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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 8, 1998
-------------------------
PORTACOM WIRELESS, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-23228 33-0650673
- -------------------------- ------------------------ ----------------
(State or Other Juris- (Commission File Number) (IRS Employer Identi-
diction of Incorporation) fication No.)
10061 Talbert Avenue, Suite 200, Fountain Valley, California 92708
- ------------------------------------------------------------ ---------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 714-593-3234
----------------
N/A
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(Former name or former address, if changed since last report.)
____________________________________
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
------------------------------------
As of June 8, 1998, PortaCom Wireless, Inc. (the "Registrant")
consummated the sale to VDC Corporation, Ltd. ("VDC") of 2,000,000 shares of
common stock and warrants to acquire, at an exercise price of $4.00 per share,
an additional 4,000,000 shares of common stock of Metromedia China Corporation
(formerly Metromedia Asia Corporation). In consideration for the sale of such
assets and subject to certain adjustment features, the Registrant received a
pool of 5,300,000 shares of VDC common stock and the right to utilize a maximum
of $3,000,000 in cash to satisfy claims made against the Registrant in
connection with Registrant's Plan of Reorganization (the "Plan") filed in its
Chapter 11 bankruptcy case in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"), Case No. 98-661 (PJW). To the
extent that more than $384,725 of the cash is used by PortaCom to satisfy claims
made in connection with the Plan, the excess thereof will result in the
Registrant returning to VDC a certain number of shares of VDC common stock
according to a predetermined formula. The final amounts of the cash and VDC
common stock received will be determined by the Registrant, its creditors and
the Bankruptcy Court. The Plan remains subject to, among other things, the
approval of impaired creditors and stockholders and confirmation by the
Bankruptcy Court.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(b) Pro Forma Financial Information.
The Registrant does not intend to file pro forma financial information
in connection with the aforementioned disposition of assets. The assets that
were disposed of were not operating assets and did not constitute a line of
business for the Registrant. Therefore, it is the Registrant's position that
such pro forma financial would not be material to investors.
(c) Exhibits
No. Description
- --- -----------
2.1 Form of Stipulation and Order in Lieu of Objection Amending the Post
Petition Asset Purchase Agreement between the Registrant and VDC
Corporation, Ltd., dated April 3, 1998./(1)/
2.2 Stipulation and Order in Lieu of Objection by and among the Registrant, VDC
Corporation Ltd. and the Official Committee of Unsecured Creditors of the
Registrant, dated April 23, 1998./(2)/
2.3 Order Authorizing Sale of Property, dated April 23, 1998./(2)/
10.1 Letter of Intent between the Registrant and VDC Corporation, Ltd. /(1)/
10.2 Loan Agreement between the Registrant and VDC Corporation, Ltd./(1)/
-2-
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10.3 Pledge Agreement between the Registrant and VDC Corporation, Ltd. /(1)/
10.4 Security between the Registrant and VDC Corporation, Ltd. /(1)/
10.5 Asset Purchase Agreement between the Registrant and VDC Corporation, Ltd.
/(1)/
10.6 First Amendment to Asset Purchase Agreement between the Registrant and VDC
Corporation, Ltd. /(1)/
10.7 Form of Post Petition Asset Purchase Agreement between the Registrant and
VDC Corporation, Ltd. /(1)/
10.8 Debtor-In-Possession Loan, Pledge and Security Agreement between the
Registrant and VDC Corporation, Ltd. /(1)/
10.9 Memorandum of Understanding, dated June 8, 1998, by and among the
Registrant, VDC Corporation Ltd. and the Official Committee of Unsecured
Creditors of the Registrant./(2)/
10.10 Escrow Agreement by and among the Registrant, VDC Corporation Ltd., the
Official Committee of Unsecured Creditors of the Registrant and Klehr,
Harrison, Harvey, Branzburg & Ellers LLP, as Escrow Agent, dated April 16,
1998./(2)/
10.11 Closing Escrow Agreement by and among the Registrant, VDC Corporation
Ltd., Metromedia China Corporation, the Official Committee of Unsecured
Creditors of the Registrant and Klehr, Harrison, Harvey, Branzburg &
Ellers LLP, as Closing Escrow Agent, dated June 8, 1998./(2)/
10.12 Waiver of Provisions of Asset Purchase Agreement, dated June 8, 1998, by
VDC Corporation Ltd./(2)/
10.13 Pledge Agreement, dated June 8, 1998, by and between the Registrant and
Metromedia China Corporation./(2)/
99.1 Press Release dated June 15, 1998. /(2)/
_________
(1) Previously filed as an exhibit to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1997 and incorporated herein
by reference.
