-----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, LG1SBsGUR2WYKkaP6gNBLyOKnogbYh3XCta/+qT7KNzL7Yr820/1eo3KJsCCkQMV JaqgN9mohmXZZGFay7zItg== 0000950115-98-001252.txt : 19980708 0000950115-98-001252.hdr.sgml : 19980708 ACCESSION NUMBER: 0000950115-98-001252 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19980622 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980707 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VDC CORP LTD CENTRAL INDEX KEY: 0000784961 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 061510832 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-14045 FILM NUMBER: 98661417 BUSINESS ADDRESS: STREET 1: 27 DOUBLING ROAD CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036619600 MAIL ADDRESS: STREET 1: 27 DOUBLING ROAD CITY: GREENWICH STATE: CT ZIP: 06830 8-K 1 CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): June 22, 1998 VDC CORPORATION LTD. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Bermuda 0-14045 061510832 -------- ---------------- ---------------- (State or other (Commission File No.) (IRS Employer jurisdiction of Identification No.) incorporation) 75 Holly Hill Lane Greenwich, CT 06831 -------------------------------- (Address of principal executive office) (203) 869-5100 -------------------------------- (Registrant's telephone number, including area code) 27 Doubling Road Greenwich, CT 06830 -------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS Description of Asset Purchase Transaction On June 22, 1998 (the "Transaction Date"), VDC Corporation Ltd. (the "Company") acquired from PortaCom Wireless, Inc. ("PortaCom") in an arm's length transaction 2,000,000 shares of common stock of Metromedia China Corporation (f/k/a Metromedia Asia Corporation) ("MCC"), par value $.01 per share (the "MCC Shares") and warrants to purchase 4,000,000 shares of common stock of MCC at an exercise price of $4.00 per share (the "Warrants") pursuant to an asset purchase transaction (the "Purchase Transaction") between the Company and PortaCom. MCC is a privately-held company headquartered in East Rutherford, New Jersey engaged in the operation of wireless cellular telecommunications systems and the build-out of telecommunications projects in the People's Republic of China. The management of the Company believes that the MCC Shares and Warrants represent approximately 8.7 percent of MCC's fully diluted shares. Management acquired the MCC Shares and Warrants to acquire a strategic stake in the telephony business in China and for long-term investment purposes. The Company and PortaCom had originally entered into an Asset Purchase Agreement, dated as of November 25, 1997, as amended as of February 16, 1998, for the sale of the MCC Shares and Warrants by PortaCom to the Company (the "Original Agreement"). On March 23, 1998, PortaCom filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") before the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). In connection with PortaCom's bankruptcy filing, the Company and PortaCom entered into an Asset Purchase Agreement, dated as of March 23, 1998 (as amended, the "Purchase Agreement"), which superseded the Original Agreement in its entirety. The Purchase Agreement was subsequently amended by two Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and April 23, 1998, respectively (collectively, the "Stipulations") and by an Escrow Agreement, dated April __, 1998, among the Company, PortaCom, the Committee of Unsecured Creditors of PortaCom Wireless, Inc. (the "Committee") and Klehr, Harrison, Harvey, Branzburg & Ellers LLP as escrow agent (the "Escrow Agent") (the "Escrow Agreement"). On April 23, 1998, the Bankruptcy Court entered an order approving the Purchase Agreement, as amended, authorizing PortaCom to execute and deliver the Purchase Agreement, as amended, to the Company, and authorizing and directing the consummation of the sale of the MCC Shares and Warrants by PortaCom to the Company under Section 363(b) of the Bankruptcy Code as contemplated by the Purchase Agreement. In order to consolidate the Purchase Agreement, Stipulations and Escrow Agreement into one document and to set forth the parties' mutual interpretation of the Purchase Agreement as amended by the Stipulations and the Escrow Agreement, the Company, PortaCom and the Escrow Agent entered into a Memorandum of Understanding, dated as of June 8, 1998 (the "MOU"). The Committee also executed the MOU for the limited purpose of approving Sections 3.4(b) and 3.4(d) thereof, which clarified the treatment of certain claims against PortaCom's bankruptcy estate. The Purchase Agreement, Stipulations, Escrow Agreement and MOU and other documents and instruments delivered in connection therewith are collectively referred to herein as the "Purchase Documents". Purchase Price The purchase price ("Purchase Price") for the MCC Shares and Warrants consists of (i) $82,000 in cash to be disbursed by the Escrow Agent to PortaCom from time to time to PortaCom for the payment of administrative claims against PortaCom's bankruptcy estate (the "Administrative Advance"); (ii) $2,600,000 in cash, to be held in escrow pursuant to the terms of the Escrow Agreement and subject to adjustment as described in the Purchase Documents (the "Cash Funds"); (iii) 5,300,000 newly issued shares of common stock, par value $2.00 per share, of the Company, subject to adjustment as described in the Purchase Documents (the "Company Shares"); (iv) the Deferred Purchase Price (as such term is defined in the Purchase Documents), if any; and (v) forgiveness of indebtedness owed by PortaCom to the Company in the original principal amount of $384,725 pursuant to (a) the Loan Agreement, dated November 10, 1997, between the Company and PortaCom, and (b) the Debtor-in-Possession Loan, Pledge and Security Agreement, dated March 23, 1998, between the Company and PortaCom, approved by the Bankruptcy Court on an interim basis on March 25, 1998 and on a final basis on April 23, 1998, as amended by the Stipulations (the "DIP Financing Agreement"). The Cash Funds and the Company Shares shall be held in escrow under the Escrow Agreement until the Bankruptcy Court confirms a plan of reorganization of PortaCom (the "Plan"). The Company is entitled to any interest earned on the Cash Funds during the escrow period. Under the Purchase Documents, the Cash Funds will be available to satisfy outstanding indebtedness owed to PortaCom's creditors and claimants in its bankruptcy case. To the extent that more than $384,725 of the Cash Funds is used by PortaCom to satisfy certain of its indebtedness, the excess thereof will reduce the number of Company Shares to which PortaCom is ultimately entitled as part of the Purchase Price. The Deferred Purchase Price is payable only in the event that, on June 8, 1999, MCC is a publicly held company and if the market value of the common stock of MCC exceeds a certain value as compared with the value of the Company's common stock as determined by a formula set forth in the Purchase Documents. VDC may elect to pay the Deferred Purchase Price in the form of either Company Shares (the "Deferred Purchase Price Shares") or cash. For a further description of the Company Shares issued to PortaCom and the Deferred Purchase Price Shares which the Company may issue to PortaCom, see "Description of the Securities Issued in the Purchase Transaction." The Company funded the Cash Funds component of the Purchase Price with its existing cash assets. On June 8, 1998, the parties commenced closing the Purchase Transaction in escrow (the "Escrow Closing") pursuant to the terms of a Closing Escrow Agreement, dated as of June 8, 1998, among the Company, PortaCom, Metromedia China Corporation ("MCC"), the Committee and Klehr, Harrison, Harvey, Branzburg & Ellers LLP as closing escrow agent (the "Closing Escrow Agent") (the "Closing Escrow Agreement"). At the Escrow Closing, which concluded on June 10, 1998, the Company delivered to the Closing Escrow Agent the Company Shares, subject to adjustment under the terms of the Purchase Documents. PortaCom delivered to the Closing Escrow Agent its assignment of warrant and stock power in blank relating to the transfer of the MCC Shares and Warrants to the Company. In addition, PortaCom and MCC delivered to the Closing Escrow Agent the original stock certificate representing the MCC Shares and the Company delivered to the Closing Escrow Agent the original warrant certificate representing the Warrants, which had been pledged to the Company by PortaCom as collateral for prior loan advances made under a Loan Agreement, Security Agreement and Pledge Agreement, each dated as of November 10, 1997, between the Company and PortaCom, and the DIP Financing Agreement. The Closing Escrow Agent subsequently delivered the original certificates representing the MCC Shares and Warrants, along with the assignment of warrant and stock power in blank, to MCC in order for MCC to reissue certificates for such shares and warrants in the name of the Company (the "Reissued Shares and Warrants"). The Closing Escrow Agreement automatically terminated by its terms upon the distribution by the Closing Escrow Agent of all of the Closing Escrowed Funds (as defined below), MCC Shares, MCC Warrants, the Reissued Shares and Warrants and the Company Shares, which occurred on June 22, 1998. The "Closing Escrowed Funds" consisted of a portion of the Cash Funds in the sum of $41,412.00, which represented the Closing Date Claims and the Bar Date Claims. The Company agreed to pay investment banking fees of 125,000 Company Shares (the "Investment Banking Shares"), for arranging the Purchase Transaction and for advisory services rendered in connection with the Purchase Transaction. To date, 75,000 Investment Banking Shares have been issued. The issuance of the remaining 50,000 Investment Banking Shares, however, is subject to the prior approval of the Bermuda Monetary Authority, which has yet to be obtained. Description of the Securities Issued in the Purchase Transaction In connection with the Purchase Transaction, the Company issued 5,300,000 Company Shares, subject to certain adjustments, and may have an obligation to issue Deferred Purchase Price Shares in the event the Company elects to pay the Deferred Purchase Price, if any, in the form of Company Shares. Registration Rights The Company anticipates that the transfer of the Company Shares from the Company to PortaCom and any subsequent resale or transfer thereof by or on behalf of PortaCom will be exempt from the registration requirements of the Securities Act of 1933, as amended (the "Act"), by virtue of Section 1145 of the Bankruptcy Code. However, the Company has agreed that, to the extent such transfers or resales of the Company Shares are not exempt from registration by virtue of Section 1145 of the Bankruptcy Code and are accordingly subject to the registration requirements of the Act, then the Company shall, within forty-five (45) days after the entry of an order of the Bankruptcy Code confirming a plan of reorganization of PortaCom, file with the Securities and Exchange Commission, and use its best efforts to have declared effective, a Registration Statement (the "Registration Statement") pursuant to which the Company shall register the potential resale of the Company Shares, and thereafter, shall use its best efforts to keep such Registration Statement effective until the earlier of (a) one year after the date such Registration Statement becomes effective or (b) the date on which PortaCom has transferred and distributed the Company Shares in accordance with such confirmed plan of reorganization. Other than brokerage or underwriting discounts or commissions, if any, the expenses of such registration will be borne by the Company. The Deferred Purchase Price Shares are entitled to certain registration rights. The Company has no obligation to assist or cooperate in the offering or disposition of the Deferred Purchase Price Shares, obtain a commitment from an underwriter relative to the sale of the Deferred Purchase Price Shares or include the Deferred Purchase Price Shares within an underwritten offering of the Company. Furthermore, the Company has the right to reduce the number of Deferred Purchase Price Shares to be included in a registration statement which is, in whole or in part, an underwritten public offering of the Company's common stock (and the registration of such Deferred Purchase Price Shares may be postponed by the Company for up to 180 days following the completion of any such underwritten public offering), if in the opinion of the managing underwriter, the inclusion of the Deferred Purchase Price Shares in such registration statement would adversely affect the marketing of the securities to be sold by the Company therein. Other than Seller's attorney's fees and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Deferred Purchase Price Shares, if any, the Company shall bear the expenses of including the Deferred Purchase Price Shares in a registration statement covering securities of the Company to be offered and sold by the Company to the public generally. Restrictions upon Resale The Company Shares issued to PortaCom are subject to restrictions upon resale such that 25% of the shares are eligible for resale upon the earlier of (a) confirmation of a Plan providing an exemption from the registration requirements of the Act pursuant to Section 1145 of the Bankruptcy Code or (b) the effectiveness of a Registration Statement (such earlier date shall be referred to herein as the "First Resale Date"), an additional 25% are eligible for resale six months after the First Resale Date, and the remaining 50% of the shares are eligible for resale one year after the First Resale Date. Principal Stockholders The following table sets forth certain information regarding the beneficial ownership of the Company Common Shares as of the Transaction Date with respect to: (i) each person known by the Company to beneficially own 5% or more of the outstanding Company Common Shares; (ii) each of the Company's directors; (iii) each of the Company's executive officers; and (iv) all directors and executive officers of the Company as a group. Except as otherwise indicated, each person set forth below has sole voting and investment power on the shares reported. Number of Shares Name Owned(1) Percentage of Shares ---- ---------------- -------------------- Frederick A. Moran 2,849,184(2) 13.7% Roberts Family Trust 2,750,000(3) 13.2% James C. Roberts, Trustee Thomas W. Wilson 21,000(4) .1% William Zimmerling 9,000(5) .04% Frederick W. Moran 1,522,957(6) 7.3% Clayton F. Moran 1,422,957(7) 6.8% PortaCom Wireless, Inc. 5,300,000(8) 25.5% All officers and directors of the Company as a group (4 persons) - --------------- (1) The securities "beneficially owned" by an individual are determined in accordance with the definition of "beneficial ownership" set forth in the regulations promulgated under the Securities Exchange Act of 1934, and, accordingly, may include securities owned by or for, among others, the spouse and/or minor children of an individual and any other relative who has the same home as such individual, as well as other securities as to which the individual has or shares voting or investment power or which each person has the right to acquire within 60 days after the date of this Current Report through the exercise of options, or otherwise. Beneficial ownership may be disclaimed as to certain of the securities. This table has been prepared based on 20,778,131 shares of common stock outstanding (assuming approximately 10,612,349 outstanding shares, plus 8,487,500 shares issuable upon conversion of the Series A Convertible Preferred Stock (the "Series A Shares") and the Series B Convertible Preferred Stock (the "Series B Shares") of Sky King Communications, Inc., the Company's subsidiary, plus 1,678,282 shares to be issued pursuant to either various private placement transactions which occurred on or before May 27, 1998, or as payment of consulting fees to investment banking firms). (2) Includes 157,090 shares of common stock to be issued, pursuant to a private placement which occurred on May 27, 1998, to the following entities of which Frederick A. Moran, his spouse or minor children are the sole owners or primary beneficiaries, or to the spouse or minor children of Mr. Moran: 27,000 shares to Moran Equity Fund, Inc.; 10,000 shares to Luke Moran; 10,000 shares to Kent Moran; 85,667 shares to Frederick A. Moran, IRA; 90 shares to Frederick A. Moran, Trust; 125 shares of common stock to Anne Moran, Trust; 333 shares to Kent Moran, IRA; 333 shares to Luke Moran, IRA; 23,667 shares to Frederick A. and Joan B. Moran. Also includes 1,304,650 shares of common stock owned by Kent F. Moran and 1,304,650 shares of common stock owned by Luke F. Moran, both of whom are minor children of Frederick A. Moran. Includes 82,670 shares of common stock owned in the name of Frederick A. Moran and Joan B. Moran, husband and wife. Does not include 1,422,850 shares of common stock to be issued to Frederick W. Moran and 1,522,850 shares of common stock to be issued to Clayton F. Moran, both of whom are adult children of Frederick A. Moran. Does not include 90 shares to be issued in the name of Frederick A. Moran, Trust, of which Clayton F. Moran is the beneficiary of 45 shares and Frederick W. Moran is the beneficiary of 45 shares, pursuant to a private placement transaction which occurred on May 27, 1988. Does not include 51,000 shares of common stock to be issued to Anne Moran, the mother of Frederick A. Moran, or her retirement accounts, pursuant to a private placement which occurred on May 27, 1998. (3) Includes 1,512,500 shares of common stock issued to The Roberts Family Trust and 1,237,500 shares of common stock which may be issued to The Roberts Family Trust upon conversion of the Series A and Series B shares. (4) Includes options to purchase 21,000 shares of common stock, which vested on April 1, 1998, but all of which are subject to forfeiture in the event that Mr. Wilson voluntarily resigns as the Executive Vice President of the Company or the President of Blue Sky Telecommunications, Inc. ("Blue Sky"), a wholly-owned subsidiary of the Company, on or before October 1, 1998, and half of which (or options to purchase 10,500 shares of common stock) are subject to the forfeiture in the event that Mr. Wilson resigns as the Company's Executive Vice President or Blue Sky's President on or before April 1, 1999. Does not include options to purchase 129,000 shares of common stock which may vest on or after March 31, 1999. (5) Includes options to purchase 9,000 shares of common stock, which vested on April 1, 1998, but all of which are subject to forfeiture in the event that Mr. Zimmerling voluntarily resigns as either VDC's or Blue Sky's Vice President on or before October 1, 1998, and half of which (or options to purchase 4,500 shares) are subject to forfeiture in the event that Mr. Zimmerling voluntarily resigns as either VDC's or Blue Sky's Vice President on or before April 1, 1999. Does not include options to purchase 17,500 shares of common stock which may vest on or after March 31, 1999. (6) Includes 100,000 shares of common stock to be issued to Frederick W. Moran pursuant to a private placement transaction which occurred on May 27, 1998. Includes 45 shares of common stock to be issued in the name of Frederick A. Moran, Trust and 62 shares of common stock to be issued in the name of Anne Moran, Trust, of which Frederick W. Moran is the beneficiary, pursuant to a private placement transaction which occurred on May 27, 1998. (7) Includes 63 shares of common stock to be issued in the name of Anne Moran, Trust, of which Clayton F. Moran is the beneficiary, pursuant to a private placement transaction which occurred on May 27, 1998. (8) All 5,300,000 shares are subject to downward adjustment and are being held in escrow pending the confirmation of a plan of reorganization of PortaCom in its pending Chapter 11 bankruptcy case. ITEM 5. OTHER EVENTS In order to raise working capital, the Company sold an aggregate number of 583,430 newly-issued Company Shares at a purchase price of $6.00 per share to various individuals and entities in a private placement transaction dated as of May 27, 1998. The Company raised a total of $3,500,580 in this private placement transaction for working capital purposes. The issuance of these shares, however, is subject to the prior approval of the Bermuda Monetary Authority, which has not yet been obtained. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits (referenced to Item 601 of Regulation S-K).
Exhibit Number Title ------ ----- 2.11 Asset Purchase Agreement, dated March 23, 1998 between VDC Corporation Ltd. and PortaCom Wireless, Inc. (1) 2.12 Stipulation and Order in Lieu of Objection, dated April 3, 1998. (2) 2.13 Stipulation and Order in Lieu of Objection, dated April 23, 1998. (2) 2.14 Escrow Agreement, dated April __, 1998, among VDC Corporation Ltd., PortaCom Wireless, Inc., the Committee of Unsecured Creditors of PortaCom Wireless, Inc. and Klehr, Harrison, Harvey, Branzburg & Ellers LLP (2) 2.15 Memorandum of Understanding, dated June 8, 1998, by and among VDC Corporation Ltd., PortaCom Wireless, Inc. and Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. (1) 2.16 Closing Escrow Agreement, dated June 8, 1998, by and among VDC Corporation Ltd., PortaCom Wireless, Inc., Metromedia China Corporation, the Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. and Klehr, Harrison, Harvey, Branzburg & Ellers LLP (1) 2.17 Promissory Note, dated June 9, 1998, made by VDC Corporation Ltd. in favor of PortaCom Wireless, Inc. (1) 2.18 Assignment, dated June 8, 1998, by PortaCom Wireless, Inc. (1) 10.3 Loan Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. (1) 10.4 Pledge Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. (1) 10.5 Security Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. (1) 10.6 Debtor-in-Possession Loan, Pledge and Security Agreement, dated March 23, 1998 between VDC Corporation Ltd and PortaCom Wireless, Inc. (1) 10.7 Waiver, dated June 8, 1998, by VDC Corporation Ltd. (1)
(1) Filed herewith. (2) Previously filed as an Exhibit to the Company's Form 10-Q for the quarter ended March 31, 1998, as filed with the SEC on June 1, 1998, and incorporated by reference herein. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: July 7, 1998 VDC CORPORATION LTD. By: /s/ Frederick A. Moran --------------------------- Frederick A. Moran Chairman and Chief Executive Officer EXHIBIT INDEX
Exhibit Page Number in Number Rule 0-3(b) (Referenced to Sequential Item 601 of Reg. Numbering System S-K) Where Exhibit Can Be Found 2.11 Asset Purchase Agreement, dated March 23, 1998 between VDC Corporation Ltd. and PortaCom Wireless, Inc. 2.15 Memorandum of Understanding, dated June 8, 1998, by and among VDC Corporation Ltd., PortaCom Wireless, Inc. and Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. 2.16 Closing Escrow Agreement, dated June 8, 1998, by and among VDC Corporation Ltd., PortaCom Wireless, Inc., Metromedia China Corporation, the Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. and Klehr, Harrison, Harvey, Branzburg & Ellers LLP 2.17 Promissory Note, dated June 9, 1998, made by VDC Corporation Ltd. in favor of PortaCom Wireless, Inc. 2.18 Assignment, dated June 8, 1998, by PortaCom Wireless, Inc. 10.3 Loan Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. 10.4 Pledge Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. 10.5 Security Agreement, dated November 10, 1997, between VDC Corporation Ltd. and PortaCom Wireless, Inc. 10.6 Debtor-in-Possession Loan, Pledge and Security Agreement, dated March 23, 1998 between VDC Corporation Ltd and PortaCom Wireless, Inc. 10.7 Waiver, dated June 8, 1998, by VDC Corporation Ltd.
EX-2.11 2 ASSET PURCHASE AGREEMENT ASSET PURCHASE AGREEMENT by and between VDC CORPORATION LTD., as Buyer, and PORTACOM WIRELESS, INC. as Seller March 23, 1998 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (the "Agreement") is made as of the 23rd day of March, 1998, by and between VDC CORPORATION LTD., a Bermuda corporation ("Buyer"), and PORTACOM WIRELESS, INC., a Delaware corporation ("Seller"). WITNESSETH: WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions hereafter set forth, certain of the assets of Seller as described herein; and WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement, dated as of November 25, 1997, as amended as of February 16, 1998, concerning the subject matter hereof (the "Original Agreement"); and WHEREAS, Seller and Buyer intend that this Agreement supersede in its entirety the Original Agreement; and WHEREAS, on March 23, 1998, Seller filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") before the United States Bankruptcy Court for the District of Delaware (or any other tribunal exercising jurisdiction over the Debtor and property of its estate, the "Court"); and WHEREAS, Seller remains in possession of its property and in control of its business pursuant to ss.ss.1107 and 1108 of the Bankruptcy Code; and WHEREAS, Seller and Buyer are parties to a Loan Agreement, Security Agreement and Pledge Agreement, entered into on November 10, 1997, whereby Buyer extended to Seller prior to the commencement of the case the principal sum of approximately $360,000 (together with all accrued interests, costs and fees, the "Pre-Petition Indebtedness"); and WHEREAS, Seller and Buyer are parties to a Debtor In Possession Loan, Security and Pledge Agreement, entered into after the commencement of the case, and subject to Court approval, whereby Buyer agreed to advance to Seller the principal amount up to an additional $333,000, subject to the terms and conditions set forth therein (together with all accrued interests, costs and fees, the "Post-Petition Indebtedness" and together with the Pre-Petition Indebtedness, the "Indebtedness"); and WHEREAS, Seller and Buyer agree that the transactions contemplated hereby are other than in the ordinary course of Seller's business, and accordingly Court approval is required; and WHEREAS, Seller and Buyer desire to consummate the transactions contemplated hereby as quickly as possible in order to maximize the benefit to the estate and intend to seek expedited consideration by the Court of the approval of this Agreement; and 1 NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and representations and warranties herein contained, and for other good and legal consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Buyer, intending to be legally bound hereby, agree as follows: ARTICLE 1 DEFINITIONS 1.1. When used in this Agreement, the following terms, in their singular and plural forms, shall have the meanings assigned to them below: "Act" means the Securities Act of 1933, as amended. "Agreement" is defined in the initial paragraph hereof. "Assets" means all of Seller's right, title and interest in and to all of the following described holdings: (i) Two million shares of common stock, par value $.01 per share ("MAC Common Stock"), of Metromedia Asia Corporation ("MAC"), as evidenced by Stock Certificate Number 59, dated February 28, 1997; and (ii) Warrants ("MAC Warrants") to purchase four million shares of common stock, par value $.01 per share, at $4.00 per share, of MAC, as evidenced by Warrant Number 19. "Buyer" is defined in the initial paragraph hereof. "Cash Funds" is defined in Section 3.2(a). "Claim" means a claim or demand for any and all I Liabilities, damages, losses, obligations, deficiencies, encumbrances, penalties, costs and expenses, including reasonable attorneys' fees, resulting from, related to or arising out of (i) any misrepresentation, breach of warranty or non-fulfillment of any covenant of Seller set forth in this Agreement or in any Related Document; (ii) Seller's ownership of the Assets; (iii) any and all actions, suits, investigations, proceedings, demands, assessments, audits, judgments and claims arising out of any of the foregoing. "Closing" and "Closing Date" are defined in Section 6.1. "Disclosure Schedule" is defined in Section 4.1. "GAAP" means generally accepted accounting principles in the United States, consistently applied. "Governmental Authority" means any foreign, federal, state, regional or local authority, agency, body, court or instrumentality, regulatory or otherwise, which, in whole or in 2 part, was formed by or operates under the auspices of any foreign, federal, state, regional or local government. "Indemnified Party" is defined in Section 10.4. "Indemnifying Party" is defined in Section 10.4. "Law" means any common law and any federal, state, regional, local or foreign law, rule, statute, ordinance, rule, order or regulation. "Liabilities" means liabilities, obligations, claims or debts of Seller of any type or nature, whether matured, unmatured, contingent or unknown, including, without limitation, tort, contract or other claims asserted against Seller which are based on acts or omissions occurring on, before or after the Closing Date. "Lien" means any lien, charge, covenant, condition, easement, adverse claim, demand, encumbrance, security interest, option, pledge, or any other title defect, easement or restriction of any kind. "Purchase Price" is defined in Section 3.1. "Registration Statement" is defined in Section 7.6. "Related Documents" means this Agreement and each document or instrument executed in connection with the consummation of the transactions contemplated herein. "Seller" is defined in the initial paragraph of this Agreement. "Termination Agreement" means that certain Termination Agreement, dated September 11, 1996, by and among Seller, MAC, as successor-in-interest to Asian American Telecommunications Corporation and Max E. Bobbitt, as Agent. "VDC Shares" is defined in Section 3.2(b). ARTICLE 2 SALE AND PURCHASE OF ASSETS 2.1. Agreement to Sell and Purchase Assets. Subject to the terms and conditions hereof and on the basis of and in reliance upon the covenants, agreements and representations and warranties set forth herein, on the Closing Date Seller shall sell the Assets to Buyer, and Buyer shall purchase the Assets from Seller. The Assets shall be sold, transferred and conveyed by Seller to Buyer free and clear of any and all claims, liens, encumbrances and the rights of others. 2.2. Responsibility for Liabilities. Buyer shall not assume any Liabilities of Seller by virtue of this Agreement or otherwise. Notwithstanding anything herein, in the Original 3 Agreement or in any Related Document to the contrary, except as otherwise expressly provided herein, Buyer is neither assuming nor agreeing to pay or discharge any of the claims against, or liabilities or obligations of, the Seller, Seller's bankruptcy estate or of any other party and nothing in this Agreement shall be construed to the contrary. All claims against, and liabilities and obligations of Seller, and Seller's bankruptcy estate, whether known or unknown, suspected or unsuspected, direct or contingent, in litigation, threatened or not yet asserted or existing with respect to any aspect of the Assets, Seller's bankruptcy case or estate, or this Agreement, arising or existing prior to or on the Closing Date are and shall remain the responsibility of Seller and Seller's bankruptcy estate, and such liabilities or obligations arising after Closing shall be the responsibility of the Buyer. The Order entered by the Court approving this Agreement shall specifically provide that the Buyer is not liable for pre-Closing claims, liabilities or obligations and is not liable as a successor-in-interest to creditors of Seller or Seller's bankruptcy estate. ARTICLE 3 PAYMENT OF THE PURCHASE PRICE 3.1. Purchase Price. The purchase price ("Purchase Price") for the Assets shall consist of (i) the Closing Purchase Price (as such term is defined in Section 3.2 below) and (ii) the Deferred Purchase Price (as such term is defined in Section 3.5 below), if any. 3.2. Closing Purchase Price. The Closing Purchase Price (the "Closing Purchase Price") shall be paid or delivered by Buyer at Closing in the following manner: (a) Subject to adjustment pursuant to Section 3.4 hereof, Buyer shall deliver an amount not to exceed the difference between Seven Hundred Thousand Dollars ($700,000) and the outstanding Indebtedness (the "Cash Funds") in immediately available funds in the form of cash, cashier's check or wire transfer; and (b) Buyer shall deliver 5,300,000 shares of newly issued shares of common stock, par value $2.00 per share, of Buyer (the "VDC Shares") in accordance with the provisions of Section 3.3; and (c) Buyer shall satisfy of the Indebtedness. 3.3. Allocation of Closing Purchase Price. The Closing Purchase Price shall be allocated in the following manner: (a) At the Closing, Seller will deliver a schedule (the "Debt Schedule") identifying its indebtedness as of the Closing Date. Buyer shall deliver to and deposit with Seller that portion of the Cash Funds and the VDC Shares necessary to satisfy Seller's indebtedness to its creditors in the amounts and manner as set forth in the Debt Schedule. The Cash Funds and/or any and all VDC Shares delivered to Seller pursuant to this Section 3.3(a) shall be credited against and considered a part of the Closing Purchase Price and shall be held and distributed by Seller to the creditors (or provision shall be made for the ultimate distribution of such amounts and/or Shares to creditors upon the final resolution of any disputed amounts 4 payable or claims against Seller) in accordance with the provisions of a further order of the Court. (b) Seller shall retain the VDC Shares until such time as a disposition of such shares occurs to Seller's stockholders pursuant to a confirmed plan of reorganization providing for the issuance of the VDC Shares pursuant to the exemption set forth in Bankruptcy Code ss.1145, or an effective registration statement in accordance with the provisions of Section 7.6 hereof. 