will not cause such overall commitment to become excessive; (iii) can afford to bear the loss of his entire investment in the Company; and (iv) has adequate means of providing for his current needs and personal contingencies and has no need for liquidity in his investment in the Company; (c) Special Suitability. The Purchaser satisfies any special suitability or other applicable requirements of his state of residence and/or the state in which the transaction by which the Shares are purchased occurs; 2 (d) Investment Intent. The Purchaser hereby acknowledges that the Purchaser has been advised that this offering has not been registered with, or reviewed by, the Securities and Exchange Commission ("SEC") because this offering is intended to be a non-public offering pursuant to Section 4(2) and Regulation D of the Act. The Purchaser represents that the Purchaser's Shares are being purchased for the Purchaser's own account and not on behalf of any other person, for investment purposes only and not with a view towards distribution or resale to others. The Purchaser agrees that the Purchaser will not attempt to sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Shares unless they are registered under the Act or unless in the opinion of counsel an exemption from such registration is available, such counsel and such opinion to be satisfactory to the Company. The Purchaser understands that the Shares have not been registered under the Act by reason of a claimed exemption under the provisions of the Act which depends, in part, upon the Purchaser's investment intention; (e) State Securities Laws. The Purchaser understands that no securities administrator of any state has made any finding or determination relating to the fairness of this investment and that no securities administrator of any state has recommended or endorsed, or will recommend or endorse, the offering of the Shares; (f) Authority; Power; No Conflict. The execution, delivery and performance by the Purchaser of the Agreement are within the powers of the Purchaser, have been duly authorized and will not constitute or result in a breach or default under, or conflict with, any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the Purchaser is a party or by which the Purchaser is bound, and, if the Purchaser is not an individual, will not violate any provision of the charter documents, By-Laws, indenture of trust or partnership agreement, as applicable, of the Purchaser. The signatures on the Agreement are genuine, and the signatory, if the Purchaser is an individual, has legal competence and capacity to execute the same, or, if the Purchaser is not an individual, the signatory has been duly authorized to execute the same; and the Agreement constitutes the legal, valid and binding obligations of the Purchaser, enforceable in accordance with its terms; (g) No General Solicitation. The Purchaser acknowledges that no general solicitation or general advertising (including communications published in any newspaper, magazine or other broadcast) has been received by him and that no public solicitation or advertisement with respect to the offering of the Shares has been made to him; (h) Advice of Tax and Legal Advisors. The Purchaser has relied solely upon the advice of his own tax and legal advisors with respect to the tax and other legal aspects of this investment; (i) No Brokers Fees. The Purchaser is not aware that any person, and has been advised that no person, will receive from the Company any compensation as a broker, finder, adviser or in any other capacity in connection with the purchase of the Shares other than as declared herein; (j) Access to Information. Purchaser has had access to all material and relevant information concerning the Company, its management, financial condition, capitalization, market information, properties and 3 prospects necessary to enable Purchaser to make an informed investment decision with respect to its investment in the Shares. Purchaser has carefully read and reviewed, and is familiar with and understands the contents thereof and hereof, including, without limitation, the risk factors described in this Agreement. See "Understanding of Investment Risks." Purchaser acknowledges that it has had the opportunity to ask questions of and receive answers from, and to obtain additional information from, representatives of the Company concerning the terms and conditions of the acquisition of the Shares and the present and proposed business and financial condition of the Company, and has had all such questions answered to its satisfaction and has been supplied all information requested; (k) Review of Exchange Act Reports. The Purchaser acknowledges that it has been provided with an opportunity to review: (i) a copy of the Company's Current Report on Form 8-K, which provides details as to the Company's recent merger with Sky King Communications, which copy is attached hereto as Exhibit "A"; (ii) a copy of the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, which is attached hereto as Exhibit "B"; and (iii) all other relevant reports filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934. (l) Understanding the Nature of Securities. The Purchaser understands and acknowledges that: (i) The Shares have not been registered under the Act or any state securities laws and are being issued and sold in reliance upon certain exemptions contained in the Act; (ii) The Shares are "restricted securities" as that term is defined in Rule 144 promulgated under the Act; (iii) The Shares cannot be sold or transferred without registration under the Act and applicable state securities laws, or unless the Company receives an opinion of counsel reasonably acceptable to it (as to both counsel and the opinion) that such registration is not necessary; and (iv) the Shares and any certificates issued in replacement therefor shall bear the following legend, in addition to any other legend required by law or otherwise: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE OR DISTRIBUTION THEREOF, AND MAY NOT BE TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE 4 SECURITIES ACT OF 1933, AS AMENDED, OR THE RULES AND REGULATIONS THEREUNDER." 