(2) Filed herewith.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PORTACOM WIRELESS, INC.
(Registrant)
Date: June 23, 1998 By: /s/ Michael Richard
-------------------------------------
Name: Michael Richard
Title: Acting Chief Executive Officer
-4-
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EXHIBIT INDEX
-------------
No. Description
- --- -----------
2.2 Stipulation and Order in Lieu of Objection by and among the Registrant,
VDC Corporation Ltd. and the Official Committee of Unsecured Creditors of
the Registrant, dated April 23, 1998.
2.3 Order Authorizing Sale of Property, dated April 23, 1998.
10.9 Memorandum of Understanding, dated June 8, 1998, by and among the
Registrant, VDC Corporation Ltd. and the Official Committee of Unsecured
Creditors of the Registrant.
10.10 Escrow Agreement by and among the Registrant, VDC Corporation Ltd., the
Official Committee of Unsecured Creditors of the Registrant and Klehr,
Harrison, Harvey, Branzburg & Ellers LLP, as Escrow Agent, dated April 16,
1998.
10.11 Closing Escrow Agreement by and among the Registrant, VDC Corporation
Ltd., Metromedia China Corporation, the Official Committee of Unsecured
Creditors of the Registrant and Klehr, Harrison, Harvey, Branzburg &
Ellers LLP, as Closing Escrow Agent, dated June 8, 1998.
10.12 Waiver of Provisions of Asset Purchase Agreement, dated June 8, 1998, by
VDC Corporation Ltd.
10.13 Pledge Agreement, dated June 8, 1998, by and between the Registrant and
Metromedia China Corporation.
99.1 Press Release dated June 15, 1998.
-5-
<PAGE>
EXHIBIT 2.2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
IN RE: :
: CASE NO. 98-661(PJW)
PORTACOM WIRELESS, INC., :
: CHAPTER 11
DEBTOR. :
STIPULATION AND ORDER IN LIEU OF OBJECTION
------------------------------------------
This Stipulation and Order In Lieu of Objection ("Stipulation") is made as
of the 23rd day of April, 1998, by and among PortaCom Wireless, Inc. ("Debtor"),
VDC Corporation Ltd. ("Buyer") and the Official Committee of Unsecured Creditors
of PortaCom Wireless, Inc. ("Committee"), by and through their respective
undersigned counsel.