3.4. Adjustment to Closing Purchase Price. Forgiveness of the Indebtedness shall constitute initial payments and deposits against the Closing Purchase Price, and, as such, shall be applied towards the Closing Purchase Price under this Agreement upon the Closing Date. 3.5. Deferred Purchase Price. (a) For the purposes of this Section 3.5, the terms listed below shall have the following meanings: (i) "MAC Base Price" means $12.00 per share for each share of MAC common stock; (ii) "MAC Market Price" means (A) If MAC's common stock is traded in the over-the-counter market and not on any national securities exchange or in the NASDAQ Reporting System, the market price shall be the average of the mean between the last bid and ask prices per share, as reported by the National Quotation Bureau, Inc. or an equivalent generally accepted reporting service, for the consecutive 20 trading days following the one year anniversary of the Closing Date, or if not so reported, the average of the closing bid and asked prices for a share of MAC common stock for the consecutive 20 trading days following the one year anniversary of the Closing Date as furnished to MAC by any member of the National Association of Securities Dealers, Inc., selected by MAC for that purpose. (B) If MAC's common stock is traded on a national securities exchange or in the NASDAQ Reporting System, the market price shall be the simple average of the closing prices of a share of MAC's common stock, as quoted on the NASDAQ Reporting System or its other principal exchange for the consecutive 20 trading days following the one year anniversary of the Closing Date. (C) If the market price cannot be determined for MAC's common stock on such date on either of the foregoing bases, the market price shall be the fair market value as reasonably determined by an investment banking firm selected by Seller and Buyer, with the cost therefor to be borne equally by Seller and Buyer. (iii) "VDC Base Price" means $5.00 per share for each share of VDC common stock; and 5 (iv) "VDC Market Price" means (A) If VDC's common stock is traded in the over-the-counter market and not on any national securities exchange nor in the NASDAQ Reporting System, the market price shall be the average of the mean between the last bid and ask prices per share, as reported by the National Quotation Bureau, Inc. or an equivalent generally accepted reporting service, for the consecutive 20 trading days following the one year anniversary of the Closing Date, or if not so reported, the average of the closing bid and asked prices for a share of VDC common stock for the consecutive 20 trading days following the one year anniversary of the Closing Date as furnished to VDC by any member of the National Association of Securities Dealers, Inc., selected by VDC for that purpose. (B) If VDC's common stock is traded on a national securities exchange or in the NASDAQ Reporting System, the market price shall be the simple average of the closing prices at which a share of VDC's common stock traded, as quoted on the NASDAQ Reporting System or its other principal exchange for the consecutive 20 trading days following the one year anniversary of the Closing Date. (C) If the market price cannot be determined by VDC's common stock on such date on either of the foregoing bases, the market price shall be the fair market value as reasonably determined by an investment banking firm selected by Seller and Buyer, with the cost therefor to be borne equally be Seller and Buyer. (b) In the event that on the one year anniversary of the Closing Date, MAC is a publicly held company whose shares are registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, Buyer shall pay and deliver to Seller the Deferred Purchase Price (the "Deferred Purchase Price") calculated in accordance with Section 3.5(c) below, if any, within ninety (90) days following the one year anniversary of the Closing Date. The Deferred Purchase Price shall be paid, at VDC's sole option, in either (i) immediately available funds in the form of cash, cashier's check or wire transfer, or (ii) shares of VDC common stock. In the event that VDC elects to pay the Deferred Purchase Price in the form of shares of VDC common stock, such stock shall be priced at the higher of $5.00 per share or the VDC Market Price per share. 6 (c) The Deferred Purchase Price shall be calculated in accordance with the following formula: MAC Market Price - VDC Market Price x $5,000,000 ----------------- ---------------- MAC Base Price VDC Base Price For example, assuming that the MAC Market Price is $13.20, and the VDC Market Price is $5.00, the Deferred Purchase Price would equal (10% - 0%) x ($5,000,000) = $500,000. If the number calculated from the above formula is negative, there is no Deferred Purchase Price. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 4.1. Disclosure Schedule. Seller has delivered or caused to be delivered to Buyer, prior to the execution of this Agreement, disclosure schedules, and documents relating thereto, which include the numbered schedules specifically referred to in this Agreement and which are attached hereto (collectively, the "Disclosure Schedule"). To the best of Seller's knowledge, the information contained in the Disclosure Schedule is complete and accurate in all material respects and all documents that are attached to the Disclosure Schedule are complete and accurate copies of the genuine original documents they purport to represent as in effect on the date hereof. Capitalized terms used in the Disclosure Schedule and not otherwise defined therein have the meanings ascribed to such terms in this Agreement. 4.2. Organization and Standing of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Subject only to approval by the Court, Seller has all requisite corporate power and authority to sell the Assets, free and clear of any and all Liens. A certified copy of Seller's Articles of Incorporation and Bylaws are attached to Schedule 4.2 of the Disclosure Schedule. 4.3. Encumbrances Created by this Agreement. The execution and delivery of this Agreement and each of the Related Documents does not, and the consummation of the transactions contemplated hereby or thereby will not, create any Liens on any assets (including the Assets) of Seller in favor of third parties. 4.4. Title to Assets. Seller and Seller's bankruptcy estate own and hold of record the entire right, title and interest in and to all of the Assets, free and clear of any and all Liens, except the liens held by Buyer and interests held by MAC. 4.5. VDC Shares to Be Issued Pursuant to Plan or Constitute Restricted Securities. Seller represents and warrants: (I) (a) that it will prepare and file a plan of reorganization and disclosure statement pertaining thereto, as soon as is practicable and in no event later than the original period fixed by ss. 1121(b) of the Bankruptcy Code, (b) that this Agreement, the 7 transactions contemplated hereby and the issuance and distribution of the VDC Shares are and will be under and in accordance with such plan as contemplated by ss.1145 of the Bankruptcy Code, or (II) upon Seller's failure to obtain a declaration from the Court that the issuance of the VDC Shares is exempt from registration pursuant to Bankruptcy Code ss.1145, (a) that it has reviewed the annual and periodic reports of Buyer, as filed by Buyer with the SEC pursuant to the Securities Exchange Act of 1934, and that it has such knowledge and experience in financial and business matters that it is capable of utilizing the information set forth therein concerning Buyer to evaluate the risks of investing in the VDC Shares; (b) that it has been advised that the VDC Shares to be issued by Buyer constitute "restricted securities" as defined in Rule 144 promulgated under the Securities Act, and accordingly, have not been and will not be registered under the Securities Act except as otherwise set forth in this Agreement, and, therefore, it may not be able to sell or otherwise dispose of such VDC Shares except if the VDC 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 VDC Shares so issued 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 for resale in connection with, a public offering or re-distribution thereof; (d) that the VDC Shares so issued will not be resold (i) without registration thereof under the Securities Act (unless an opinion of counsel acceptable to VDC, or to Buyer, an exemption from such registration is available), (ii) in violation of any law; and (e) that the certificate or certificates representing the VDC Shares to be issued will be imprinted with a legend in form and substance 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 Buyer is hereby authorized to notify the transfer agent of the status of the VDC Shares, and to take such other action including, but not limited to, the placing of a "stop transfer" order on the books and records of Buyer's transfer agent to ensure compliance with the foregoing. 4.6. Brokers' Fees. No broker, finder or other person or entity acting in a similar capacity has participated on behalf of Seller in connection with the transactions contemplated by this Agreement. Seller has not incurred any Liability for brokers' fees, finders' fees, agents' commissions or other similar forms of compensation in connection with this Agreement or the transactions contemplated hereby. 4.7. Avoidance. The transactions contemplated hereby are not subject to avoidance as fraudulent transfers or fraudulent conveyances under applicable non-bankruptcy law or the Bankruptcy Code. 8 4.8. Fair Value. Seller acknowledges and agrees that the Purchase Price constitutes fair, adequate and reasonably equivalent consideration in exchange for the Assets. 4.9. Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in any Disclosure Schedule to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 5.1. Organization and Standing of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Bermuda. 5.2. Authorization and Enforceability. Buyer has all requisite corporate power and authority to enter into this Agreement and the Related Documents to which it is a party and to carry out the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. All necessary and appropriate action has been taken by Buyer with respect to the execution and delivery of this Agreement and each of the Related Documents and the performance of its obligations hereunder and thereunder. The execution and delivery of this Agreement and the Related Documents and the consummation of the contemplated transactions by Buyer will not (a) result in the breach of any of the terms or conditions of, or constitute a default under, the Certificate of Incorporation or the By-Laws of Buyer or (b) violate any Law or any order, writ, injunction or decree of any Governmental Authority. This Agreement and any Related Documents to which Buyer is a party constitute valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms. 5.3. VDC Shares. The VDC Shares delivered by Buyer at Closing will be validly and legally issued, free and clear of any and all Liens, and will be fully paid and non-assessable, except that in the event the Court does not declare that the issuance of the VDC Shares are under a plan in Seller's bankruptcy case pursuant to Bankruptcy Code ss.1145, the VDC Shares shall be "restricted securities" pursuant to Rule 144 promulgated under the Act and except for the restrictions on resale set forth in Section 7.6 hereof. 5.4. Approval. The Board of Directors of the Buyer has approved the execution of this Agreement and the transactions contemplated thereby. 5.5. Brokers' Fees. Buyer has not incurred any liability for brokers' fees, finders' fees, agents' commissions or other similar forms of compensation in connection with this Agreement or the transactions contemplated hereby for which Seller shall have any responsibility. 5.6. Full Disclosure. No representation or warranty by Buyer in this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to 9 make the statements contained therein, in light of the circumstances in which they are made, not misleading. ARTICLE 6 CLOSING 6.1. Closing. Subject to satisfaction or waiver of all conditions precedent set forth in Sections 8 and 9 of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Buchanan Ingersoll Professional Corporation, at 10:00 a.m., local time the day on which the last of the conditions precedent set forth in either Section 8 or 9 of this Agreement is fulfilled (the "Closing Date") or at such other time, date and place as the parties may agree, but in no event shall such date be later than April 30, 1998. 6.2. Obligations of Seller. At or prior to the Closing, Seller shall deliver to Buyer, in each case, in form and substance satisfactory to Buyer: (a) a written release by all of the parties to the Termination Agreement agreeing to the release of the MAC Common Stock to the Buyer; (b) written evidence from MAC confirming that, as of the Closing Date, no part of the Assets pledged as collateral under the Termination Agreement has been sold, assigned, transferred or otherwise disposed of or subject to any action for any of the foregoing (other than the transaction contemplated in this Agreement), and that, as of the Closing Date, neither MAC nor its parent corporation, Metromedia International Group, Inc., contemplates taking any of the foregoing actions; (c) such other instruments of transfer as shall be necessary or appropriate to vest in the Buyer good and marketable title to the Assets; (d) such other documents as may be described in Article 8 of this Agreement; and (e) a certified copy of the Order approving this Agreement and authorizing Seller to consummate the transactions contemplated hereby. 6.3. Obligations of Buyer. At the Closing, Buyer shall deliver: (a) the Purchase Price in accordance with Article 3 of this Agreement; (b) a Deferred Purchase Price Note, in form and substance mutually satisfactory to the parties hereto; (c) evidence of the satisfaction of the Indebtedness; and (d) such other documents as may be described in Article 9 of this Agreement. 10 6.4. Further Documents or Necessary Action. Buyer and Seller each agree to take all such further actions on or after the Closing Date as may be necessary, desirable or appropriate in order to confirm or effectuate the transactions contemplated by this Agreement. ARTICLE 7 COVENANTS AND AGREEMENTS Seller covenants to and agrees with Buyer, and Buyer covenants to and agrees with Seller, as follows: 7.1. Conduct of Business Pending the Closing. During the period from the date of this Agreement to the Closing Date, Seller shall conduct its business operations in the ordinary and usual course and to maintain its records and books of account in a manner consistent with prior periods. Seller shall, without purporting to make any commitment on behalf of Buyer, exercise reasonable efforts to preserve intact the present business organization and personnel of Seller and the present goodwill of Seller with persons having business dealings with them. Except as otherwise required or contemplated hereby, Seller further covenants and agrees that, from the date of this Agreement to the Closing Date, it shall not, without the written consent of Buyer: (a) enter into any negotiations, discussions or agreements contemplating, affecting or respecting the Assets or Seller's ability to transfer the Assets; (b) enter into any negotiations, discussions or agreements contemplating or respecting the acquisition of Seller or any material asset thereof (other than in the ordinary course of business), whether through a sale of stock, a merger or consolidation, the sale of all or substantially all of the assets of Seller, any type of recapitalization or otherwise, with the exception of the Seller's interest in and to its Cambodian venture, the disposition of which has been discussed with the Buyer; (c) incur any Liabilities or take any action that would diminish the value of the Assets; (d) take any action which would interfere with or prevent performance of this Agreement; or (e) engage in any activity or enter into any transaction which would be inconsistent in any respect with any of the representations, warranties or covenants set forth in this Agreement, as if such representations, warranties and covenants were made at a time subsequent to such activity or transaction and all references to the date of this Agreement were deemed to be such later date. 7.2. Access By Buyer; Confidentiality. During the period from the date of this Agreement to the Closing Date, Seller shall cause Buyer, its agents and representatives to be given full access during normal business hours to the premises, buildings, offices, books, records, assets (including the Assets), Liabilities, operations, contracts, files, personnel, financial 11 and tax information and other data and information of Seller, and shall cooperate with Buyer in conducting its due diligence investigation of Seller; provided that such access shall not unreasonably interfere with the normal operations and employee relationships of Seller. All information provided to or learned by Buyer as a result of such access or otherwise in connection with the transactions contemplated by this Agreement shall be held in confidence. 7.3. Access By Seller; Confidentiality. During the period from the date of this Agreement to the Closing Date, Buyer shall cause Seller, its agents and representatives to be given full access during normal business hours to the premises, buildings, offices, books, records, assets, liabilities, operations, contracts, files, personnel, financial and tax information and other data and information of Buyer, and shall cooperate with Seller in conducting its due diligence investigation of Buyer; provided that such access shall not unreasonably interfere with the normal operations and employee relationships of Buyer. Buyer shall provide Seller with copies of all reports and/or findings made with the Securities and Exchange Commission from the date hereof through the Closing. All information provided to or learned by Seller as a result of such access or otherwise in connection with the transactions contemplated by this Agreement shall be held in confidence. 7.4. Notice of Breach or Failure of Condition. Seller and Buyer agree to give prompt notice to the others of the occurrence of any event or the failure of any event to occur that might preclude or interfere with the timely satisfaction of any condition precedent to the obligations of Seller or Buyer under this Agreement. 7.5. Best Efforts. Seller and Buyer shall use their respective best efforts to obtain all consents or approvals necessary to bring about the satisfaction of the conditions required to be performed, fulfilled or complied with by them pursuant to this Agreement and 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 to consummate and make effective the transactions contemplated by this Agreement as expeditiously as practicable. 7.6. Registration Rights Agreement. (a) Buyer agrees that, to the extent that the VDC shares may not be transferred by Seller pursuant to the provisions of Section 1145 of the Bankruptcy Code, within forty-five (45) days after the Closing Date, it shall, at its sole expense, use its best efforts to file with the SEC a registration statement (the "Registration Statement") which shall register (i) the distribution of the VDC Shares to the stockholders of Seller and (ii) the distribution of the VDC Shares delivered to third parties by the Seller in satisfaction of claims against Seller and its bankruptcy estate. Resale of the VDC Shares shall be subject to the following limitations: (i) 25% of the VDC Shares may be sold upon the date of declaration of the effectiveness of the Registration Statement; (ii) 25% of the VDC Shares may be sold upon the six month anniversary of the date of declaration of effectiveness of the Registration Statement; and 12 (iii) the remaining 50% of the VDC Shares may be sold upon the one year anniversary of the date of declaration of effectiveness of the Registration Statement. (b) Notwithstanding the rights granted hereunder, Buyer shall have no obligation whatsoever to: (i) assist or cooperate in the offering or disposition of the VDC Shares; (ii) indemnify or hold harmless the holders of the VDC Shares or any underwriter designated by such security holders; (iii) obtain a commitment from an underwriter relative to the sale of the VDC Shares; or (iv) include the VDC Shares within an underwritten offering of Buyer. 7.7. Loans. Buyer agrees to make advances, in its sole discretion, to the Seller under and in accordance Loan, Security and Pledge Agreement, with such advances being applied against the Purchase Price pursuant to Section 3.4 hereof. 7.8. Exclusive Dealing. In consideration of Buyer expending considerable time and expenses in connection with the transactions contemplated in this Agreement, including those incurred for due diligence inquiries and legal fees, Seller hereby covenants and agrees that until the later of (i) sixty (60) days after the date on which this Agreement automatically expires pursuant to Section 11.5 and (ii) the date on which this Agreement is terminated pursuant to Sections 11.1, 11.2 or 11.3, Seller will not, directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with or in any manner encourage, discuss, accept or consider any proposal of any other person relating to the acquisition of the Assets, in whole or in part, whether directly or indirectly, through purchase, merger, consolidation or otherwise, except as otherwise may be required by law or order of the Court. 7.9. Good Faith. Seller and Buyer have each acted and negotiated this Agreement in good faith. This Agreement represents an arms-length agreement among the parties, absent collusion, coercion or duress. The Purchase Price to be paid by the Buyer for the Assets in accordance herewith, represents the fair and reasonably equivalent value of and for the Assets. Further, the Order approving this Agreement shall provide that the reversal or modification or appeal thereof will not affect the validity of the Closing of the sale of the Assets to Buyer under and in accordance with such Order by virtue of specific findings that the Buyer purchased the Assets in good faith, unless such Order is stayed prior to the Closing. 7.10. Bidding Procedures. Seller covenants and agrees that it will seek expedited consideration by the Court of the approval of this Agreement, together with approval of bidding procedures acceptable to Buyer and approval of the Break-Up Fee provided for in section 11.4 below. In the event that the Court makes the sale of the Assets to Buyer subject to the submission 13 of higher and better offers, the following procedure, among others agreed to by Buyer, will govern the submission of any Competing Bid as follows: (a) The Competing Bid shall provide for consideration that exceeds the Purchase Price offered by Buyer by at least $1,100,000 (taking into effect that portion of the Purchase Price resulting from the forgiveness of the Indebtedness), and if the successful highest bidder is not Buyer, deliver to Seller at the hearing scheduled for the approval of this Agreement a nonrefundable deposit payable in cash or by certified or cashier's check in an amount equal to 10% of successful highest Competing Bid; (b) The amount of the Competing Bid for purposes of paragraph (a) above shall not be on terms which are more burdensome or conditional in any material respect than the terms hereof; (c) The form of the Competing Bid must be in the form of a final written contract signed by the competing bidder which, when and if approved by the Court, can be immediately countersigned by the Seller and shall form a binding agreement between the parties thereto; (d) The Competing Bid shall not be contingent upon receipt of financing necessary to its consummation; and (e) The Competing Bid shall not be conditioned on the outcome of unperformed due diligence by the competing bidder with respect to the business or the Seller's Assets; and the competing bidder shall be obligated to close prior to July 1, 1998. (f) If any Competing Bid does not conform to paragraphs (a) through (e) above, such bid will not be considered by the Court or be admissible at such hearing. 7.11. Cooperation. Seller and Buyer agree that they will cooperate in good faith with respect to all proceedings before the Court in the case in connection with the approval and consummation of this Agreement and the transactions contemplated hereby. 14 ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER All obligations of Buyer under this Agreement are subject to the satisfaction by Seller at or before the Closing of all of the following conditions, except to the extent expressly waived in writing by Buyer: 8.1. Representations and Warranties True at Closing. The representations and warranties of Seller contained in this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made again on the Closing Date. 8.2. Performance. Seller shall have performed and complied in all material respects with all agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing, including, without limitation, the delivery to Buyer of the documents listed in Section 6.2. 8.3. No Adverse Changes. Except as contemplated by this Agreement, there shall have been no material adverse change in the condition, prospects, business or operations, financial or otherwise, of Seller from the date of this Agreement to the Closing Date. 8.4. Litigation. On the Closing Date, there shall not be any pending or threatened litigation in any court or any proceedings by or before any Governmental Authority with a view to seek, or in which it is sought, to restrain or prohibit the consummation of the transactions contemplated by this Agreement or in which it is sought to obtain divestiture, rescission or damages in connection with the transactions contemplated by this Agreement and no investigation by any Governmental Authority shall be pending which might result in any such litigation or other proceeding. 8.5. Necessary Consents. All statutory requirements for the valid consummation by Buyer of the transactions contemplated by this Agreement shall have been fulfilled and all authorizations, consents, waivers, approvals or other actions by any Governmental Authority or third party which are required for the consummation of the transactions contemplated by this Agreement shall have been received and shall be in full force and effect. 8.6. Stockholder Approval. To the extent required by the laws of Bermuda, the stockholders of Buyer shall have approved the transactions contemplated by this Agreement. 8.7. Certificate. Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, of the Seller to the effect that the conditions set forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.8 have been satisfied. 8.8. Consents. Seller shall have provided written consents to the acquisition of the Assets by Buyer from all appropriate Governmental Authorities (to the extent so required by law) in form and substance reasonably acceptable to Buyer. 15 8.9. Due Diligence. Buyer shall have completed, to its satisfaction, a due diligence review of the financial condition, results of operations, properties, assets, liabilities, business and prospects of Seller. 8.10. Evidence of Satisfaction of Indebtedness. Seller shall have provided validly executed releases, waivers and/or settlement agreements, satisfactory in form and substance to Buyer, evidencing agreements for the satisfaction of substantially all indebtedness of, and claims against, Seller. 8.11. Court Approval. The Court shall have entered an Order in form and substance satisfactory to Buyer, approving this Agreement, authorizing the transactions contemplated hereby, replacing the Liens on the Assets by granting to the holders thereof Liens in and on the Purchase Price and authorizing the sale of the Assets free and clear of all Liens, which Order shall not be subject to a pending appeal, or motion for reconsideration, modification, vacation or stay, and as to which the time to file such appeal or motion has expired, or any such appeal or motion that may have been filed has been dismissed with prejudice or otherwise disposed of without impacting negatively the Order contemplated hereby. Further, such Order shall recognize Buyer's rights with respect to the Indebtedness under Bankruptcy Code ss.363(k), shall declare the parties' good faith in all respects under and in accordance with Bankruptcy Code ss.363(m), and shall give full effect to the Break-Up Fee, bidding and exclusive dealing provisions hereof. ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER All obligations of Seller under this Agreement are subject to the satisfaction by Buyer at or before the Closing of all of the following conditions, except to the extent expressly waived in writing by Seller: 9.1. Representations and Warranties True at Closing. The representations and warranties of Buyer contained in this Agreement shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made again on the Closing Date; provided, however, that if Buyer changes its jurisdiction of incorporation from the Commonwealth of Bermuda to the State of Delaware on or before the Closing Date, Buyer shall be deemed to represent in Section 5.1 that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 9.2. Performance. Buyer shall have performed and complied, in all material respects, with all agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing. 16 9.3. No Adverse Changes. Except as contemplated by this Agreement, there shall have been no material adverse change in the condition, business or operations, financial or otherwise, of Buyer from the date of this Agreement to the Closing Date. 9.4. Necessary Consents. All statutory requirements for the valid consummation by Seller of the transactions contemplated by this Agreement shall have been fulfilled and all authorizations, consents, waivers, approvals or other actions by any Governmental Authority or third party which are required for the consummation of the transactions contemplated by this Agreement shall have been received and shall be in full force and effect. 9.5. Certificate. Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, to the effect that the conditions set forth in Sections 9.1, 9.2 and 9.3 have been satisfied. 9.6. Court Approval. The Court shall have entered an Order in form and substance satisfactory to Seller, approving this Agreement, authorizing the transactions contemplated hereby, replacing the Liens on the Assets by granting to the holders thereof Liens in and on the Purchase Price and authorizing the sale of the Assets free and clear of all Liens. 9.7. Indebtedness. Seller shall be obligated to perform hereunder and Close the transactions contemplated hereby notwithstanding the occurrence of an Event of Default under the documents evidencing the Indebtedness or Buyer's exercise of any rights or remedies thereunder, including, without limitation, Seller shall continue to seek approval of this Agreement with respect to the MAC Shares following Buyer's exercise of its right to retain possession of the MAC Warrants in satisfaction of the Indebtedness and the Purchase Price shall be adjusted by reducing the Purchase Price by the Indebtedness and Cash Funds, resulting in the VDC Shares and Deferred Purchase Price being exchanged for the Assets. ARTICLE 10 INDEMNIFICATION AND RELATED MATTERS 10.1. Survival of Representations and Warranties. The representations and warranties contained in this Agreement, the schedules and exhibits hereto, and any agreement, document, instrument or certificate delivered hereunder, including the Related Documents, shall survive the Closing Date. This Article 10 constitutes the sole and exclusive remedy of Buyer and Seller with respect to any subject matter addressed herein, and Buyer and Seller hereby waive and release the other from any and all claims and other causes of action, including without limitation claims for contribution, relating to any such subject matter. 10.2. Indemnification by Seller. (a) Seller agrees to indemnify Buyer against and hold it harmless from: (i) all liability, loss, damage or deficiency resulting from or arising out of any inaccuracy in or breach of any representation or warranty by Seller in 17 this Agreement, in any Related Document to which Seller was a signatory or in any other agreement or document delivered by or on behalf of Seller in connection with the transactions contemplated by this Agreement; (ii) all liability of Seller not expressly assumed by Buyer; (iii) all liability, loss, damage or deficiency resulting from or arising out of any breach or nonperformance of any covenant or obligation made or incurred by Seller in this Agreement, in any Related Document to which Seller was a signatory or in any other agreement or document delivered by or on behalf of Seller in connection with the transactions contemplated by this Agreement; and (iv) any and all reasonable costs and expenses (including reasonable legal and accounting fees) related to any of the foregoing. In the event that Buyer makes a Claim which is determined by a court of competent jurisdiction to be without reasonable basis in law or fact, Buyer shall bear all reasonable costs and expenses (including court costs and reasonable legal and accounting fees), incurred by Seller in investigating and defending against such Claim, which indemnification obligation of Seller shall be secured by the Deferred Purchase Price and the VDC Shares that remain unissued and Buyer shall have the right of offset with respect thereto. 10.3. Indemnification by Buyer. Buyer shall indemnify Seller against and hold it harmless from: (a) all liability, loss, damage or deficiency resulting from or arising out of any inaccuracy in or breach of any representation or warranty by Buyer in this Agreement in any Related Document or in any other agreement or document delivered by or on behalf of Buyer in connection with the transactions contemplated by this Agreement; (b) all liability, loss, damage or deficiency resulting from or arising out of any breach or nonperformance of any covenant or obligation made or incurred by Buyer in this Agreement, in any Related Document, or in any other agreement or document delivered by or on behalf of Buyer in connection with the transactions contemplated by this Agreement; and (c) any and all reasonable costs and expenses (including reasonable legal and accounting fees) related to any of the foregoing. In the event that Seller makes a Claim which is determined by a court of competent jurisdiction to be without reasonable basis in law or fact, Seller shall bear all reasonable costs and expenses (including court costs and reasonable legal and accounting fees), incurred by Buyer in investigating and defending against such Claim. 