6. Understanding of Investment Risks. An investment in the Shares should not be made by a Purchaser who cannot afford the loss of his entire Purchase Price. The Purchaser acknowledges that the Shares offered hereby have not been approved or disapproved by the Securities and Exchange Commission, or any state securities commissions, nor has the Securities and Exchange Commission or any state securities commission passed upon the adequacy or accuracy of this Securities Purchase Agreement or any exhibit hereto. Prior to making an investment in the Shares, the Purchaser has fully considered, among other things, the financial and other information set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 (a copy of which is attached hereto as Exhibit "B"), and acknowledges that such information have been considered prior to making this investment decision. 7. Registration Rights. The Company agrees that within ninety (90) days of the Closing, it will prepare and file with the Securities and Exchange Commission, and use its best efforts to have declared effective thereafter, a Registration Statement on Form SB-2 or other equivalent form pursuant to which the Company shall register the public resale of the Shares. The Company shall have the right to include within such Registration Statement any other securities on behalf of the Company or other security holders. The expenses of such registration shall be borne by the Company. Notwithstanding the foregoing, the Company may: (A) delay filing the Registration Statement and may withhold efforts to cause the Registration Statement to become effective, if the Company determines in good faith that such registration rights might (i) interfere with or affect the negotiation or completion of any transaction that is being contemplated by the Company (whether or not a final decision has been made to undertake such transaction) at the time the right to delay is exercised, or (ii) involve initial or continuing disclosure obligations that might not be in the best interest of the Company's stockholders, and (B) not include the Shares in a Registration Statement covering an underwritten offering to the extent that the inclusion of the Shares would, in the opinion of the managing underwriter of such an offering, adversely affect such an offering or the market for the Company's securities. In the event that the Shares are not included in the Registration Statement in accordance with the provisions of clause (B) above, the Company agrees to register the Shares promptly after the completion of the underwritten offering described in clause (B) as may be permitted by the managing underwriter of such an offering. If, after the Registration Statement becomes effective, the Company advises the holders of registered Shares that the Company considers it appropriate for the Registration Statement to be amended, the holders of such Shares shall suspend any further sales of their registered Shares until the Company advises them that the Registration Statement has been amended. Each holder of Shares whose shares are registered pursuant to the Registration Statement set forth herein shall indemnify and hold harmless the Company, each of its directors and each of its officers from and against any and all claims, damages or liabilities, joint or several, to which they or any of them may become subject, including all legal and other expenses, arising out 5 of or in connection with any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, in any preliminary or amended preliminary prospectus or in the prospectus (or the Registration Statement or prospectus as from time to time amended or supplemented) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading in the circumstances in which they were made, but only insofar as any such statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company in connection therewith by such holder expressly for use therein. The liability of any such holder shall be limited to the aggregate price at which such holder's Shares of the Company is sold. In connection with the registration rights, the Company shall have no obligation: (i) to assist or cooperate in the offering or disposition of such Shares; (ii) to indemnify or hold harmless the holders of the securities being registered; (iii) to obtain a commitment from an underwriter relative to the sale of such Shares; or (iv) to include such Shares within an underwritten offering of the Company. 8. Representations and Warranties of the Company. The Company hereby represents and warrants to Purchaser as follows: (a) Organization and Standing of the Company. The Company is a duly organized and validly existing corporation in good standing under the laws of the Commonwealth of Bermuda with adequate power and authority to conduct the business in which it is now engaged and has the corporate power and authority to enter into this Agreement, and is duly qualified and licensed to do business as a foreign corporation in such other jurisdictions as is necessary to enable it to carry on its business, except where failure to do so would not have a material adverse effect on its business; (b) Corporate Power and Authority. The execution and delivery of this Agreement and the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company. No other corporate act or proceeding on the part of the Company is necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. When duly executed and delivered by the parties hereto, this Agreement will constitute a valid and legally binding obligation of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium, reorganization or other similar laws and legal and equitable principles limiting or affecting the rights of creditors generally; and/or (ii) general principles of equity, regardless of whether considered in a proceeding in equity or at law; (c) Noncontravention. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not, to the best of the Company's knowledge and belief, (i) permit the termination or acceleration of the maturity of any material indebtedness or material obligation of the Company; (ii) permit the termination of any material note, mortgage, indenture, license, agreement, contract, or other instrument to which the Company is a party or by which it is bound or the Memorandum of Association or Bye-Laws of the Company; (iii) except as expressly provided in this Agreement and except for state "blue sky" approvals that may be required and those consents and waivers which already have been obtained by the Company, require 6 the consent, approval, waiver or authorization from or registration or filing with any party, including but not limited to any party to a material agreement to which the Company is a party or by which it is bound, or any regulatory or governmental agency, body or entity except where failure to obtain such consent, approval, waiver or authorization would not have a material adverse effect on the Company's business; (iv) result in the creation or imposition of any lien, claim or encumbrance of any kind or nature on any material properties or assets of the Company; or (v) violate in any material aspect any statute, law, rule, regulation or ordinance, or any judgment, decree, order, regulation or rule of any court, tribunal, administrative or governmental agency, body or entity to which the Company or its properties is subject except where such violation would not have a material adverse effect on the Company's business; and (d) Reservation of Securities. The requisite number of shares of Common Stock of the Company have been duly authorized and reserved for issuance upon the Company's receipt and acceptance of payment therefor, and no further corporate action is required for the valid issuance of such Shares. 9. IMPORTANT CONSIDERATIONS: SUITABILITY STANDARDS - WHO SHOULD INVEST. INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL RESOURCES WHO HAVE NO NEED FOR LIQUIDITY IN THEIR INVESTMENT. A substantial number of state securities commissions have established investor suitability standards for the marketing within their respective jurisdictions of restricted securities. Some have also established minimum dollar levels for purchases in their states. The reasons for these standards appear to be, among others, the relative lack of liquidity of securities of such programs as compared with other securities investments. Investment in the Shares involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in their investments. The Company has adopted as a general investor suitability standard the requirement that each Subscriber for Shares represents in writing that the Subscriber: (a) is acquiring the Shares for investment and not with a view to resale or distribution; (b) can bear the economic risk of losing its entire investment; (c) its overall commitment to investments which are not readily marketable is not disproportionate to its net worth, and an investment in the Shares will not cause such overall commitment to become excessive; (d) has adequate means of providing for its current needs and personal contingencies and has no need for liquidity in this investment in the Shares; (e) has evaluated all the risks of investment in the Company; and (f) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Company or is relying on its own purchaser representative in making an investment decision. In addition, all of the Subscribers for Shares must be: (1) extremely sophisticated investors with substantial net worth and experience in making investments of this nature; and (2) "accredited investors," as defined in 7 Rule 501 of Regulation D under the Act, by meeting any of the following conditions: (i) he or she has an individual income in excess of $200,000 in each of the two most recent years or joint income with his or her spouse in excess of $300,000 in each of those years, and he or she reasonably expects an income in excess of the aforesaid levels in the current year, or (ii) he or she has an individual net worth, or a joint net worth with his or her spouse, at the time of his or her purchase, in excess of $250,000 (net worth for these purposes includes homes, home furnishings and automobiles), or (iii) he or she otherwise satisfies the Company that he or she is an accredited investor, as defined in Rule 501 under the Act. Other categories of investors included within the definition of accredited investor include the following: certain institutional investors, including certain banks, whether acting in their individual or fiduciary capacities; certain insurance companies; federally registered investment companies; business development companies (as defined under the Investment Company Act of 1940); Small Business Investment Companies licensed by the Small Business Administration; certain employee benefit plans; private business development companies (as defined in the Investment Advisers Act of 1940); tax exempt organizations (as defined in Section 501(c)(3) of the Internal Revenue Code) with total assets in excess of $5,000,000; entities in which all the equity owners are accredited investors; and certain affiliates of the Company. A partnership Subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its partners are accredited investors. A corporate subscriber, which satisfies the requirements set forth in clauses (a) through (f) above shall satisfy the investor suitability standards if it is an accredited investor by reason of clause (iii) above, or if all of its shareholders are accredited investors. Corporate subscribers must have net worth of at least three (3) times the amount of their investment in the Shares. The suitability standards referred to above represent minimum suitability requirements for prospective purchasers and the satisfaction of such standards by a prospective purchaser does not necessarily mean that the Shares are a suitable investment for such purchaser. The Company may, in circumstances it deems appropriate, modify such requirements. The Company may also reject subscriptions for whatever reasons, in its sole discretion, it deems appropriate. Securities Purchase Agreements may not necessarily be accepted in the order in which received. Purchasers who are residents of certain states may be required to meet certain additional suitability standards. THE ACCEPTANCE OF A SUBSCRIPTION FOR SHARES BY THE COMPANY DOES NOT CONSTITUTE A DETERMINATION BY THE COMPANY THAT AN INVESTMENT IN THE SHARES IS SUITABLE FOR A PROSPECTIVE INVESTOR. THE FINAL DETERMINATION OF THE 8 SUITABILITY OF INVESTMENT IN THE SHARES MUST BE MADE BY THE PROSPECTIVE INVESTOR AND HIS OR HER ADVISERS. 