W I T N E S S E T H:
WHEREAS, on March 23, 1998, Debtor filed a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code ("Code"), commencing a
case in the United States Bankruptcy Court for the District of Delaware (the
"Court"), which is pending at number 98-661 (the "Case"); and
WHEREAS, on March 29, 1998, the Office of the United States Trustee
convened a meeting of the twenty largest unsecured creditors of the Debtor for
the purpose of appointing a committee of creditors; and
WHEREAS, the Office of the United States Trustee appointed three creditors
to the committee, which Committee engaged counsel; and
WHEREAS, prior to the commencement of the Case, the Debtor and Buyer were
parties to an asset purchase agreement and amendments thereto, pertaining to the
Debtor's agreement to
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sell to Buyer its interest in and to 2,000,000 shares of common stock ("MAC
Shares") of Metromedia Asia Corporation ("MAC") and warrants to purchase an
additional 4,000,000 of MAC common stock with a strike price of $4.00 per share
("MAC Warrants"); and
WHEREAS, the Debtor and Buyer negotiated the terms of an Asset Purchase
Agreement to be entered into in the Case and approved by the Court ("Purchase
Agreement") and agreed upon the procedures pursuant to which the Purchase
Agreement would be submitted to the Court for approval; and
WHEREAS, together with the petition commencing the Case, the Debtor filed
the Motion Of Debtor (A) To Establish Bidding Procedures And To Approve A Break-
Up Fee In Connection With The Sale Of The Debtor's Interest In Certain Property
Of The Estate And (B) To Approve The Form And Manner Of Notice ("Procedures
Motion") with respect to the Purchase Agreement, which is attached hereto as
Exhibit A and incorporated herein; and
WHEREAS, the Committee expressed its intention to object to various
provisions of the Procedures Motion and Notice, however, in lieu thereof, the
Debtor, Buyer and Committee entered into that certain Stipulation and Order in
Lieu of Objection ("Procedures Stipulation"), which is attached hereto as
Exhibit B and incorporated herein; and
WHEREAS, pursuant to the terms of the Procedures Stipulation that parties
entered into an Escrow Agreement, among other things, to provide assurance to
unsecured creditors that their allowed claims would be paid in full as a result
of the consummation of the sale of the MAC Shares and MAC Warrants to Buyer
("Escrow Agreement"). A copy of the Escrow Agreement is attached hereto as
Exhibit C and incorporated herein; and
WHEREAS, on the petition date the Debtor fled the Motion of PortaCom
Wireless, Inc. to Obtain Post-Petition Financing Pursuant to 11 U.S.C. (S)
364(c) ("DIP Motion") and after
2
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conducting a preliminary hearing in accordance with Fed.R.Bankr.P. 4001(c)(2),
the Court entered a Preliminary Order thereon and scheduled a final hearing
thereon for April 23, 1998; and
WHEREAS, the Committee filed objections to the entry of the final order on
the DIP Motion; and
WHEREAS, the Debtor, Buyer and Committee, have agreed to resolve the
Committee's concerns and objections by further modifying the terms of the
Purchase Agreement, as amended by the Procedures Stipulation and Escrow
Agreement, as more fully set forth below, in consideration of the Committee's
waiver of its objections to the Procedures Motion and DIP Motion and the
approval of the Amended Purchase Agreement, as defined below, at the hearing
scheduled for April 23, 1998 to approve the same and confirm the Buyer as the
"Successful Bidder;" and
NOW, THEREFORE, intending to be legally bound hereby, for and in
consideration of the mutual covenants set forth below, the parties agree as
follows:
1. The recitals set forth above are incorporated herein as though set
forth below at length.
2. The Purchase Agreement, as amended by the Procedures Stipulation and
Escrow Agreement (as amended, the "Amended Purchase Agreement"), is incorporated
herein and shall be amended pursuant to the terms set forth below. Capitalized
terms used herein and not defined herein shall have the meaning ascribed to such
term in the Amended Purchase Agreement.
3. Section 1.1 shall be amended by deleting the definition for "Cash
Purchase Escrow" and replacing it with the following:
3
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"Cash Purchase Escrow" means that segregated, interest bearing escrow
account established and maintained by the Debtor, funded by Buyer, in
an amount equal to $2,682,000. The Cash Purchase Escrow may be funded
by any combination of cash and stand-by letter of credit; provided,
however, that the cash portion shall be in the minimum amount of
$1,250,000. The holders of administrative claims to the extent of
$82,000, and the holders of priority unsecured claims and general
unsecured claims shall be the beneficiaries of this fund.