18 10.4. Third Party Claims. If any action, suit, investigation or proceeding (including without limitation negotiations with federal, state, local or foreign tax authorities) shall be threatened or commenced by a third party in respect of which a party (an "Indemnified Party") may make a Claim hereunder, the Indemnified Party shall notify the party obligated to indemnify such party hereunder (the "Indemnifying Party") to that effect with reasonable promptness (so as to not prejudice such party's rights) after the commencement or threatened commencement of such action, suit, investigation or proceeding, and the Indemnifying Party shall have the opportunity to defend against such action, suit, investigation or proceeding (or, if the action, suit, investigation or proceeding involves to a significant extent matters beyond the scope of the indemnity agreement contained herein, those claims that are covered hereby) subject to the limitations set forth below. If the Indemnifying Party elects to defend against any action, suit, investigation or proceeding (or, as described in the preceding parenthetical, one or more claims relating thereto), the Indemnifying Party shall notify the Indemnified Party to that effect with reasonable promptness. In such case, the Indemnified Party shall have the right to employ its own counsel and participate in the defense of such matter, but the fees and expenses of counsel shall be at the expense of the Indemnified Party unless the employment of such counsel at the expense of the Indemnifying Party shall have been authorized in writing by the Indemnifying Party. Any party granted the right to direct the defense of a threatened or actual suit, investigation or proceeding hereunder shall: (i) keep the other fully informed of material developments in the action, suit, investigation or proceeding at all stages thereof; (ii) promptly submit to the other copies of all pleadings, responsive pleadings, motions and other similar legal documents and papers received in connection with the action, suit, investigation or proceeding; (iii) permit the other and its counsel, to the extent practicable, to confer on the conduct of the defense of the action, suit, investigation or proceeding; and (iv) to the extent practicable, permit the other and its counsel an opportunity to review all legal papers to be submitted prior to their submission. The parties shall make available to each other and each other's counsel and accountants all of its or their books and records relating to the action, suit, investigation or proceeding, and each party shall render to the other such assistance as may be reasonably required in order to insure the proper and adequate defense of the action, suit, investigation or proceeding. The parties shall use their respective good faith efforts to avoid the waiver of any privilege of either party. The assumption of the defense of any matter by an Indemnifying Party shall not constitute an admission of responsibility to indemnify or in any manner impair or restrict such party's rights to later seek to be reimbursed its costs and expenses if indemnification under this Agreement with respect to such matter was not required. An Indemnifying Party may elect to assume the defense of a matter at any time during the pendency of such matter, even if initially such party did not elect to assume such defense, so long as such assumption at such later time would not prejudice the rights of the Indemnified Party. No settlement of a matter by the Indemnified Party shall be binding on an Indemnifying Party for purposes of such party's indemnification obligations hereunder. 19 ARTICLE 11 TERMINATION 11.1. Termination by Mutual Consent. At any time on or prior to the Closing Date, this Agreement may be terminated by the mutual written consent of Seller and Buyer without liability on the part of Seller or Buyer. 11.2. Termination Upon Breach or Default. If Seller or Buyer shall materially default in the observance or in the due and timely performance of any of the covenants contained in this Agreement, or if there shall have been a material breach by either of the parties of any of the representations or warranties set forth in this Agreement, the other party may, upon written notice and a reasonably opportunity to cure, terminate this Agreement, without prejudice to its rights and remedies available at law, including the right to recover expenses, costs and other damages. 11.3. Termination Based Upon Failure of Conditions. If any of the conditions of this Agreement to be complied with or performed by a party on or before the Closing Date, shall not have been complied with or performed in all material respects by such date and such noncompliance or nonperformance shall not have been waived in writing by the other party, the party to whom the benefit of such condition runs may, upon written notice, terminate this Agreement, without prejudice to its or their rights and remedies available under law, including the right to recover expenses, costs and other damages. 11.4. Break-Up Fees. Notwithstanding anything to the contrary contained within this Agreement, in the event Seller is unable to, or elects not to complete the transactions contemplated by this Agreement for any reason, except: (i) a breach by Buyer of any of its representations, warranties and covenants contained herein or (ii) a material adverse development in the business or operations of Buyer between the date of this Agreement and the Closing Date, then; and in that event, Seller shall pay Buyer a break-up fee equal to One Million Dollars ($1,000,000) ("Break-Up Fee") in order to reimburse Buyer for its time and expenses incurred in connection with the transactions contemplated in this Agreement, as well as for any lost opportunity costs and direct and indirect consequential damages. Payment of the Break-Up Fee shall be made by wire transfer of immediately available funds to an account designated by Buyer not later than five (5) days after receipt by Seller of a written demand for the Break-Up Fee by Buyer, but in no case later than Seller's receipt of proceeds from the sale or other disposition of the Assets, directly or indirectly. Seller acknowledges that any payment of the Break-Up Fee will be treated as one for liquidated damages and not a penalty, such being agreed between Buyer and Seller to be a necessary condition to this Agreement to compensate Buyer for expenses and expenditures incurred and made in connection herewith and otherwise for Seller's non-compliance with this Agreement. 11.5. Final Expiration. This Agreement shall automatically expire if the Closing does not occur on or before April 30, 1998, or, upon such later date as VDC in its sole discretion may determine; provided, however, that such later date shall not be later than July 1, 1998. 20 ARTICLE 12 GENERAL 12.1. Entire Agreement. This Agreement, and the exhibits and schedules hereto (including the Disclosure Schedule), and the agreements specifically referred to herein, including the documents evidencing the Indebtedness, set forth the entire agreement and understanding of Seller and Buyer in respect of the transactions contemplated hereby and, except with respect to the provisions of Section 13 of the Letter of Intent and the no shop provisions set forth in Section 8 of the Letter of Intent, supersede all prior agreements, arrangements and understandings relating to the subject matter hereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer that is not embodied in this Agreement or in the documents specifically referred to herein and neither Seller nor Buyer shall not be bound by or liable for any alleged representation, promise, inducement or statement of intention not so set forth. 12.2. Binding Effect; Benefits; Assignment. Upon the entry of an Order by the Court approving this Agreement, all of the terms of this Agreement shall be binding upon, inure to the benefit of and be enforceable by and against Seller and its successors and authorized assigns, and Buyer and its successors and authorized assigns. Nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this Agreement except as expressly indicated herein. Neither Seller nor Buyer shall assign any of their respective rights or obligations under this Agreement to any other person, firm or corporation without the prior written consent of the other party, except that Buyer may assign its rights and obligations under this Agreement to a direct or indirect wholly-owned subsidiary of Buyer, although Buyer shall remain fully responsible for all of its obligations under this Agreement. 12.3. Construction. The headings of the sections and paragraphs of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof. The language used in this Agreement shall be deemed to be the language chosen by the parties to this Agreement to express their mutual intent, and no rule of strict construction shall be applied against any party. 12.4. Amendment and Waiver. This Agreement may be amended, modified, superseded or canceled and any of the terms, covenants, representations, warranties or conditions hereof may be waived only by a written instrument executed by Seller and Buyer or, in the case of a waiver, by or on behalf of the party waiving compliance. 12.5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware as applicable to contracts made and to be performed in Delaware, without regard to conflict of laws principles. 12.6. Public Disclosure. Except as required by Law, or in connection with the solicitation of new investment advisory agreements with Seller's clients, neither Buyer nor Seller shall make any public disclosure of the existence or terms of this Agreement or the transactions 21 contemplated hereby without the prior written consent of the other party, which consent shall not be unreasonably withheld. In the event that Seller or Buyer determines that the disclosure of the existence or terms of this Agreement is required by Law, such party shall so notify the other parties and shall provide to the other party a copy of any such public disclosure prior to releasing the same. 12.7. Notices. All notices, requests, demands and other communications to be given pursuant to the terms of this Agreement shall be in writing and shall be deemed to have been duly given if hand delivered, sent by overnight mail by a nationally recognized overnight delivery service or mailed first class, postage prepaid: (a) If to Seller: Michael Richard, President PortaCom Wireless, Inc. 10061 Talbert Avenue, Suite 200 Fountain Valley, CA 92708 Telephone: (714) 593-3234 Telecopier: (714) 593-3264 with a copy to: Francis A. Monaco, Jr., Esquire Walsh and Monzack, P.A. 1201 Orange Street, Suite 400 Wilmington, DE 19899 Telephone: (302) 656-8162 Telecopier: (302) 656-2769 and Jeffrey Kurtzman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers 1401 Walnut Street Philadelphia, PA 19102 Telephone: (215) 568-4493 Telecopier: (215) 568-6603 22 (b) If to Buyer: Frederick A. Moran, Chief Executive Officer VDC Corporation Ltd. 27 Doubling Road Greenwich, CT 06830 Telephone: (203) 661-9600 Telecopier: (203) 869-1430 with a copy to: Stephen M. Cohen, Esq. Stuart M. Brown, Esq. Buchanan Ingersoll Professional Corporation Eleven Penn Center, 14th Floor 1835 Market Street Philadelphia, Pennsylvania 19103 Telephone: (215) 665-3873 Telecopier: (215) 665-8760 Either party may change its address by prior written notice to the other party. 12.8. Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original and such counterparts shall together constitute one and the same instrument. 12.9. Expenses. Each party shall pay their own respective expenses, costs and fees incurred in connection with the negotiation, preparation, execution and delivery of this Agreement and each of the Related Documents and the consummation of the transactions contemplated hereby, including, without limitation, the fees and expenses of their respective legal counsel, accountants and financial advisors. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. VDC CORPORATION LTD. By: /s/ Frederick A. Moran ------------------------------------------- Frederick A. Moran, Chief Executive Officer PORTACOM WIRELESS, INC. By: /s/ Michael Richard ------------------------------------------- Michael Richard, President 23 EXHIBIT A Indebtedness of Seller to be satisfied from proceeds of the Purchase Price Source of Proceeds --------------------------- Cash Funds VDC Shares Creditor/Claimant Amount (amount) (Number) - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- - --------------------- --------------- --------------- --------------------- 24 EX-2.15 3 MEMORANDUM OF UNDERSTANDING MEMORANDUM OF UNDERSTANDING by and among VDC CORPORATION LTD., as Buyer, and PORTACOM WIRELESS, INC., as Seller and OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF PORTACOM WIRELESS, INC. June 8, 1998 MEMORANDUM OF UNDERSTANDING This MEMORANDUM OF UNDERSTANDING (the "MOU") is made as of the 8th day of June, 1998, by and among VDC CORPORATION LTD., a Bermuda corporation ("Buyer"), PORTACOM WIRELESS, INC., a Delaware corporation ("Seller") and the OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF PORTACOM WIRELESS, INC. (the "Committee"). WITNESSETH: WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the terms and conditions hereafter set forth, certain of the assets of Seller as described herein; and WHEREAS, Seller and Buyer are parties to that certain Asset Purchase Agreement, dated as of March 23, 1998 (the "Prior Agreement"), as amended by two Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and April 23, 1998, respectively (collectively, the "Stipulations") and by an Escrow Agreement among Seller, Buyer, the Committee and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP ("Escrow Agreement"), which Prior Agreement, as amended (the "Amended Agreement"), superseded in its entirety the Asset Purchase Agreement between Seller and Buyer dated as of November 25, 1997, as amended as of February 16, 1998, concerning the subject matter hereof; and WHEREAS, on March 23, 1998, Seller filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") before the United States Bankruptcy Court for the District of Delaware (or any other tribunal exercising jurisdiction over the Seller and property of its estate, the "Court"); and WHEREAS, Seller remains in possession of its property and in control of its business pursuant to ss.ss. 1107 and 1108 of the Bankruptcy Code; and WHEREAS, Seller and Buyer are parties to a Loan Agreement, Security Agreement and Pledge Agreement, entered into on November 10, 1997, whereby Buyer extended to Seller prior to the commencement of the case the principal sum of $366,725 (together with all accrued interests, costs and fees, the "Pre-Petition Indebtedness"); and WHEREAS, Seller and Buyer are parties to a Debtor In Possession Loan, Security and Pledge Agreement (the "DIP Financing Agreement"), entered into after the commencement of the case, and approved by the Court on an interim basis on April 3, 1998, and by a final order entered on or about April 23, 1998, as amended by the Stipulations, whereby Buyer agreed to advance to Seller the principal amount up to an additional $18,000, subject to the terms and conditions set forth therein (together with all post-petition accrued interests, costs and fees, the "Post-Petition Indebtedness" and together with the Pre-Petition Indebtedness, the "Indebtedness"); and 2 WHEREAS, the transactions contemplated hereby are other than in the ordinary course of Seller's business and, therefore, require Court approval pursuant to Bankruptcy Code ss. 363; and WHEREAS, on or about April 23, 1998, the Court entered an order (the "Order") approving the execution of the Amended Agreement and the consummation of the transactions contemplated thereby and hereby; and WHEREAS, the parties intend for this MOU to consolidate the Prior Agreement, Stipulations and Escrow Agreement into one document and set forth the parties' mutual interpretation of the Amended Agreement; and NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and representations and warranties herein contained, and for other good and legal consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE 1 DEFINITIONS 1.1 When used in this MOU, the following terms, in their singular and plural forms, shall have the meanings assigned to them below: "Act" means the Securities Act of 1933, as amended. "Allowed Claims" means the pre-petition unsecured claims, as defined in Bankruptcy Code ss. 101(5), or portion thereof, that: (a) are allowed pursuant to a final, non-appealable Order of the Court, or (b) are deemed allowed pursuant to Bankruptcy Code ss. 1111(a), or (c) are the subject of pre-petition settlement agreements, or post-petition settlements approved by the Court, that provide for the payment of cash, in whole or in part, in settlement and satisfaction thereof, and in such case, the cash portion thereof. "Amended Agreement" is defined in the recitals to this MOU. "Assets" means all of Seller's right, title and interest in and to all of the following described holdings: (i) Two million shares of common stock, par value $.01 per share ("MAC Common Stock"), of Metromedia Asia Corporation ("MAC"), predecessor-in-interest to Metromedia China Corporation, as evidenced by Stock Certificate Number 59, dated February 28, 1997; and (ii) Warrants ("MAC Warrants") to purchase four million shares of common stock, par value $.01 per share, at $4.00 per share, of MAC, as evidenced by Warrant Number 19. 3 The term "Assets" shall also include all rights and privileges pertaining to the MAC Common Stock and MAC Warrants, including, without limitation, all securities and additional securities receivable in respect of or in exchange for such securities, all rights to subscribe for securities incident to or arising from ownership of such securities, all cash, interest, stock and other dividends or distributions paid or payable on such securities, and whatever is received when any of the foregoing is sold, exchanged or otherwise disposed of, including any proceeds as such term is defined in the Uniform Commercial Code of each state as enacted and in effect on the date hereof in each applicable jurisdiction, and as the same may subsequently be amended from time to time. "Buyer" is defined in the initial paragraph hereof. "Cash Funds" is defined in Section 3.2(a) hereof. "Cash Purchase Escrow" means that segregated, interest bearing escrow account established and maintained by the Seller, funded by Buyer, in an amount equal to $2,682,000. The Cash Purchase Escrow may be funded by any combination of cash and stand-by letter of credit; provided, however, that the cash portion shall be in the minimum amount of $1,250,000. The holders of administrative claims to the extent of $82,000, and the holders of priority unsecured claims and general unsecured claims shall be the beneficiaries of this fund. "Claim" means a claim or demand for any and all Liabilities, damages, losses, obligations, deficiencies, encumbrances, penalties, costs and expenses, including reasonable attorneys' fees, resulting from, related to or arising out of (i) any misrepresentation, breach of warranty or non-fulfillment of any covenant of Seller set forth in the Amended Agreement or in any Related Document; (ii) Seller's ownership of the Assets; (iii) any and all actions, suits, investigations, proceedings, demands, assessments, audits, judgments and claims arising out of any of the foregoing. "Closing" and "Closing Date" are defined in Section 6.1 hereof. "Committee" is defined in the initial paragraph hereof. "Disclosure Schedule" is defined in Section 4.1 hereof. "Disputed Claims" means any pre-petition, unsecured claim that is not an Allowed Claim, by virtue of its being scheduled by the Seller as disputed, contingent or unliquidated, and proof of which has not been timely filed, or as to which an objection has been interposed and which is pending as of Closing. "Escrow Agent" shall mean Klehr, Harrison, Harvey, Branzburg & Ellers LLP, as escrow agent under the Escrow Agreement. "Escrow Agreement" is defined in the recitals to this MOU. 4 "GAAP" means generally accepted accounting principles in the United States, consistently applied. "Governmental Authority" means any foreign, federal, state, regional or local authority, agency, body, court or instrumentality, regulatory or otherwise, which, in whole or in part, was formed by or operates under the auspices of any foreign, federal, state, regional or local government. "Indemnified Party" is defined in Section 10.4 hereof. "Indemnifying Party" is defined in Section 10.4 hereof. "Law" means any common law and any federal, state, regional, local or foreign law, rule, statute, ordinance, rule, order or regulation. "Liabilities" means liabilities, obligations, claims or debts of Seller of any type or nature, whether matured, unmatured, contingent or unknown, including, without limitation, tort, contract or other claims asserted against Seller which are based on acts or omissions occurring on, before or after the Closing Date. "Lien" means any lien, charge, covenant, condition, easement, adverse claim, demand, encumbrance, security interest, option, pledge, or any other title defect, easement or restriction of any kind. "MOU" is defined in the initial paragraph hereof. "Purchase Price" is defined in Section 3.1 hereof. "Registration Statement" is defined in Section 7.6 hereof. "Related Documents" means the Amended Agreement, Escrow Agreement and each document or instrument executed in connection with the consummation of the transactions contemplated herein. "Seller" is defined in the initial paragraph of this MOU. "Settlements" means the pre-petition settlement agreements and post-petition settlements approved by the Court which provide for the payment of securities of Buyer or cash. "Termination Agreement" means that certain Termination Agreement, dated September 11, 1996, by and among Seller, MAC, as successor-in-interest to Asian American Telecommunications Corporation and predecessor-in-interest to Metromedia China Corporation, and Max E. Bobbitt, as Agent. "VDC Shares" is defined in Section 3.2(b) hereof. 5 ARTICLE 2 SALE AND PURCHASE OF ASSETS 2.1 Agreement to Sell and Purchase Assets. Subject to the terms and conditions hereof and on the basis of and in reliance upon the covenants, agreements and representations and warranties set forth herein, on the Closing Date Seller shall sell the Assets to Buyer, and Buyer shall purchase the Assets from Seller. The Assets shall be sold, transferred and conveyed by Seller to Buyer free and clear of any and all claims, Liens, encumbrances and the rights of others, including, without limitation, any restrictions upon resale under applicable federal or state securities rules, regulations or laws. 2.2 Responsibility for Liabilities. Buyer shall not assume any Liabilities of Seller by virtue of the Amended Agreement or otherwise. Notwithstanding anything herein, in the Amended Agreement or in any Related Document to the contrary, except as otherwise expressly provided herein, Buyer is neither assuming nor agreeing to pay or discharge any of the claims against, or Liabilities or obligations of, the Seller, Seller's bankruptcy estate or of any other party and nothing in any such document or the Order shall be construed to the contrary. All claims against, and Liabilities and obligations of Seller, and Seller's bankruptcy estate, whether known or unknown, suspected or unsuspected, direct or contingent, in litigation, threatened or not yet asserted or existing with respect to any aspect of the Assets, Seller's bankruptcy case or estate, or the Amended Agreement, arising or existing prior to or on the Closing Date are and shall remain the responsibility of Seller and Seller's bankruptcy estate, and such Liabilities or obligations arising after Closing with respect to any aspect of the Assets shall be the responsibility of the Buyer. The Order entered by the Court approving the Amended Agreement specifically provides that the Buyer is not liable for pre-Closing claims, Liabilities or obligations and is not liable as a successor-in-interest to creditors of Seller or Seller's bankruptcy estate. ARTICLE 3 PAYMENT OF THE PURCHASE PRICE 3.1 Purchase Price. The purchase price ("Purchase Price") for the Assets shall consist of (i) the Administrative Advance (as such term is defined in Section 3.4(i) below), (ii) the Closing Purchase Price (as such term is defined in Section 3.2 below) and (iii) the Deferred Purchase Price (as such term is defined in Section 3.5 below), if any. 3.2 Closing Purchase Price. The Closing Purchase Price (the "Closing Purchase Price") shall be paid or delivered by Buyer at or before Closing in the following manner: (a) Subject to adjustment pursuant to Section 3.4 hereof, Buyer has delivered the Cash Purchase Escrow (the "Cash Funds") to the Escrow Agent for the benefit of Seller and Buyer; and (b) At Closing, subject to adjustment provided for in Section 3.4 hereof, Buyer shall deliver to the Escrow Agent 5,300,000 newly issued shares of common stock, par 6 value $2.00 per share, of Buyer in accordance with the provisions of Sections 3.3 and 7.7 hereof (the "VDC Shares"). After Closing, the number of VDC Shares to be issued to Seller, and subsequently transferred to Seller's creditors and equity security holders, in consideration hereof shall equal the difference between (i) 5,300,000 and (ii) the difference between the principal amount of the Cash Purchase Escrow delivered to Seller (subject to and in accordance with the terms of Section 3.4 hereof) and the Indebtedness, divided by the value of the Buyer's stock valued consistently with paragraph 14 of the Motion to (A) to Establish Bidding Procedures and Approve a Break-Up Fee in Connection with the Sale of the Debtor's Interest in Certain Property of the Estate and (B) to Approve the Form and Manner of Notice, dated March 23, 1998, which is attached hereto as Exhibit "B" (the "Procedures Motion"). For example, if the funds of the Cash Purchase Escrow delivered to Seller are in the amount of $1,400,000, the Indebtedness is $400,000 and the value of the VDC Shares is $6.00, the number of VDC Shares to be issued to Seller is equal to 5,133,334 shares (5,300,000 - ((1,400,000 - 400,000)/6)); and (c) Post Closing and after Buyer has received from the Escrow Agent that portion of the Cash Purchase Escrow, together with all accrued interest and other earnings thereon, as well as the Returned Shares (as such term is defined in Section 3.4(h)(i) hereof), pursuant to Sections 3.4(e), (f) and (h) hereof and Section 8(b) of the Escrow Agreement, Buyer shall, within fifteen (15) business days thereafter, mark the notes evidencing the Indebtedness satisfied and deliver the same to Seller. 3.3 Distribution of VDC Shares. In addition to Section 7.6 and subject to Section 7.7, Seller shall retain the VDC Shares delivered from the Escrow Agent until such time as a transfer or other disposition of such shares occurs to Seller's creditors and stockholders pursuant to (a) a confirmed plan of reorganization providing for the transfer of the VDC Shares pursuant to the exemption set forth in Bankruptcy Code ss. 1145, or (b) an effective Registration Statement in accordance with the provisions of Section 7.6 hereof. 3.4 Closing and Post-Closing Adjustments of Cash Purchase Escrow and VDC Shares. (a) Forgiveness of the Indebtedness shall constitute a portion of the Closing Purchase Price, and, as such, shall be applied towards the Closing Purchase Price under the Amended Agreement upon or after the Closing Date, as the case may be. (b) At or before Closing, the Seller shall deliver to the Escrow Agent a schedule containing the amounts and names of the holders of all priority unsecured and general unsecured claims for which, as of the Closing Date, proof(s) of claim have been filed in the scheduled or a lesser amount ("Closing Date Claims"). At Closing, the Escrow Agent shall deliver to Seller from the Cash Funds an amount equal to the Closing Date Claims for distribution to the holders of Closing Date Claims pursuant to further order of the Court. (c) Upon the later of (i) Closing or (ii) the entry of a final, non-appealable Order by the Court approving or ratifying the Settlements, or otherwise authorizing a settlement and compromise upon the terms of, the Settlements, including an Order confirming a plan of 7 reorganization providing for such approval, ratification, or authorization, the Escrow Agent shall deliver to Seller or the disbursing agent under such plan, as the case may be, cash and a portion of the VDC Shares in an amount equal to that to be distributed pursuant to the Settlements. The consideration payable to third parties to any Settlement shall be deemed to constitute an Allowed Claim having a value in the amount of such consideration. In the event Seller fails to obtain a final, non-appealable Order approving or ratifying any of the Settlements, or otherwise authorizing a settlement and compromise upon the terms of such Settlement, then any resulting claim asserted against the Seller's bankruptcy estate shall constitute a Disputed Claim and be treated in accordance with paragraph 3.4(e) below. (d) Upon the later of (i) Closing or (ii) within seven (7) days after May 15, 1998 (the "Bar Date"), Seller shall deliver to the Escrow Agent, Buyer and the Committee a schedule containing the amounts and names of holders of all claims, other than the Closing Date Claims, as to which, as of the Bar Date, are scheduled by the Seller as fixed and liquidated, unsecured claims against the Seller's bankruptcy estate and for which no proof(s) of claim has been filed or for which proof(s) of claim have been filed in the scheduled or a lesser amount than that which was scheduled by the Seller (collectively, the "Bar Date Claims"). The Bar Date Claims shall be deemed to constitute Allowed Claims. Within five (5) days after delivery by the Seller of such schedule, but not before Closing, the Escrow Agent shall deliver to Seller from the Cash Funds an amount equal to the Bar Date Claims for distribution to the holders of Bar Date Claims pursuant to further order of the Court. (e) All claims against the Seller's bankruptcy estate other than the Closing Date Claims, claims resolved through the Settlements and the Bar Date Claims constitute "Disputed Claims." From time to time after Closing, and to the extent that any Disputed Claim becomes an Allowed Claim pursuant to a final, non-appealable Order of the Court ("Other Allowed Claim(s)"), the Escrow Agent shall deliver to Seller or the disbursing agent under a plan of reorganization confirmed in the Seller's case, as the case may be, for distribution to the holder(s) thereof, cash and/or a portion of the VDC Shares having an aggregate value equal to the aggregate amount of such Other Allowed Claim pursuant to further order of the Court; and shall disburse to Buyer the 60% Credit without further order of the Court (as defined in Section 3.4(f) below) on account of each such Other Allowed Claim. (f) 60% Credit. The "60% Credit" shall equal 60% of the disallowed portion of any Disputed Claim and constitute a reduction, from time to time and prior to the final disbursement provided for in section 3.4(g) below, in Buyer's liability under the standby letter of credit used to fund the Cash Purchase Escrow (the "Letter of Credit") and/or a payment in cash to Buyer, whichever Buyer may from time to time elect in writing (Buyer, having funded the Cash Purchase Escrow in full in cash is deemed to elect a payment in cash to Buyer of the 60% Credit). In the event Buyer has elected to receive a reduction in its liability under the Letter of Credit, the Escrow Agent shall as is necessary to implement Section 3.4(g) hereof, send written notice of the 60% Credit(s) to the financial institution issuing the Letter of Credit. (g) Upon the later of (i) Closing or (ii) following the entry of an order confirming a plan of reorganization in the Case that provides for the consummation of the Amended 8 Agreement and sale of the Assets to Buyer, then the Escrow Agent may disburse to Seller not more than one million VDC Shares of the First Series of VDC Shares, as defined in Section 7.7(a)(i) below, that may be alienated by Seller pursuant to Sections 7.6 and 7.7 hereof, which VDC Shares may be liquidated by Seller, and the proceeds thereof available to pay administrative expenses or otherwise distributed to creditors (such VDC Shares shall be referred to as the "Administrative Shares"). (h) After payment of all Closing Date Claims, Settlements, Bar Date Claims, and Other Allowed Claims, the Escrow Agent shall make a final distribution of the Cash Purchase Escrow and VDC Shares: (i) To the Buyer: (A) of cash in an amount equal to the sum of the disallowed amount of Disputed Claims not previously disbursed as part of the 60% Credit, plus the Cash Portion funded in the Escrow Account in excess of the cash required to pay the Closing Date Claims, Bar Date Claims, cash paid under Settlements, and cash paid to holders of Other Allowed Claims, plus all interest and other earnings on the Cash Funds, and (B) of the "Returned Shares," defined as a portion of the VDC Shares in an amount equal to the difference between (x) the total amount of the Cash Funds distributed on account of the Closing Date Claims, Bar Date Claims, Settlements, Other Allowed Claims and Administrative Advance, as defined below, and (y) the Indebtedness, plus the fee incurred by Buyer to obtain the Letter of Credit, divided by the value of the shares of stock of Buyer valued consistently with paragraph 14 of the Procedures Motion; and (ii) To the Seller: of all of the VDC Shares remaining after distribution of the Returned Shares to Buyer and the Administrative Shares, or portion thereof, to Seller. (i) The Cash Funds shall comprise in part the amount of $82,000.00, which amount may be disbursed by the Escrow Agent to the Seller from time to time for the payment of administrative claims ("Administrative Advance"). The Administrative Advance may be disbursed as a result of the entry of the Order, and may be disbursed prior to Closing under the Amended Agreement, as a non-refundable deposit on account of the Closing Purchase Price. Thereafter, the Seller shall submit advance requests to the Escrow Agent and legal counsel for the Committee and funds from the Administrative Advance will be disbursed by the Escrow Agent to the Seller in amounts approved by the Committee, which approval shall not be unreasonably withheld, subject to all terms of the Escrow Agreement. The Committee shall be deemed to approve any advance requests as to which it has not notified the Seller's counsel and Escrow Agent of an objection thereto within three (3) business days of its receipt of any such request. 