VDC COMMUNICATIONS INC, DEF 14A, 2000-10-27

VDC COMMUNICATIONS INC
DEF 14A, 2000-10-27
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant []

Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

VDC COMMUNICATIONS, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

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2) Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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<PAGE>

VDC COMMUNICATIONS, INC.
75 Holly Hill Lane, 3rd Floor
Greenwich, Connecticut 06830

October 20, 2000

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders
(the "Meeting") of VDC Communications, Inc. ("VDC") which will be held at VDC's
offices at 75 Holly Hill Lane, 3rd Floor, Greenwich, Connecticut on Monday,
December 11, 2000 at 10:00 A.M. Eastern Standard Time. Your Board of Directors
and management look forward to personally greeting those stockholders able to
attend.

At the Meeting, stockholders will be asked:

(1) to elect one (1) director to serve until the end of his term
or until his successor is elected and qualified;

(2) to approve an amendment to VDC's 1998 Stock Incentive Plan,
as amended, to increase the number of shares of VDC's common stock available for
issuance pursuant to grants thereunder from five million (5,000,000) shares to
eight million (8,000,000) shares;

(3) to ratify the appointment of BDO Seidman, LLP as VDC's
independent auditors for the year ending June 30, 2001; and

(4) to consider such other matters as may be properly brought
before the Meeting and at any adjournment(s) or postponement(s) thereof.

These matters are discussed in greater detail in the accompanying Proxy
Statement.

Your Board of Directors recommends a vote FOR the election of the
director nominated, FOR the approval of the amendment of VDC's 1998 Stock
Incentive Plan, as amended, and FOR the ratification of BDO Seidman, LLP as
VDC's independent auditors.

Regardless of the number of shares you own or whether you plan to
attend, it is important that your shares be represented and voted at the
Meeting. You are requested to sign, date and mail the enclosed proxy promptly.

A copy of the Annual Report for the year ended June 30, 2000 is
enclosed for your information. No material contained in the Annual Report is to
be considered a part of the proxy solicitation material.

<PAGE>

We wish to thank our stockholders for their loyal support of VDC and
their participation in this process.

Sincerely,

/s/ Frederick A. Moran
Frederick A. Moran
Chairman of the Board
and Chief Executive Officer

<PAGE>

VDC COMMUNICATIONS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 11, 2000

October 20, 2000

To the Stockholders of VDC Communications, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of VDC Communications, Inc. ("VDC") will be held at VDC's offices at
75 Holly Hill Lane, 3rd Floor, Greenwich, Connecticut on Monday, December 11,
2000, at 10:00 A.M. Eastern Standard Time, for the following purposes:

(1) to elect one (1) director to serve until the end of his term
or until his successor is elected and qualified;

(3) to ratify the appointment of BDO Seidman, LLP as VDC's
independent auditors for the year ending June 30, 2001; and

(4) to consider such other matters as may be properly brought
before the Meeting and at any adjournment(s) or postponement(s) thereof.

Only stockholders of record as of the close of business on October 16,
2000 will be entitled to vote at the Meeting and any adjournment(s) or
postponement(s) thereof.

All stockholders are cordially invited to attend the Meeting. However,
to assure your representation at the Meeting, you are urged to complete, sign,
date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Meeting may vote in person even if he or she has returned a proxy.

<PAGE>

By Order of the Board of Directors,

/s/ Frederick A. Moran
Frederick A. Moran
Chairman of the Board and
Chief Executive Officer

Greenwich, Connecticut

YOUR VOTE IS IMPORTANT
You are urged to sign, date and promptly
return your proxy in the enclosed envelope.

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<PAGE>

VDC COMMUNICATIONS, INC.
75 Holly Hill Lane, 3rd Floor
Greenwich, Connecticut 06830

PROXY STATEMENT

The enclosed proxy is solicited on behalf of the Board of Directors of
VDC Communications, Inc. ("VDC") to be voted at the Annual Meeting of
Stockholders (the "Meeting") of VDC to be held at VDC's offices at 75 Holly Hill
Lane, 3rd Floor, Greenwich, Connecticut on Monday, December 11, 2000 at 10:00
A.M. Eastern Standard Time, and at any adjournment(s) or postponement(s) thereof
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. The proxy solicitation materials were mailed on or about October
27, 2000 to all stockholders entitled to vote at the Meeting.

Record Date and Share Ownership
-------------------------------

Stockholders of record at the close of business on October 16, 2000
(the "Record Date") are entitled to notice of and to vote at the Meeting, and at
any adjournment(s) or postponement(s) thereof. At the Record Date, 24,398,029
shares of VDC's common stock, $0.0001 par value per share were issued,
outstanding and entitled to notice of and to vote at the Meeting and at any
adjournment(s) or postponement(s) thereof.

Revocability of Proxies
-----------------------

The execution of a proxy will not affect a stockholder's right to
attend the Meeting and vote in person. Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before it is
used at the Meeting by filing with the Secretary of VDC either: (i) a written
notice of revocation; (ii) a proxy bearing a later date than the most recently
submitted proxy; or (iii) by attendance at the Meeting and voting in person.
Attendance at the Meeting will not, by itself, revoke a proxy.

Annual Report
-------------

A copy of VDC's Annual Report for the year ended June 30, 2000
accompanies this Proxy Statement. No material contained in the Annual Report is
to be considered a part of the proxy solicitation material.

The mailing address of VDC's executive office is 75 Holly Hill Lane,
3rd Floor, Greenwich, Connecticut 06830.

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<PAGE>

Quorum and Voting Requirements; Solicitation
--------------------------------------------

As of the Record Date for the Meeting, there were 24,398,029 shares of
common stock outstanding. The presence at the Meeting, in person or by a proxy
relating to any matter to be acted upon at the Meeting, of a majority of the
outstanding shares, or 12,199,015 shares, is necessary to constitute a quorum
for the Meeting. Each outstanding share of common stock is entitled to one vote
on all matters. For purposes of the quorum and the discussion below regarding
the vote necessary to take stockholder action, stockholders of record who are
present at the Meeting in person or by proxy and who abstain, including brokers
holding customers' shares of record who cause abstentions to be recorded at the
Meeting, are considered stockholders who are present and entitled to vote and
they count toward the quorum.

Although there are no controlling precedents under Delaware law
regarding the treatment of broker non-votes in certain circumstances, VDC
intends to apply the principles set forth below. As used herein, "uninstructed
shares" means shares held by a broker who has not received instructions from its
customers on such matters and the broker has so notified VDC on a proxy form in
accordance with industry practice or has otherwise advised VDC that it lacks
voting authority. As used herein, "broker non-votes" means the votes that could
have been cast on the matter in question by brokers with respect to uninstructed
shares if the brokers had received their customers' instructions and such shares
cannot otherwise be voted in accordance with applicable New York Stock Exchange
regulations.

Other than for the election of directors, the vote required to approve
a proposal is the affirmative vote of the majority of the shares of common stock
present in person or by proxy at the Meeting. Abstentions and broker non-votes
have the effect of negative votes with respect to the approval of the amendment
to VDC's 1998 Stock Incentive Plan, as amended, and the approval of auditors.
Nominees receiving a plurality of the votes cast will be elected as directors.
Abstentions and broker non-votes will not be taken into account in determining
the outcome of the election of directors.

Proxies which are validly executed by stockholders and which are
received by VDC no later than the business day preceding the Meeting will be
voted in accordance with the instructions contained thereon. If no instructions
are given, the proxy will be voted in accordance with the recommendations of the
Board of Directors and in the discretion of the proxy on all other matters
presented to the Meeting. For the reasons set forth in more detail in the Proxy
Statement, the Board of Directors recommends a vote FOR the election of the
director nominated, FOR the approval of the amendment of VDC's 1998 Stock
Incentive Plan, as amended, and FOR the ratification of BDO Seidman, LLP as
VDC's independent auditors.

The cost of this proxy solicitation will be borne by VDC. In addition
to the use of mail, proxies may be solicited in person or by telephone by
employees of VDC without additional compensation. VDC will reimburse brokers and
other persons holding stock in their names or in the names of nominees for their
expenses incurred in sending proxy material to principals and obtaining their
proxies.

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<PAGE>

PROPOSAL 1
ELECTION OF DIRECTORS

Nominees for Consideration at the Meeting
-----------------------------------------

The Bylaws, as amended (the "Bylaws"), and Certificate of Incorporation
of VDC, as amended (the "Certificate of Incorporation"), provide that the number
of directors of VDC shall be fixed from time to time by the affirmative vote of
a majority of the directors then in office. The Board of Directors is divided
into three classes of staggered terms. Currently, the Board of Directors
consists of four (4) directors, of whom one is serving a term expiring at the
Meeting, one is serving a term expiring at the 2001 Annual Meeting and two are
serving a term expiring at the 2002 Annual Meeting or, in each case, until their
successors are duly elected and qualified.

The person listed below has been nominated by the Board of Directors to
serve as a director of VDC for a three year term until the 2003 Annual Meeting
or until his successor is duly elected and qualified.

Unless otherwise specified, each properly executed proxy received will
be voted for the election of the nominee named below to serve as a director
until the end of his term or until his successor is elected and qualified. VDC
is not aware of any reason that the nominee will be unable to serve or will
decline to serve as a director. In the event that the nominee is unable to serve
or will not serve as a director, it is intended that the proxies solicited
hereby will be voted for such other person as shall be nominated by the Board of
Directors. Vacancies on the Board of Directors may be filled by the Board of
Directors and any director chosen to fill a vacancy would hold office until the
next election of the class for which such director had been chosen or until his
successor is duly elected and qualified.

The following table sets forth certain information with respect to the
nominee for director.

<TABLE>
<CAPTION>
CLASS II

--------------------------------------------------------------------------------------------------------
Director Whose Term Year in Which
Expires at the 2000 Service as a
Annual Meeting Principal Occupation Director Began
--------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dr. Leonard Hausman, 58 International businessman 1998
--------------------------------------------------------------------------------------------------------

</TABLE>

Dr. Leonard Hausman

Dr. Hausman has served as a member of VDC's Board of Directors since
November 4, 1998. Dr. Hausman is a partner in Middle East Holdings LLC, a
company devoted to facilitating trade and investment in the Middle East and
North Africa. Dr. Hausman is also a member of the Board of Directors of the
following entities: deltathree.com, Inc., EastWeb, Inc., Peaceworks, Inc. Dr.
Hausman is also President of American Online University. From 1988 until 1998,
Dr. Hausman was the Director of the Institute for Social and Economic Policy in
the Middle East at Harvard University.

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<PAGE>

Other Members of the Board of Directors and Executive Officers
--------------------------------------------------------------

The following identifies and describes the business experience of: (i)
the Company's directors who are not being voted upon at the Meeting; and (ii)
the Company's executive officers.