4. Section 3.2(b) of the Amended Purchase Agreement is hereby amended by
deleting the sub-section in its entirety and replacing it with the following:
(b) At Closing, subject to adjustment provided for in Section 3.4
hereof, Buyer shall deliver to the Escrow Agent 5,300,000 newly issued
shares of common stock, par value $2.00 per share, of Buyer in
accordance with the provisions of Section 3.3 hereof (the "VDC
Shares"). The number of VDC Shares to be issued to Debtor in
consideration hereof shall equal the difference between (i) 5,300,000
and (ii) the difference between the principal amount of the Cash
Purchase Escrow delivered to Seller (subject to and in accordance with
the terms of Section 3.4 hereof) and the Indebtedness (the sum of the
Pre-Petition Indebtedness and Post-Petition Loan), divided by the
value of the VDC stock valued consistently with paragraph 14 of the
Procedures Motion. For example, if the funds of the Cash Purchase
Escrow delivered to Seller are in the amount of $1,400,000, the
Indebtedness is $400,000 and the value of the VDC Shares is $6.00, the
number of VDC Shares to be issued to Debtor is equal to 5,133,334
shares (5,300,000 - ((1,400,000 - 400,000)/6)); and
5. Section 3.4 of the Amended Purchase Agreement is hereby amended by
deleting the sub-section in its entirety and replacing it with the following:
3.4 Closing and Post-Closing Adjustments of Cash Purchase Escrow and
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VDC Shares.
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(a) Forgiveness of the Indebtedness shall constitute initial payments
and deposits against the Closing Purchase Price, and, as such, shall
be applied towards the Closing Purchase Price under this Agreement
upon the Closing Date.
(b) At or before Closing, the Debtor shall deliver to the Escrow
Agent a schedule containing the amounts and names of the holders of
all priority unsecured and general unsecured claims which, as of the
Closing Date (as defined in the Amended Purchase Agreement), are
scheduled by the Debtor as fixed and liquidated, unsecured claims
against the Debtor's estate and for which no proof(s) of claim has
been filed or for which proof(s) of claim have been filed in the
scheduled or a lesser amount ("Closing Date Claims"). At Closing, the
Escrow
4
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Agent shall deliver to Debtor from the Escrowed Funds cash in an
amount equal to the Closing Date Claims for distribution to the
holders of Closing Date Claims.
(c) Upon the later of (i) Closing or (ii) the entry of a final, non-
appealable Order by the Court approving or ratifying the settlement
agreements entered into by the Debtor prior to the commencement of the
Case ("Pre-Petition Settlements"), or otherwise authorizing a
settlement and compromise upon the terms of, the Pre-Petition
Settlements, including an Order confirming a plan of reorganization
providing for such approval, ratification, or authorization, the
Escrow Agent shall deliver to Debtor or the disbursing agent under
such plan, as the case may be, cash and a portion of the VDC Shares in
an amount equal to that to be distributed pursuant to the Pre-Petition
Settlements. The consideration payable to the non-Debtor party to any
Pre-Petition Settlement shall be deemed to constitute an Allowed Claim
having a value in the amount of such consideration. In the event
Debtor fails to obtain a final, non-appealable Order approving or
ratifying any of the Pre-Petition Settlements, or otherwise
authorizing a settlement and compromise upon the terms of such Pre-
Petition Settlement, then any resulting claim asserted against the
Debtor's estate shall constitute a Disputed Claim and be treated in
accordance with paragraph 3.4(e) below.
(d) Within seven (7) days after May 15, 1998 (the "Bar Date"), Debtor
shall deliver to the Escrow Agent, Buyer and the Committee a schedule
containing the amounts and names of holders of all claims, other than
the Closing Date Claims, as to which, as of the Bar Date, proof(s) of
claim have been filed in the scheduled or a lesser amount than that
which was scheduled by the Debtor (collectively, the "Bar Date
Claims"). The Bar Date Claims shall be deemed to constitute Allowed
Claims. Within five (5) days after delivery by the Debtor of such
schedule, the Escrow Agent shall deliver to Debtor from the Escrowed
Funds cash in an amount equal to the Bar Date Claims for distribution
to the holders of Bar Date Claims.