3.5 Deferred Purchase Price. (a) For the purposes of this Section 3.5, the terms listed below shall have the following meanings: 9 (i) "MAC Base Price" means $12.00 per share for each share of MAC common stock; (ii) "MAC Market Price" means (A) If MAC's common stock is traded in the over-the-counter market and not on any national securities exchange or in the NASDAQ Reporting System, the market price shall be the average of the mean between the last bid and ask prices per share, as reported by the National Quotation Bureau, Inc. or an equivalent generally accepted reporting service, for the consecutive 20 trading days following the one year anniversary of the Closing Date, or if not so reported, the average of the closing bid and asked prices for a share of MAC common stock for the consecutive 20 trading days following the one year anniversary of the Closing Date as furnished to MAC by any member of the National Association of Securities Dealers, Inc., selected by MAC for that purpose. (B) If MAC's common stock is traded on a national securities exchange or in the NASDAQ Reporting System, the market price shall be the simple average of the closing prices of a share of MAC's common stock, as quoted on the NASDAQ Reporting System or its other principal exchange for the consecutive 20 trading days following the one year anniversary of the Closing Date. (C) If the market price cannot be determined by MAC's common stock on such date on either of the foregoing bases, the market price shall be the fair market value as reasonably determined by an investment banking firm selected by Seller and Buyer, with the cost therefor to be borne equally by Seller and Buyer. (iii) "VDC Base Price" means $5.00 per share for each share of VDC common stock; and (iv) "VDC Market Price" means (A) If VDC's common stock is traded in the over-the-counter market and not on any national securities exchange nor in the NASDAQ Reporting System, the market price shall be the average of the mean between the last bid and ask prices per share, as reported by the National Quotation Bureau, Inc. or an equivalent generally accepted reporting service, for the consecutive 20 trading days following the one year anniversary of the Closing Date, or if not so reported, the average of the closing bid and asked prices for a share of VDC common stock for the consecutive 20 trading days following the one year anniversary of the Closing Date as furnished to VDC by any member of the National Association of Securities Dealers, Inc., selected by VDC for that purpose. (B) If VDC's common stock is traded on a national securities exchange or in the NASDAQ Reporting System, the market price shall be the simple average of the closing prices at which a share of VDC's common stock traded, as quoted on the NASDAQ 10 Reporting System or its other principal exchange for the consecutive 20 trading days following the one year anniversary of the Closing Date. (C) If the market price cannot be determined by VDC's common stock on such date on either of the foregoing bases, the market price shall be the fair market value as reasonably determined by an investment banking firm selected by Seller and Buyer, with the cost therefor to be borne equally be Seller and Buyer. (b) In the event that on the one year anniversary of the Closing Date, MAC is a publicly held company whose shares are registered with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934, as amended (the "1934 Act"), Buyer shall pay and deliver to Seller the Deferred Purchase Price (the "Deferred Purchase Price") calculated in accordance with Section 3.5(c) below, if any, within ninety (90) days following the one year anniversary of the Closing Date. The Deferred Purchase Price shall be paid, at VDC's sole option, in either (i) immediately available funds in the form of cash, cashier's check or wire transfer, or (ii) shares of VDC common stock. In the event that VDC elects to pay the Deferred Purchase Price in the form of shares of VDC common stock (the "Deferred Purchase Price Shares"), the value of such stock for the purposes of such determination, shall be computed at the higher of $5.00 per share or the VDC Market Price per share. The following registration rights shall apply with respect to the resale of the Deferred Purchase Price Shares by Seller: (i) The Buyer shall advise the Seller 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 Buyer to be offered and sold by the Buyer to the public generally and shall, upon the request of the Seller given at least seven (7) business days prior to the filing of such registration statement, include in any such registration statement such information as may be required to permit a public offering of the Deferred Purchase Price Shares. The Buyer shall supply prospectuses, qualify the Deferred Purchase Price Shares for sale in such states as the Buyer qualified its securities and furnish indemnification in the manner as set forth in subsection (ii)(B) of this Section 3.5(b); provided, however, that the Buyer will not be required to maintain the registration of the Deferred Purchase Price Shares for any longer period than it shall require for its own purposes. The Seller shall furnish such information as may be reasonably requested by the Buyer in order to include such Deferred Purchase Price Shares in the registration statement. The Buyer need not include the resale of the Deferred Purchase Price Shares in any underwritten offering; the sole obligation of the Buyer being to include the resale of such shares in a registration statement, not to ensure their method of distribution. Towards that end, the Buyer shall have no obligation whatsoever to (a) assist or cooperate in the offering or disposition of the Deferred Purchase Price Shares; (b) obtain a commitment from an underwriter relative to the sale of the Deferred Purchase Price Shares; or (c) include the Deferred Purchase Price Shares within an underwritten offering of the Buyer. In the event that any registration pursuant to this Section 3.5(b) shall be, in whole or in part, an underwritten public offering of common stock of Buyer, the number of Deferred Purchase Price Shares to be included in such underwriting may be reduced (and the registration of such Deferred Purchase Price Shares may be postponed by the Buyer for up to 180 days following the completion of any such underwritten offering) if and to the extent the managing underwriter shall be of the opinion 11 that such inclusion would adversely affect the marketing of the securities to be sold by the Buyer therein. Notwithstanding the foregoing, the Buyer may withdraw any registration statement referred to in this Section 3.5(b) without thereby incurring liability to the Seller. (ii) The following provisions of this Section 3.5(b) shall also be applicable: (A) The Buyer shall bear the entire cost and expense of any registration of securities initiated by it under subsection (i) of this Section 3.5(b) notwithstanding that Deferred Purchase Price Shares may be included in any such registration. The Seller shall, however, bear the fees of its own counsel and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Deferred Purchase Price Shares sold by it pursuant to any registration statement pursuant to this Section 3.5(b) and bear any other costs imposed by applicable federal or state securities laws, rules or regulations. (B) The Buyer shall indemnify and hold harmless the Seller and each underwriter, within the meaning of the Act, who may purchase from or sell for the Seller any Deferred Purchase Price Shares from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement under the Act filed by or at the direction of the Buyer or any prospectus included therein required to be filed or furnished by reason of this Section 3.5(b) or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims damages or liabilities are caused by any such untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Buyer by the Seller or underwriter expressly for use therein, which indemnification shall include each person, if any, who controls any such underwriter within the meaning of such Act; provided, however, that the Buyer shall not be obliged so to indemnify the Seller or underwriter or controlling person unless the Seller or underwriter shall at the same time indemnify the Buyer, its directors, each officer signing the related registration statement and each person, if any, who controls the Buyer within the meaning of such Act, from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus required to be filed or furnished by reason of this Section 3.5(b) or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such losses, claims, damages or liabilities are caused by any untrue statement or alleged untrue statement or omission based upon information furnished in writing to the Buyer by the Seller or underwriter expressly for use therein. (c) The Deferred Purchase Price shall be calculated in accordance with the following formula: MAC Market Price - VDC Market Price x $5,000,000 ---------------- ---------------- MAC Base Price VDC Base Price 12 For example, assuming that the MAC Market Price is $13.20, and the VDC Market Price is $5.00, the Deferred Purchase Price would equal (10% - 0%) x ($5,000,000) = $500,000. If the number calculated from the above formula is negative, there is no Deferred Purchase Price. (d) Notwithstanding anything to the contrary contained herein, in the event that on the one year anniversary of the Closing Date, MAC is not a publicly held company whose shares are registered with the SEC under the 1934 Act, Buyer shall have no obligation to pay the Deferred Purchase Price. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 4.1 Disclosure Schedule. Seller has delivered or caused to be delivered to Buyer, prior to the execution of this MOU, disclosure schedules, and documents relating thereto, which include the numbered schedules specifically referred to in this MOU and which are attached hereto (collectively, the "Disclosure Schedule"). To the best of Seller's knowledge, the information contained in the Disclosure Schedule is complete and accurate in all material respects and all documents that are attached to the Disclosure Schedule are complete and accurate copies of the genuine original documents they purport to represent as in effect on the date hereof. Capitalized terms used in the Disclosure Schedule and not otherwise defined therein have the meanings ascribed to such terms in this MOU. 4.2 Organization and Standing of Seller. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Subject only to approval by the Court, Seller has all requisite corporate power and authority to sell the Assets, free and clear of any and all Liens, including, without limitation, any restrictions upon resale under applicable federal or state securities rules, regulations or laws. A certified copy of Seller's Articles of Incorporation and Bylaws are attached to Schedule 4.2 of the Disclosure Schedule. 4.3 Encumbrances Created by the Amended Agreement. The execution and delivery of the Amended Agreement and each of the Related Documents does not, and the consummation of the transactions contemplated hereby or thereby will not create (i) any Liens on any assets (including the Assets) of Seller in favor of third parties, or (ii) any restrictions upon resale of the Assets under applicable federal or state securities rules, regulations or laws. 4.4 Title to Assets. Seller and Seller's bankruptcy estate own and hold of record the entire right, title and interest in and to all of the Assets, free and clear of any and all Liens, including, without limitation, any restrictions upon resale under applicable federal or state securities rules, regulations or laws, except the Liens held by Buyer and interests held by MAC which are to be released upon the Closing. 13 4.5 VDC Shares to Be Transferred Pursuant to Plan or Constitute Restricted Securities. Seller represents and warrants: (I) (a) that it has prepared and filed a plan of reorganization and disclosure statement pertaining thereto within the original period fixed by ss. 1121(b) of the Bankruptcy Code, (b) that the Amended Agreement, the transactions contemplated thereby and the distribution of the VDC Shares are and will be under and in accordance with such plan as contemplated by ss. 1145 of the Bankruptcy Code, or (II) upon Seller's failure to obtain a declaration from the Court that the offer, sale or transfer of the VDC Shares is exempt from registration pursuant to Bankruptcy Code ss. 1145 in accordance with a plan of reorganization, (a) that it has reviewed the annual and periodic reports of Buyer, as filed by Buyer with the SEC pursuant to the Securities Exchange Act of 1934, and that it has such knowledge and experience in financial and business matters that it is capable of utilizing the information set forth therein concerning Buyer to evaluate the risks of investing in the VDC Shares; (b) that it has been advised that the VDC Shares to be issued by Buyer constitute "restricted securities" as defined in Rule 144 promulgated under the Securities Act, and accordingly, have not been and will not be registered under the Securities Act except as otherwise set forth in the Amended Agreement, and, therefore, it may not be able to sell or otherwise dispose of such VDC Shares except if the VDC 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 VDC Shares so issued 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 for resale in connection with, a public offering or re-distribution thereof, except in accordance with and pursuant to a confirmed plan of reorganization and confirmation order entered by the Court; (d) that the VDC Shares so issued will not be resold (i) without registration thereof under the Securities Act (unless an opinion of counsel acceptable to VDC, or to Buyer, an exemption from such registration is available), (ii) in violation of any law; and (e) that the certificate or certificates representing the VDC Shares to be issued will be imprinted with a legend in form and substance 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 Buyer is hereby authorized to notify the transfer agent of the status of the VDC Shares, and to take such other action including, but not limited to, the placing of a "stop transfer" order on the books and records of Buyer's transfer agent to ensure compliance with the foregoing and Sections 7.6 and 7.7 hereof. 4.6 Brokers' Fees. No broker, finder or other person or entity acting in a similar capacity has participated on behalf of Seller in connection with the transactions contemplated by 14 the Amended Agreement. Seller has not incurred any Liability for brokers' fees, finders' fees, agents' commissions or other similar forms of compensation in connection with the Amended Agreement or the transactions contemplated thereby. 4.7 Avoidance. The transactions contemplated hereby are not subject to avoidance as fraudulent transfers or fraudulent conveyances under applicable non-bankruptcy law or the Bankruptcy Code. 4.8 Fair Value. Seller acknowledges and agrees that the Purchase Price constitutes fair, adequate and reasonably equivalent consideration in exchange for the Assets. 4.9 Settlements. To the best of Seller's knowledge, the Settlements are enforceable in Seller's bankruptcy case, and Seller will vigorously attempt to enforce them in Seller's Chapter 11 bankruptcy case, to the extent necessary. 4.10 Full Disclosure. No representation or warranty by Seller in the Amended Agreement or this MOU and no statement contained in any Disclosure Schedule to the Amended Agreement or this MOU contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. . ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 5.1 Organization and Standing of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Bermuda. 5.2 Authorization and Enforceability. Buyer has all requisite corporate power and authority to enter into the Amended Agreement and the Related Documents to which it is a party and to carry out the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. All necessary and appropriate action has been taken by Buyer with respect to the execution and delivery of the Amended Agreement and each of the Related Documents and the performance of its obligations hereunder and thereunder. The execution and delivery of the Amended Agreement and the Related Documents and the consummation of the contemplated transactions by Buyer will not (a) result in the breach of any of the terms or conditions of, or constitute a default under, the Memorandum of Association or the Bye-Laws of Buyer or (b) violate any Law or any order, writ, injunction or decree of any Governmental Authority. The Amended Agreement and any Related Documents to which Buyer is a party constitute valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms. 5.3 VDC Shares. The VDC Shares delivered by Buyer at Closing will be validly and legally issued, free and clear of any and all Liens, and will be fully paid and non-assessable. The 15 VDC Shares constitute "restricted securities" as such term is defined in Rule 144 under the Act and may not be subsequently offered, sold or transferred without registration under the Act except pursuant to Bankruptcy Code ss. 1145 or pursuant to an exemption from registration under the Act. The VDC Shares are also subject to the restrictions on resale set forth in Section 7.7 hereof. 5.4 Approval. The Board of Directors of the Buyer has approved the execution of the Amended Agreement and the transactions contemplated thereby. 5.5 Brokers' Fees. Buyer has not incurred any liability for brokers' fees, finders' fees, agents' commissions or other similar form of compensation in connection with the Amended Agreement and the transactions contemplated hereby for which Seller shall have any responsibility. 5.6 Full Disclosure. No representation or warranty by Buyer in this MOU or the Amended Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. ARTICLE 6 CLOSING 6.1 Closing. Subject to satisfaction or waiver of all conditions precedent set forth in Articles 8 and 9 of the Amended Agreement, the closing of the transactions contemplated by the Amended Agreement (the "Closing") shall take place at the offices of Buchanan Ingersoll Professional Corporation, at 10:00 a.m., local time the day on which the last of the conditions precedent set forth in either Article 8 or 9 of the Amended Agreement is fulfilled (the "Closing Date") or at such other time, date and place as the parties may agree, but in no event shall such date be later than July 1, 1998. 6.2 Obligations of Seller. At or prior to the Closing, Seller shall deliver to Buyer, in each case, in form and substance satisfactory to Buyer: (a) a newly issued share certificate issued in the name of Buyer, free of any restriction on transfer thereof, representing 2,000,000 shares of common stock, par value $.01 per share, of Metromedia China Corporation; (b) a newly issued warrant certificate issued in the name of Buyer, free of any restriction on transfer thereof, representing the right to purchase 4,000,000 shares of common stock, par value $.01 per share, of Metromedia China Corporation, at $4.00 per share; (c) a written release by all of the parties to the Termination Agreement agreeing to the release of the MAC Common Stock to the Buyer; 16 (d) written evidence from MAC confirming that, as of the Closing Date, no part of the Assets pledged as collateral under the Termination Agreement has been sold, assigned, transferred or otherwise disposed of or subject to any action for any of the foregoing (other than the transaction contemplated in the Amended Agreement), and that, as of the Closing Date, neither MAC nor its parent corporation, Metromedia International Group, Inc., contemplates taking any of the foregoing actions; (e) such other instruments of transfer as shall be necessary or appropriate to vest in the Buyer good and marketable title to the Assets; (f) such other documents as may be described in Article 8 of this MOU; and (g) a certified copy of the Order approving the Amended Agreement and authorizing Seller to consummate the transactions contemplated hereby and all certifications of service and publication filed in connection therewith. 6.3 Obligations of Buyer. At the Closing, Buyer shall deliver: (a) the Purchase Price in accordance with Article 3 of this MOU; (b) such other documents as may be described in Article 9 of this MOU; and (c) the Deferred Purchase Price Note. 6.4 Further Documents or Necessary Action. Buyer and Seller each agree to take all such further actions on or after the Closing Date as may be necessary, desirable or appropriate in order to confirm or effectuate the transactions contemplated by this MOU and the Amended Agreement. ARTICLE 7 COVENANTS AND AGREEMENTS Seller covenants to and agrees with Buyer, and Buyer covenants to and agrees with Seller, as follows: 7.1 Conduct of Business Pending the Closing. During the period from the date of the Amended Agreement to the Closing Date, Seller shall conduct its business operations in the ordinary and usual course and to maintain its records and books of account in a manner consistent with prior periods. Seller shall, without purporting to make any commitment on behalf of Buyer, exercise reasonable efforts to preserve intact the present business organization and personnel of Seller and the present goodwill of Seller with persons having business dealings with them. Except as otherwise required or contemplated hereby, Seller further covenants and agrees that, from the date of the Amended Agreement to the Closing Date, it shall not, without the written consent of Buyer: 17 (a) enter into any negotiations, discussions or agreements contemplating, affecting or respecting the Assets or Seller's ability to transfer the Assets; (b) enter into any negotiations, discussions or agreements contemplating or respecting the acquisition of Seller or any material asset thereof (other than in the ordinary course of business), whether through a sale of stock, a merger or consolidation, the sale of all or substantially all of the assets of Seller, any type of recapitalization or otherwise, with the exception of the Seller's interest in and to its Cambodian venture, the disposition of which has been discussed with the Buyer; (c) incur any Liabilities or take any action that would diminish the value of the Assets; (d) take any action which would interfere with or prevent performance of this MOU or the Amended Agreement; or (e) engage in any activity or enter into any transaction which would be inconsistent in any respect with any of the representations, warranties or covenants set forth in this MOU or the Amended Agreement as if such representations, warranties and covenants were made at a time subsequent to such activity or transaction and all references to the date of this MOU or the Amended Agreement, as the case may be, were deemed to be such later date. 7.2 Access By Buyer; Confidentiality. During the period from the date of the Amended Agreement to the Closing Date, Seller shall cause Buyer, its agents and representatives to be given full access during normal business hours to the premises, buildings, offices, books, records, assets (including the Assets), Liabilities, operations, contracts, files, personnel, financial and tax information and other data and information of Seller, and shall cooperate with Buyer in conducting its due diligence investigation of Seller; provided that such access shall not unreasonably interfere with the normal operations and employee relationships of Seller. All information provided to or learned by Buyer as a result of such access or otherwise in connection with the transactions contemplated by this MOU and the Amended Agreement shall be held in confidence, except as otherwise disclosed by Seller in its bankruptcy case. 7.3 Access By Seller; Confidentiality. During the period from the date of the Amended Agreement to the Closing Date, Buyer shall cause Seller, its agents and representatives to be given full access during normal business hours to the premises, buildings, offices, books, records, assets, liabilities, operations, contracts, files, personnel, financial and tax information and other data and information of Buyer, and shall cooperate with Seller in conducting its due diligence investigation of Buyer; provided that such access shall not unreasonably interfere with the normal operations and employee relationships of Buyer. Buyer shall provide Seller with copies of all reports and/or findings made with the SEC from the date hereof through the Closing. All information provided to or learned by Seller as a result of such access or otherwise in connection with the transactions contemplated by this MOU and the Amended Agreement shall be held in confidence. 18 7.4 Notice of Breach or Failure of Condition. Seller and Buyer agree to give prompt notice to the other of the occurrence of any event or the failure of any event to occur that might preclude or interfere with the timely satisfaction of any condition precedent to the obligations of Seller or Buyer under the Amended Agreement. 7.5 Best Efforts. Seller and Buyer shall use their respective best efforts to obtain all consents or approvals necessary to bring about the satisfaction of the conditions required to be performed, fulfilled or complied with by them pursuant to the Amended Agreement and 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 to consummate and make effective the transactions contemplated by the Amended Agreement as expeditiously as practicable. 7.6 Resales and Transfers of VDC Shares. Buyer and Seller contemplate that an offer and sale of the VDC Shares to Seller and any resale or transfer thereof by or on behalf of Seller will be exempt from registration by virtue of Section 1145 of the Bankruptcy Code. Buyer agrees that, to the extent, and only to the extent, that an offer, sale, resale or transfer of the VDC Shares is subject to the registration requirements of the Act, then within forty-five (45) days after the entry of an order of the Court confirming a plan of reorganization of the Seller, Buyer shall, at its sole expense, file with the SEC a registration statement (the "Registration Statement") which shall register the offer, sale, resale, transfer or distribution of the VDC Shares from VDC to PortaCom, and by or on behalf of PortaCom to its stockholders and creditors pursuant to such a plan, thereafter shall use its best efforts to cause such Registration Statement to become effective in accordance with the requirements of the Act and to remain effective until the earlier of (i) one year after the date such Registration Statement becomes effective or (ii) PortaCom has transferred and distributed the VDC Shares in accordance with such plan of reorganization. 7.7 Restrictions on Resale of VDC Shares. (a) Resale of the VDC Shares, regardless of whether such shares may be sold, offered or transferred by Seller pursuant to Section 1145 of the Bankruptcy Code or pursuant to an effective registration statement filed pursuant to Section 7.6 above, shall be subject to the following additional limitations: (i) 25% of the VDC Shares, inclusive of the Administrative Shares disbursed pursuant to Section 3.4(g) above (the "First Series"), may only be sold, offered or transferred upon the earlier of (A) confirmation of a plan of reorganization of Seller providing an exemption from the registration requirements of the Act Section 1145 of the Bankruptcy Code or (B) the effectiveness of the Registration Statement provided in Section 7.6 above (the "First Resale Date"); (ii) 25% of the VDC Shares (the "Second Series") may only be sold, offered or transferred upon the six month anniversary of the First Resale Date; and 19 (iii) the remaining 50% of the VDC Shares (the "Third Series") may only be sold, offered or transferred upon the one year anniversary of First Resale Date. (b) Notwithstanding the rights granted hereunder, Buyer shall have no obligation whatsoever to: (i) assist or cooperate in the offering or disposition of the VDC Shares; (ii) indemnify or hold harmless the holders of the VDC Shares or any underwriter designated by such security holders; (iii) obtain a commitment from an underwriter relative to the sale of the VDC Shares; or (iv) include the VDC Shares within an underwritten offering of Buyer. (c) The VDC Shares representing the First Series (which shall include the Administrative Shares) distributed to Seller and its stockholders shall bear the following restrictive legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON RESALE AS SET FORTH IN SECTION 7.6(a)(i) OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998 BETWEEN THE COMPANY AND PORTACOM WIRELESS, INC. ("PORTACOM"), AS AMENDED, AND SECTION 7.7(a)(i) OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998 BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH PROHIBITS THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE MOU). (d) The VDC Shares representing the Second Series distributed to Seller and its stockholders shall bear the following restrictive legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON RESALE AS SET FORTH IN 20 SECTION 7.6(a)(ii) OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998 BETWEEN THE COMPANY AND PORTACOM WIRELESS, INC. ("PORTACOM") AND SECTION 7.7(a)(ii) OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998 BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH PROHIBITS THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE MOU). (e) The VDC Shares representing the Third Series distributed to Seller and its stockholders shall bear the following restrictive legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON RESALE AS SET FORTH IN SECTION 7.6(a)(iii) OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998 BETWEEN THE COMPANY AND PORTACOM WIRELESS, INC. ("PORTACOM") AND SECTION 7.7(a)(iii) OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998 BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH PROHIBITS THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE MOU). 7.8 Loans. Buyer has made advances to the Seller under and in accordance with the Loan, Security and Pledge Agreement in the aggregate principal amount of $384,725 as of the date hereof and is under no obligation to, and may not pursuant to order of the Court, make additional advances to Seller. The Indebtedness shall be applied on account of the Purchase Price pursuant to Section 3.4 hereof. 21 7.9 Exclusive Dealing. In consideration of Buyer expending considerable time and expenses in connection with the transactions contemplated in the Amended Agreement, including those incurred for due diligence inquiries and legal fees, Seller hereby covenants and agrees that until the date on which the Amended Agreement is terminated pursuant to Sections 11.1, 11.2 or 11.3, Seller will not, directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with or in any manner encourage, discuss, accept or consider any proposal of any other person relating to the acquisition of the Assets, in whole or in part, whether directly or indirectly, through purchase, merger, consolidation or otherwise, except as otherwise may be required by law or order of the Court. 7.10 Good Faith. Seller and Buyer have each acted and negotiated this MOU in good faith. This MOU represents an arms-length agreement among the parties, absent collusion, coercion or duress. The Purchase Price to be paid by the Buyer for the Assets in accordance herewith, represents the fair and reasonably equivalent value of and for the Assets. Further, the Order approving the Amended Agreement shall provide that the reversal or modification or appeal thereof will not affect the validity of the Closing of the sale of the Assets to Buyer under and in accordance with such Order by virtue of specific findings that the Buyer purchased the Assets in good faith, unless such Order is stayed prior to the Closing. 7.11 Bidding Procedures. [Intentionally omitted]. 7.12 Cooperation. Seller and Buyer agree that they will cooperate in good faith with respect to all proceedings before the Court in the case in connection with the approval and consummation of the Amended Agreement and this MOU and the transactions contemplated hereby. 7.13 Cash Purchase Escrow. Interest and all other earnings on the Cash Purchase Escrow shall inure to the benefit of Buyer. The excess Cash Purchase Escrow, or any portion thereof, shall be returned to Buyer from time to time at such time as any Disputed Claim becomes an Allowed Claim, as provided for in Section 3.4 hereof. All other terms and conditions of the escrow are set forth in the Escrow Agreement. The Escrow Agreement, except Section 8(a) thereof as expressly modified by Section 3.4(b) hereof, shall remain in full force and effect; provided, however, that the terms of Section 10 of the Escrow Agreement shall remain in full force and effect notwithstanding anything to the contrary contained herein. 7.14 Post-Closing Agreement. Seller and Buyer covenant and agree to enter into a Post-Closing Agreement on the Closing Date that shall include an obligation on the part of Seller to file an amended plan of reorganization with the Court identifying the sale, offer, transfer or distribution of the VDC Shares from Buyer to Seller and from Seller to Seller's creditors and stockholders as exempt from registration under Section 1145 of the Bankruptcy Code consistent with the terms hereof. 