Frederick A. Moran

Mr. Moran has served as Chairman, Chief Executive Officer, Secretary,
and Director of VDC since March 6, 1998. Mr. Moran served as Chief Financial
Officer of VDC from March 6, 1998 until December 10, 1999. Mr. Moran served as
the Chairman of Sky King Connecticut from its inception in 1996 through its
merger with and into VDC. In 1997, Mr. Moran served as Chairman and Chief
Executive Officer of NovoComm, Inc., a privately owned company engaged in the
telephony and communications businesses in Russia and Ukraine. Mr. Moran was the
co-founder and, from 1990 to 1993, served as Chairman and Chief Executive
Officer of International Telcell, Inc. (now part of Metromedia International
Group, Inc.). Additionally, Mr. Moran was the founder of and, from 1987 to 1996,
served as President of Moran & Associates, Inc. Securities Brokerage, an
investment banking and securities brokerage firm ("Moran Brokerage"), and Moran
Asset Management, Inc., an investment advisory firm ("Moran Asset").

James B. Dittman

Mr. Dittman has served as a member of VDC's Board of Directors since
November 4, 1998. Mr. Dittman is President and a principal shareholder of
Dittman Incentive Marketing, a motivation and performance improvement company he
founded in 1976. In 1997, this company was named by the top industry publication
as one of the five most innovative incentive marketing companies in the United
States. Prior to forming Dittman Incentive Marketing, Mr. Dittman held
management positions in marketing and communications with such firms as the
Bendix Corporation, Litton Industries, and the SCM Corporation. Mr. Dittman's
articles on incentive marketing have appeared widely in business publications,
and he has been a keynote speaker and conducted incentive workshops and seminars
for 25 years. Mr. Dittman is a past President of the Society of Incentive Travel
Executives ("SITE"). In 23 years of SITE involvement, Mr. Dittman has been a
member of the Board of Directors and Executive Committee and a Trustee of the
SITE Foundation.

Dr. Hussein Elkholy

Dr. Elkholy has served as a member of VDC's Board of Directors since
July 8, 1998. From 1995 to the present, Dr. Elkholy has served as the Chairman
of National Telecom Company and the President and Chief Executive Officer of
Satellite Equipment Manufacturing Corporation, both located in Cairo, Egypt. Dr.
Elkholy is also a member of the Board of Directors of the following entities:
Egynet, Egyptian Telephone Company, Egyptian Space Communication. Dr. Elkholy is
also a full professor at the Department of Mathematics, Computer Science and
Physics at Fairleigh Dickinson University, where he has taught undergraduate and
graduate courses in physics, engineering and computer science for over 34 years.

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<PAGE>

From 1979 to 1980, Dr. Elkholy served as acting Dean of the College of Arts and
Sciences at Fairleigh Dickinson University.

Clayton F. Moran

Mr. Moran has served as Chief Financial Officer and Treasurer of VDC
since December 10, 1999. Prior thereto, Mr. Moran served as Vice President,
Finance of VDC beginning on June 1, 1998. Prior to joining VDC, Mr. Moran was
employed by Moran Real Estate Holdings, Inc. and Putnam Avenue Properties, Inc.
and from 1993 to 1995, Mr. Moran was an equity research analyst with Smith
Barney, Inc. Mr. Moran is a graduate of Princeton University, with a Bachelor of
Arts degree in economics. Mr. Moran is an adult son of Frederick A. Moran.

Edwin B. Read

Mr. Read has served as Vice President of Operations of VDC since
December 10, 1999. Prior to this appointment he served as Manager of System
Engineering, having joined VDC in April 1998 as one of its charter employees. As
a 20 year Electrical Engineer, Mr. Read has a diverse background in
telecommunications, having implemented systems throughout the world, most
recently with Communications Group International Inc ("CGI") (1993 - 1998).
Prior to CGI, he held engineering management positions with Plexsys Corporation,
Harris Corporation and worked as a private consultant. With these companies and
as an independent consultant, Mr. Read has served as a field
installation/integration engineer, as a project development engineer, and has
been extensively involved in projects for most of the continents of the world.
His work has taken him to several Central and South American countries,
throughout the Caribbean region, to the countries of the former Soviet Union, to
China, Africa, and the Middle East.

Involvement in Certain Legal Proceedings

In a civil action filed by the Securities and Exchange Commission
("SEC") during June 1995, Frederick A. Moran ("Mr. Moran") and Moran Asset were
found by the United States District Court for the Southern District of New York
to have violated Section 206(2) of the Investment Advisers Act of 1940 (the
"Advisers Act") for negligently allocating shares of stock to Mr. Moran's
personal, family and firm accounts at a slightly lower price than shares of
stock purchased for Moran Asset's advisory clients the following day. The Court
also found that Mr. Moran, Moran Asset and Moran Brokerage had violated the
disclosure requirements of Section 204 of the Advisers Act and the corresponding
broker-dealer registration requirements of Section 15(b) of the Securities
Exchange Act of 1934 (the "Exchange Act") by willfully failing to disclose that
Mr. Moran's two eldest sons were members of Moran Asset's and Moran Brokerage's
board of directors. Mr. Moran was the President and principal portfolio manager
of Moran Asset, as well as the President and Director of Research for Moran
Brokerage. As a result of these findings, Mr. Moran, Moran Asset and Moran
Brokerage were permanently enjoined from violating Sections 204, 206(2), and 207
of the Advisers Act and Section 15(b) of the Exchange Act. The Court ordered
Moran Asset and Moran Brokerage to pay civil monetary penalties in the
respective amounts of $50,000 and $25,000. The Court also ordered Mr. Moran to
disgorge $9,551.17 plus prejudgment interest and pay a civil monetary penalty
for $25,000.

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<PAGE>

Although Mr. Moran and the other named parties accepted and fully complied with
the findings of the District Court, they believe that the outcome of the matter
and the sanctions imposed failed to take into account a number of mitigating
circumstances, the first of which is that the basis for the violation of Section
206(2) of the Advisers Act was an isolated incident of negligence resulting in
the allocation of 15,000 shares of stock to Moran family and firm accounts at a
slightly lower price than those purchased for firm clients the following day,
resulting in $9,551.17 in higher purchase cost incurred by these clients. In the
opinion of Mr. Moran, the scope of this infraction was not properly considered
in view of the following circumstances, among others: (i) the extraordinary
volume of the daily business undertaken by Moran Asset and Moran Brokerage
which, on the date in question, purchased approximately $34,000,000 of stocks
for advisory clients and proprietary accounts; (ii) that the appropriate
personnel had inadvertently allocated shares to certain personal and family
accounts on the belief that all client purchases had been completed; and (iii)
shares of an additional stock had been purchased that day for certain personal
and family accounts at prices higher than those paid by advisory clients the
following day. Second, with respect to the violation of the disclosure
requirements of Section 204 of the Advisers Act and Section 15(b) of the
Exchange Act, the Court found Mr. Moran and others to be liable for failure to
disclose additional directors of Moran Asset and Moran Brokerage. However, the
additional directors in question were Mr. Moran's two older sons who had been
appointed as directors as a matter of clerical convenience. In fact, they never
participated in any Board of Directors meetings, nor made any decisions
concerning Moran Asset or Moran Brokerage, and were never informed that they
were directors. Furthermore, if their directorships had been disclosed, as the
Court had determined to be required, Mr. Moran believes that any such disclosure
would have, in fact, enhanced the Form ADV of Moran Asset and the Form BD of
Moran Brokerage, since both adult sons were professional securities analysts
with major investment banks and held college degrees from prestigious
universities. Third, during his twenty-four years as a full time investment
professional, Mr. Moran has not otherwise been the subject of any SEC, NASD or
other regulatory or judicial matters.

To the best of VDC's knowledge, other than the events specified above,
there have been no events under any state or federal bankruptcy laws, no
criminal proceedings, no judgments, orders, decrees or injunctions entered
against any officer or director, and no violations of federal or state
securities or commodities laws material to the ability and integrity of any
director or executive officer during the past five years.

Board and Committee Meetings
----------------------------

During the year ended June 30, 2000, the Board of Directors met five
times. Additionally, the Board of Directors took action by unanimous written
consent on fourteen occasions.

On November 9, 1998, VDC's Board of Directors established an Audit
Committee and Compensation Committee. Frederick A. Moran, Dr. Hussein Elkholy,
and Dr. Leonard Hausman serve on the Audit Committee. Mr. Moran is not an
independent member of the audit committee. As a result of changes in AMEX's
listing requirements, by June 2001 the Audit Committee must consist solely of

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<PAGE>

independent directors. Accordingly, it is anticipated that Mr. Moran will be
replaced on the Audit Committee with a new director meeting the AMEX
independence requirements. On May 30, 2000, VDC's Board of Directors and the
Audit Committee adopted and approved an Audit Committee Charter for VDC for the
purpose of complying with the newly adopted audit committee rules of AMEX. As
reflected in this Charter, the Audit Committee's primary duties and
responsibilities are to:

o Monitor the integrity of VDC's financial reporting process and systems of
internal controls regarding finance, accounting, and legal compliance.

o Monitor the independence and performance of VDC's independent auditors
and internal auditing department.

o Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.

The Audit Committee Charter is attached to this Proxy Statement as Appendix
1. During the year ended June 30, 2000, the Audit Committee met twice and took
action by unanimous written consent on one occasion.

The Compensation Committee recommends general compensation policies to the
Board, oversees VDC's compensation plans, establishes the compensation levels
for executive officers and advises the Board on the compensation policies for
VDC's executive officers. The Compensation Committee met twice during the year
ended June 30, 2000.

EXECUTIVE COMPENSATION

Compensation Committee Report

On November 9, 1998, VDC's Board of Directors established a Compensation
Committee. The Compensation Committee consists of Frederick A. Moran, James
Dittman, and Dr. Leonard Hausman. James Dittman and Dr. Leonard Hausman are
non-employee directors within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act") and outside directors within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. The
Compensation Committee recommends general compensation policies to the Board,
oversees VDC's compensation plans, establishes the compensation levels for
executive officers and advises the Board on the compensation policies for VDC's
executive officers.

Goals: In determining the amount and composition of executive compensation for
the year ended June 30, 2000 ("Fiscal 2000"), the Committee was guided by the
following goals:

1) Attract, motivate and retain the executives necessary to VDC's
success by providing total compensation packages comparable to
that offered by other entrepreneurial growth companies;

9
<PAGE>

2) Afford the executives an opportunity to acquire or increase
their proprietary interest in VDC through the grant of options
that align the interests of the executives more closely with
those of the overall goals of VDC; and

3) Ensuring that a portion of the executives' compensation is
variable and is tied to short-term goals (annual performance)
and long-term measures (stock-based incentives awards) of
VDC's performance.

The Committee considered several factors in establishing the components of the
executives' compensation package, including: (i) a base salary which reflects
individual performance; (ii) annual discretionary bonuses and long-term
incentives in the form of stock options or other VDC securities which the
Committee believes strengthen the mutuality of interest between the executive
and VDC's stockholders. In establishing the actual level of compensation for
executives, the Committee took into account both qualitative and quantitative
factors and all compensation decisions were designed to further the general
goals as described above.