(e) All claims against the Debtor's estate other than the Closing
Date Claims, the Pre-Petition Settlements and the Bar Date Claims
constitute "Disputed Claims." From time to time, and to the extent
that any Disputed Claim becomes an Allowed Claim pursuant to a final,
non-appealable Order of the Court ("Other Allowed Claim(s)"), the
Escrow Agent shall deliver to Debtor or the disbursing agent under a
plan of reorganization confirmed in the Debtor's case, as the case may
be, for distribution to the holder(s) thereof, cash and/or a portion
of the VDC Shares having an aggregate value equal to the aggregate
amount of such Other Allowed Claim; and shall disburse to Buyer the
60% Credit (as defined below) on account of each such Other Allowed
Claim.
(f) 60% Credit. The "60% Credit" shall equal 60% of the disallowed
----------
portion of any Disputed Claim and constitute a reduction, from time to
time and prior to the final disbursement provided for in section
3.4(g) below, in Buyer's liability under the Letter of Credit and/or a
payment in cash to Buyer, whichever Buyer may
5
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from time to time elect in writing. In the event Buyer has elected to
receive a reduction in its liability under the Letter of Credit, the
Escrow Agent shall as is necessary to implement paragraph 3.4(g)
hereof, send written notice of the 60% Credit(s) to the financial
institution issuing the Letter of Credit.
(g) Following the entry of an order confirming a plan of
reorganization in the Case that provides for the consummation of the
Amended Purchase Agreement and sale to Buyer, then the Escrow Agent
may disburse not more than one million VDC Shares of the first
allocation of VDC Shares that may be alienated by Debtor pursuant to
Section 7.6 of the Amended Purchase Agreement to Debtor, which VDC
Shares may be liquidated by Debtor, and the proceeds thereof available
to pay administrative expenses or otherwise distributed to creditors
(such VDC Shares shall be referred to as the "Administrative Shares").
(h) After payment of all Closing Date Claims, Pre-Petition
Settlements, Bar Date Claims, and Other Allowed Claims, the Escrow
Agent shall make a final distribution of the Cash Purchase Escrow and
VDC Shares:
(i) To the Buyer: (A) of cash in an amount equal to the sum of
the disallowed amount of Disputed Claims not previously disbursed as
part of the 60% Credit, plus the Cash Portion funded in the Escrow
Account in excess of the cash required to pay the Closing Date Claims,
Bar Date Claims, cash paid under Pre-Petition Settlements, and cash
paid to holders of Other Allowed Claims, plus all interest and other
earnings on the Escrowed Funds, and (B) of the "Returned Shares,"
defined as a portion of the VDC Shares in an amount equal to the
difference between (x) the total amount of the Escrowed Funds
distributed on account of the Closing Date Claims, Bar Date Claims,
Pre-Petition Settlements, Other Allowed Claims and Administrative
Advance, as defined below, and (y) the Indebtedness, plus the fee
incurred by Buyer to obtain the Letter of Credit, divided by the value
of the VDC stock valued consistently with paragraph 14 of the
Procedures Motion; and
(ii) To the Debtor: of all of the VDC Shares remaining after
distribution of the Returned Shares to Buyer and the Administrative
Shares, or portion thereof, to Debtor.
(i) The Escrowed Funds shall comprise in part the amount of
$82,000.00, which amount may be disbursed by the Escrow Agent to the
Debtor from time to time for the payment of administrative claims
("Administrative Advance"). The Administrative Advance may not be
disbursed unless and until an Order is entered by the Bankruptcy Court
approving the Sale Motion and confirming VDC as the Purchaser
thereunder, but may be disbursed prior to Closing under the Amended
Purchase Agreement. Thereafter, the Debtor shall submit advance
requests to the Escrow Agent and Committee (to its counsel) and funds
from the Administrative Advance will be disbursed by the Escrow Agent
to the Debtor in amounts
6
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approved by the Committee, which approval shall not be unreasonably
withheld. The Committee shall be deemed to approve any advance
requests as to which it has not notified the Debtor's counsel and
Escrow Agent of an objection thereto within three (3) business days of
its receipt of any such request.