7.15 Non-Refundable Deposit. The Administrative Advance and, by virtue of the entry of the Order, $260,000 of the Cash Purchase Escrow shall be non-refundable as to Buyer, except in the event of a default by Seller under the Amended Agreement. 22 ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER All obligations of Buyer under the Amended Agreement are subject to the satisfaction by Seller at or before the Closing of all of the following conditions, except to the extent expressly waived in writing by Buyer: 8.1 Representations and Warranties True at Closing. The representations and warranties of Seller contained in this MOU shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made again on the Closing Date. 8.2 Performance. Seller shall have performed and complied in all material respects with all agreements and conditions required by this MOU and the Amended Agreement to be performed or complied with by Seller prior to or at the Closing, including, without limitation, the delivery to Buyer of the documents listed in Section 6.2. 8.3 No Adverse Changes. Except as contemplated by this MOU, there shall have been no material adverse change in the condition, prospects, business or operations, financial or otherwise, of Seller from the date of the Amended Agreement to the Closing Date. 8.4 Litigation. On the Closing Date, there shall not be any pending or threatened litigation in any court or any proceedings by or before any Governmental Authority with a view to seek, or in which it is sought, to restrain or prohibit the consummation of the transactions contemplated by this MOU or in which it is sought to obtain divestiture, rescission or damages in connection with the transactions contemplated by this MOU and no investigation by any Governmental Authority shall be pending which might result in any such litigation or other proceeding. 8.5 Necessary Consents. All statutory requirements for the valid consummation by Buyer of the transactions contemplated by this MOU shall have been fulfilled and all authorizations, consents, waivers, approvals or other actions by any Governmental Authority or third party which are required for the consummation of the transactions contemplated by this MOU shall have been received and shall be in full force and effect. 8.6 Stockholder Approval. To the extent required by the laws of Bermuda, the stockholders of Buyer shall have approved the transactions contemplated by this MOU. 8.7 Certificate. Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, of the Seller to the effect that the conditions set forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.8 have been satisfied. 8.8 Consents. Seller shall have provided written consents to the acquisition of the Assets by Buyer from all appropriate Governmental Authorities (to the extent so required by law) in form and substance reasonably acceptable to Buyer. 23 8.9 Due Diligence. Buyer shall have completed, to its satisfaction, a due diligence review of the financial condition, results of operations, properties, assets, liabilities, business and prospects of Seller. 8.10 Satisfaction of Claims. The Settlements shall be determined to be enforceable against the non-Seller parties thereto in accordance with their terms in the Seller's bankruptcy case. Seller shall use its best efforts to resolve claims against its bankruptcy estate as soon as is practicable. 8.11 Court Approval. The Court has entered the Order. The Order shall not be subject to a pending appeal, or motion for reconsideration, modification, vacation or stay, and as to which any appeal or motion, the time to file such appeal or motion has expired, or any such appeal or motion that may have been filed has been dismissed with prejudice or otherwise disposed of without impacting negatively the validity and enforceability of the Order contemplated hereby. 8.12 Escrow Agreement. The Committee and Escrow Agent shall have executed this MOU, agreeing to the amendment and modification of Section 8(a) of the Escrow Agreement by Section 3.4(b) hereof. There shall not have occurred and be continuing an uncured event of default under the Escrow Agreement. ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER All obligations of Seller under the Amended Agreement are subject to the satisfaction by Buyer at or before the Closing of all of the following conditions, except to the extent expressly waived in writing by Seller: 9.1 Representations and Warranties True at Closing. The representations and warranties of Buyer contained in this MOU shall have been true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made again on the Closing Date; provided, however, that if Buyer changes its jurisdiction of incorporation from the Commonwealth of Bermuda to the State of Delaware on or before the Closing Date, Buyer shall be deemed to represent in Section 5.1 that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 9.2 Performance. Buyer shall have performed and complied, in all material respects, with all agreements and conditions required by this MOU and the Amended Agreement to be performed or complied with by Buyer prior to or at the Closing. 9.3 No Adverse Changes. Except as contemplated by this MOU, there shall have been no material adverse change in the condition, business or operations, financial or otherwise, of Buyer from the date of the Amended Agreement to the Closing Date. 24 9.4 Necessary Consents. All statutory requirements for the valid consummation by Seller of the transactions contemplated by this MOU shall have been fulfilled and all authorizations, consents, waivers, approvals or other actions by any Governmental Authority or third party which are required for the consummation of the transactions contemplated by this MOU shall have been received and shall be in full force and effect. 9.5 Certificate. Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, to the effect that the conditions set forth in Sections 9.1, 9.2 and 9.3 have been satisfied. 9.6 Indebtedness. Seller shall be obligated to perform hereunder and Close the transactions contemplated hereby notwithstanding the occurrence of an Event of Default under the documents evidencing the Indebtedness or Buyer's exercise of any rights or remedies thereunder. 9.7 Escrow Agreement. The Committee and Escrow Agent shall have executed this MOU, agreeing to the amendment and modification of Section 8(a) of the Escrow Agreement by Section 3.4(b) hereof. There shall not have occurred and be continuing an uncured event of default under the Escrow Agreement. ARTICLE 10 INDEMNIFICATION AND RELATED MATTERS 10.1 Survival of Representations and Warranties. The representations and warranties contained in the Amended Agreement and this MOU, the schedules and exhibits hereto, and any agreement, document, instrument or certificate delivered hereunder, including the Related Documents, shall survive the Closing Date. Except as otherwise provided in Section 7.15 hereof, this Article 10 constitutes the sole and exclusive remedy of Buyer and Seller with respect to any subject matter addressed herein, and Buyer and Seller hereby waive and release the other from any and all claims and other causes of action, including without limitation claims for contribution, relating to any such subject matter. 10.2 Indemnification by Seller. (a) Seller agrees to indemnify Buyer against and hold it harmless from: (i) all liability, loss, damage or deficiency resulting from or arising out of any inaccuracy in or breach of any representation or warranty by Seller in the Amended Agreement or this MOU, in any Related Document to which Seller was a signatory or in any other agreement or document delivered by or on behalf of Seller in connection with the transactions contemplated by this MOU and the Amended Agreement; (ii) all liability of Seller not expressly assumed by Buyer; 25 (iii) all liability, loss, damage or deficiency resulting from or arising out of any breach or nonperformance of any covenant or obligation made or incurred by Seller in the Amended Agreement or this MOU, in any Related Document to which Seller was a signatory or in any other agreement or document delivered by or on behalf of Seller in connection with the transactions contemplated by this MOU and the Amended Agreement; and (iv) any and all reasonable costs and expenses (including reasonable legal and accounting fees) related to any of the foregoing. In the event that Buyer makes a Claim which is determined by a court of competent jurisdiction to be without reasonable basis in law or fact, Buyer shall bear all reasonable costs and expenses (including court costs and reasonable legal and accounting fees), incurred by Seller in investigating and defending against such Claim, which indemnification obligation of Seller shall be secured by the Deferred Purchase Price and the VDC Shares that remain unissued in the possession of the Escrow Agent or not further distributed to creditors or stockholders of Seller and Buyer shall have the right of offset with respect thereto. 10.3 Indemnification by Buyer. (a) Buyer shall indemnify Seller against and hold it harmless from: (i) all liability, loss, damage or deficiency resulting from or arising out of any inaccuracy in or breach of any representation or warranty by Buyer in the Amended Agreement or this MOU in any Related Document or in any other agreement or document delivered by or on behalf of Buyer in connection with the transactions contemplated by this MOU and the Amended Agreement; (ii) all liability, loss, damage or deficiency resulting from or arising out of any breach or nonperformance of any covenant or obligation made or incurred by Buyer in the Amended Agreement and this MOU, in any Related Document, or in any other agreement or document delivered by or on behalf of Buyer in connection with the transactions contemplated by this MOU and the Amended Agreement; and (iii) any and all reasonable costs and expenses (including reasonable legal and accounting fees) related to any of the foregoing. In the event that Seller makes a Claim which is determined by a court of competent jurisdiction to be without reasonable basis in law or fact, Seller shall bear all reasonable costs and expenses (including court costs and reasonable legal and accounting fees), incurred by Buyer in investigating and defending against such Claim. 10.4 Third Party Claims. If any action, suit, investigation or proceeding (including without limitation negotiations with federal, state, local or foreign tax authorities) shall be threatened or commenced by a third party in respect of which a party (an "Indemnified Party") 26 may make a Claim hereunder, the Indemnified Party shall notify the party obligated to indemnify such party hereunder (the "Indemnifying Party") to that effect with reasonable promptness (so as to not prejudice such party's rights) after the commencement or threatened commencement of such action, suit, investigation or proceeding, and the Indemnifying Party shall have the opportunity to defend against such action, suit, investigation or proceeding (or, if the action, suit, investigation or proceeding involves to a significant extent matters beyond the scope of the indemnity agreement contained herein, those claims that are covered hereby) subject to the limitations set forth below. If the Indemnifying Party elects to defend against any action, suit, investigation or proceeding (or, as described in the preceding parenthetical, one or more claims relating thereto), the Indemnifying Party shall notify the Indemnified Party to that effect with reasonable promptness. In such case, the Indemnified Party shall have the right to employ its own counsel and participate in the defense of such matter, but the fees and expenses of counsel shall be at the expense of the Indemnified Party unless the employment of such counsel at the expense of the Indemnifying Party shall have been authorized in writing by the Indemnifying Party. Any party granted the right to direct the defense of a threatened or actual suit, investigation or proceeding hereunder shall: (i) keep the other fully informed of material developments in the action, suit, investigation or proceeding at all stages thereof; (ii) promptly submit to the other copies of all pleadings, responsive pleadings, motions and other similar legal documents and papers received in connection with the action, suit, investigation or proceeding; (iii) permit the other and its counsel, to the extent practicable, to confer on the conduct of the defense of the action, suit, investigation or proceeding; and (iv) to the extent practicable, permit the other and its counsel an opportunity to review all legal papers to be submitted prior to their submission. The parties shall make available to each other and each other's counsel and accountants all of its or their books and records relating to the action, suit, investigation or proceeding, and each party shall render to the other such assistance as may be reasonably required in order to insure the proper and adequate defense of the action, suit, investigation or proceeding. The parties shall use their respective good faith efforts to avoid the waiver of any privilege of either party. The assumption of the defense of any matter by an Indemnifying Party shall not constitute an admission of responsibility to indemnify or in any manner impair or restrict such party's rights to later seek to be reimbursed its costs and expenses if indemnification under the Amended Agreement or this MOU with respect to such matter was not required. An Indemnifying Party may elect to assume the defense of a matter at any time during the pendency of such matter, even if initially such party did not elect to assume such defense, so long as such assumption at such later time would not prejudice the rights of the Indemnified Party. No settlement of a matter by the Indemnified Party shall be binding on an Indemnifying Party for purposes of such party's indemnification obligations hereunder. ARTICLE 11 TERMINATION 11.1 Termination by Mutual Consent. At any time on or prior to the Closing Date, the Amended Agreement and this MOU may be terminated by the mutual written consent of Seller and Buyer without liability, including deposits not paid, on the part of Seller or Buyer. 27 11.2 Termination Upon Breach or Default. If Seller or Buyer shall materially default in the observance or in the due and timely performance of any of the covenants contained in the Amended Agreement, or if there shall have been a material breach by either of the parties of any of the representations or warranties set forth in this MOU, the other party may, upon written notice and a reasonably opportunity to cure, terminate the Amended Agreement, without prejudice to its rights and remedies available at law, including the right to recover expenses, costs and other damages. 11.3 Termination Based Upon Failure of Conditions. If any of the conditions of the Amended Agreement to be complied with or performed by a party on or before the Closing Date, shall not have been complied with or performed in all material respects by such date and such noncompliance or nonperformance shall not have been waived in writing by the other party, the party to whom the benefit of such condition runs may, upon written notice, terminate the Amended Agreement, without prejudice to its or their rights and remedies available under law, including the right to recover expenses, costs and other damages, and, upon a breach of this Section 11.3 by Seller, Buyer shall be entitled to retain all unpaid deposits. 11.4 Break-Up Fees. Notwithstanding anything to the contrary contained within this MOU or the Amended Agreement, in the event Seller is unable to, or elects not to complete the transactions contemplated by this MOU for any reason, except: (i) a breach by Buyer of any of its representations, warranties and covenants contained herein or (ii) a material adverse development in the business or operations of Buyer between the date of the Amended Agreement and the Closing Date, then, and in that event, Seller shall pay Buyer a break-up fee equal to One Million Dollars ($1,000,000) ("Break-Up Fee") in order to reimburse Buyer for its time and expenses incurred in connection with the transactions contemplated in this MOU and the Amended Agreement, as well as for any lost opportunity costs and direct and indirect consequential damages. Payment of the Break-Up Fee shall be made by wire transfer of immediately available funds to an account designated by Buyer not later than five (5) days after receipt by Seller of a written demand for the Break-Up Fee by Buyer, but in no case later than Seller's receipt of proceeds from the sale or other disposition of the Assets, directly or indirectly. Seller acknowledges that any payment of the Break-Up Fee will be treated as one for liquidated damages and not a penalty, such being agreed between Buyer and Seller to be a necessary condition to this MOU and the Amended Agreement to compensate Buyer for expenses and expenditures incurred and made in connection herewith and otherwise for Seller's non-compliance with this MOU and the Amended Agreement. 11.5 Final Expiration. The Amended Agreement shall automatically expire if the Closing does not occur on or before July 1, 1998, or, upon such later date as VDC in its sole discretion may determine; provided, however, that such later date shall not be later than December 31, 1998. 28 ARTICLE 12 GENERAL 12.1 Entire Agreement. Subject to Section 12.10, this MOU, and the exhibits and schedules hereto (including the Disclosure Schedule), and the agreements specifically referred to herein, including the Escrow Agreement, as amended by Section 3.4(b) hereof, and the documents evidencing the Indebtedness, set forth the entire agreement and understanding of Seller and Buyer in respect of the transactions contemplated hereby and, except with respect to the provisions of Section 13 of the Letter of Intent and the no shop provisions set forth in Section 8 of the Letter of Intent, supersede all prior agreements, arrangements and understandings relating to the subject matter hereof. No representation, promise, inducement or statement of intention has been made by Seller or Buyer that is not embodied in this MOU or in the documents specifically referred to herein and neither Seller nor Buyer shall not be bound by or liable for any alleged representation, promise, inducement or statement of intention not so set forth. 12.2 Binding Effect; Benefits; Assignment. By virtue of the entry of the Order by the Court approving the Amended Agreement, all of the terms of the Amended Agreement are binding upon, inure to the benefit of and are enforceable by and against Seller and its successors and authorized assigns, and Buyer and its successors and authorized assigns. Nothing in this MOU or the Amended Agreement, express or implied, is intended to confer upon any other person any rights or remedies under or by reason of this MOU or the Amended Agreement except as expressly indicated herein. Neither Seller nor Buyer shall assign any of their respective rights or obligations under this MOU or the Amended Agreement to any other person, firm or corporation without the prior written consent of the other party, except that Buyer may assign its rights and obligations under this MOU or the Amended Agreement to a direct or indirect wholly-owned subsidiary of Buyer, although Buyer shall remain fully responsible for all of its obligations under this MOU or the Amended Agreement. 12.3 Construction. The headings of the sections and paragraphs of this MOU have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof. The language used in this MOU shall be deemed to be the language chosen by the parties to this MOU and the Amended Agreement to express their mutual intent, and no rule of strict construction shall be applied against any party. 12.4 Amendment and Waiver. This MOU may be amended, modified, superseded or canceled and any of the terms, covenants, representations, warranties or conditions hereof may be waived only by a written instrument executed by Seller and Buyer or, in the case of a waiver, by or on behalf of the party waiving compliance. 12.5 Governing Law. This MOU shall be governed by and construed in accordance with the laws of the State of Delaware as applicable to contracts made and to be performed in Delaware, without regard to conflict of laws principles. 12.6 [Intentionally omitted]. 29 12.7 Notices. All notices, requests, demands and other communications to be given pursuant to the terms of this MOU shall be in writing and shall be deemed to have been duly given if hand delivered, sent by overnight mail by a nationally recognized overnight delivery service or mailed first class, postage prepaid: (a) If to Seller: Michael Richard, President PortaCom Wireless, Inc. 10061 Talbert Avenue, Suite 200 Fountain Valley, CA 92708 Telephone: (714) 593-3234 Telecopier: (714) 593-3264 with a copy to: Francis A. Monaco, Jr., Esquire Walsh and Monzack, P.A. 1201 Orange Street, Suite 400 Wilmington, DE 19899 Telephone: (302) 656-8162 Telecopier: (302) 656-2769 and Jeffrey Kurtzman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers LLP 1401 Walnut Street Philadelphia, PA 19102 Telephone: (215) 568-4493 Telecopier: (215) 568-6603 b) If to Buyer: Frederick A. Moran, Chief Executive Officer VDC Corporation Ltd. 27 Doubling Road Greenwich, CT 06830 Telephone: (203) 661-9600 Telecopier: (203) 869-1430 30 with a copy to: Stephen M. Cohen, Esq. Stuart M. Brown, Esq. Buchanan Ingersoll Professional Corporation Eleven Penn Center, 14th Floor 1835 Market Street Philadelphia, Pennsylvania 19103 Telephone: (215) 665-3873 Telecopier: (215) 665-8760 c) if to the Committee: Francis J. Lawall, Esquire Pepper Hamilton LLP 3000 Two Logan Square 18th & Arch Streets Philadelphia, PA 19103-2799 Telephone: (215) 981-4481 Telecopier: (215) 981-4750 Either party may change its address by prior written notice to the other party. 12.8 Counterparts. This MOU may be executed in counterparts, each of which when so executed shall be deemed to be an original and such counterparts shall together constitute one and the same instrument. 12.9 Expenses. Each party shall pay their own respective expenses, costs and fees incurred in connection with the negotiation, preparation, execution and delivery of this MOU and the Amended Agreement and each of the Related Documents and the consummation of the transactions contemplated hereby, including, without limitation, the fees and expenses of their respective legal counsel, accountants and financial advisors. 12.10 Survival of Prior Agreement. Seller and Buyer intend for this MOU to set forth their mutual interpretation of the Amended Agreement and the Escrow Agreement; provided, however, if a separate order of the Court is not entered approving this MOU and to the extent that any of the parties hereto seek to enforce any of the provisions of this MOU which are inconsistent with the Amended Agreement or the Escrow Agreement, then the Amended Agreement and the Escrow Agreement, shall survive and remain in full force and effect for that purpose. 31 IN WITNESS WHEREOF, the parties hereto have caused this MOU to be duly executed as of the day and year first above written. VDC CORPORATION LTD. By: /s/ Frederick A. Moran ------------------------------------------- Frederick A. Moran, Chief Executive Officer PORTACOM WIRELESS, INC. By: /s/ Michael A. Richard ------------------------------------------- Michael A. Richard, President OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF PORTACOM WIRELESS, INC. (the "Committee") By: /s/ Francis J. Lawall ------------------------------------------- Name: Francis J. Lawall, Esquire Title: Pepper Hamilton LLP This document is being executed on behalf of the Committee for the limited purpose of approving paragraphs 3.4(b) and 3.4(d) hereof. The Committee's execution hereof does not constitute a consent to or ratification of any other provision of this document. Intending to be legally bound hereby, the Escrow Agent hereby agrees that Section 8(a) of the Escrow Agreement is and shall be amended and modified consistent with the terms of Section 3.4(b) of the foregoing MOU, and that the Escrow Agreement, as amended and modified, shall remain in full force and effect. ESCROW AGENT - KLEHR , HARRISON, HARVEY, BRANZBURG & ELLERS LLP By: /s/ Jeffrey Kurtzman ------------------------------------------- Name: Jeffrey Kurtzman Title: A Member of the Firm 32 EXHIBIT A Indebtedness of Seller to be satisfied from proceeds of the Purchase Price - ------------------------------------------------------------------------------- Source of Proceeds - ------------------------------------------------------------------------------- Cash Funds VDC Shares Creditor/Claimant Amount (amount) (Number) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 33 EXHIBIT B Procedures Motion 34 EX-2.16 4 CLOSING ESCROW AGREEMENT CLOSING ESCROW AGREEMENT This CLOSING ESCROW AGREEMENT ("Agreement") is made as of the 8th day of June, 1998, by and among VDC Corporation Ltd. ("Buyer"), PortaCom Wireless, Inc. ("Debtor"), Metromedia China Corporation ("MCC"), the Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. ("Committee"), Klehr, Harrison, Harvey, Branzburg & Ellers LLP ("Closing Escrow Agent") and Klehr, Harrison, Harvey, Branzburg & Ellers LLP ("Escrow Agent"). BACKGROUND A. On March 23, 1998, Debtor filed a Voluntary Petition for relief under Chapter 11 of Title 11 of the United States Code ("Code"), commencing a case in the United States Bankruptcy Court for the District of Delaware (the "Court"), which is pending at number 98-661 (the "Case"). B. The Office of the United States Trustee thereafter appointed the Committee. C. Prior to the commencement of the Case, Debtor and Buyer were parties to an asset purchase agreement and amendments thereto, pertaining to Debtor's agreement to sell to Buyer its interest in and to 2,000,000 shares of common stock ("MAC Shares") of Metromedia Asia Corporation, predecessor in interest to MCC ("MAC"), and warrants to purchase an additional 4,000,000 shares of MAC common stock with a strike price of $4.00 per share ("MAC Warrants"). D. Debtor and Buyer negotiated the terms of an asset purchase agreement to be entered into in the Case and approved by the Court ("Purchase Agreement") and agreed upon the procedures pursuant to which the Purchase Agreement would be submitted to the Court for approval. The Purchase Agreement was amended by (a) two Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and April 23, 1998, respectively (collectively, the "Stipulations"), by and among Debtor, VDC and the Committee; and (b) the Escrow Agreement (the "Escrow Agreement"), dated April __, 1998, among Debtor, VDC, the Committee and Klehr, Harrison, Harvey, Branzburg & Ellers LLP as Escrow Agent. E. Together with the petition commencing the Case, the Debtor filed the Motion Of Debtor (A) To Establish Bidding Procedures And To Approve A Break-Up Fee In Connection With The Sale Of The Debtor's Interest In Certain Property Of The Estate And (B) To Approve The Form And Manner Of Notice ("Procedures Motion") with respect to the Purchase Agreement, and the Debtor's Motion for Approval of the Sale of the Debtor's Interest in Property of the Estate Free and Clear of Liens, Claims and Encumbrances Pursuant to 11 U.S.C. ss.363(b) and (f) and Federal Rule of Bankruptcy Procedure 6004 ("Sale Motion"). F. On April 23, 1998, the United States Bankruptcy Court for the District of Delaware (the "Court") entered an order (the "Sale Order") approving the Purchase Agreement and authorizing the sale of the MAC Shares and Warrants free and clear of any liens or encumbrances, including MCC's first priority security interest in the MCC Shares (the "MCC Lien"). Pursuant to the Sale Order and section 363 of the Bankruptcy Code, the MCC Lien attached to the sale proceeds (the "Replacement Lien"), including certain shares of common stock of VDC (the "VDC Shares"). G. Pursuant to that certain pledge agreement dated June 8, 1998 between the Debtor and MCC (the "Pledge Agreement"), MCC has agreed that the Replacement Lien is limited to 50% of the Debtor's interest in the VDC Shares deliverable to the Debtor under the Purchase Agreement dated March 23, 1998, as amended. Pursuant to the Pledge Agreement, in order for MCC to perfect the Replacement Lien, the Debtor has agreed that 2.65 million VDC Shares will be pledged to MCC (the "Pledged Shares"), subject to the terms of the Pledge Agreement. H. Buyer has demanded that, as a condition for closing under the Purchase Agreement, the Debtor deliver to Buyer a newly issued stock certificate representing the MAC Shares and a newly issued warrant certificate representing the MAC Warrants, each in the name of Buyer (collectively, the "Reissued Shares and Warrants"). I. This Closing Escrow Agreement is delivered in furtherance of the closing of the sale of the MAC Shares and Warrants, that commenced on June 8, 1998 at the offices of Buchanan Ingersoll Professional Corporation (the "Closing"). NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound, the parties hereto do hereby agree as follows: 1. The foregoing recitals are hereby incorporated in this Agreement as though set forth at length herein. 2. Appointment of Closing Escrow Agent. Debtor, Buyer, MCC and the Committee hereby appoint Closing Escrow Agent, and Closing Escrow Agent hereby accepts such appointment, as the escrow agent hereunder. Closing Escrow Agent agrees to comply with the terms and conditions hereof. The Closing Escrow Agent's appointment hereunder shall terminate as provided in paragraph 3. 3. Term of Agreement; Termination and Appointment of Successor Agent. This Agreement shall automatically terminate upon the distribution by the Closing Escrow Agent, of all of the Closing Escrowed Funds (as defined below), MAC Shares, MAC Warrants, the Reissued Shares and Warrant and VDC Shares (as defined below) in accordance herewith. Prior to the automatic termination as provided for in this paragraph, the appointment of the Closing Escrow Agent may be terminated upon the written consent of (i) Buyer and (ii) either (x) Debtor or (y) the Committee and a successor escrow agent shall be appointed satisfactory to Buyer, Debtor, MCC and the Committee. Notwithstanding termination of this Agreement, the Closing Escrow Agent shall continue its obligations as Escrow Agent under the Escrow Agreement. 4. Delivery of Escrowed Funds. The "Closing Escrowed Funds" comprise a portion of the Escrowed Funds, as defined in the Escrow Agreement, in the sum of the Closing Date Claims and Bar Date Claims, as defined in the Purchase Agreement, totaling $41,412.00. 2 The Escrow Agent is in possession of the Escrowed Funds and the Closing Escrow Agent hereby acknowledges constructive receipt of the Closing Escrowed Funds 5. Delivery of MAC Shares, MAC Warrants, VDC Shares and Other Deliverables to Closing Escrow Agent. At or before the Closing under the Purchase Agreement, the Buyer shall deliver to the Closing Escrow Agent, subject to adjustment provided for in the Escrow Agreement and the Purchase Agreement, three (3) share certificates representing the aggregate of 5,300,000 newly issued shares of common stock, par value $2.00 per share, of Buyer (the "VDC Shares"). The share certificates representing the VDC Shares shall be issued in the name of the Debtor and shall be delivered by the Buyer to the Closing Escrow Agent in the following designations, subject to adjustment as provided in the Purchase Agreement and the Escrow Agreement: (i) 2,650,000 shares ("Certificate 1") which shall constitute the Pledged Shares, (ii) 1,325,000 shares ("Certificate 2") and (iii) 1,325,000 shares ("Certificate 3"). Buyer shall cause its counsel to deliver its opinion to MCC regarding the applicability of exemptions from registration required under the Securities Act of 1933, as amended, to the transfer by Debtor to Buyer of the MAC Shares and MAC Warrants. Debtor shall deliver to the Closing Escrow Agent its assignment of warrant and stock power in blank relating to the transfer of the MAC Shares and MAC Warrants to Buyer. Debtor and MCC shall deliver to the Closing Escrow Agent the MAC Shares and Buyer shall deliver to the Closing Escrow Agent the MAC Warrants. In connection with Certificate 1, Debtor and MCC shall, at or prior to Closing, execute the Pledge Agreement in favor of MCC and deliver such Pledge Agreement to the Closing Escrow Agent. 6. Delivery to MCC. MCC shall cause the MAC Warrants and the certificates representing the MAC Shares, both of which are currently in the name of Debtor, to be re-issued in the name of the Buyer, and MCC shall deliver such new certificate and such new warrant to the Closing Escrow Agent in no event later than seven (7) business days after the Closing in exchange for the previously issued certificate and warrant. In order to effectuate the reissuance of the MAC Shares as set forth in paragraph 5 above, at Closing, the Closing Escrow Agent, with the assistance of MCC, shall deliver to MCC's transfer agent the following documents: (a) the original certificate for the MAC Shares, issued in the name of the Debtor; (b) the irrevocable stock power executed by the Debtor; (c) the opinion of counsel to VDC to the effect that the offer and sale of the MAC Shares is exempt from registration; (d) the written direction from MCC to reissue the MAC Shares in the name of VDC and to deliver the Reissued Shares to the Closing Escrow Agent. The parties hereto acknowledge and agree that, if for any reason, MCC's transfer agent cannot or will not reissue the MAC Shares in the name of VDC, MCC will immediately direct its transfer agent to return to the Closing Escrow Agent the original certificate for the MAC Shares issued in the name of the Debtor. At Closing, MCC shall deliver the Reissued Warrants to the Closing Escrow Agent. 