10. State Law Considerations for Residents of All States. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SHARES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE DESCRIPTION OF BUSINESS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. 11. Notices. All notices, requests, consents or other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed first class postage prepaid, registered or certified mail, to the following addresses: If to the Company: VDC Corporation Ltd. 27 Doubling Road Greenwich, CT 06830 Attention: Frederick A. Moran, Chief Executive Officer With a copy to: Stephen M. Cohen, Esquire Buchanan Ingersoll Professional Corporation Eleven Penn Center 1835 Market Street, 14th Floor Philadelphia, PA 19103 In the case of Purchaser: To the address set forth at the end of this Agreement or to such other addresses as may be specified in accordance herewith from time to time. Unless specified otherwise, such notices and other communications shall for all purposes of this Agreement be treated as being effective upon being delivered personally or, if sent by mail, five days after 9 the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed as set forth above, and postage prepaid. 12. Survival of Representations and Warranties. Representations and warranties contained herein shall survive the execution and delivery of this Agreement. 13. Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto, provided that this Agreement and the interests herein may not be assigned by either party without the express written consent of the other party. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction of incorporation of the Company without regard to the principles of conflict of laws. The parties hereto hereby submit to the exclusive jurisdiction of the courts located in the jurisdiction of incorporation of the Company with respect to any dispute arising under this Agreement, the agreements entered into in connection herewith or the transactions contemplated hereby or thereby. 15. Sections and Other Headings. The section and other headings contained in this Agreement are for the convenience of reference only, and do not constitute part of this Agreement or otherwise affect any of the provisions hereof. 16. Counterpart Signatures. This Agreement may be signed in counterparts and all counterparts together shall become effective only when the counterpart(s) have been executed and delivered by and on behalf of the Company and the Purchaser. 17. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. 18. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser make any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement. 19. United States Dollars. All dollar amounts stated herein refer to and are payable solely in United States Dollars. IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have caused this Agreement to be signed by their duly authorized officers. Purchaser: Frederick W. Moran By:_/s/ Frederick W. Moran ----------------------- 10 100,000 Shares/$600,000 Frederick W. Moran - ----------------------- ------------------ Number and dollar amount Name (Signature) of Shares purchased - Purchase Price Address/Residence of Purchaser: ------------------------------------ ------------------------------------ Social Security No. ----------------- Accredited Investor Certification --------------------------------- (Place initials on the appropriate line(s)) (i) I am a natural person who had individual income of more - --- than $200,000 in each of the most recent two years or joint income with my spouse in excess of $300,000 in each of the most recent two years and reasonably expect to reach that same income level for the current year ("income", for purposes hereof, should be computed as follows: individual adjusted gross income, as reported (or to be reported) on a federal income tax return, increased by (1) any deduction of long-term capital gains under section 1202 of the Internal Revenue Code of 1986 (the "Code"), (2) any deduction for depletion under Section 611 et seq. of the Code, (3) any exclusion for interest under Section 103 of the Code and (4) any losses of a partnership as reported on Schedule E of Form 1040); (ii) I am a natural person whose individual net worth (i.e., - --- total assets in excess of total liabilities), or joint net worth with my spouse, will at the time of purchase of the Shares be in excess of $250,000; (iii) The Purchaser is an investor satisfying the requirements of - --- Section 501(a)(1), (2) or (3) of Regulation D promulgated under the Securities Act, which includes but is not limited to, a self-directed employee benefit plan where investment decisions are made solely by persons who are "accredited investors" as otherwise defined in Regulation D; (iv) The Purchaser is a "qualified institutional buyer" as that - --- term is defined in Rule 144A of the Securities Act; (v) The Purchaser is a trust, which trust has total assets - --- in excess of $5,000,000, which is not formed for the specific purpose of acquiring the Shares offered hereby and whose purchase is directed by a sophisticated person as described in Rule 506(b)(ii) of Regulation D and who has such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of an investment in the Shares; 11 (vi) I am a director or executive officer of the Company; or - --- (vii) The Purchaser is an entity (other than a trust) in which - --- all of the equity owners meet the requirements of at least one of the above subparagraphs. Agreed and Accepted by VDC CORPORATION LTD. By:/s/ Frederick A. Moran ------------------------------------------ Frederick A. Moran, Chief Executive Officer DATED:5-27-98 -------------------------- 12 EXHIBIT "A" VDC CORPORATION LTD. CURRENT REPORT ON FORM 8-K EXHIBIT "B" VDC CORPORATION LTD. FORM 10-Q -----END PRIVACY-ENHANCED MESSAGE-----