6. A final order shall be entered approving the Debtor In Possession
Loan, Security and Pledge Agreement between the Debtor and Buyer ("DIP Financing
Agreement"), authorizing Debtor to obtain post-petition financing in the amount
advanced of $18,000.00, and prohibiting VDC from making further advances of
funds or credit thereunder without further order of the Court.
7. The Committee's objections to the DIP Motion and entry of the final
order thereon are hereby withdrawn.
8. Except as expressly modified hereby, the Amended Purchase Agreement,
as amended by the Stipulation and Order in Lieu of Objection dated April 6, 1998
and the Escrow Agreement, Motion, Notice, DIP Financing Agreement and Final
Order on the DIP Financing Agreement shall remain in full force and effect.
9. The Committee hereby waives any and all objections to the Motion,
Notice and approval of the Amended Purchase Agreement by the Court and
confirmation of Buyer as the Successful Bidder and approved purchaser
thereunder.
10. The Debtor shall use its best efforts to review the claims asserted
against the estate and interpose and pursue objects thereto. Any and all
objections to claims shall be filed on or before May 22, 1998.
11. This Stipulation and the approved form of Final Order on the DIP
Motion set forth the entire agreement of the parties hereto with respect to the
subject matter hereof and may be amended only by a writing signed by each party
hereto and approved by the Court.
7
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12. This Stipulation shall inure to and be binding upon the parties hereto
and their respective successor and assigns upon approval hereof by an Order of
the Court.
13. Counsel signing this Stipulation on behalf of the parties hereto each
represent that they have all the requisite authority to bind their client
hereto.
14. This Stipulation may be executed in counterparts.
IN WITNESSETH WHEREOF, the parties hereto through their duly authorized
counsel, have signed this Stipulation the day and year first above written.
PORTACOM WIRELESS, INC.
Dated: April 23, 1998 /s/ Jeffrey Kurtzman
-----------------------------------
By: Jeffrey Kurtzman, Esquire
Special Counsel to PortaCom Wireless, Inc.
VDC CORPORATION, LTD.
Dated: 4/23/98 /s/ Stuart M. Brown
-----------------------------------
By: Kenneth E. Aaron, Esquire
Stuart M. Brown, Esquire
Counsel to VDC Corporation, Ltd.
8
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OFFICIAL COMMITTEE OF UNSECURED CREDITORS
Dated: /s/ Francis Lawall
----------------------------------------
By: Francis Lawall, Esquire
J. Gregg Miller, Esquire
Counsel to Official Committee of Unsecured
Creditors
ESCROW AGENT - KLEHR, HARRISON, HARVEY,
BRANZBURG & ELLERS, LLP
Dated: April 23, 1998 /s/ Jeffrey Kurtzman
----------------------------------------
By: Jeffrey Kurtzman, Partner
APPROVED and so ORDERED, ADJUDGED and DECREED, this 23 day of April, 1998.