7. Distribution of Reissued Shares and Warrants, VDC Shares and Closing Escrowed Funds. Upon full performance under paragraphs 5 and 6 above, the Closing Escrow Agent shall (i) deliver the Reissued Shares and Warrants to Buyer; (ii) deliver Certificate 1 and the Pledge Agreement to MCC, (iii) deliver custody of Certificate 2 and Certificate 3 to the Escrow Agent; and (iv) deliver the Closing Escrowed Funds to Debtor. 3 8. Failure to Close. The parties hereto agree to use their best efforts to complete timely their respective performances under paragraphs 5, 6 and 7 above. In the event, however, that the Closing Escrow Agent does not receive the Reissued Shares and Warrants within seven (7) business days of the date hereof, or any other deliverables within such time period, except as previously impleaded pursuant to paragraph 13 below, then the Closing Escrow Agent shall return all deliverables in its possession to the respective party from whom the Closing Escrow Agent received such deliverables, and the Closing Escrow Agent's term and appointment shall be terminated thereafter, unless the parties hereto consent in writing to extend such time of performance. 9. Fees of Escrow Agent. The Closing Escrow Agent shall not be entitled to any compensation or reimbursement of expenses on account of its services as Closing Escrow Agent directly from the Escrowed Funds; however, the Closing Escrow Agent shall be entitled to be compensated for its services from funds otherwise available for distribution to the holders of administrative expense claims, subject to Court approval under Code ss.ss.330, 331, and/or 503. 10. Duties Ministerial. The duties of Closing Escrow Agent are entirely ministerial and not discretionary. Closing Escrow Agent may rely upon any order of court, not only as to its due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein, which the Closing Escrow Agent shall in good faith believe to be genuine, to have been entered of record. 11. Release of, and Covenant not to Sue, Escrow Agent. In consideration for the Closing Escrow Agent's agreement to perform its duties under this Agreement, Buyer, Debtor, MCC and Committee, and their respective shareholders, partners, officers, employees, agents, successors and assigns, jointly and severally, hereby waive any suit, claim, demand or cause of action of any kind which any of them may have or may assert against Closing Escrow Agent arising out of or relating to the execution or performance by Closing Escrow Agent of its duties under this Agreement, unless such suit, claim or demand or cause of action arises from the gross negligence or willfulness of Closing Escrow Agent. Buyer, Debtor and Committee, jointly and severally, hereby irrevocably covenant not to sue or commence or join in any proceedings, whether legal, equitable or otherwise, against Closing Escrow Agent on account of any act or omission to act on the part of Closing Escrow Agent, unless such action or omission was willful or grossly negligent. Further, to induce Closing Escrow Agent to act hereunder, the parties hereto agree to indemnify, defend and hold Closing Escrow Agent harmless from any liability incurred by any action taken or omission by Closing Escrow Agent, except for gross negligence or willful acts, including, but not limited to its reasonable attorneys' fees and costs in connection therewith. 12. Conflict Waiver. After consultation with their respective counsel, the parties hereto waive any actual and/or potential conflict of interest between the parties hereto and the Closing Escrow Agent, or any future conflicts which may arise during the course of performance of this Agreement or the administration of the Case resulting from the Closing Escrow Agent's execution and performance of this Agreement. 4 13. Disputes. In the event of any disputes regarding the Closing Escrowed Funds, the MAC Shares, the MAC Warrants, the Reissued Shares and Warrants and/or the VDC Shares, including without limitation their distribution, use, or ownership, the Closing Escrow Agent shall implead the Closing Escrowed Funds, the MAC Shares, the MAC Warrants, the Reissued Shares and Warrants and/or the VDC Shares, as applicable, to the Court. 14. Notices. All notices, demands, requests and other communications required or permitted hereunder shall be in writing and shall be deemed to be delivered (a) when actually transmitted via facsimile, or (b) one day following deposit with a nationally recognized overnight carrier, addressed to the addressee as follows: (a) If to Buyer: Frederick A. Moran, Chief Executive Officer VDC Corporation, Ltd. 27 Doubling Road Greenwich, CT 06830 (203) 869-1430 (Fax) with copies to: Stuart M. Brown, Esquire Buchanan Ingersoll Professional Corporation 11 Penn Center, 14th Floor 1835 Market Street Philadelphia, PA 19103 (215) 665-8760 (Fax) (b) If to Debtor: Michael Richard, President PortaCom Wireless, Inc. 10061 Talbert Avenue, Suite 200 Fountain Valley, CA 92708 (714) 593-3264 (Fax) with copies to: Francis A. Monaco, Jr., Esquire Walsh and Monzack, P.A. 1201 Orange Street, Suite 400 Wilmington, DE 19899 (302) 656-2769 (Fax) and Michael C. Forman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers LLP 1401 Walnut Street Philadelphia, PA 19102 (215) 568-6603 (Fax) 5 (c) If to Committee: Francis J. Lawall, Esquire Pepper Hamilton LLP 3000 Two Logan Square Eighteenth and Arch Streets Philadelphia, PA 19103-2799 (215) 981-4750 (Fax) (d) If to Closing Escrow Agent: Jeffrey Kurtzman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers LLP 1401 Walnut Street Philadelphia, PA 19102 (215) 568-6603 (Fax) (e) If to Escrow Agent: Jeffrey Kurtzman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers LLP 1401 Walnut Street Philadelphia, PA 19102 (215) 568-6603 (Fax) (f) If to MCC: Arnold L. Wadler, Esquire General Counsel, Metromedia China Corporation One Meadowlands Plaza East Rutherford, NJ 07073 (201) 531-2803 (Fax) 15. Savings Clause. In the event that any provision of this Agreement or its application to any person or circumstance shall be finally determined by the court to be invalid or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 16. Interpretation. This Agreement shall be interpreted in accordance with the laws of the Commonwealth of Pennsylvania for contracts made and performed within the Commonwealth. 17. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns, including any trustee appointed or elected pursuant to Code ss.ss.701 and 702. The terms and conditions of this Agreement, the rights and the obligations of the parties and their respective successors and assigns shall survive any and all breaches and/or defaults under this Agreement and any such other events as may occur as herein provided. 6 18. Jurisdiction. The United States Bankruptcy Court for the District of Delaware, or any other court exercising jurisdiction over the Debtor's estate, shall have exclusive jurisdiction to enforce the terms and conditions of this Agreement and enter any and all appropriate injunctions, contempt orders, orders for specific performance and other relief as may be just and equitable. 19. Captions. The titles and captions used herein are for reference only and shall not constitute a part of this Agreement or construed as having any legal effect. 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above-written. VDC CORPORATION, LTD. By: /s/ Frederick A. Moran ----------------------------------------------- Frederick A. Moran, Chief Executive Officer PORTACOM WIRELESS, INC. By: /s/ Michael A. Richard ----------------------------------------------- Michael A. Richard, Chief Executive Officer METROMEDIA CHINA CORP. By: /s/ Robert A. Maresca ----------------------------------------------- Robert A. Maresca, Senior Vice President OFFICIAL COMMITTEE OF UNSECURED CREDITORS By: /s/ Francis Lawall ----------------------------------------------- Francis Lawall, Counsel to the Committee [signatures continue onto next page] 7 CLOSING ESCROW AGENT - KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP By: /s/ Jeffrey Kurtzman ---------------------------------------------- Jeffrey Kurtzman, A Member of the Firm ESCROW AGENT - KLEHR, HARRISON, HARVEY, BRANZBURG & ELLERS LLP By: /s/ Jeffrey Kurtzman ---------------------------------------------- Jeffrey Kurtzman, A Member of the Firm 8 EX-2.17 5 PROMISSORY NOTE PROMISSORY NOTE June 9, 1998 FOR VALUE RECEIVED, VDC CORPORATION LTD., a Bermuda corporation (the "Maker"), promises to pay to the order of PORTACOM WIRELESS, a Delaware corporation (the "Payee") the amount set forth below in accordance with the terms hereof. This Note is the Deferred Purchase Price Note referred to in the Asset Purchase Agreement, dated March 23, 1998, between Maker and Payee, as amended (the "Purchase Agreement") and the Memorandum of Understanding, dated as of June 9, 1998, among Maker, Payee and the Official Committee of Unsecured Creditors of PortaCom Wireless, Inc. (the "MOU"). Capitalized terms not defined herein shall have the meaning ascribed thereto in the Purchase Agreement. The original principal amount due hereunder shall be that amount calculated in accordance with the following formula (the "Formula"), as set forth in Section 3.5 of the Purchase Agreement: MAC Market Price - VDC Market Price x $5,000,000 ---------------- ---------------- MAC Base Price VDC Base Price The entire principal amount outstanding under this Note shall be payable in either lawful money of the United States or, at Maker's sole option, shares of common stock of Maker as set forth in Section 3.5(b) of the Purchase Agreement, at Payee's principal offices at 10061 Talbert Avenue, Suite 200, Fountain Valley, California 92708 or at such other place or places as Payee shall designate, on September 4, 1999, provided, however, that Maker shall not be obligated to pay any amount due hereunder and this Note shall be deemed null and void in the event that either (1) on June 8, 1999, Metromedia China Corporation is not a publicly traded company whose shares are registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or (2) the amount calculated in accordance with the Formula is a negative number. Maker is obligated to make the payments on the above specified due date in accordance with the terms of this Note and the Purchase Agreement without defalcation or setoff and without notice or demand, and the failure to receive any notice or demand from Payee shall not be a defense to, or excuse for, the failure to make such payment on the due date. Maker shall be in default hereunder upon the occurrence of any of the following events (an "Event of Default"): (i) the failure to make payment when due; or (ii) the failure of Maker to observe or perform or cause to be observed or performed any agreement, condition or obligation on Maker's part to be performed hereunder. Upon the occurrence of any Event of Default, the entire amount outstanding under this Note shall, at the option of Payee, become immediately due and payable without presentment, demand or further action of any kind, and one or more executions may forthwith issue on any judgment or judgments obtained by virtue of any provision of this Note or otherwise obtained. The rights and remedies provided herein shall be cumulative and concurrent and shall not be exclusive of any right or remedy provided by law, in equity or otherwise. Said rights and remedies may, at the sole discretion of Payee, be pursued singly, successively or together as often as occasion therefor shall arise, against Maker. No failure on the part of Payee to exercise any of such rights or remedies shall be deemed a waiver of any such rights or remedies or of any Event of Default hereunder. The granting, with or without notice, of any extension or extensions of time for payment of any sum or sums due hereunder, or for the performance of any covenant, provision, condition or agreement contained herein or therein, or the granting of any other indulgence, or the taking or releasing or subordinating of any security for the indebtedness evidenced hereby, or any other modification or amendment of this Note will in no way release or discharge the liability of Maker whether or not granted or done with the knowledge or consent of Maker. Payee shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder, at law or in equity, unless such waiver is in writing and signed by Payee, and then only to the extent specifically set forth in the writing. A waiver as to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. In the event any portion of this Note shall be declared by any court of competent jurisdiction to be invalid or unenforceable, such portion shall be deemed severable from this Note, and the remaining parts hereof shall remain in full force and effect, as fully as though such invalid or unenforceable portion was never part of this Note. The obligations of Maker hereunder shall be binding on the heirs, representatives, successors and assigns of Maker and the benefits of this Note shall inure to Payee, and its heirs, representatives, successors and assigns and to any holder of this Note. The outstanding balance due under this Note may be prepaid, in the aggregate during the term of this Note, in whole or in part, without penalty or premium. No partial prepayment shall postpone or interrupt payment of the remaining balance, which shall continue to be due and payable at the time and in the manner set forth above. All notices and other communications required or given under this Note shall be in writing and shall be sent by U.S. certified mail, return receipt requested, or by a nationally recognized overnight courier service, addressed to Payee or to Maker at their respective addresses as set forth in the Purchase Agreement. 2 This Note, and all issues arising hereunder, shall be governed by and construed according to the laws of the State of Delaware. IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Promissory Note to be duly executed as of the 9th day of June, 1998. VDC CORPORATION LTD. By: /s/ Frederick A. Moran ------------------------------- Frederick A. Moran, Chief Executive Officer 3 EX-2.18 6 ASSIGNMENT ASSIGNMENT The undersigned hereby assigns and transfers Warrant No. 19 (the "Warrant") to Purchase Shares of Common Stock, Par Value $.01 Per Share, of Metromedia Asia Corporation (n/k/a Metromedia China Corporation) ("MCC") to VDC Corporation Ltd. whose federal tax identification number is 061510832 and whose principal executive offices are located at 27 Doubling Road, Greenwich, Connecticut 06830, and irrevocably appoints Hadley E. Feldman as agent to transfer this Warrant on the books of MCC. Such agent may substitute another to act for such agent. PORTACOM WIRELESS, INC. Date: June 8, 1998 By: /s/ Michael A. Richard --------------------------------------- Michael A. Richard, Chief Executive Officer EX-10.3 7 LOAN AGREEMENT LOAN AGREEMENT THIS LOAN AGREEMENT (the "Agreement") is made this 10th day of November, 1997, by and between VDC Corporation Ltd., a Bermuda corporation (the "Lender"), and PortaCom Wireless, Inc., a Delaware corporation (the "Debtor"). W I T N E S S E T H: WHEREAS, the Lender and the Debtor have entered into a Letter of Intent dated September 29, 1997 (the "Letter of Intent"), attached hereto as Exhibit B, which sets forth the proposed terms of a possible acquisition transaction between the parties (the "Transaction"); and WHEREAS, pursuant to the Letter of Intent, Lender has agreed to advance certain amounts to the Debtor as a loan (the "Loan") to be used by the Debtor for the purposes identified at Section 4(e) hereafter. The Debtor and the Lender desire to set forth herein the terms and conditions pursuant to which the Lender has agreed to advance the Loan to the Debtor. NOW, THEREFORE, in consideration of the promises and of the mutual covenants contained herein, and intending to be legally bound hereby, the Lender and the Debtor hereby agree as follows: 1. The Loan. The Lender has granted to the Debtor the Loan upon the terms and subject to the conditions hereinafter set forth. Lender shall have no obligation to provide advances, except in its sole discretion. Any amounts advanced by Lender under this Agreement shall be evidenced by a properly completed and executed Note, the form of which is attached hereto as Exhibit A, dated as of the date of advancement (the "Note"), made by the Debtor in favor of the Lender in such amounts as may be requested by Debtor and approved by Lender. The determination of the principal amount of the Loan issued under this Agreement on any date shall be made on the basis of the face aggregate amount of the Note(s) which have been issued and are outstanding on such date. The obligation of the Debtor to repay to the Lender the aggregate outstanding principal amount of the Loan, together with accrued interest thereon, shall be evidenced by any and all Notes to be executed and delivered by the Debtor to the Lender either concurrently with the execution and delivery of this Agreement or in the future. 2. Payment of Interest and Principal. (a) Payment of Loan. The unpaid principal balance under the Loan (as evidenced by any Notes which may be issued), together with all accrued and unpaid interest on the unpaid principal balance, which shall accrue at the rate of ten percent (10%) per annum (the "Interest Rate"), shall be paid in full upon the earlier to occur of: (i) the date the Transaction has been terminated by either of the parties (as such termination may be provided for in the Letter of Intent, or thereafter, in any "Definitive Agreement," as such term is defined in the Letter of Intent); (ii) the date of the closing of the Transaction; or (iii) 180 days from the date hereof. (b) Prepayment. The Debtor shall have the right to prepay at any time and from time to time, without penalty or premium, all or any portion of the outstanding balance of the Loan. All prepayments of the Loan shall be applied first to accrued interest, and second to the unpaid principal balance due thereunder. (c) Place of Payment. The Debtor shall make all payments to the Lender at the place set forth in Section 7(d) hereunder, or at such other place or places as the Lender, from time to time, shall designate in writing to the Debtor in accordance with Section 7(d) hereunder. 3. Security Interest. To secure all of the Debtor's obligations under the Notes and this Agreement, the Debtor has concurrently herewith granted to Lender a lien on and security interest in and to the Collateral, as such term is defined in the Security Agreement, dated of even date herewith, which is hereby confirmed and ratified as being in full force and effect and incorporated into this Agreement by reference. Except as expressly stated otherwise in the Security Agreement, the Lender's security interest in the Collateral shall be a first priority lien. 4. Representations and Warranties of the Debtor. As a further inducement to the Lender to execute and deliver this Agreement and to make the Loan available to the Debtor, the Debtor, except as otherwise set forth in the Disclosure Statement attached hereto as Exhibit B, hereby represents and warrants to, and makes the following agreements with the Lender as follows: (a) Authority. (i) The Debtor is a corporation, duly organized, validly existing and subsisting under the laws of Delaware. (ii) The Debtor has full power and authority to borrow the Loan, to execute and deliver this Agreement and any and all Notes and any other instruments and documents required to be executed in connection herewith and therewith (such other instruments and documents being collectively called the "Other Documents"). (b) Validity and Enforceability. This Agreement, each Note and each of the Other Documents have been, and will be, validly executed and delivered by the Debtor and are the legal, valid and binding obligations of the Debtor, enforceable against the Debtor in accordance with their respective terms. (c) No Conflicts. The execution and delivery by the Debtor of this Agreement, any Note and each of the Other Documents and the performance by the Debtor of all of its obligations hereunder and thereunder (a) will not violate or be in conflict with any law, order, rule or regulation of any court of other governmental authority applicable to the Debtor; (b) will not constitute a default (with or without the giving of notice or the passage of time or both) under any indenture, agreement or other instrument to which it is a party or by which it or any of its properties or assets is or may be bound or subject; and (c) will not result in the creation or imposition of any lien, security interest, charge or encumbrance of any nature upon any of its properties or assets, except the Permitted Lien, as such term is defined in the Security Agreement. -2- (d) No Consents. No consent, approval or authorization of, or registration, declaration or filing with, any governmental authority or other third party is required as a condition to, or in connection with, the due and valid execution and delivery by the Debtor of this Agreement, any Note or any of the Other Documents. (e) Use of Loan Proceeds. The proceeds from the Loan issued hereunder shall be used by the Debtor only for working capital purposes in the ordinary course of business. (f) Business Qualification. The Debtor is duly qualified to transact business in the United States and in each state of the United States where it conducts business and is in good standing in each jurisdiction in which its failure to be so qualified and in good standing would have a materially adverse effect on its financial condition of business, and it has the corporate power and ability to own and operate its properties and to carry on its business as now conducted. (g) SEC Filings. The Debtor has filed all necessary reports and filings (collectively, the "Filings") required to be filed with the Securities and Exchange Commission as of the date hereof and all Filings are true and correct and contain no material misrepresentations or omissions of material fact. (h) Litigation. Except as disclosed in the Filings, there is no action, suit or proceeding pending with any court, administrative agency or other governmental body or arbitrator, or threatened against the Debtor. The Debtor is not a party or subject to or bound by any injunction, judgment, order or decree, whether or not still subject to appeal, of any court, administrative agency or other governmental body or arbitrator. (i) Taxes. The Debtor has paid all federal and state income and other applicable taxes levied by the United States and all deficiencies or other additions to any tax interest and penalties owed by the Debtor in connection with any tax requiring to be paid relating to the Debtor or any of its assets or business as of the date hereof. The Debtor shall timely pay all taxes relating to it or its business or assets, including additions, interests, penalties and estimated payments required to be paid by it under the applicable law after the date hereof. (j) Liens. The Debtor has all right, title and interest in, and good and marketable title to, the Collateral, free and clear of any claim, pledge, security interest, restriction, lien or encumbrance of any kind or nature whatsoever, except for the Permitted Lien, as such term is defined in the Security Agreement. 5. Events of Default: Remedies. (a) Events of Default. The following shall constitute events of default under this Agreement ("Events of Default"): -3- (i) The Debtor fails to pay when due any principal, interest or other sums due hereunder or under any of the Notes and shall not have remedied such failure within five (5) days after the date when due. (ii) The Debtor defaults in the observance or performance of any condition or covenant contained in this Agreement or any Note and the Debtor shall not have remedied the default within fifteen (15) days after receipt of written notice of such default has been given by Lender to the Debtor. (iii) A breach by the Debtor of any warranty or any representation contained in this Agreement or any Note, and such breach shall not have been remedied within fifteen (15) days after receipt of written notice of such breach has been given by Lender to the Debtor. (iv) A dissolution or liquidation of the Debtor shall have been declared. (v) If Debtor shall make an assignment for the benefit of creditors, or file a voluntary petition under the Bankruptcy Code, as amended, or any other insolvency law, or apply for or consent to the appointment of a receiver, trustee or custodian of all or part of its property. (vi) If the Debtor files an answer admitting the jurisdiction of the court and the material allegations of an involuntary petition filed against the Debtor under the Bankruptcy Code, as amended, or any other insolvency law or there is a failure to have such petition dismissed within ninety (90) days after its filing. (vii) If an Order for relief shall be entered following the filing of an involuntary petition against the Debtor under the Bankruptcy Code, as amended, or any other insolvency law, or if an Order shall be entered appointing a receiver, trustee or custodian of all or parts of its property. (viii) If there shall have occurred an Event of Default under any other agreements between the Debtor and the Lender. (b) Remedies. In the event an Event of Default shall occur and be continuing, then, in the sole discretion of the Lender and without further notice to the Debtor, the unpaid principal amount of the Loan, together with all accrued interest thereon at the applicable rate specified in the Note, and all other sums due by the Debtor under any Note or this Agreement shall become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Debtor, until Debtor has made full payment to the Lender of all amounts due under any and all Notes or under this Agreement. Upon the occurrence of an Event of Default, the Lender shall have the right to charge and accrue interest at a rate per annum equal to the Interest Rate plus three percent (3%) (the "Default Rate"). In addition, in each case, the Lender may recover all costs of suit and other expenses incurred by the Lender (including attorneys' fees) in connection with the collection of -4- any sums due under any and all Notes or under this Agreement. In addition to all other remedies available to it, the Lender may exercise its rights under any and all Notes delivered to the Lender or under any of the Other Documents. The remedies set forth herein shall be in addition to, and not in lieu of, any other additional rights or remedies the Lender may have at law or in equity. 6. Survival of Representations and Covenants. This Agreement and all covenants, agreements, representations and warranties made herein, in the Disclosure Statement attached hereto as Exhibit B, and in any Other Documents delivered pursuant hereto shall survive the making of the Loan and the execution and delivery of any Note and this Agreement, and shall continue in full force and effect until all of the obligations have been fully paid, performed, satisfied and discharged. 7. Miscellaneous. (a) Entire Agreement: Amendments. This Agreement, all Notes and all of the Other Documents executed and delivered pursuant hereto constitute the entire agreement between the Lender and the Debtor with respect to the subject matter hereof. The provisions of this Agreement, any Note or any of the Other Documents shall not be modified, rescinded or waived except in writing executed by the party against whom such modification, rescission or waiver is sought to be enforced. (b) Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the Lender and the Debtor and their respective heirs, personal representatives, successors and assigns, except that the Debtor shall not make any assignment of its rights hereunder without the prior written consent of the Lender. (c) Rights Cumulative. The remedies of the Lender as provided in any and all Notes, or in this Agreement and all of the Other Documents shall be cumulative and concurrent; may be pursued singly, successively, or together at the sole discretion of the Lender; may be exercised as often as occasion for their exercise shall occur; and in no event shall the failure to exercise any such right or remedy be construed as a waiver or release of it. (d) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made when received by the party to whom the notice, request, etc. is directed, and which shall be delivered personally, by courier service such as Federal Express, or by messenger, or by United States mail, registered or certified mail, postage pre-paid, return receipt requested, addressed as set forth below. If to the Debtor: PortaCom Wireless, Inc. 10061 Talbert Avenue Suite 200 Fountain Valley, CA 92708 -5- If to the Lender: VDC Corporation Ltd. P.O. Box HM 1255 44 Church Street Hamilton, Bermuda with a copy to: Stephen M. Cohen, Esquire Buchanan Ingersoll Profession Corporation 11 Penn Center, 14th Floor 1835 Market Street Philadelphia, PA 19103 (e) Controlling Law and Jurisdiction. This Agreement and all questions relating to its validity, interpretation and performance shall be governed by and construed in accordance with the laws of the State of Delaware of the United States. The Debtor hereby consents to the exclusive jurisdiction of the United States District Court for the Eastern District of Pennsylvania for the resolution of all claims, disputes and controversies arising hereunder. (f) Notice of Default. The Debtor hereby agrees to promptly notify the Lender of any event or circumstance which gives rise to or which is reasonably likely to give rise to an Event of Default hereunder. (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. (i) Severability. If any provisions of this Agreement shall be held invalid under any applicable laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provisions and, to this end, the provisions hereof are severable. IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be executed and delivered as of the date first written above. VDC CORPORATION LTD. BY: /s/ Graham Ferguson Lacey ------------------------------------- Graham Ferguson Lacey, President PORTACOM WIRELESS, INC. BY: /s/ Douglas C. MacLellan ------------------------------------- Douglas C. MacLellan, President and Chief Executive Officer -6- EX-10.4 8 PLEDGE AGREEMENT PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (the "Agreement"), dated November 10, 1997, is made and entered into by and between PORTACOM WIRELESS, INC., a Delaware corporation (the "Debtor") and VDC CORPORATION LTD., (the "Secured Party") under that certain Loan Agreement dated of even date herewith (as it may hereafter from time to time be restated, amended, modified or supplemented, the "Loan Agreement") by and between the Debtor and the Secured Party. WHEREAS, pursuant to the Loan Agreement, the Secured Party agreed to provide certain loans to Debtor; and WHEREAS, as security for such loans, and as required by the Loan Agreement, all of the warrants (whether now existing or hereafter acquired) held by Debtor to purchase common stock of Metromedia Asia Corporation ("MAC") shall be pledged to the Secured Party in accordance herewith. NOW, THEREFORE, intending to be legally bound hereby, the parties hereto agree as follows: 1. Defined Terms. (a) Except as otherwise expressly provided herein, capitalized terms used in this Agreement shall have the respective meanings assigned to them in the Loan Agreement. Where applicable and except as otherwise expressly provided herein, terms used herein (whether or not capitalized) shall have the respective meanings assigned to them in the Uniform Commercial Code as enacted in each applicable jurisdiction and as may be amended from time to time (the "Code"). (b) "Pledged Collateral" shall mean and include the following: (i) the securities listed on Schedule A attached hereto and made a part hereof, and all rights and privileges pertaining thereto, including, without limitation, all securities and additional securities receivable in respect of or in exchange for such securities, all rights to subscribe for securities incident to or arising from ownership of such securities, all cash, interest, stock and other dividends or distributions paid or payable on such securities, and all books and records pertaining to the foregoing, including, without limitation, all stock record and transfer books, (ii) any and all other securities hereafter pledged to the Secured Party to secure the Secured Obligations (as hereinafter defined) of Debtor, and all rights and privileges pertaining thereto, including, without limitation, all securities and additional securities receivable in respect of or in exchange for such securities, all rights to subscribe for securities incident to or arising from ownership of such securities, all cash, interest, stock and other dividends or distributions paid or payable on such securities, and all books and records pertaining to the foregoing, including, without limitation, all stock record and stock transfer books and (iii) whatever is received when any of the foregoing is -1- sold, exchanged or otherwise disposed of, including any proceeds as such term is defined in the Code. 2. Grant of Security Interests. (a) Debtor, to secure on a first priority basis, the payment and performance of all of its indebtedness and other obligations of every nature it owes under the Loan Agreement, any and all Notes and all of the Other Documents (the "Secured Obligations"), hereby grants to the Secured Party a security interest in all of Debtor's now existing and hereafter acquired and/or arising right, title and interest in, to and under the Pledged Collateral, whether now or hereafter existing and wherever located. (b) Upon the execution and delivery of this Agreement, Debtor has delivered to and deposited with the Secured Party in pledge, stock and/or warrant certificates and any other instruments evidencing the Pledged Collateral, together with undated stock powers signed in blank by Debtor. 