Base Salary: As a general matter, VDC establishes base salaries for each of its
executives based upon their individual performance and contribution to the
organization, as measured against executives of comparable position in similar
industries and companies. Although VDC pays its executives salaries that are
generally lower than those paid by its industry competitors and some other
entrepreneurial growth companies, the Committee believes that this is offset by
considerable stock option grants. The employment contract for VDC's Chief
Executive Officer was entered into contemporaneously with the commencement of
VDC's telecommunications business (March 1998) and reflects his level of
compensation prior to such commencement and the factors described in the
preceding sentence.

Bonus: The Committee may from time to time award discretionary bonuses to its
executive officers to reward them for extraordinary individual or VDC
performance. No discretionary bonus awards were made to executive officers of
VDC in Fiscal 2000.

Stock Options: VDC uses stock options aggressively to supplement executive
salaries that are generally lower than those paid by its industry competitors
and some other entrepreneurial growth companies. During Fiscal 2000, the
Committee and the Board periodically considered the grant of stock options to
certain of its executives, and other employees, pursuant to VDC's 1998 Stock
Incentive Plan, as amended (the "Plan"). The grants were designed to align the
interests of each executive with those of the stockholders and provide each
individual with a significant incentive to manage VDC from the perspective of an
owner with an equity stake in the business. Each grant was intended to permit
the executive to acquire shares of VDC's common stock at a fixed price per share
(typically, the market price on the grant date) over a specified period of time
(typically, with five year vesting periods), and to provide a return to the
executive only if the market price of the shares appreciated over the option
term. The size of the option grant to each executive was intended to take into
account the individual's potential for future responsibility over the option
term, the individual's personal performance in recent periods and the
individual's current holdings of VDC's stock and options. Additional information
regarding stock options granted in Fiscal 2000 is included in the "Option Grants
in Last Fiscal Year" table below. Finally, subsequent to the close of Fiscal

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<PAGE>

2000, the Board adopted a resolution to offer, under certain conditions, to
members of VDC's Board and employees and consultants of VDC and its Subsidiaries
(as defined in the Plan), the option of extending options granted pursuant to
the Plan (as the same has been amended and may be amended in the future), to the
extent then vested, for up to one year from the date of the termination of said
stock option holder's termination of employment with (in the case of the
employees) or service to (in the case of consultants and members of VDC's Board
of Directors) VDC or its Subsidiaries (as defined in the Plan), as the case may
be. The Committee believes that this option, to the extent provided, makes stock
options more attractive.

Compensation of the Chief Executive Officer: During Fiscal 2000, Frederick A.
Moran served as the Chairman of the Board, Chief Executive Officer, Chief
Financial Officer (until December 10, 1999), and Secretary of VDC. Mr. Moran's
compensation was determined pursuant to the terms of his employment agreement,
which was negotiated and entered into by VDC in connection with the acquisition
by VDC of Sky King Communications, Inc., a development stage telecommunications
company (the "Sky King Connecticut Acquisition") and was intended to align his
interests with those of the stockholders and to compensate him for guiding VDC
to achieve its goals and objectives. Additional information regarding Mr.
Moran's employment contract is contained in the "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements" section below.
During Fiscal 2000, the Board granted Mr. Moran options to purchase 470,000
shares of VDC common stock. The option to purchase 450,000 shares of VDC common
stock vests in equal installments over five years. The option to purchase 20,000
shares of VDC common stock was vested upon granting. Additionally, during Fiscal
2000, the Board repriced an option to purchase 200,000 shares of VDC common
stock that had been granted to Mr. Moran in Fiscal 1999. These grants were made
in recognition of Mr. Moran's contributions to and achievements with VDC in his
capacity as an executive officer. See "Option Grants in Last Fiscal Year." The
repricing was made in connection with a broader repricing program. See "Option
Repricing Program."

Employee Compensation Strategy: The Committee believes VDC's employee
compensation strategy enables VDC to attract, motivate and retain employees by
providing competitive total compensation opportunity based on performance. Base
salaries that reflect each individual's level of responsibility and annual
variable performance-based incentive awards are intended to be important
elements of VDC's compensation policy. The Committee believes that the grant of
options not only aligns the interests of the employee with stockholders, but
creates a competitive advantage for VDC as well. The Committee believes VDC's
employee compensation policies strike an appropriate balance between short and
long-term performance objectives.

Option Repricing Program: Competition for skilled engineers, sales personnel and
other key employees in the telecommunications industry is intense, and the use
of stock options for retention and motivation of such personnel is widespread in
high-technology industries. The Board of Directors believes that stock options
are a critical component of the compensation offered by VDC to promote long-term
retention of key employees, motivate high levels of performance and recognize
employee contributions to the success of VDC. The market price of the common
stock decreased from a high of $7.50 in July 1998 to a low of $1.25 on October

11
<PAGE>

1, 1999. In light of this substantial decline in market price, the Board of
Directors believed that the outstanding stock options with an exercise price in
excess of the actual market price were no longer an effective tool to encourage
employee retention or to motivate high levels of performance. As a result, in
October 1999, the Board of Directors approved an option repricing program under
which options to acquire shares of common stock that were originally issued with
exercise prices above $1.25 per share were reissued with an exercise price of
$1.25 per share (the fair market value of the common stock at the repricing
date) or $1.38, in the case of the Chief Executive Officer and his wife. These
options will continue to vest under the original terms of the option grant.
Options to purchase 757,500 shares of VDC common stock were affected by the
repricing program including options to purchase 567,500 shares of common stock
issued under the Plan and options to purchase 190,000 shares of common stock
issued outside of the Plan. Options to purchase 510,000 shares of common stock
granted to executive officers and members of the Board of Directors were
affected by the repricing program.

Compensation Committee:

Frederick A. Moran
James Dittman
Dr. Leonard Hausman

The following Summary Compensation Table sets forth the compensation
earned for the three fiscal years ended June 30, 2000 by VDC's Chief Executive
Officer and each of VDC's four most highly compensated executive officers, other
than the Chief Executive Officer, whose total annual salary and bonus for Fiscal
2000 exceeded $100,000 (the "Named Executive Officers"). Other than the Chief
Executive Officer, there was no VDC executive officer who earned salary and
bonus in excess of $100,000 for services rendered in all capacities to VDC and
its subsidiaries during Fiscal 2000.

Summary Compensation Table

Long Term Compensation
----------------------
Annual Compensation Awards
------------------- ------

Securities
Underlying
Options/
Name and Principal Position Year(s) Salary($) SARs(#)
--------------------------- ------- --------- -------

<S> <C> <C> <C>
Frederick A. Moran(1) 2000 125,000.00 670,000(2)
Chief Executive Officer, 1999 125,000.04 (3) 200,000(4)
Chairman, Secretary and 1998 40,625.05 (5) -
Director of VDC

</TABLE>

(1) Mr. Moran also served as Chief Financial Officer during Fiscal 2000
until December 10, 1999 when another officer was elected to that
position.

12
<PAGE>

(2) VDC granted Mr. Moran an option to purchase 450,000 shares of VDC
common stock on November 30, 1999 and an option to purchase 20,000
shares of VDC common stock on March 24, 2000. Additional information
regarding these stock option grants is contained in the "Option Grants
in Last Fiscal Year" table below. Also includes option to purchase
200,000 shares of VDC common stock that was repriced. See "Ten-Year
Option / SAR Repricings."

(3) Included $20,833.34 in deferred income, but not yet paid to Mr. Moran.

(4) VDC granted Mr. Moran an option to purchase 200,000 shares of VDC
common stock on December 8, 1998. Additional information regarding
these stock option grants is contained in the "Option Grants in Last
Fiscal Year" table below.

(5) Reflects compensation for partial year employment. Mr. Moran became
Chief Executive Officer, Chief Financial Officer, Chairman, and
Director of VDC in March 1998 in connection with the Sky King
Connecticut Acquisition. Mr. Moran was neither an officer nor a
director of VDC prior to the Sky King Connecticut Acquisition.

The following table contains information concerning stock option grants
made to Named Executive Officers during Fiscal 2000.

<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
---------------------------------

Individual Grants
-----------------

Potential Potential
Realizable Realizable
Value at Assumed Value at Assumed
Annual Rates of Annual Rates of
% of Total Stock Price Stock Price
Number of Securities Options/SARs Exercise or Appreciation for Appreciation for
Underlying Options/ Granted to Employees Base Price Expiration Option Term Option Term
Name SARs Granted (#) in Fiscal Year (1) ($/Share) Date 5% ($)(2) 10% ($) (2)
---- ---------------- ------------------ --------- ---- --------- -----------

<S> <C> <C> <C> <C> <C> <C>
Frederick A. Moran 450,000 (3) 17.7% $1.03125 11/30/04 74,368.13 215,371.41

Frederick A. Moran 20,000 (4) 1%(5) $3.79 3/24/05 11,944.25 34,922.56

Frederick A. Moran 200,000 (6) 7.9% $1.38 12/8/03 27,877.50 (7) 90,025.00 (7)

</TABLE>

(1) Based upon options to purchase an aggregate of 2,544,500 shares of
common stock granted to employees in Fiscal 2000. The options to
purchase 2,544,500 shares of common stock includes: (a) options to
purchase 1,862,000 shares of common stock granted under VDC's 1998
Stock Incentive Plan, as amended in Fiscal 2000; and (b) options to
purchase 682,500 shares of common stock granted prior to Fiscal 2000
but repriced in Fiscal 2000. Excludes options to purchase 30,000 shares
of common stock granted to non-employees in Fiscal 2000 and options to
purchase 75,000 shares of common stock granted to non-employees prior
to Fiscal 2000 but repriced in Fiscal 2000.

13
<PAGE>

(2) The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and Exchange
Commission. There can be no assurance provided to any executive officer
or any other holder of VDC's securities that the actual stock price
appreciation over the 5 year option term will be at the assumed 5% and
10% levels or at any other defined level. Unless the market price of
the common stock appreciates over the option term, no value will be
realized from the option grants made to the Named Executive Officers.

(3) VDC granted Mr. Moran an option to purchase 450,000 shares of VDC
common stock on November 30, 1999. The option vests in equal
installments over five years commencing on the first anniversary of the
date of grant. The options are exercisable upon vesting.

(4) VDC granted Mr. Moran an option to purchase 20,000 shares of VDC common
stock on March 24, 2000. The option was fully vested as of the date of
grant. The option was exercisable as of the date of grant.

(5) The actual percentage is less than 1%. The 1% reflected in the table
reflects rounding.

(6) Represents option to purchase 200,000 shares of VDC common stock
granted to Mr. Moran on December 8, 1998 and repriced on October 1,
1999. The option vests in equal installments over five years commencing
on the first anniversary of the date of grant (December 8, 1998). The
options are exercisable upon vesting.