3. Further Assurances. Prior to or concurrently with the execution of this Agreement, and thereafter at any time and from time to time upon reasonable request of the Secured Party, Debtor shall execute and deliver to the Secured Party all financing statements, continuation financing statements, termination statements, assignments, certificates and documents of title, affidavits, reports, notices, schedules of account, letters of authority, further pledges, powers of attorney and all other documents (collectively, the "Security Documents") which the Secured Party may reasonably request, in form reasonably satisfactory to the Secured Party, and take such other action which the Secured Party may request, to perfect and continue perfected and to create and maintain the first priority status of the Secured Party's security interest in (subject only to Permitted Liens) the Pledged Collateral and to fully consummate the transactions contemplated under the Loan Agreement, any and all Notes and this Agreement. Debtor hereby irrevocably makes, constitutes and appoints the Secured Party (and any of the Secured Party's officers or employees or agents designated by the Secured Party) as Debtor's true and lawful attorney with power to sign the name of Debtor on all or any of the Security Documents which the Secured Party reasonably determines must be executed, filed, recorded or sent in order to perfect or continue perfected the Secured Party's security interest in the Pledged Collateral in the event Debtor fails to so execute such documents upon Secured Party's request. Such power, being coupled with an interest, is irrevocable until all of the Secured Obligations have been indefeasibly paid in full and have terminated. 4. Representations and Warranties. In addition to the representations and warranties of Debtor set forth in the Loan Agreement which are incorporated herein by reference, Debtor hereby represents and warrants to the Secured Party as follows: -2- (a) Debtor has, and will continue to have (or, in the case of after-acquired Pledged Collateral, at the time Debtor acquires rights in such Pledged Collateral, will have), title to the Pledged Collateral, free and clear of all Liens. (b) Debtor owns warrants or other ownership interests of MAC as set forth in Schedule A hereto. (c) The warrants to purchase shares of common stock constituting the Pledged Collateral have been duly authorized and validly issued to Debtor (as set forth on Schedule A hereto), and constitute all of the warrants to purchase common stock of MAC owned by Debtor. (d) The security interests in the Pledged Collateral granted hereunder are valid, perfected and of first priority. (e) There are no restrictions upon the transfer of the Pledged Collateral and Debtor has the power and authority and right to transfer the Pledged Collateral free of any encumbrances and without obtaining the consent of any other person. It is acknowledged that a transfer of the Pledged Collateral by Secured Party following a foreclosure may require compliance with federal and state securities laws. (f) Debtor has all necessary power to execute, deliver and perform this Agreement and all necessary action to authorize the execution, delivery and performance of this Agreement has been properly taken. (g) There are no actions, suits, or proceedings pending or, to Debtor's best knowledge after due inquiry, threatened against or affecting Debtor with respect to the Pledged Collateral, at law or in equity or before or by any commission, board, bureau, agency, department or instrumentality, and Debtor is not in default with respect to any judgment, writ, injunction, decree, rule or regulation which would adversely affect Debtor's performance hereunder. (h) This Agreement has been duly executed and delivered and constitutes the valid and legally binding obligation of Debtor, enforceable in accordance with its terms, except to the extent that enforceability of this Agreement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific performance or by general equitable principles. (i) Neither the execution and delivery by Debtor of this Agreement, nor the compliance with the terms and provisions hereof, will violate any provision of the articles or certificates of incorporation or similar organizational documents, bylaws or partnership agreement of Debtor or any law or conflict with or result in a breach of any of the terms, conditions or provisions of any judgment, order, injunction, decree or ruling of any court or arbitration tribunal or any governmental authority to which Debtor is subject or any provision of -3- any material agreement, understanding or arrangement to which Debtor is a party or by which Debtor is bound. (j) Debtor's principal place of business and chief executive office is as set forth on the signature page hereto. 5. General Covenants. In addition to any covenants and agreements of Debtor set forth in the Loan Agreement, the Notes and Other Documents, which are incorporated herein by this reference, Debtor hereby covenants and agrees as follows: (a) Debtor shall do all reasonable acts that may be necessary and appropriate to maintain, preserve and protect the Pledged Collateral; Debtor shall be responsible for the risk of loss of, damage to, or destruction of the Pledged Collateral owned by Debtor, unless such loss is the result of the gross negligence or willful misconduct of the Secured Party. Debtor shall notify the Secured Party in writing ten (10) days prior to any change in either the address and location of Debtor's chief executive office or the address and location of Debtor's principal place of business. (b) Debtor shall pay promptly when due all taxes, assessments, charges and obligations secured by encumbrances and liens now or hereafter imposed upon or affecting any of the Pledged Collateral, except as otherwise expressly permitted under the Loan Agreement. (c) Debtor shall appear in and defend any action or proceeding of which Debtor is aware which could reasonably be expected to affect Debtor's title to, or the Secured Party's interest in, the Pledged Collateral owned by Debtor and the proceeds thereof; provided, however, that Debtor may settle such actions or proceedings with respect to the Pledged Collateral Debtor owns with the consent of the Secured Party, which consent shall not be unreasonably withheld or delayed. (d) Debtor shall keep separate, accurate and complete records of the Pledged Collateral owned by Debtor, disclosing the Secured Party's security interest hereunder. (e) Debtor shall permit the Secured Party, its officers, employees and agents at reasonable times and on reasonable prior notice to inspect all books and records related to the Pledged Collateral. (f) During the term of this Agreement, Debtor shall not sell, assign, transfer, pledge, grant a security interest, place a lien on or otherwise dispose of the Pledged Collateral except as permitted under the Loan Agreement. -4- 6. Other Rights With Respect to Pledged Collateral. In addition to the other rights with respect to the Pledged Collateral granted to the Secured Party hereunder, at any time and from time to time, after and during the continuation of an Event of Default, the Secured Party at its option and at the expense of Debtor, may (a) transfer into its own name, or into the name of its nominee, all or any part of the Pledged Collateral, thereafter receiving all dividends, income or other distributions upon the Pledged Collateral; (b) take control of and manage all or any of the Pledged Collateral; (c) apply to the payment of any of the Secured Obligations, whether any be due and payable or not, any moneys, including cash dividends and income from any Pledged Collateral, now or hereafter in the hands of the Secured Party or any Affiliate of the Secured Party, on deposit or otherwise, belonging to Debtor, as the Secured Party, in its sole discretion, shall determine; and (d) do anything which Debtor is required but fails to do hereunder. The proceeds of any collection, sale or other disposition of the Pledged Collateral of Debtor, or any part thereof, shall, after the Secured Party has made all deductions of expenses, including but not limited to reasonable attorneys' fees and other expenses incurred in connection with repossession, collection, sale or disposition of such Pledged Collateral or in connection with the enforcement of the Secured Party's rights with respect to the Pledged Collateral in any insolvency, bankruptcy or reorganization proceedings, be applied against the Secured Obligations, whether or not all the same be then due and payable, in such manner and order as set forth in the Loan Agreement. 7. Additional Remedies Upon Event of Default. Upon the occurrence of any Event of Default and while such Event of Default shall be continuing, the Secured Party shall have, in addition to all rights and remedies of a secured party under the Code or other applicable Law, and in addition to its rights under Section 6 above and under the Loan Agreement, the Notes and the Other Documents, the following rights and remedies: (a) The Secured Party may, after ten (10) days' advance notice to Debtor, sell, assign, give an option or options to purchase or otherwise dispose of the Pledged Collateral or any part thereof at public or private sale, at any of the Secured Party's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Secured Party may deem commercially reasonable. Debtor agrees that ten (10) days' advance notice of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Secured Party shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Debtor recognizes that the Secured Party may be compelled to resort to one or more private sales of the Pledged Collateral to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such securities for its own account for investment and not with a view to the distribution or resale thereof. Debtor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale -5- shall be deemed to have been made in a commercially reasonable manner. The Secured Party shall be under no obligation to delay sale of any of the Pledged Collateral for the period of time necessary to permit Debtor to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if Debtor would agree to do so. (b) The proceeds of any collection, sale or other disposition of the Pledged Collateral of Debtor, or any part thereof, shall, after the Secured Party has made all deductions of expenses, including but not limited to reasonable attorneys' fees and other expenses incurred in connection with repossession, collection, sale or disposition of such Pledged Collateral or in connection with the enforcement of the Secured Party's rights with respect to the Pledged Collateral in any insolvency, bankruptcy or reorganization proceedings, be applied against the Secured Obligations, whether or not all the same be then due and payable, in such manner and order as set forth in the Loan Agreement. 8. Secured Party's Duties. The powers conferred on the Secured Party hereunder are solely to protect its interest in the Pledged Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Secured Party shall have no duty as to any Pledged Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral. 9. No Waiver; Cumulative Remedies. No failure to exercise, and no delay in exercising, on the part of the Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any further exercise thereof or the exercise of any other right, power or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided under the Loan Agreement, the Note, and the Other Documents or by Law. Debtor waives any right to require the Secured Party to proceed against any other person or to exhaust any of the Pledged Collateral or other security for the Secured Obligations or to pursue any remedy in the Secured Party's power. 10. Assignment. All rights of the Secured Party under this Agreement shall inure to the benefit of its successors and assigns. All obligations of Debtor shall bind its successors and assigns; provided, however, Debtor may not assign or transfer any of its rights and obligations hereunder or any interest herein. 11. Severability. Any provision of this Agreement which shall be held invalid or unenforceable shall be ineffective without invalidating the remaining provisions hereof. -6- 12. Governing Law and Jurisdiction. This Agreement shall be construed in accordance with and governed by the internal laws of the State of Delaware without regard to its conflicts of law principles, except to the extent the validity or perfection of the security interests or the remedies hereunder in respect of any Pledged Collateral are governed by the law of a jurisdiction other than the State of Delaware. The Debtor hereby irrevocably consents to the exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania located within Philadelphia County or the United States District Court for the Eastern District of Pennsylvania for the resolution of all claims, disputes and controversies arising hereunder. 13. Notices. Debtor agrees that all notices, statements, requests, demands and other communications under this Agreement shall be given to each of the parties at the address set forth below their names and the manner provided in Section 7 of the Loan Agreement. 14. Specific Performance. Debtor acknowledges and agrees that, in addition to the other rights of the Secured Party hereunder and under the other Loan Documents, because the Secured Party's remedies at law for failure of Debtor to comply with the provisions hereof relating to the Secured Party's rights (i) to inspect the books and records related to the Pledged Collateral, (ii) to receive the various notifications Debtor is required to deliver hereunder, (iii) to obtain copies of agreements and documents as provided herein with respect to the Pledged Collateral, (iv) to enforce the provisions hereof pursuant to which Debtor has appointed the Secured Party its attorney-in-fact, and (v) to enforce the Secured Party's remedies hereunder, would be inadequate and that any such failure would not be adequately compensable in damages, Debtor agrees that each such provision hereof may be specifically enforced. 15. Dividends; Voting Rights in Respect of the Pledged Collateral. So long as no Event of Default shall occur and be continuing under the Loan Agreement, Debtor may exercise any and all voting and other consensual rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement, the Loan Agreement, the Notes or Other Documents; provided, however, that Debtor will not exercise or will refrain from exercising any such right, as the case may be, if such action would be inconsistent with the covenants and obligations of Debtor under the Loan Agreement and the Other Documents or would have a material adverse effect on the value of any Pledged Collateral. So long as no Event of Default has occurred and is continuing, any lawful dividends paid in cash to Debtor in respect of the Pledged Collateral may be used or applied by Debtor for any purpose permitted by the Loan Agreement. 16. Entire Agreement; Amendments. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements relating to a grant of a -7- security interest in the Pledged Collateral by Debtor. This Agreement may not be amended or supplemented except by a writing signed by the Secured Party and Debtor. 17. Counterparts. This Agreement may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute but one and the same agreement. 18. Descriptive Headings. The descriptive headings which are used in this Agreement are for the convenience of the parties only and shall not affect the meaning of any provision of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. SECURED PARTY: VDC CORPORATION LTD. BY: /s/Graham Ferguson Lacey ------------------------------------ Graham Ferguson Lacey, President DEBTOR: PORTACOM WIRELESS, INC. BY: /s/Douglas C. MacLellan ------------------------------------ Douglas C. MacLellan, President and Chief Executive Officer [SEAL] Principal Place of Business: 10061 Talbert Avenue - Suite 200 Fountain Valley, CA 92708 Chief Executive Office: 10061 Talbert Avenue - Suite 200 Fountain Valley, CA 92708 -8- SCHEDULE A TO PLEDGE AGREEMENT Description of Pledged Collateral Type and Debtor Amount of Ownership - ------ ------------------- PORTACOM WIRELESS, INC. 4,000,000 Warrants to Purchase Common Stock of Metromedia Asia Corporation -9- EX-10.5 9 SECURITY AGREEMENT SECURITY AGREEMENT THIS SECURITY AGREEMENT is dated November 10, 1997 and is made between PortaCom Wireless, Inc., a Delaware corporation ("Grantor") and VDC Corporation Ltd. ("Lender") pursuant to the Loan Agreement referred to below. WITNESSETH THAT: WHEREAS, pursuant to that certain Loan Agreement dated November 10, 1997 (as it may hereafter be amended or otherwise modified from time to time, the "Loan Agreement") between Grantor and the Lender, the Lender has agreed to make certain loans to Grantor; WHEREAS, the obligations of the Lender to make loans under the Loan Agreement are subject to the condition, among others, that Grantor secure its obligations to the Lender under the Loan Agreement by the grant of security interests in the Collateral, as defined and more fully set forth herein; and WHEREAS, Grantor is (or will be with respect to after-acquired property) the legal and beneficial owner and holder of the Collateral (as defined in Section 1 hereof), and has agreed to grant security interests in such Collateral to the Lender on the terms and conditions set forth herein. NOW, THEREFORE, intending to be legally bound hereby and for value received, the parties hereto covenant and agree as follows: 1. Definitions. Terms which are defined in the Loan Agreement and not otherwise defined herein are used herein as defined therein. In addition to the words and terms defined elsewhere in this Security Agreement, the following words and terms shall have the following meanings, respectively, unless the context otherwise clearly requires: (a) "Code" shall mean the Uniform Commercial Code of each state as enacted and in effect on the date hereof in each applicable jurisdiction, and as the same may subsequently be amended from time to time. (b) "Collateral" shall mean, all of Grantor's right, title and interest in, to and under the following described property, whether now owned or hereafter acquired (words and terms defined in the Code shall have the same meanings when used herein): (i) warrants to purchase 4,000,000 shares of the common stock of Metromedia Asia Corporation (the "Warrants") which the Grantor now beneficially owns or may hereafter acquire, as the same have been described in the Termination Agreement (the "Termination Agreement"), dated September 11, 1996, by and among Grantor, Metromedia Asia Corporation ("MAC"), as successor-in-interest to Asian American Telecommunications Corporation and Max E. Bobbitt; and (ii) 2,000,000 shares (the "Shares") of the common stock of MAC held beneficially and of record by Grantor, to the extent permissible under the terms of the Termination Agreement, pursuant to which such shares are being held in escrow until January 1, 1999. The Shares and the Warrants collectively shall be referred to as the "Securities". The term "Collateral" as it applies to the Shares and the Warrants shall also include all rights and privileges pertaining thereto, including, without limitation, all securities and additional securities receivable in respect of or in exchange for such Securities, all rights to subscribe for securities incident to or arising from ownership of such Securities, all cash, interest, stock and other dividends or distributions paid or payable on such Securities, and all books and records pertaining to the foregoing, including, without limitation, all stock record and transfer books, and whatever is received when any of the foregoing is sold, exchanged or otherwise disposed of, including any proceeds as such term is defined in the Code. (c) "Secured Indebtedness" shall mean (i) all obligations, whether of principal, interest, fees, expenses or otherwise, of Grantor to Lender, whether now existing or hereafter incurred, under the Loan Agreement, Notes or any of the Other Documents as any of the same may from time to time be amended, modified or supplemented, together with any and all extensions, renewals, refinancings or refundings thereof in whole or in part by the Lender, (ii) all out-of-pocket costs, expenses and disbursements, including reasonable attorneys' fees and legal expenses, incurred by the Lender in the collection of any of the obligations referred to in subclause 1(c)(i) above; and (iii) any advances made, subsequent to an Event of Default, by the Lender, for the reasonable maintenance, preservation, protection or enforcement of, or realization upon, the Collateral, including advances for taxes and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale or other realization on, any of the Collateral. 2. Assignment and Grant of Security Interests. As security for the due and punctual payment and performance of the Secured Indebtedness in full, Grantor hereby agrees that the Lender shall have, and Grantor hereby grants to and creates in favor of the Lender, for the benefit of the Lender, to secure all of the Secured Indebtedness, a continuing first priority security interest in and to Grantor's Collateral; provided, however, that the security interest granted in all of the Shares is subordinated to any security interest in the Shares granted by the Grantor to MAC (the "Permitted Lien") pursuant to the Termination Agreement. Without limiting the generality of Section 4 below, Grantor further agrees that with respect to each item of Collateral as to which (i) the creation of valid and enforceable security interests is not governed exclusively by the Code or (ii) the perfection of valid and enforceable security interests therein under the Code cannot be accomplished by the Lender taking possession thereof or by the filing in appropriate locations of appropriate Code financing statements executed by the Grantor, Grantor will at its expense execute and deliver to the Lender such documents, agreements, notices, assignments and instruments and take such further actions as may be reasonably requested by the Lender from time to time for the purpose of creating a valid and perfected first priority lien on such item, enforceable against the Grantor and all third parties to secure the Secured Indebtedness. 2 3. Representations and Warranties. Except as otherwise set forth in the Disclosure Statement attached as Exhibit B to the Loan Agreement, Grantor represents, warrants and covenants to the Lender that: (a) Grantor is the legal and beneficial owner and holder of the Collateral and Grantor has and will continue to have good and marketable title to the Collateral which Grantor purports to own or which is reflected as owned in its books and records. (b) The Grantor has received value from the Lender for Grantor's grant of security interests hereunder and, except for the security interests granted to and created in favor of the Lender hereunder, all of the Collateral is and will continue to be free and clear of all liens, except the Permitted Lien. (c) Grantor has full power to enter into, execute, deliver and carry out this Security Agreement and to perform its obligations hereunder and all such actions have been duly authorized by all necessary proceedings on its part. This Security Agreement has been duly and validly executed and delivered by Grantor. This Security Agreement constitutes the legal, valid and binding obligations of Grantor, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific performance. (d) Neither the execution and delivery of this Security Agreement nor compliance with the terms and provisions hereof (i) will conflict with or result in any breach of the terms and conditions of the articles of incorporation, bylaws or equivalent documents of Grantor or of any law or of the Termination Agreement or any material agreement or instrument to which Grantor is a party or by which it is bound or to which it is subject, (ii) will constitute a default under any of the documents referred to in clause 3(d)(i) above or (iii) will result in the creation or enforcement of any lien (other than the Permitted Lien) whatsoever upon any Collateral (now or hereafter acquired) of Grantor. 4. Further Assurances. Grantor will, from time to time, at its expense, faithfully preserve and protect the Lender's security interests in the Collateral (other than the Shares) as continuing first priority perfected security interests and the Lender's security interest in Grantor's Shares as a continuing perfected security interest subordinate only to the Permitted Lien, and will do all such other acts and things and will, upon request therefor by the Lender, execute, deliver, file and record all such other documents and instruments, including financing statements, security agreements, pledges, assignments, documents and powers of attorney with respect to the Collateral, and pay all filing fees and taxes related thereto as the Lender in its reasonable discretion may deem necessary or advisable from time to time in order to preserve, perfect or protect any security interest granted or purported to be granted hereby or to enable the Lender to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral. Without limiting the generality of the foregoing, to the extent Article 9 of the Code does not govern the creation and/or perfection of the security interests intended to be created hereunder, 3 Grantor agrees to execute and deliver such further documents and instruments and do such further acts as the Lender may from time to time require. 5. Covenants. Grantor covenants and agrees that, except as otherwise required by the Termination Agreement, (a) it will not sell, assign or otherwise dispose of any portion of the Collateral; (b) it will obtain and maintain sole and exclusive possession of its Collateral; (c) it will keep materially accurate and complete books and records concerning the Collateral and such other books and records as may be required under the Loan Agreement; (d) it will promptly furnish to the Lender such information and documents relating to the Collateral as the Lender may reasonably request in order to confirm the status of the Lender's security interests in such Collateral; (e) it will not take or omit to take any actions, the taking or the omission of which might result in a material adverse alteration or impairment of the Collateral or in a violation of this Security Agreement; (f) it will execute and deliver to the Lender and record such supplements to this Security Agreement and additional assignments as the Lender reasonably may request to evidence and confirm the security interests herein contained; and (g) it will not agree to change, modify, extend or terminate the Termination Agreement without the prior written consent of the Lender. The Grantor shall notify the Lender in writing ten (10) days prior to the effective date of any change or modification to, or extension or terminate of, the Termination Agreement. 6. Preservation of Security Interests. Grantor assumes full responsibility for taking and hereby agrees to take any and all necessary steps to preserve and defend the Lender's right, title and security interests in and to the Collateral against the claims and demands of all persons. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in the Lender's possession if, prior to the existence of an Event of Default, the Lender takes such action for that purpose as such Grantor shall reasonably request in writing, provided that such requested action will not, in the judgment of the Lender, impair the security interests in the Collateral created hereby or the Lender's rights in, or the value of, such Collateral, and provided further that such written request is received by the Lender in sufficient time to permit the Lender to take the requested action. 7. Lender's Rights with Respect to the Collateral. At any time and from time to time, whether or not an Event of Default shall have occurred, and without notice to or consent of the Grantor, the Lender may, at its option, do any or all of the following: (a) do anything which the Grantor is required but fails to do hereunder, and in particular the Lender may, if the Grantor fails to do so, (i) insure or take any reasonable steps to protect the Collateral, (ii) pay any or all taxes, levies, expenses and costs arising with respect to the Collateral, or (iii) pay any or all premiums payable on any policy of insurance required to be obtained or maintained hereunder, and add any amounts paid under this Section 7 to the principal amount of the Loan Agreement, as evidenced by the Notes, and other liabilities of Grantor secured by this Security Agreement; (b) inspect the Collateral at any reasonable time; and (c) pay any amounts the Lender reasonably elects to pay or advance hereunder on account of insurance, taxes or other costs, fees or charges arising in connection with the Collateral, either directly to the payee(s) of such cost, fee or charge, directly to the Grantor, or to such payee(s) and Grantor, jointly. 4 8. Remedies on Default. If there shall have occurred and be continuing an Event of Default under the terms of the Loan Agreement, then the Lender shall, subject to any restrictions set forth in the Termination Agreement, have such rights and remedies with respect to the Collateral or any part thereof and the proceeds thereof as are provided by the Code and such other rights and remedies with respect thereto which it may have at law or in equity or under this Security Agreement, including to the extent not inconsistent with the provisions of the Code or any other applicable Law, the right to take over and collect the Collateral which consists of amounts owing to Grantor to the extent not prohibited by applicable law. To this end, the Lender shall have the right to (a) transfer all or any part of any of the Collateral into the Lender's name or into the name of its nominee or nominees and thereafter receive all cash, stock and other dividends or distributions paid or payable in respect thereof, and otherwise act with respect thereto as the absolute owner thereof; (b) notify the obligors on any of the Collateral, whether accounts or otherwise, to make payment thereon directly to the Lender, whether or not the Grantor was theretofore making collections thereon; (c) take control of and manage the Collateral; (d) apply to the payment of the Secured Indebtedness, whether it be due and payable or not, any moneys, including cash dividends and income from the Collateral, now or hereafter in the hands of the Lender, on deposit or otherwise, belonging to Grantor, in accordance with Section 9 hereof; (e) endorse the name of the Grantor upon any checks or other evidences of payment or any document or instrument that may come into the possession of the Lender as proceeds of or relating to such Grantor's Collateral; (f) demand, sue for, collect, compromise and give acquittances for the Collateral; (g) prosecute, defend or compromise any action, claim or proceeding with respect to the Collateral; and (h) take such other action as the Lender may deem appropriate, including extending or modifying the terms of payment of the debtors of Grantor. In addition, upon the occurrence of an Event of Default but subject to any restrictions set forth in the Termination Agreement, Grantor, at the request of the Lender, shall assemble all or any portion of the Grantor's Collateral at such locations as the Lender shall designate which are reasonably convenient to Grantor, and the Lender may sell, assign, give an option or options to purchase or otherwise dispose of all or any part of the Collateral at any public or private sale at such place or places and at such time or times and upon such terms, whether for cash or on credit, and in such manner, as the Lender may determine, and apply the proceeds so received in accordance with Section 9 hereof. Written notice of sale mailed by certified mail, return receipt requested, to the Grantor, at least ten (10) days prior to such sale shall be deemed reasonable notice. In the event of a breach by Grantor in the performance of any of the terms of this Security Agreement, the Lender may demand specific performance of this Security Agreement and seek injunctive relief and may exercise any other remedy, available at law or in equity, it being recognized that the remedies of the Lender at law may not fully compensate the Lender for the damages it may suffer in the event of a breach hereof. 9. Application of Proceeds. The proceeds of the Collateral shall be applied in accordance with the terms of the Loan Agreement. Grantor shall be liable for any deficiency if the proceeds of any sale, assignment, giving of an option or options to purchase or other disposition of the Collateral is insufficient to pay all amounts to which the Lender is entitled. 5 10. Attorneys-in-Fact. After an Event of Default the Grantor hereby irrevocably appoints the Lender, its officers, employees and agents, or any of them, as attorneys-in-fact, with full power of substitution, for Grantor for the purpose of carrying out the provisions of this Security Agreement and taking any action and executing, delivering, filing and recording any instruments which the Lender may deem necessary or advisable to accomplish the purposes hereof, which power of attorney being given for security is coupled with an interest and irrevocable. The Grantor hereby ratifies and confirms and agrees to ratify and confirm all action taken by the Lender, its officers, employees or agents pursuant to the foregoing power of attorney. 11. Indemnity and Expenses. (a) The Grantor unconditionally agrees to indemnify the Lender from and against any and all claims, losses and liabilities arising out of or resulting from this Security Agreement (including enforcement of this Security Agreement), except claims, losses or liabilities resulting from the gross negligence or willful misconduct of the Lender. (b) The Grantor unconditionally agrees upon demand to pay to the Lender the amount of any and all reasonable and necessary out-of-pocket costs, expenses and disbursements, including fees and expenses of its counsel, which the Lender may incur in connection with (i) the administration of this Security Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, the Collateral, (iii) the exercise or enforcement of any of the rights of the Lender hereunder or (iv) the failure by the Grantor to perform or observe any of the provisions hereof. 12. Security Interest Absolute; Waiver of Notices. All rights of the Lender hereunder, all security interests hereunder, and all obligations of the Grantor hereunder shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of the Loan Agreement, the Notes or any of the Other Documents; (b) any change in the time, manner or place or payment of, or in any other term of, all or any of the Secured Indebtedness or any other amendment or waiver of or any consent to any departure from the Loan Agreement, the Notes or any of the Other Documents; (c) any exchange, release or non-perfection of any other Collateral; or (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Grantor or any third party mortgagors, pledgors or grantors of security interests. Grantor waives any and all notice with respect to acceptance by the Lender of this Security Agreement, the provisions of the Loan Agreement, the Notes or any of the Other Documents or any other note, instrument or agreement relating to the Secured Indebtedness, and any default in connection with the Secured Indebtedness. Grantor waives any presentment, demand, notice of dishonor or nonpayment, protest, notice of protest and any other notice of any kind in connection with the Secured Indebtedness. 13. Termination. Upon payment in full of the Secured Indebtedness and termination of the Loan Agreement and the Notes, this Security Agreement shall terminate and be of no further force and effect, and the Lender, at the Grantor's expense, shall thereupon promptly return to Grantor the Collateral and such other documents delivered by Grantor hereunder as may 6 then be in the Lender's possession. Upon any such termination, the Lender will, at the Grantor's expense, execute and deliver to the Grantor such documents as that Grantor shall reasonably request to evidence such termination. 14. Modifications, Amendments and Waivers. Any and all agreements amending or changing any provision of this Security Agreement or the rights of any of the Lender or the Grantor, and any and all waivers or consents to Events of Default or other departures from the due performance of the Grantor hereunder shall be made only pursuant to the provisions of Section 7 of the Loan Agreement. 15. No Implied Waivers; Cumulative Remedies. No course of dealing and no failure or delay on the part of the Lender in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof or of any other right, remedy, power or privilege of the Lender hereunder; and no single or partial exercise of any such right, remedy, power or privilege shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights and remedies of the Lender under this Security Agreement are cumulative and not exclusive of any rights or remedies which it may otherwise have. 16. Notices. All notices, statements, requests, demands and other communications given to or made upon the Grantor, the Lender in accordance with the provisions of this Security Agreement shall be given or made as provided in Section 7 of the Loan Agreement. 17. Severability. (a) Grantor agrees that the provisions of this Security Agreement are severable, and in an action or proceeding involving any state or federal bankruptcy, insolvency or other law affecting the rights of creditors generally: (i) if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Agreement in any jurisdiction; (ii) if this Security Agreement would be held or determined to be void, invalid or unenforceable on account of the amount of the aggregate liability of Grantor under this Security Agreement, then, notwithstanding any other provision of this Security Agreement to the contrary, the aggregate amount of such liability shall, without any further action by the Lender, Grantor or any other person, be automatically limited and reduced to the highest amount which is valid and enforceable as determined in such action or proceeding. (iii) If the grant of any security interest hereunder by Grantor is held or determined to be void, invalid or unenforceable, in whole or in part, such holding or determination shall not impair or affect the validity and enforceability of any clause or provision not so held to be void, invalid or unenforceable. 7 18. Governing Law. This Security Agreement shall be deemed to be a contract under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the internal laws of said State, without reference to its conflicts of law principles, except as required by mandatory provisions of law and except to the extent that the validity or perfection of security interests hereunder, or remedies hereunder with respect to the Collateral, is governed by the laws of a jurisdiction other than the law of the State of Delaware. 19. Successors and Assigns. This Security Agreement shall be freely assignable and transferable by the Lender in connection with the assignment or transfer of the Secured Indebtedness; provided, however, the duties and obligations of the Grantor may not be delegated or transferred by the Grantor, without the written consent of the Lender. The rights and privileges of the Lender shall inure to their benefit and the benefit of its respective successors and assigns (as permitted under the Loan Agreement) and the duties and obligations of the Grantor shall bind the Grantor and its respective successors and assigns. 20. Counterparts. This Security Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. 21. Consent to Jurisdiction; Waiver of Jury Trial. The Grantor hereby irrevocably consents to the exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania located within Philadelphia County and the United States District Court for the Eastern District of Pennsylvania and waives personal service of any and all process upon it and consents that all such service of process be made by certified or registered mail directed to the Grantor at the addresses set forth or referred to in Section 16 hereof and service so made shall be deemed to be completed upon actual receipt thereof. The Grantor waives any objection to jurisdiction and venue of any action instituted against it as provided herein and agrees not to assert any defense based on lack of jurisdiction or venue, AND THE LENDER WAIVES TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM WITH RESPECT TO THIS SECURITY AGREEMENT TO THE FULL EXTENT PERMITTED BY LAW. WITNESS the due execution hereof as of the day and year first above written. PORTACOM WIRELESS, INC. BY: /s/ Douglas C. MacLellan --------------------------------- Douglas C. MacLellan, President and Chief Executive Officer VDC CORPORATION LTD. BY: /s/ Graham Ferguson Lacey --------------------------------- Graham Ferguson Lacey, President 8 EX-10.6 10 MATERIAL CONTRACTS DEBTOR IN POSSESSION LOAN, SECURITY AND PLEDGE AGREEMENT THIS DEBTOR IN POSSESSION LOAN, SECURITY AND PLEDGE AGREEMENT (the "Agreement") is made this 23rd day of March, 1998, by and between VDC Corporation Ltd., a Bermuda corporation (the "Lender" or "VDC"), and PortaCom Wireless, Inc., a Delaware corporation (the "Debtor"). W I T N E S S E T H: WHEREAS, the Lender and the Debtor entered into a Loan Agreement, Security Agreement, and Pledge Agreement all dated November 10, 1997, in order to evidence the terms and conditions pursuant to which the Lender agreed to advance funds to Debtor (the "Loan"); and WHEREAS, in order to secure the Debtor's obligations to Lender for amounts advanced under the Loan, the Debtor granted to Lender a first-priority security interest in all of the Debtor's rights, title, and interest in and to those certain warrants to purchase 4,000,000 shares of common stock of Metromedia Asia Corporation (the "Warrants") and those certain 2,000,000 shares of the common stock of Metromedia Asia Corporation (the "Shares" and together with the Warrants sometimes collectively referred to as the "Securities"), together with all rights and privileges pertaining thereto, including, without limitation, all securities and additional securities receivable in respect of or in exchange for such Securities, all rights to subscribe for securities incident to or arising from ownership of such Securities, all cash, interest, stock and other dividends or distributions paid or payable on such Securities, and all books and records pertaining to the foregoing, including, without limitation, all stock record and transfer books, and whatever is received when any of the foregoing is sold, exchanged or otherwise disposed of, including any proceeds as such term is defined in the Uniform Commercial Code of each state as enacted and in effect on the date hereof in each applicable jurisdiction, and as the same may subsequently be amended from time to time (the "UCC") (collectively, the "Collateral"), as further defined in and pursuant to the Security Agreement; and WHEREAS, VDC's interest in the Warrants was perfected as a result of (i) the parties' execution of the Pledge Agreement, whereby Debtor pledged the Warrants to VDC as collateral to secure Debtor's obligations to VDC, (ii) VDC's possession of the Warrants, and (iii) the filing of UCC Financing Statements with the Secretary of State for the States of Delaware, California, Ohio, New Jersey, New York (collectively, the "UCC-1's"); and WHEREAS, pursuant to the Loan, Lender agreed to advance certain amounts to the Debtor to be used by the Debtor for working capital, as further described at Section 4(e) of the Loan Agreement; and WHEREAS, on March 23, 1998 (the "Petition Date"), the Debtor filed a Voluntary Petition for relief under Chapter 11 of Title 11 of the United States Code (the "Code"); and WHEREAS, the Debtor remains in control of its property and is maintaining and managing its business as a debtor-in-possession pursuant to Code ss.ss. 1107 and 1108; and WHEREAS, prior to the commencement of the case, VDC extended $366,725.00 to Debtor under the Loan, which advances are evidenced by Credit Notes (collectively, the "Credit Notes") in the principal amount of $366,725.00, together with any and all accrued and unpaid interest, costs and fees, including attorneys' fees (collectively, the "Pre-Petition Indebtedness"). The Loan Agreement, Security Agreement, and Pledge Agreement dated November 10, 1997, and Credit Notes shall be collectively referred to herein as the "Pre-Petition Loan Documents"; and WHEREAS, by virtue of the Pre-Petition Loan Documents, UCC-1's, and possession of the Warrants, VDC has a first-priority lien on and security interest in and to the Warrants; and WHEREAS, Lender and Debtor have entered into an Asset Purchase Agreement dated November, 1997, and amendments thereto (as amended, the "Purchase Agreement"), whereby Lender agreed to purchase and Debtor agreed to sell the Securities in consideration of 5.3 million shares of the common stock of Lender plus $700,000.00 plus deferred purchase consideration, and which Purchase Agreement has been superseded by an Asset Purchase Agreement entered into between the parties post-petition (the "Transaction"); and WHEREAS, Debtor has requested additional advances under the Loan post-petition in accordance with the terms and conditions set forth below; and WHEREAS, Lender has agreed to advance additional funds to Debtor ("Post-Petition Loan") only in accordance with the terms and conditions set forth below and upon the Court's approval of such financing under Code ss. 364(c), secured by a Court-approved grant of a post-petition lien on and security interest in all of the Debtor's property (the "Post-Petition Financing Order"); and WHEREAS, Lender and Debtor have entered into this Agreement to evidence the terms and conditions pursuant to which the Lender has agreed to extend credit and advance funds to the Debtor post-petition; and NOW, THEREFORE, in consideration of the promises and of the mutual covenants contained herein, and intending to be legally bound hereby, subject only to the entry of the Post-Petition Financing Order by the Court, the Lender and the Debtor hereby agree as follows: 1. Recitals Incorporated. The Recitals set forth above are incorporated herein as though set forth at length below. 2. Ratification and Acknowledgment. The Debtor, for itself, its creditors and its estate, hereby ratifies and confirms for the benefit of Lender, its successors and assigns, the full extent of the Pre-Petition Indebtedness, the enforceability of the Pre-Petition Loan -2- Documents in accordance with their respective terms, and the extent, validity, priority, enforceability and perfection of Lender's lien on and interest in and to the Warrants. The Debtor hereby acknowledges and confirms that it has no defenses, counterclaims, set-offs, recoupments or other claims or rights to disallow, in whole or in part, the Pre-Petition Indebtedness or Lender's lien on and interest in and to the Warrants, and no objection to, or the allowance of, the secured claim of Lender. Prior to the making of any advances hereunder, Lender holds an allowed secured claim to the full extent of the Pre-Petition Indebtedness and will hold an allowed secured claim to the full extent of the Pre-Petition Indebtedness plus all advances hereunder, if any, plus all accrued interest, costs and fees, including attorneys' fees due hereunder. 3. The Post-Petition Loan. The Lender has agreed to extend credit and advance funds to the Debtor and make the Post-Petition Loan upon the terms and subject to the conditions hereinafter set forth. Lender shall have no obligation to provide advances, except in its sole discretion. Any amounts advanced by Lender under this Agreement shall be evidenced by a properly completed and executed Note, the form of which is attached hereto as Exhibit A, dated as of the date of advancement (the "Note"), made by the Debtor in favor of the Lender in such amounts as may be requested by Debtor and approved by Lender. The principal amount of the Post-Petition Loan, or any portion thereof, that may be issued under this Agreement is limited to the difference between (a) $700,000.00 and (b) the Pre-Petition Indebtedness (approximately $333,000.00). Notwithstanding anything to the contrary contained herein or in the Post-Petition Financing Order, Lender shall not be obligated to extend credit or advance funds under the Pre-Petition Loan Documents and the Post-Petition Loan in the aggregate principal amount in excess of $700,000.00. 4. Payment of Interest and Principal. (a) Payment of Post-Petition Loan. The unpaid principal balance under the Post-Petition Loan (as evidenced by any Notes which may be issued herewith or hereafter), together with all accrued and unpaid interest on the unpaid principal balance, which shall accrue at the rate of ten percent (10%) per annum (the "Interest Rate"), shall be paid in full upon the earlier to occur (the "Maturity Date") of: (i) the forty-fifth (45th) day following the entry of the Order for Relief under Code ss. 301; or (ii) the date approved by the Court as the sale or auction date of the Transaction; or (iii) April 30, 1998. Notwithstanding anything herein to the contrary, the Maturity Date may be extended from time to time upon the written consent of Lender, which consent shall be in Lender's absolute and sole discretion, may be withheld without cause and shall not constitute or be deemed a waiver or cure of any Event of Default. (b) Prepayment. The Debtor shall have the right to prepay at any time and from time to time, without penalty or premium, all or any portion of the outstanding balance of the Pre-Petition Indebtedness and Post-Petition Loan. All prepayments of the Pre-Petition Indebtedness and the Post-Petition Loan shall be applied first to accrued interest, and second to the unpaid principal balance due thereunder respectively first to the Post-Petition Loan and second to the Pre-Petition Indebtedness. -3- (c) Place of Payment. The Debtor shall make all payments to the Lender at the place set forth in Section 9(d) hereunder, or at such other place or places as the Lender, from time to time, shall designate in writing to the Debtor in accordance with Section 9(d) hereunder. 5. Security Interest. To secure all of the Debtor's obligations under the Post-Petition Loan, Notes and this Agreement, pursuant to Code ss. 364(c) the Debtor hereby grants and pledges to Lender a security interest in and lien on all now owned and hereafter acquired property of the Debtor, including, without limitation, the Collateral, accounts, accounts receivable, inventory, equipment, chattel paper, instruments, general intangibles and documents, and the proceeds of all of the foregoing, whether arising pre- or post-petition, which liens and security interests shall (i) have priority equal to the pre-petition lien and security interest granted to Lender under the Loan, and (ii) have first-priority in all other property of the Debtor's estate, and (iii) be deemed perfected without the necessity of Lender taking possession of the Shares or Warrants, filing UCC-1 Financing Statements, or taking any other action to perfect such liens and interests in any other property of the Debtor's estate. With respect to property of the Debtor in which other creditors hold a valid and perfected pre-petition interest, the pledge, lien and security interest granted and pledged to Lender in accordance herewith shall have priority equal to other creditors' interests in such property. 6. Representations and Warranties of the Debtor. As a further inducement to the Lender to execute and deliver this Agreement and to make the Post-Petition Loan available to the Debtor, the Debtor, except as otherwise set forth in the disclosure statement attached as Exhibit B to the Loan Agreement, hereby represents and warrants to, and makes the following agreements with the Lender, and the Post-Petition Financing Order shall declare, find, determine and conclude, as follows: (a) Authority. (i) The Debtor is a corporation, duly organized, validly existing and subsisting under the laws of Delaware. (ii) The Debtor has full power and authority to borrow the Post- Petition Loan, to execute and deliver this Agreement and any and all Notes and any other instruments and documents required to be executed in connection herewith and therewith (such other instruments and documents being collectively called the "Other Documents") without further Order of the Court. (b) Validity and Enforceability. This Agreement, each Note and each of the Other Documents have been, and will be, validly executed and delivered by the Debtor and are the legal, valid and binding obligations of the Debtor, enforceable against the Debtor in accordance with their respective terms. (c) No Conflicts. The execution and delivery by the Debtor of this Agreement, any Note and each of the Other Documents and the performance by the Debtor of all of its obligations hereunder and thereunder (a) will not violate or be in conflict with any law, -4- order, rule or regulation of any court of other governmental authority applicable to the Debtor; (b) will not constitute a default (with or without the giving of notice or the passage of time or both) under any indenture, agreement or other instrument to which it is a party or by which it or any of its properties or assets is or may be bound or subject; and (c) will not result in the creation or imposition of any lien, security interest, charge or encumbrance of any nature upon any of its properties or assets, except the Permitted Lien, as such term is defined in the Security Agreement. (d) No Consents. No consent, approval or authorization of, or registration, declaration or filing with, any governmental authority or other third party is required as a condition to, or in connection with, the due and valid execution and delivery by the Debtor of this Agreement, any Note or any of the Other Documents. (e) Use of Loan Proceeds. The proceeds from the Post-Petition Loan issued hereunder shall be used by the Debtor only for working capital purposes in the ordinary course of business, or in connection with the case or the Transaction. (f) Business Qualification. The Debtor is duly qualified to transact business in the United States and in each state of the United States where it conducts business and is in good standing in each jurisdiction in which its failure to be so qualified and in good standing would have a materially adverse effect on its financial condition of business, and it has the corporate power and ability to own and operate its properties and to carry on its business as now conducted. (g) SEC Filings. The Debtor has filed all necessary reports and filings (collectively, the "Filings") required to be filed with the Securities and Exchange Commission as of the date hereof and all Filings are true and correct and contain no material misrepresentations or omissions of material fact. (h) Taxes. The Debtor has paid all federal and state income and other applicable taxes levied by the United States and all deficiencies or other additions to any tax interest and penalties owed by the Debtor in connection with any tax requiring to be paid relating to the Debtor or any of its assets or business as of the date hereof. The Debtor shall timely pay all taxes relating to it or its business or assets, including additions, interests, penalties and estimated payments required to be paid by it under the applicable law after the date hereof. (i) Liens. The Debtor has all right, title and interest in, and good and marketable title to, the Securities and Collateral, free and clear of any claim, pledge, security interest, restriction, lien or encumbrance of any kind or nature whatsoever, except for the pre-petition lien to the Lender and the Permitted Lien on the Shares, as such term is defined in the Security Agreement. -5- 7. Events of Default: Remedies. (a) Events of Default. The following shall constitute events of default under this Agreement ("Events of Default"): (i) The Debtor fails to pay when due any principal, interest or other sums due hereunder or under any of the Notes. (ii) Except for Events of Default described in sub-paragraph (i) hereof, the Debtor defaults in the observance or performance of any condition or covenant contained in this Agreement or any Note and the Debtor shall not have remedied the default within fifteen (15) days after receipt of written notice of such default has been given by Lender to the Debtor. (iii) A breach by the Debtor of any warranty or any representation contained in this Agreement or any Note, and such breach shall not have been remedied within fifteen (15) days after receipt of written notice of such breach has been given by Lender to the Debtor. (iv) The conversion of the Debtor's case to a case proceeding under Chapter 7 of the Code, or the dismissal of the Debtor's Chapter 11 case, or the appointment of a trustee in either a Chapter 7 or Chapter 11 case of the Debtor. (v) The appeal, rehearing, reconsideration, reversal, modification, vacation or stay of the Post-Petition Financing Order. (vi) The failure to have scheduled a hearing on approval of the post-petition Asset Purchase Agreement and the Transaction ("Sale Hearing") within thirty (30) days following the commencement of the Case. (vii) The failure to have obtained approval of the proposed bidding procedures and Break-Up Fee, as described in the Transaction documents and in connection with the Sale Hearing. (viii) The failure to have obtained approval of the post-petition Asset Purchase Agreement and the Transaction within thirty-five (35) days following the commencement of the Case. (ix) The appeal, rehearing, reconsideration, reversal, modification, vacation or stay of the Order approving the Transaction. (x) The failure of the parties to close the Transaction within fifty (50) days of the commencement of the Case. (xi) If there shall have occurred an Event of Default under any other agreements between the Debtor and the Lender, except that the commencement of the Debtor's case shall not be deemed to constitute a default hereunder or thereunder. -6- (b) Remedies. In the event an Event of Default shall occur, then, in the sole discretion of the Lender and without further notice to the Debtor or any other party, the unpaid principal amount of the Pre-Petition Indebtedness and the Post-Petition Loan, together with all accrued interest thereon at the applicable rate specified in the Note, and all other sums due by the Debtor under any Note or this Agreement shall become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Debtor. Upon the occurrence of an Event of Default, the Lender shall have the right to charge and accrue interest at a rate per annum equal to the Interest Rate plus three percent (3%) (the "Default Rate"). In addition, in each case, the Lender may recover all costs of suit and other expenses incurred by the Lender (including attorneys' fees) in connection with the collection of any sums due under any and all Notes or under this Agreement. In addition to all other remedies available to it, the Lender may exercise its rights under any and all Notes delivered to the Lender or under any of the Other Documents. The remedies set forth herein shall be in addition to, and not in lieu of, any other additional rights or remedies the Lender may have at law or in equity. In addition, upon the occurrence of an Event of Default the automatic stay imposed by Code ss. 362, and all other stays and injunctions, if any, following three (3) business days' notice to Debtor shall be deemed modified and dissolved, and of no further force or effect, in order to permit Lender to exercise all rights or remedies with respect to or in the Collateral and recover therefrom the Pre-Petition Indebtedness and all obligations due Lender hereunder and the Notes. Further, Lender and Debtor agree that upon the occurrence of an Event of Default or the Maturity Date, whichever shall first occur, Lender shall be entitled to (i) exercise its rights in and to the Warrants, (ii) credit the Debtor, and (iii) apply the Warrants to and in satisfaction of the obligations of Debtor to Lender with respect to the Pre-Petition Indebtedness and all obligations under the Post-Petition Loan. Debtor hereby acknowledges notice of the Lender's intention to retain the Warrants in satisfaction of such obligations of Debtor to Lender and expressly waives its right to receive any further notice from Lender of its intention to do so, either before or after the occurrence of any Event of Default or the Maturity Date. All of the foregoing rights and remedies shall be cumulative and the exercise of any such right or remedy shall not exhaust or act to waive any other rights or remedies available to the Lender. No failure to exercise, or delay by the Lender in exercising, any right, power or privilege under this Agreement or otherwise shall preclude any other or further exercise thereof, or the exercise of any other right, power or privilege of the Lender. 8. Survival of Representations and Covenants. This Agreement and all covenants, agreements, representations and warranties made herein, in the disclosure statement attached as Exhibit B to the Loan Agreement, and in any Other Documents delivered pursuant hereto shall survive the making of the Post-Petition Loan and the execution and delivery of any Note and this Agreement, and shall continue in full force and effect until all of the obligations have been fully paid, performed, satisfied and discharged. 9. Miscellaneous. (a) Entire Agreement: Amendments. This Agreement, all Notes and all of the Other Documents executed and delivered pursuant hereto constitute the entire agreement between the Lender and the Debtor with respect to the subject matter hereof. The -7- provisions of this Agreement, any Note or any of the Other Documents shall not be modified, rescinded or waived except in writing executed by the party against whom such modification, rescission or waiver is sought to be enforced. (b) Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the Lender and the Debtor and their respective heirs, personal representatives, successors and assigns, including, without limitation, any committee of creditors or equity security holders appointed in the Debtor's case, as well as any trustee appointed in the Debtor's case, whether interim, permanent or elected, and whether under Chapter 7 or 11 of the Code, except that the Debtor shall not make any assignment of its rights hereunder without the prior written consent of the Lender. (c) Rights Cumulative. The remedies of the Lender as provided in any and all Notes, or in this Agreement and all of the Other Documents shall be cumulative and concurrent; may be pursued singly, successively, or together at the sole discretion of the Lender; may be exercised as often as occasion for their exercise shall occur; and in no event shall the failure to exercise any such right or remedy be construed as a waiver or release of it. (d) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made when received by the party to whom the notice, request, etc. is directed, and which shall be delivered personally, by courier service such as Federal Express, or by messenger, or by United States mail, registered or certified mail, postage pre-paid, return receipt requested, addressed as set forth below. If to the Debtor: PortaCom Wireless, Inc. 10061 Talbert Avenue Suite 200 Fountain Valley, CA 92708 with a copy to: Francis A. Monaco, Jr., Esquire Walsh and Monzack, P.A. 1201 Orange Street, Suite 400 Wilmington, DE 19899 and Jeffrey Kurtzman, Esquire Klehr, Harrison, Harvey, Branzburg & Ellers 1401 Walnut Street Philadelphia, PA 19102 -8- If to the Lender: VDC Corporation Ltd. P.O. Box HM 1255 44 Church Street Hamilton, Bermuda with a copy to: Stephen M. Cohen, Esquire Stuart M. Brown, Esquire Buchanan Ingersoll Profession Corporation 11 Penn Center, 14th Floor 1835 Market Street Philadelphia, PA 19103 (e) Controlling Law and Jurisdiction. This Agreement and all questions relating to its validity, interpretation and performance shall be governed by and construed in accordance with the laws of the State of Delaware of the United States. The Debtor hereby consents to the exclusive jurisdiction of the United States Bankruptcy Court for the District of Delaware for the resolution of all claims, disputes and controversies arising hereunder. (f) Notice of Default. The Debtor hereby agrees to promptly notify the Lender of any event or circumstance which gives rise to or which is reasonably likely to give rise to an Event of Default hereunder. [remainder of page intentionally left blank] -9- (g) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute but one and the same instrument. (h) Severability. If any provisions of this Agreement shall be held invalid under any applicable laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provisions and, to this end, the provisions hereof are severable. IN WITNESS WHEREOF, the parties hereto have caused this Debtor In Possession Loan, Security And Pledge Agreement to be executed and delivered as of the date first written above. VDC CORPORATION LTD. BY: /s/Frederick A. Moran ------------------------------------ Frederick A. Moran, Chief Executive Officer PORTACOM WIRELESS, INC. BY: /s/ Michael A. Richard ------------------------------------ Michael A. Richard Chief Executive Officer -10- EX-10.7 11 WAIVER WAIVER WAIVER (the "Waiver") dated as of June 8, 1998, by VDC CORPORATION LTD., a Bermuda Corporation ("VDC"). RECITALS WHEREAS, VDC and PORTACOM WIRELESS, INC., a Delaware corporation ("PortaCom"), are the parties to that certain Asset Purchase Agreement dated as of March 23, 1998 (the "Asset Purchase Agreement"), as amended by two Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and April 23, 1998, respectively, and the Escrow Agreement dated April __, 1998 among PortaCom, VDC, the Committee of Unsecured Creditors of PortaCom Wireless, Inc. and Klehr, Harrison, Harvey, Branzburg & Ellers LLP. WHEREAS, Section 8.10 of the Asset Purchase Agreement states that VDC's obligations under the Asset Purchase Agreement are subject to the condition, unless such condition is expressly waived in writing by VDC, that "[PortaCom] shall have provided validly executed releases, waivers and/or settlement agreements, satisfactory in form and substance to [VDC], evidencing agreements for the satisfaction of substantially all indebtedness of, and claims against, [PortaCom]." WHEREAS, Section 6.2(a) of the Asset Purchase Agreement states that "at or prior to the Closing, Seller shall deliver to Buyer. . . in form and substance satisfactory to Buyer, a written release by all of the parties to the Termination Agreement agreeing to the release of the MAC Common Stock to the Buyer." WHEREAS, Section 6.2(b) of the Asset Purchase Agreement states that "at or prior to the Closing, Seller shall deliver to Buyer. . . in form and substance satisfactory to Buyer, written evidence from MAC confirming that, as of the Closing Date, no part of the Assets pledged as collateral under the Termination Agreement has been sold, assigned, transferred or otherwise disposed of or subject to any action for any of the foregoing (other than the transaction contemplated in this Agreement), and that, as of the Closing Date, neither MAC nor its parent corporation, Metromedia International Group, Inc., contemplates taking any of the foregoing actions." WHEREAS, Section 3.3(a) of the Asset Purchase Agreement states that "[PortaCom] will deliver a . . . Debt Schedule . . . identifying its indebtedness as of the Closing Date". WHEREAS, VDC and PortaCom have mutually determined and agreed that the aforementioned conditions set forth in Sections 3.3(a), 6.2(a), 6.2(b) and 8.10 of the Asset Purchase Agreement is no longer applicable to the closing of the transactions contemplated by the Asset Purchase Agreement. NOW THEREFORE, VDC, intending to be legally bound hereby, hereby waives the satisfaction of the conditions set forth in Sections 3.3(a), 6.2(a), 6.2(b) and 8.10 of the Asset Purchase Agreement as a condition to VDC's obligations under the Asset Purchase Agreement. IN WITNESS WHEREOF, the undersigned has duly executed this Waiver as of the date and year first written above. VDC CORPORATION LTD. By: /s/ Frederick A. Moran ------------------------------- Frederick A. Moran, Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----