(7) Does not include potential realized value at assumed annual rates of
stock price appreciation for period from October 1, 1999 to December 8,
1999. Assumes appreciation from December 8, 1999 through December 8,
2003.

Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option/SAR Values
-----------------------------------------------------------------------------------------

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options Options/SARs
at FY-End(#) at FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable (1)
---- --------------- ----------- ------------- -----------------

<S> <C> <C> <C> <C>
Frederick A. Moran 0 0 40,000(E)/160,000(U) 4,800(E)/19,200(U)

Frederick A. Moran 0 0 0(E)/450,000(U) 0(E)/210,937.50(U)

Frederick A. Moran 0 0 20,000(E)/0(U) (2)

</TABLE>

(1) Based upon the closing price for VDC common stock for June 30, 2000 of
$1.50 per share.

14
<PAGE>

(2) Based upon the closing price for VDC common stock for June 30, 2000 of
$1.50 per share, none of the options referenced in this line were
in-the-money at the close of Fiscal 2000.

Ten-Year Option / SAR Repricings

Number of Securities Market Price of Length of Original
Underlying Options/ Stock at Time Exercise Price at New Option Term Remaining
SARs Repriced or of Repricing or Time of Repricing Exercise at Date of Repricing
Name Date Amended (#) Amendment $ or Amendment $ Price $ or Amendment
---- ---- ----------- ----------- -------------- ------- ------------

<S> <C> <C> <C> <C> <C> <C>
Clayton F. Moran 10/1/99 10,000 1.25 4.125 1.25 6/1/08

Clayton F. Moran 10/1/99 45,000 1.25 3.75 1.25 12/8/08

Frederick A. Moran 10/1/99 200,000 1.25 4.125 1.38 (1) 12/8/03

Charles W. Mulloy 10/1/99 10,000 1.25 4.125 1.25 2/1/08

Charles W. Mulloy 10/1/99 50,000 1.25 4.125 1.25 9/2/08

Charles W. Mulloy 10/1/99 40,000 1.25 3.75 1.25 12/8/08

Robert E. Warner 10/1/99 5,000 1.25 4.125 1.25 4/1/08

Robert E. Warner 10/1/99 2,500 1.25 4.125 1.25 9/2/08

Robert E. Warner 10/1/99 42,500 1.25 3.75 1.25 12/8/08

</TABLE>

(1) The new exercise price was slightly more than 110% of the market price
of the stock at the time of repricing. The repricing was structured this way for
Mr. Moran to preserve the incentive stock option nature of his option.

Explanation of Repricing

Competition for skilled engineers, sales personnel and other key
employees in the telecommunications industry is intense, and the use of stock
options for retention and motivation of such personnel is widespread in
high-technology industries. The Board of Directors believes that stock options
are a critical component of the compensation offered by VDC to promote long-term
retention of key employees, motivate high levels of performance and recognize
employee contributions to the success of VDC. The market price of the common
stock decreased from a high of $7.50 in July 1998 to a low of $1.25 on October
1, 1999. In light of this substantial decline in market price, the Board of
Directors believed that the outstanding stock options with an exercise price in
excess of the actual market price were no longer an effective tool to encourage
employee retention or to motivate high levels of performance. As a result, in
October 1999, the Board of Directors approved an option repricing program under
which options to acquire shares of common stock that were originally issued with
exercise prices above $1.25 per share were reissued with an exercise price of
$1.25 per share (or $1.38 in the case of the Chief Executive Officer and his
wife), the fair market value of the common stock at the repricing date. These

15
<PAGE>

options will continue to vest under the original terms of the option grant.
Options to purchase 757,500 shares of VDC common stock were affected by the
repricing program including options to purchase 567,500 shares of common stock
issued under the Plan and options to purchase 190,000 shares of common stock
issued outside of the Plan. Options to purchase 510,000 shares of common stock
granted to executive officers and members of the Board of Directors were
affected by the repricing program.

Compensation Committee:

Frederick A. Moran
James Dittman
Dr. Leonard Hausman

October 2000 Repricing

Competition for skilled engineers, sales personnel and other key
employees in the telecommunications industry is intense, and the use of stock
options for retention and motivation of such personnel is widespread in
high-technology industries. The Board of Directors believes that stock options
are a critical component of the compensation offered by VDC to promote long-term
retention of key employees, motivate high levels of performance and recognize
employee contributions to the success of VDC. The market price of the common
stock decreased from a high of $7.50 in July 1998 to a low of $0.1875 on October
16, 2000. In light of this substantial decline in market price, the Board of
Directors believed that the outstanding stock options with an exercise price in
excess of the actual market price were no longer an effective tool to encourage
employee retention or to motivate high levels of performance. As a result, in
October 2000, the Board of Directors approved an option repricing program under
which options to acquire shares of common stock that were originally issued with
exercise prices above $0.1875 per share were reissued with an exercise price of
$0.1875 per share (or $.20625 in the case of the Chief Executive Officer and his
wife), the fair market value of the common stock at the repricing date. These
options will continue to vest under the original terms of the option grant.
Options to purchase 2,529,000 shares of VDC common stock were affected by the
repricing program. Options to purchase 1,345,000 shares of common stock granted
to executive officers and members of the Board of Directors were affected by the
repricing program.

Director Compensation

As compensation for their service to VDC, each independent Director is
granted upon initial appointment options to purchase 25,000 shares of VDC's
common stock. The options vest in equal installments over three years commencing
on the first anniversary of the date of grant and are contingent upon continued
service as a member of the Board of Directors. Other than the stock options
granted to independent Directors, Directors do not receive a salary, payment or
reimbursement of any kind for their service to VDC. From time to time, the Board
may grant additional options to each independent Director.

16
<PAGE>

On November 30, 1999, VDC granted each of Dr. Leonard Hausman, Dr.
Hussein Elkholy and James Dittman options to purchase 10,000 shares of VDC
common stock at an exercise price of $0.9375 per share, in connection with their
service as Directors. The options vest in equal installments over three years
commencing on the first anniversary of the date of grant and are contingent upon
continued service as a member of the Board of Directors.

On October 16, 2000, VDC granted each of Dr. Leonard Hausman, Dr.
Hussein Elkholy and James Dittman options to purchase 10,000 shares of VDC
common stock at an exercise price of $0.1875 per share, in connection with their
service as Directors. The options vest in equal installments over three years
commencing on the first anniversary of the date of grant and are contingent upon
continued service as a member of the Board of Directors.

Certain Awards to Executive Officers Under Stock Incentive Plan

Thus far during the year ending June 30, 2001, VDC has granted
executive officers restricted stock awards totaling 175,000 shares of VDC common
stock and options to purchase an aggregate of 375,000 shares of VDC common
stock. Subject to the terms of the applicable restricted stock agreement, the
restricted stock awards vest on the one year anniversary of the date of grant.
Subject to the terms of the applicable stock option agreement, the options vest
in equal installments over five years commencing on the first anniversary of the
date of grant. The exercise prices of the options range from $0.1875 per share
to $0.825 per share. (Options issued with exercise prices above $0.1875 have
been repriced to $0.1875, or $.20625 in the case of the Chief Executive Officer.
See "October 2000 Repricing" above.) The Board of Directors may in the future
consider a restricted stock award to Frederick A. Moran.

Employment Contracts and Termination of Employment and Change-in-Control
Arrangements

VDC has an employment agreement with Frederick A. Moran. The agreement,
which is dated March 3, 1998, provides for an initial term of five years with
year-to-year renewals in the event that neither Mr. Moran nor VDC elects to
terminate the agreement after the initial term or otherwise. The agreement
contains non-competition and non-solicitation provisions which survive
employment for a term of one year. Mr. Moran's current base salary is $125,000.
Upon Mr. Moran's death, incapacity or termination without "cause", as defined in
the agreement, Mr. Moran is entitled to a lump sum payment at the time of the
termination of his employment equal to one year's base salary. Mr. Moran has
been granted options to purchase shares of VDC common stock. See "Option Grants
in Last Fiscal Year." Pursuant to VDC's 1998 Stock Incentive Plan, as amended
(the "Plan"), all options held by Mr. Moran, and all other option holders under
the Plan will vest upon certain change-in-control transactions.

Compensation Committee Interlocks and Insider Participation in Compensation
Decisions

17
<PAGE>

Exchange Act and outside directors within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended. Mr. Moran serves as an executive
officer of VDC and as an officer of each of VDC's subsidiaries. As a member of
both the Compensation Committee and Board of Directors, Mr. Moran participates
in discussions and voting regarding compensation, including his own and the
compensation of family members that work at VDC. The Compensation Committee
recommends general compensation policies to the Board, oversees VDC's
compensation plans, establishes the compensation levels for executive officers
and advises the Board on the compensation policies for VDC's executive officers.

No executive officer of VDC served as a member of the board of
directors of any entity (other than VDC and its subsidiaries) that had one or
more executive officers serving as a member of VDC's Board of Directors or
Compensation Committee.

Comparison of 5 Year Cumulative Total Returns

The following Performance Graph sets forth VDC's total stockholder
return as compared to: (i) the University of Chicago Graduate School of Business
CRSP Total Return Index for the AMEX Market (U.S. companies) ("CRSP Index"), and
(ii) a Peer Group selected on the basis of a 3-Digit SIC Group (SIC 4810-4819
U.S.). The table assumes that $100 was invested on June 30, 1995 in VDC's common
stock, the CRSP Index and the peer group index, and that all dividends were
reinvested. In addition, the graph weighs the peer group on the basis of its
respective market capitalization, measured at the beginning of each relevant
time period.

Date Company Market Peer
---- Index Index Index
----- ----- -----

<S> <C> <C> <C>
06/30/1995 $100.000 $100.000 $100.000
09/29/1995 122.353 110.121 120.120
12/29/1995 105.882 111.034 126.749
03/29/1996 110.588 113.937 122.019
06/28/1996 169.412 115.034 125.846
09/30/1996 138.824 112.145 118.128
12/31/1996 98.824 112.717 128.821
03/31/1997 96.471 111.828 123.595
06/30/1997 80.000 123.608 146.472
09/30/1997 85.882 140.877 161.997
12/31/1997 98.824 141.272 188.705
03/31/1998 98.824 156.095 236.295
06/30/1998 98.824 155.234 241.459
09/30/1998 53.462 132.023 234.610
12/31/1998 56.702 151.609 318.643
03/31/1999 51.842 155.242 352.381
06/30/1999 38.881 174.875 399.098
09/30/1999 16.201 170.355 364.272

18
<PAGE>

12/31/1999 29.161 199.226 445.258
03/31/2000 51.032 219.694 449.056
06/30/2000 19.441 206.129 381.822

</TABLE>

(1) VDC became involved in the telecommunications industry on
March 6, 1998. Prior to March 6, 1998 VDC was involved in
other unrelated industries. The Peer Group reflects VDC's SIC
Group and does not reflect VDC's SIC Groups for periods prior
to the March 6, 1998 acquisition. Consequently, a comparison
of the Peer Group's performance to the performance of VDC
during the period March 6, 1998 to June 30, 2000 may be
meaningful, however, a comparison of the Peer Group's
performance to that of VDC for periods prior to the Sky King
Connecticut Acquisition is unlikely to be meaningful.
Furthermore, the comparisons presented may not be indicative
of VDC's future performance.

(2) The Performance Graph contains an AMEX index because VDC's
common stock began trading on the American Stock Exchange on
July 7, 1998.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of VDC common stock as of October 19, 2000 with respect to:
(i) each person known by VDC to beneficially own 5% or more of the outstanding
shares of Company common stock; (ii) each of VDC's directors; (iii) each of
VDC's Named Executive Officers; and (iv) all directors and executive officers of
VDC as a group. Except as otherwise indicated, each person set forth below has
sole voting and investment power on the shares reported.

<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address of Beneficial Owner (1) Beneficial Ownership(2) Of Class
------------------------------------ -------------------- --------

<S> <C> <C>
Frederick A. Moran 4,246,387 (3) 17.3%
75 Holly Hill Lane
Greenwich, CT 06830

Dr. Hussein Elkholy 19,999 (4) *
75 Holly Hill Lane
Greenwich, CT 06830

Dr. Leonard Hausman 19,999 (5) *
75 Holly Hill Lane
Greenwich, CT 06830

James B. Dittman 21,999 (5) *
75 Holly Hill Lane
Greenwich, CT 06830

19
<PAGE>

Clayton F. Moran 1,525,663 (6) 6.2%
75 Holly Hill Lane
Greenwich, CT 06830

All executive officers and directors 6,013,047 (7) 24.1%
as a group (6 persons)

</TABLE>

(*) Less than 1%.

(1) PortaCom Wireless, Inc. ("PortaCom"), a shareholder shown in previous
VDC Annual Reports on Form 10-K as being a significant shareholder, has
been excluded from the foregoing table due to the fact that the records
of VDC's transfer agent as of October 19, 2000 indicate that PortaCom
does not beneficially own 5% or more of the outstanding shares of VDC
common stock.

(2) 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 of the date hereof 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 24,398,029 shares of
common stock outstanding as of October 19, 2000.

(3) Includes 1,139,890 shares owned directly by Mr. Moran as well as
2,907,997 shares owned, directly or indirectly, by certain members of
Mr. Moran's family and certain entities associated with Mr. Moran's
family, whose ownership is attributed to Mr. Moran. Does not include
1,200,063 shares beneficially owned by Frederick W. Moran and 1,525,663
beneficially owned by Clayton F. Moran, both of whom are Mr. Moran's
adult children. Includes options, in the name of Mr. Moran, to purchase
190,000 shares of common stock. Includes options, in the name of Mr.
Moran's wife, to purchase 8,500 shares of common stock. Does not
include options, in the name of Mr. Moran, to purchase 705,000 shares
of common stock which may vest in or after August 2001. Does not
include options, in the name of Mr. Moran's wife, to purchase 34,000
shares of common stock which may vest in or after August 2001. Mr.
Moran has filed a Schedule 13D (and an amendment thereto) reporting
beneficial ownership of more than 10% of VDC Communications, Inc.'s
outstanding shares of common stock. This Schedule 13D contains numerous
disclaimers including one in which he asserts "[t]he filing of this
Statement shall not be construed as an admission that Mr. Moran is, for
purposes of Section 13(d), or 13(g) of the Act, the beneficial owner of
any securities covered by the Statement."

20
<PAGE>

(4) Represents options to purchase 19,999 shares of common stock. Does not
include options to purchase 25,001 shares of common stock which may
vest on or after July 17, 2001.

(5) Includes options to purchase 19,999 shares of common stock. Does not
include options to purchase 25,001 shares of common stock which may
vest on or after November 4, 2001.

(6) Includes options to purchase 50,000 shares of common stock and
restricted stock award of 50,000 shares of common stock. Does not
include options to purchase 220,000 shares of common stock which may
vest on and after June 1, 2001. Includes 63 shares that Mr. Moran has
the right to acquire upon demand from a trust. An adult son of
Frederick A. Moran and employed as Chief Financial Officer and
Treasurer of VDC.

(7) Includes options to purchase 360,497 shares of common stock and
restricted stock awards of 175,000 shares of common stock. Does not
include options to purchase 1,202,003 shares of common stock which may
vest on and after March 29, 2001.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Registration of Certain Moran Shares

VDC registered the potential resale of 6,931,046 shares of VDC common
stock the beneficial ownership of which is attributed to Frederick A. Moran and
certain members of Mr. Moran's immediate family (the "Moran Shares"). The Moran
Shares were included in an Amendment No. 1 to a Registration Statement on Form
S-1 (Registration No. 333-80107) which was filed with the United States
Securities and Exchange Commission on November 8, 1999 (the "Registration
Statement"). Of the Moran Shares included in the Registration Statement, 328,170
of said shares were included pursuant to registration rights granted in
connection with the sale of said shares in May 1999 to Mr. Moran, certain Moran
family members, and certain trusts for the benefit of Mr. Moran's minor
children.

VDC also included the Moran Shares, to the extent they had not been
sold or disposed of, in a Registration Statement on Form S-3 (No. 333-46694)
which was filed with the United States Securities and Exchange Commission on
September 27, 2000, in order to continue to permit their resale. VDC also
included in the S-3 an additional 587,073 for Mr. Moran and his wife. 540,000 of
these shares were included in the S-3 pursuant to registration rights granted in
connection with their sale to Mr. Moran and his wife.

21
<PAGE>

Loans From Director and Officer

In September 1999, Frederick A. Moran, a director and officer of VDC,
transferred personal funds totaling $80,000 to VDC. This amount represented a
short term loan to be repaid by VDC in accordance with the terms of a promissory
note executed by VDC on September 24, 1999. In April 2000, VDC repaid the
promissory note and accrued interest in full. The promissory note was due on
September 24, 2000 and provided for an interest rate of eight percent (8%) per
annum.

Private Placement Transactions

Through a Securities Purchase Agreement dated April 26, 2000, VDC sold
an aggregate of 540,000 shares of VDC common stock, at a price of $2.00 per
share, the closing market price on the date of sale, to Frederick A. Moran and
Joan B. Moran, joint tenants, in a non-public offering exempt from registration
pursuant to Section 4(2) and Rule 506 of Regulation D of the Act.

Through a Securities Purchase Agreement dated October 27, 1999, VDC
sold 666,667 shares of VDC common stock, at a price of $0.75 per share, to
Frederick W. Moran, the adult son of Frederick A. Moran, in a non-public
offering exempt from registration pursuant to Section 4(2) and Rule 506 of
Regulation D of the Act.

Option Repricing

On October 16, 2000, the Board of Directors approved an option
repricing program under which options to acquire shares of common stock that
were originally issued with exercise prices above $0.1875 per share were
reissued with an exercise price of $0.1875 per share (or $.20625 in the case of
the Chief Executive Officer and his wife), the fair market value of the common
stock at the repricing date. These options will continue to vest under the
original terms of the option grant. Options to purchase 2,529,000 shares of VDC
common stock were affected by the repricing program. Options to purchase
1,345,000 shares of common stock granted to executive officers (Frederick A.
Moran, Clayton F. Moran, Edwin B. Read) and members of the Board of Directors
(Frederick A. Moran, James B. Dittman, Dr. Hussein Elkholy and Dr. Leonard
Hausman) were affected by the repricing program.

Proposed Issuance of Convertible Debentures to Mr. Moran

On October 18, 2000, the Board of Directors approved the issuance of up
to $650,000 principal amount of 8% Convertible Senior Debentures (the
"Debentures") to a limited number of accredited investors, including Frederick
A. Moran. The investors have not yet agreed to the transaction approved by the
Board of Directors (nor can there be any assurance that they will agree to such
transaction) and as of October 19, 2000, no Debentures have been issued. The
transaction approved by the Board of Directors is further described below. The
Debentures would mature three (3) years from the date of issuance, accrue
interest at the rate of 8% per annum payable upon maturity and be prepayable at
any time upon thirty (30) days written notice. Any Debentures issued to Mr.

22
<PAGE>

Moran and affiliates of Mr. Moran and family trusts associated with Mr. Moran
would be convertible at $.1875 per share, so long as such amount is not less
than the closing market price of the VDC's common stock on the date of issuance,
and any Debentures issued to other investors would be convertible at $.145 per
share. The Debentures would be secured by a first priority perfected security
interest in substantially all assets of VDC. VDC's use of any proceeds from the
Debentures would be restricted to, among other things, advances to its
subsidiaries to pay operational expenses other than accounts payable outstanding
as of the date of issuance. A breach of this covenant would constitute an event
of default under the Debentures and would result in the immediate acceleration
of VDC's obligation to repay the Debentures. VDC would agree to grant piggyback
registration rights to the purchasers of the Debentures to include the shares
issuable upon conversion of the Debentures in a registration statement filed by
VDC.

VOTE REQUIRED FOR APPROVAL

Voting Procedures
-----------------

A plurality of the votes cast by the shares present in person or by
proxy is required to elect a nominee as a director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
---
THE NOMINEE TO THE BOARD OF DIRECTORS

23
<PAGE>

PROPOSAL 2

AMENDMENT TO VDC'S 1998 STOCK INCENTIVE PLAN, AS AMENDED TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE PURSUANT
TO GRANTS FROM 5,000,000 TO 8,000,000

The stockholders of VDC are being asked to vote on a proposal to amend
VDC's 1998 Stock Incentive Plan, as amended (the "Plan") to increase the number
of shares of the common stock (as defined in the Plan) issuable thereunder by
5,000,000 shares to 8,000,000 shares. The Board of Directors believes that the
share increase is necessary in order to ensure that VDC will continue to have
the ability in the future to attract and retain the services of highly qualified
officers and other employees by providing them with adequate equity incentives
in the form of stock option grants and other stock based awards. As of October
19, 2000, 1,468,775 shares were available for future issuance under the Plan.

The terms and provisions of the Plan, as proposed to be amended, are
described more fully below. The description, however, is not intended to be a
complete summary of all the terms of the Plan.

Because executive officers (who may also be members of the Board) and
members of the Board are eligible to receive awards under the Plan, each of them
has a personal interest in the approval of these amendments.

Purpose of the Plan
-------------------

The purpose of the Plan is to encourage and enable the officers,
employees, directors and consultants of VDC and its subsidiaries (as defined in
the Plan) upon whose judgment, initiative and efforts VDC largely depends for
the successful conduct of its business to acquire a proprietary interest in VDC.
It is anticipated that providing such persons with a direct stake in VDC's
welfare will assure a closer identification of their interests with those of
VDC, thereby stimulating their efforts on VDC's behalf and strengthening their
desire to remain with VDC.

Administration of the Plan
--------------------------

The Plan is to be administered by the full Board of Directors of VDC or
a committee constituted so as to permit the Plan to comply with Rule 16b-3, or
any successor rule ("Rule 16b-3") passed under the Exchange Act (the "Plan
Administrator"). Subject to the terms of the Plan, the Plan Administrator
selects from eligible persons those persons to whom awards will be granted. The
Plan Administrator will determine the terms and conditions, including any
restrictions, of any award and approves the form of written instrument
evidencing awards. The Plan Administrator is authorized to construe the Plan and
any award under the Plan and to determine the number of shares of common stock
to be covered by any award. The Plan Administrator also has the power to
accelerate at any time the exercisability or vesting of all or any portion of
any award, impose limitations on awards, extend the exercise period within which
stock options may be exercised and determine at any time whether, to what
extent, and under what circumstances stock and other amounts payable with
respect to an award shall be deferred. In addition, the Plan Administrator
determines whether and to what extent VDC shall pay or credit amounts

24
<PAGE>

constituting interest (at rates determined by the Plan Administrator) or
dividends or deemed dividends on such deferrals. Finally, the Plan
Administrator, in its discretion, may delegate to the Chairman of VDC all or
part of the Plan Administrator's authority and duties with respect to granting
awards to individuals who are not subject to the reporting provisions of Section
16 of the Exchange Act or "covered employees" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").

Eligibility
-----------

Directors, officers, employees and consultants of VDC and its
subsidiaries (as defined in the Plan) who, in the opinion of the Plan
Administrator, are mainly responsible for the continued growth and development
and future financial success of the business are eligible to participate in the
Plan.

Type of Awards and Certain Features
-----------------------------------

Stock Options and Stock Appreciation Rights.

Stock Options. The Plan provides for the Plan Administrator, in its
discretion, to grant options either in the form of incentive stock options
("Incentive Stock Options") qualified as such under Section 422 of the Code, or
other options ("Non-Qualified Stock Options"). See "Certain Federal Income Tax
Consequences" below for a summary of the differing tax consequences of Incentive
Stock Options and Non-Qualified Stock Options. However, Incentive Stock Options
may only be granted to employees of VDC or any subsidiary (as defined in the
Plan) that is a "subsidiary corporation" within the meaning of Section 424(f) of
the Code. Additionally, no Incentive Stock Option may be granted following the
tenth anniversary of the effective date of the Plan.

Stock Appreciation Rights. The Plan also permits the Plan Administrator
to grant Stock Appreciation Rights ("SARs") to eligible participants. SARs may
be granted (i) alone, (ii) simultaneously with a grant of an Incentive Stock
Option or Non-Qualified Stock Option or (iii) subsequent to the grant of a
Non-Qualified Stock Option. An SAR entitles the holder upon exercise thereof to
receive from VDC, upon a written request, (i) a number of shares of common
stock, (ii) an amount of cash, or (iii) any combination of shares of common
stock and cash, having an aggregate fair market value equal to the product of
(a) the excess of the fair market value, on the day of such request, of one
share of common stock over the exercise price per share specified in such SAR or
its related option and (b) the number of shares of common stock for which such
SAR shall be exercised.

Fair market value is defined to be (i) if the stock is admitted to
quotation on the National Association of Securities Dealers Associated Quotation
System ("NASDAQ"), the average of the highest bid and lowest asked price of the
common stock for such date or, if no bid and asked prices were reported for such
date, for the last day preceding such date for which such prices were reported,
(ii) if the common stock is admitted to trading on a United States securities
exchange or the NASDAQ National Market System, the closing price reported for
such date, or, if no sales were reported for such date, for the last day
preceding such date for which a sale was reported or (iii) if the fair market

25
<PAGE>

value cannot be determined on the basis set forth in (i) or (ii), the Board of
Directors of VDC shall in good faith determine the fair market value on such
date.

Exercise Price. The price at which each share covered by an option
granted under the Plan may be purchased is determined in each case by the Plan
Administrator but, in the case of Incentive Stock Options, may not be less than
the fair market value of the underlying common stock at the time the option is
granted. The exercise price of an SAR granted alone is determined by the Plan
Administrator, but may not be less than the fair market value of the underlying
common stock on the date of the grant. SARs granted at the same time of or after
the grant of an option and in conjunction therewith or in the alternative
thereto have the same exercise price as the related option.

Exercise Period. An option or an SAR may be exercised in whole at any
time or in part from time to time within such period as may be determined by the
Plan Administrator provided that the option period for an Incentive Stock Option
may not exceed ten years from the granting of the option.

Termination of Employment or Service. If a participant in the Plan
ceases to be employed by VDC or a subsidiary (as defined in the Plan), as the
case may be, all options or SARs may be exercised only within three months after
the termination of employment and within the option period, or, if such
termination was due to disability or retirement (as defined in the Plan), within
two years after termination of employment and within the option period.
Notwithstanding the foregoing, if a participant who is an employee of VDC ceases
to be an employee of VDC but immediately continues as an employee of a
subsidiary (i.e. there is not more than a two week gap between such employments)
or an employee of a subsidiary ceases to be an employee of that subsidiary but
immediately continues as an employee of VDC or another subsidiary (i.e. there is
not more than a two week gap between such employments), then said participant's
options shall remain unaffected by said transition in employment. If termination
of a participant's employment was for cause (as defined in the Plan) or the
participant became an officer or director of, a consultant to, or employee of a
competing business (as defined in the Plan) during the option period, then the
option or SAR shall terminate. In the sole discretion of the Plan Administrator,
the option period may be extended for up to three years from the date of
termination regardless of the original option period. Further, any option or SAR
may be exercised only within two years after the optionee's death and within the
option period and only by the optionee's personal representatives or persons
entitled thereto under the optionee's will or the laws of descent and
distribution.

If the participant who is a director of VDC ceases to serve as a
director of VDC, any options or SARs may be exercised only within three months
after the cessation of service and within the option period. If such cessation
was due to disability, then any options or SARs may be exercised only within two
years after cessation of service and within the option period. In the event that
such cessation of service as a director was the result of removal for cause or
the participant becomes an officer or director of, a consultant to or employed
by a competing business during the option period, any options or SARs shall
forthwith terminate; provided, however, that the Plan Administrator may in its
sole discretion extend the option period of any option or SAR for up to three
years from the date of cessation of service regardless of the original option

26
<PAGE>

period. Further, any option or SAR may be exercised only within two years after
the optionee's death and within the option period and only by the optionee's
personal representatives or persons entitled thereto under the optionee's will
or the laws of descent and distribution.

If a participant who is a consultant to VDC or a subsidiary shall cease
to serve as a consultant to VDC or a subsidiary, as the case may be, any options
or SARs may be exercised only within three months after the cessation of service
and within the option period. Notwithstanding the foregoing, the Plan
Administrator may in its sole discretion extend the option period of any option
or SAR for up to three years from the date of cessation of service regardless of
the original option period. Notwithstanding the foregoing, if a consultant of
VDC ceases to be a consultant of VDC but immediately continues as a consultant
of a subsidiary (i.e. there is not more than a two week gap between such
engagements) or a consultant of a subsidiary ceases to be a consultant of that
subsidiary but immediately continues as a consultant of VDC or another
subsidiary (i.e. there is not more than a two week gap between such
engagements), then said participant's options shall remain unaffected by said
transition in engagement.

Exercise of Option or SAR. An optionee must pay in full the option
exercise price of each share purchased pursuant to an option at the time of each
exercise of the option in one of the following ways:

(i) in cash;

(ii) by delivering to VDC a notice of exercise with
an irrevocable direction to a broker-dealer registered under the Exchange Act to
sell a sufficient portion of the shares and deliver the proceeds directly to VDC
to pay the exercise price;

(iii) in the discretion of the Plan Administrator,
through the delivery to VDC of previously-owned shares of common stock having an
aggregate fair market value equal to the option exercise price; provided,
however, that shares of common stock delivered in payment of the option exercise
price must have been held by the participant for at least six months in order to
be utilized to pay the option exercise price;

(iv) in the discretion of the Plan Administrator,
through an election to have shares of common stock otherwise issuable to the
optionee withheld to pay the exercise price of such option; or

(v) in the discretion of the Plan Administrator,
through any combination of the foregoing.

Nontransferability. A participant cannot transfer an option or an SAR
otherwise than by will or by the laws of descent and distribution or pursuant to
a domestic relations order. After the death of the participant, the participant
may transfer an option or an SAR to VDC upon such terms and conditions, if any,
as the Plan Administrator and the personal representative or other person
entitled to the option or SAR may agree within the applicable period specified
above.

27
<PAGE>

Independent Director Stock Options.

Each member of the board of directors of VDC who is not an employee or
officer of VDC or any subsidiary (an "Independent Director") who is first
elected or appointed to serve beginning after June 1, 1998 shall automatically
be granted Non-Qualified Stock Options to purchase 25,000 shares of common
stock. The option exercise price for options granted to Independent Directors
under the Plan will equal the fair market value of the common stock on the date
of grant. Options granted to Independent Directors under the foregoing
provisions will be granted on the date that such Independent Director is first
elected or appointed to serve as a director and, so long as the Independent
Director continuously remains a director, will vest in equal annual installments
over three years beginning on the anniversary of the date of grant. These
options will expire ten years after grant, subject to earlier termination if the
optionee ceases to serve as a director. Options will terminate ninety (90) days
after a director ceases to serve as a director.

Restricted Stock Awards.

The Plan Administrator may from time to time award common stock to
participants pursuant to Restricted Stock Awards. Such an award entitles the
recipient to acquire shares of common stock subject to such restrictions and
conditions as the Plan Administrator may determine at the time of grant. At the
time of grant, the Plan Administrator shall specify the date or dates and/or the
attainment of pre-established performance goals, objectives and other conditions
on which the Restricted Stock shall become vested. If the grantee or VDC, as the
case may be, fails to achieve the designated goals or the grantee's relationship
with VDC is terminated prior to the expiration of the vesting period, the
grantee shall forfeit all shares of common stock subject to the Restricted Stock
Award which have not then vested.

Once a participant signs a written instrument setting forth the
Restricted Stock Award and pays any applicable purchase price, he or she shall
have the rights of a shareholder with respect to the stock subject to the
Restricted Share Award. However, a participant may not sell, assign, transfer,
pledge or otherwise encumber or dispose of unvested Restricted Stock except as
specifically provided in the written instrument evidencing the Restricted Stock
Award or in the Plan.

Stock Awards.

The Plan Administrator may, in its sole discretion, grant or sell a
Stock Award to any officer, employee or consultant of VDC or its subsidiaries,
under which such individual may receive shares of common stock free of any
vesting restrictions. Stock Awards may be granted or sold in respect of past
services or other valid consideration, or in lieu of any cash compensation due
to such individual.

Performance Share Awards.

Independent of or in connection with the granting of any other award
under the Plan, the Plan Administrator may, in its sole discretion, grant
Performance Share Awards to any officer, employee or consultant of VDC or its
subsidiaries. A Performance Share Award is an award entitling the recipient to

28
<PAGE>

acquire shares of common stock upon the attainment of specialized performance
goals, which shall be determined by the Plan Administrator. The Plan
Administrator in its sole discretion shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Plan Administrator may rely on the performance goals
and other standards applicable to other performance plans of VDC setting the
standards for Performance Share Awards under the Plan.

Amendment and Termination
-------------------------

The Board of Directors may alter, amend, suspend or discontinue the
Plan, provided that no such action may deprive any person without such person's
consent of any rights granted under the Plan.

Adjustments
-----------

The Plan Administrator retains the right to make an appropriate or
proportionate adjustment in (i) the number of options that can be granted to any
one individual participant, (ii) the number and kind of shares or other
securities subject to any then outstanding awards under the Plan, and (iii) the
price for each share subject to any then outstanding options under the Plan,
without changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of shares) as to which such options remain exercisable.
The adjustment by the Plan Administrator shall be final, binding and conclusive.

However, the Plan Administrator only has the authority to make the
above adjustments if, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of VDC, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of common stock are
increased or decreased or are exchanged for a different number or kind of shares
or other securities of VDC, or additional shares or new or different shares or
other securities of VDC or other non-cash assets are distributed with respect to
such shares of common stock or other securities. If this paragraph applies to a
particular event and the event is also an "Acquisition Event" (as defined
below), then this paragraph does not apply and the adjustments and contingencies
upon the occurrence of an "Acquisition Event", as described below, shall apply.

In the event that, by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation, the
Board of Directors shall authorize the issuance or assumption of an option or
options in a transaction to which Section 424(a) of the Code applies, then,
notwithstanding any other provision of the Plan, the Plan Administrator may
grant an option or options upon such terms and conditions as it may deem
appropriate for the purpose of assumption of the old option, or substitution of
a new option for the old option, in conformity with the provisions of Code
Section 424(a) and the rules and regulations thereunder, as they may be amended
from time to time. If this paragraph applies to a particular event and the event
is also an "Acquisition Event" (as defined below), then this paragraph does not

29
<PAGE>

apply and the adjustments and contingencies upon the occurrence of an
"Acquisition Event", as described below, apply.

No adjustment or substitution requires VDC to issue or to sell a
fractional share under any option agreement or share award agreement and the
total adjustment or substitution with respect to each option and share award
agreement is limited accordingly.

The Plan provides for certain adjustments and contingencies upon the
occurrence of either an "Acquisition Event" or a "Change in Control Event." For
purposes of the Plan, an "Acquisition Event" means:

(1) after August 9, 2000, any merger or consolidation of VDC with
or into another entity as a result of which the common stock is converted into
or exchanged for the right to receive cash, securities or other property; or

(2) after August 9, 2000, any exchange of shares of VDC for cash,
securities or other property pursuant to a statutory share exchange transaction.

For purposes of the Plan, a "Change in Control Event" means:

(1) after August 9, 2000, any merger, consolidation, or
transaction (or series of related transactions which commence after August 9,
2000 and occur within any 12 month period) which results in the voting
securities of VDC outstanding immediately prior thereto representing immediately
thereafter (either by remaining outstanding or by being converted into voting
securities of the surviving or acquiring entity) less than 62.5% of the combined
voting power of the voting securities of VDC or such surviving or acquiring
entity outstanding immediately after such merger, consolidation, or transaction;
or

(2) any individual, entity, or "person," as such term is used
in Sections 13(d) and 14(d) of the Exchange Act (other than (A) VDC, (B) any
trustee or other fiduciary holding securities under an employee benefit plan of
VDC, or (C) any person who, immediately prior to August 9, 2000, was the
"beneficial owner" (as defined in Rule 13d-3 (or its successor rule) under the
Exchange Act), directly or indirectly, of more than 10% of the combined voting
power of VDC's then outstanding voting securities), is or becomes, after August
9, 2000, the "beneficial owner" (as defined in Rule 13d-3 (or its successor
rule) under the Exchange Act), directly or indirectly, of securities of VDC
representing 30% or more of the combined voting power of VDC's then outstanding
voting securities; or

(3) during any period of not more than two consecutive years, not
including any period prior to August 9, 2000, individuals who at the beginning
of such period constitute the Board of Directors, and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest, including, but not limited to a consent
solicitation, relating to the election of directors of VDC) whose election by
the Board of Directors or nomination for election by VDC's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or whose

30
<PAGE>

election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof; or

(4) after August 9, 2000, any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of VDC, other than to a wholly-owned subsidiary
of VDC; or

(5) the complete liquidation of VDC.

Upon the occurrence of an Acquisition Event (regardless of
whether such event also constitutes a Change in Control Event), or the execution
by VDC of any agreement with respect to an Acquisition Event (regardless of
whether such event will result in a Change in Control Event), the Board of
Directors shall provide that all outstanding options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof); provided that if such Acquisition Event
also constitutes a Change in Control Event, such assumed or substituted options
shall be immediately exercisable in full upon the occurrence of such Acquisition
Event. For purposes of the Plan, an option shall be considered to be assumed if,
following consummation of the Acquisition Event, the option confers the right to
purchase, for each share of common stock subject to the option immediately prior
to the consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of common stock for each share of common stock held immediately prior to
the consummation of the Acquisition Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of common stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate thereof), VDC
may, with the consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of options to consist solely
of common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration received
by holders of outstanding shares of common stock as a result of the Acquisition
Event. Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
options, then the Plan Administrator shall, upon written notice to the
participants, provide that all then unexercised options will become exercisable
in full as of a specified time prior to the Acquisition Event (the Board of
Directors shall use its best efforts to ensure that option holders have at least
90 calendar days, and in no event less than 30 calendar days, to exercise their
options) and will terminate immediately prior to the consummation of such
Acquisition Event, except to the extent exercised by the participants before the
consummation of such Acquisition Event; provided, however, in the event of an
Acquisition Event under the terms of which holders of common stock will receive
upon consummation thereof a cash payment for each share of common stock
surrendered pursuant to such Acquisition Event (the "Acquisition Price"), then
the Board of Directors may instead provide that all outstanding options shall
terminate upon consummation of such Acquisition Event and that each participant
shall receive, in exchange therefor, a cash payment equal to the amount (if any)
by which (A) the Acquisition Price multiplied by the number of shares of common
stock subject to such outstanding options (whether or not then exercisable),
exceeds (B) the aggregate exercise price of such options.

31
<PAGE>

Upon the occurrence of a Change in Control Event that does not also
constitute an Acquisition Event, all options then-outstanding shall
automatically become immediately exercisable in full.

The Plan Administrator shall specify the effect of an Acquisition Event
that is not a Change in Control Event on any other Award granted under the Plan
at the time of the grant of such Award. Upon the occurrence of a Change in
Control Event (regardless of whether such event also constitutes an Acquisition
Event), except to the extent specifically provided to the contrary in the
instrument evidencing any other Award or any other agreement between a
participant and VDC, all other Awards shall become exercisable, realizable or
vested in full, or shall be free of all conditions or restrictions, as
applicable to each such Award.

In the event of a proposed liquidation or dissolution of VDC, the Plan
Administrator shall upon written notice to the participants provide that all
then unexercised options will (i) become exercisable in full as of a specified
time prior to the effective date of such liquidation or dissolution (the Board
of Directors shall use its best efforts to ensure that option holders have at
least 90 calendar days, and in no event less than 30 calendar days, to exercise
their options) and (ii) terminate effective upon such liquidation or
dissolution, except to the extent exercised before such effective date. The Plan
Administrator may specify the effect of a liquidation or dissolution on any
Restricted Stock Award or other Award granted under the Plan at the time of the
grant of such Award.

New Plan Benefits and Closing Quotation
---------------------------------------

Because the grant of awards under the Plan are at the discretion of the
Plan Administrator, it is not possible to indicate what awards will be made to
eligible participants.

As of October 19, 2000 the closing price of VDC's common stock as
reported on the American Stock Exchange was $0.25 per share.

Federal Income Tax Consequences
-------------------------------

Incentive Stock Options.

The grantee of an Incentive Stock Option under the Plan will not be
required to recognize any income for federal income tax purposes at the time of
award nor is VDC then entitled to any deduction. The exercise of an Incentive
Stock Option is also not a taxable event, although the difference between the
option exercise price for the shares acquired and their fair market value on the
date of exercise is an item of tax preference for purposes of determining the
alternative minimum tax. If stock acquired upon exercise of an Incentive Stock
Option is held for two years from the date the option was granted and one year
from the date the Stock was transferred to the grantee (the "ISO Holding
Period"), then the grantee will have a long-term capital gain or loss on the
disposition of such stock measured by the difference between the amount realized
and the option exercise price. If the ISO Holding Period is not met, upon
disposition of such shares (a "disqualifying disposition"), the grantee will
realize compensation taxable as ordinary income in an amount equal to the excess

32
<PAGE>

of the fair market value of the shares at the time of exercise over the option
exercise price, limited, however, to the gain on disposition. VDC will be
entitled to a deduction in the same amount and at the same time. Any additional
gain would be taxable as long-term or short-term capital gain.

If the Incentive Stock Option is exercisable by delivery of
previously-owned shares of common stock in partial or full payment of the option
exercise price, the grantee will not ordinarily recognize gain or loss on the
transfer of such previously-owned shares. However, if the previously-owned
shares transferred were acquired through the exercise of an Incentive Stock
Option, the grantee may realize ordinary income with respect to the shares used
to exercise an Incentive Stock Option if such transferred shares have not been
held for the ISO Holding Period. If the grantee recognizes ordinary income upon
a disqualifying disposition, VDC will generally be entitled to a tax deduction
in the same amount.

Non-Qualified Stock Options.

The grantee of a Non-Qualified Stock Option under the Plan will not be
required to recognize any income for federal income tax purposes at the time of
award and, as a result, VDC is not entitled to any deduction. Upon exercise of a
Non-Qualified Stock Option, the grantee will realize compensation taxable as
ordinary income in an amount measured by the excess, if any, of the fair market
value of the shares on the date of exercise over the option exercise price. VDC
will then be entitled to a deduction in the same amount and at the same time.
Upon the sale of shares acquired on exercise of a Non-Qualified Stock Option,
the grantee will realize capital gain (or loss) measured by the difference
between the amount realized and the fair market value of the shares on the date
of exercise.

If the exercise price of a Non-Qualified Stock Option is paid in whole
or in part in shares of common stock, the tax results to the grantee are (i) a
tax-free exchange of previously-owned shares for an equivalent number of new
shares and (ii) the realization of ordinary income in an amount equal to the
fair market value on the date of exercise of any additional shares received in
excess of the number exchanged.

If the grantee of an Incentive Stock Option or Non-Qualified Stock
Option pays for shares purchased upon the exercise of an option in whole or in
part by delivering shares of common stock, such delivery will not result in the
recognition of gain or loss by the grantee on the shares delivered at the time
of delivery. The basis in the shares paid for by delivery of common stock is
equal to the basis in the shares used by the grantee in the exercise. The
recognition of such gain or loss on the shares delivered is deferred until the
newly-acquired shares are sold.

If the grantee elects, with the Plan Adminstrator's approval, to
satisfy the tax withholding obligation by delivering to VDC previously-owned
shares, said delivery will result in the recognition of gain or loss by the
grantee on the shares delivered.

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<PAGE>

Stock Appreciation Rights.

The grantee of an SAR will not recognize ordinary income upon the grant
of the SAR. Upon exercise of an SAR, the tax consequences to the holder and VDC
are the same as for the exercise of an Non-Qualified Stock Option.

Share Awards.

The grantee of a Restricted Stock Award, Stock Award or Performance
Share Award under the Plan (collectively a "share award") will generally
recognize ordinary income equal to the excess of (i) the fair market value of
the shares received (determined as of the date on which the shares become
transferable or not subject to a substantial risk of forfeiture, whichever
occurs first) over (ii) the amount, if any, paid for the shares. The grantee
may, however, make an election (the "Tax Election"), within thirty days
following the grant of the share award, to recognize income at the time of the
award based on the fair market value of the shares on that date rather than upon
the expiration of the risk of forfeiture. VDC will be entitled to a deduction in
the same amount and at the same time that the grantee recognizes ordinary
income. Upon the sale or other disposition (including any forfeiture) of the
shares awarded, the grantee will realize capital gain (or loss) measured by the
difference between the amount realized and the fair market value of the shares
on the date the award vested (or on the date of grant if the grantee made the
Tax Election).

Taxation of Capital Gains and Losses.

If shares of stock acquired by a grantee are held for more than the
long-term capital gains holding period (and, in the case of Incentive Stock
Options, the ISO Holding Periods are satisfied), any gain realized upon sale
will be long-term capital gain rather than short-term capital gain or ordinary
income. For stock acquired after 1987, the holding period for long-term capital
gain or loss is one year. If a grantee sells shares at a loss, such loss,
together with other capital losses realized during the year, will be deductible
only to the extent that the loss offsets capital gains plus up to $3,000 of
ordinary income per year. Net capital losses not deductible in the year realized
may be carried over to and applied in succeeding years in accordance with the
above limitation.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority of the shares of common stock
present at the Meeting in person or by proxy is required for the approval of the
amendment to the Plan. If the shareholders do not approve the proposal, then the
Plan will continue in effect in accordance with its existing provisions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL TO
AMEND THE PLAN ---

34
<PAGE>

PROPOSAL 3
RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS

BDO Seidman, LLP has audited VDC's financial statements for the year
ended June 30, 2000. The Board of Directors has selected BDO Seidman, LLP to
serve as the independent auditors for VDC for the fiscal year ending June 30,
2001. VDC does not expect to have a representative of BDO Seidman, LLP present
at the Meeting.

The Board of Directors shall consider the selection of another
accounting firm to serve as VDC's independent auditors in the event that the
stockholders do not approve the selection of BDO Seidman, LLP as VDC's
independent auditors.

VOTE REQUIRED FOR APPROVAL

The affirmative vote of a majority of the shares of common stock
present at the Meeting in person or by proxy is required for ratification of BDO
Seidman, LLP as VDC's independent auditors for the fiscal year ending June 30,
2001.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
---
OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
2001 FISCAL YEAR

OTHER MATTERS

The Board of Directors does not know of any other matter which is
intended to be brought before the Meeting, but if such matter is presented, the
persons named in the enclosed proxy intend to vote the same according to their
best judgment.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Based solely on its review of copies of forms filed pursuant to Section
16(a) of the Exchange Act, and written representations from certain reporting
persons, VDC believes that during Fiscal 2000 all reporting persons timely
complied with all filing requirements applicable to them, except for Form 4s and
a Form 5 for PortaCom Wireless, Inc ("PortaCom"). Beyond what is reported above,
VDC does not know the following with regard to PortaCom: (i) the number of late
reports; (ii) the number of transactions that were not reported on a timely
basis, or (iii) any known failure to file a required form.

DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS

VDC currently intends to hold its 2001 Annual Meeting of Stockholders
in December 2001 and to mail proxy statements relating to such meeting in
October 2001. In order for proposals of stockholders to be considered for
inclusion in the proxy statement and form of proxy relating to VDC's 2001 Annual

35
<PAGE>

Meeting of Stockholders, such proposals must be received by VDC no later than
June 29, 2001 and must otherwise be in compliance with all applicable laws and
regulations.

By Order of the Board of Directors

/s/ Frederick A. Moran
Frederick A. Moran
Chairman of the Board and
Chief Executive Officer

Dated: October 20, 2000

36
<PAGE>

APPENDIX 1

AUDIT COMMITTEE CHARTER

VDC Communications, Inc. Audit Committee Charter

I. Audit Committee Purpose

The Audit Committee is appointed by the Board of Directors of VDC
Communications, Inc. (the "Company") to assist the Board in fulfilling
its oversight responsibilities. The Audit Committee's primary duties
and responsibilities are to:

o Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting,
and legal compliance.

o Monitor the independence and performance of the Company's
independent auditors and internal auditing department.

o Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of
Directors.

The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other consultants or
experts it deems necessary in the performance of its duties.

II. Audit Committee Composition and Meetings

Audit Committee members shall meet the applicable independence and
experience requirements, in effect from time to time, of the American
Stock Exchange ("AMEX") or such other applicable stock exchange or
association on which the Company's common stock is then listed. The
Audit Committee shall be comprised of three or more directors as
determined by the Board. All members of the Committee shall have a
basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of
the Committee shall have accounting or related financial management
expertise.

Audit Committee members shall be appointed by the Board. If an Audit
Committee Chair is not designated or present, the members of the
Committee may designate a Chair by majority vote of the Committee
membership.

The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. Audit

37
<PAGE>

Committee members may attend meetings in person, by telephone
conference or similar communications equipment, or as otherwise
permitted by law. The Committee should meet privately in executive
session at least annually with management, the director of the internal
auditing department, the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believe
should be discussed.

III. Audit Committee Responsibilities and Duties

Review Procedures
-----------------

1. Review and reassess the adequacy of this Charter at least
annually. Submit the Charter to the Board of Directors for
approval and have the document published in accordance with
applicable Securities and Exchange Commission ("SEC") and AMEX
regulations.

2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of major issues regarding
accounting principles, practices, and judgments that could
significantly affect the Company's financial statements.

3. In consultation with management, the independent auditors, and the
internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss any
significant financial risk exposures and the steps management has
taken to monitor, control, and report such exposures. Review
significant findings prepared by the independent auditors and the
internal auditing department together with management's responses.

4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of
earnings and the Company's quarterly financial statements prior to
filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be
communicated by the independent auditors in accordance with
Statement on Auditing Standards No. 61 ("SAS 61") (see item 9).
The Chair of the Committee may represent the entire Audit
Committee for purposes of this review.

Independent Auditors
--------------------

5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review the independence and performance of the auditors and
annually recommend to the Board of Directors the appointment of
the independent auditors or approve any discharge of auditors when
circumstances warrant.

6. Approve the fees and other significant compensation to be paid to
the independent auditors.

38
<PAGE>

7. On an annual basis, the Committee should review and discuss with
the independent auditors all significant relationships they have
with the Company that could impair the auditors' independence.

8. Review the independent auditors audit plan - discuss scope,
staffing, reliance upon management, and internal audit and general
audit approach.

9. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance with
SAS 61.

10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied
in its financial reporting.

Internal Audit Department and Legal Compliance
----------------------------------------------

11. Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal audit
department, as needed.

12. Review the appointment and performance of, and any decision to
replace, the senior internal audit executive.

13. Review significant reports prepared by the internal audit
department together with management's response and follow-up to
these reports.

14. On at least an annual basis, review with the Company's counsel,
any legal matters that could have a significant impact on the
organization's financial statements, the Company's system for
monitoring compliance with applicable laws and regulations,
including response to any material inquiries received from
regulators or governmental agencies.

Other Audit Committee Responsibilities
--------------------------------------

15. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report will be included in
the Company's annual proxy statement as required by the applicable
rules of the SEC and AMEX.

16. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the
Board deems necessary or appropriate.

17. Periodically report to the Board of Directors on significant
results of the foregoing activities.

39
<PAGE>

Scope of Duties
---------------

18. While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee
to plan, direct or conduct audits, or to determine whether the
Company's financial statements are complete and accurate and are
in accordance with generally accepted accounting principles. This
is the responsibility of management and the independent auditors.
Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between
management and the independent auditors or to assure compliance
with laws and regulations and any internal rules or codes of
conduct of the Company.

40
<PAGE>

VDC COMMUNICATIONS, INC.

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints Frederick A. Moran proxy with power to
appoint a substitute and hereby authorizes him to represent and to vote all
shares of common stock of VDC Communications, Inc. held of record by the
undersigned on October 16, 2000 at the Annual Meeting of Stockholders of VDC
Communications, Inc. to be held on December 11, 2000 and at any adjournment(s)
or postponement(s) thereof, and to vote as directed on the reverse side of this
form and, in his discretion, upon such other matters not specified as may come
before said meeting.

You are encouraged to specify your choice by marking the appropriate box (SEE
REVERSE SIDE), but you need not mark any box if you wish to vote in accordance
with the Board of Directors' recommendations.

THE PROXY CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD
----------------------------------------------------------------------

SEE REVERSE SIDE

41
<PAGE>

<TABLE>
<CAPTION>
FOR WITHHELD Nominee:
<S> <C> <C> <C> <C>
1. Proposal 1

Election of Directors [ ] [ ] Dr. Leonard Hausman

2. Proposal 2 FOR AGAINST ABSTAIN

Amendment to VDC's 1998 Stock Incentive Plan, [ ] [ ] [ ]
as amended, to Increase the Number of Shares
Available for Issuance Pursuant to Grants
from 5,000,000 to 8,000,000

3. Proposal 3 FOR AGAINST ABSTAIN

Ratification of the Appointment of BDO [ ] [ ] [ ]
Seidman, LLP as Independent Auditors for VDC.

</TABLE>

THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE
NOMINEE FOR DIRECTOR, FOR THE PROPOSAL
TO AMEND THE 1998 STOCK INCENTIVE PLAN,
AS AMENDED, AND FOR THE RATIFICATION OF
BDO SEIDMAN, LLP AS INDEPENDENT AUDITORS
FOR VDC COMMUNICATIONS, INC. FOR THE
2001 FISCAL YEAR.

PLEASE SIGN, DATE AND RETURN YOUR PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THE UNITED
STATES.

NOTE: Please sign name(s) exactly
as printed hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such.

SIGNATURE(S)
---------------

---------------------------

---------------------, 2000
DATE