/s/ Peter J. Walsh
----------------------------------------
Peter J. Walsh,
United States Bankruptcy Judge
9
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EXHIBIT 2.3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: : Chapter 11
:
PORTACOM WIRELESS, INC., : Case No. 98-661 (PJW)
:
Debtor. :
ORDER AUTHORIZING SALE OF DEBTOR'S
INTEREST IN CERTAIN PROPERTY OF THE
ESTATE FREE AND CLEAR OF LIENS, CLAIMS AND
ENCUMBRANCES PURSUANT TO 11 U.S.C. (S)363(B) AND (F)
AND FEDERAL RULE OF BANKRUPTCY PROCEDURE 6004
---------------------------------------------
Upon the motion of PortaCom Wireless, Inc. (the "Debtor") for an order
pursuant to 11 U.S.C. (S) 363(b) and (f) and Federal Rule of Bankruptcy
Procedure 6004 authorizing the sale of certain of its assets consisting of
2,000,000 shares of common stock (the "MAC Shares") in Metromedia Asia
Corporation ("MAC") and warrants to purchase an additional 4,000,000 shares of
MAC common stock with a strike price of $4.00 per share (the "Warrants") free
and clear of liens, claims and encumbrances (the "Motion"), and an auction with
respect to the MAC Shares and Warrants having been held on April 23, 1998
beginning at 10:00 a.m. at which VDC Corporation, Ltd. ("VDC") submitted the
highest and best offer for the MAC Shares and Warrants, and a hearing on the
Motion having been held on April 23, 1998 at 2:30 p.m. to consider the Motion
(the "Hearing"), and good and sufficient cause appearing for the relief
requested in the Motion, and notice of the Motion having been proper, the Court
makes the following findings:
1. Due and proper notice of the Motion, including notice to MAC, has been
given in accordance with the provisions of 11 U.S.C. (S)363(b) and (f) and
Federal Rules of Bankruptcy
<PAGE>
Procedure 2002, 6004 and 9006(c)(1);
2. An auction to solicit higher or better offers with respect to the MAC
Shares and Warrants was necessary in order to maximize value for the Debtor's
estate.
3. There were no objections or competing bids at the Hearing by any
competing bidders or interested parties to the bidding procedures.
4. VDC's offer (the "Purchase Offer") to purchase the MAC Shares and
Warrants,as reflected in the Motion and as modified by the Stipulation and Order
in Lieu of Objection dated April 6, 1998, the Escrow Agreement, the Stipulation
and Order in Lieu of Objection dated as of April 23, 1998, the final order in
respect of the Debtor's motion for approval of post-petition financing, and on
the record of the Hearing, constitutes the highest and best offer for the MAC
Shares and Warrants within the meaning of 11 U.S.C. (S)363(b) and applicable
law.
5. The entry of this Order and the sale of the MAC Shares and Warrants is
necessary and appropriate to maximize the value of the Debtor's estate.
6. The consideration to be realized by the Debtor's estate pursuant to the
Purchase Offer is fair and reasonable, and in the best interest of the Debtor
and its estate.
7. VDC shall consummate the purchase of the MAC Shares and Warrants as
provided in the Purchase Offer.
8. The Purchase Offer has been made in good faith, VDC is not an insider
within the meaning of 11 U.S.C. (S)101(31) and VDC is a good faith purchaser
within the meaning of 11 U.S.C. (S)363(m).
9. The sale of the MAC Shares and Warrants and the issuance of the VDC
Shares (as hereinafter defined) in connection with the Purchase Offer are being
made under or in connection
<PAGE>
with a plan within the meaning of 11 U.S.C. (S)1145.
IT IS THEREFORE ORDERED, pursuant to 11 U.S.C. (S)(S)363(b), (f) and (k)
and Federal Rule of Bankruptcy Procedure 6004, that the Motion be and hereby is
granted; and it is further
ORDERED, in accordance with the foregoing, that the Debtor be and is hereby
authorized to sell, transfer and convey the MAC Shares and Warrants to VDC free
and clear of all liens, claims, encumbrances, pledges, security interests, and
charges of any kind (collectively, the "Liens") encumbering the MAC Shares and
Warrants; and it is further
ORDERED, that the Liens, if any, shall attach exclusively to the proceeds
resulting from the sale of the MAC Shares and Warrants; and it is further
ORDERED, that in the event that shares of VDC's common stock (the "VDC
Shares") are distributed by the Debtor under a Chapter 11 plan of
reorganization, as contemplated in the Purchase Offer and the Motion, VDC shall
be deemed to be a "successor to the debtor under the plan" for the sole and
limited purpose of acquiring the Debtor's interest in the MAC Shares and
Warrants, and the VDC Shares issued to the Debtor shall be deemed to be in
exchange for claims and interests and shall be exempt from registration pursuant
to 11 U.S.C. (S)1145; and it is further
ORDERED, that notwithstanding the foregoing paragraph, VDC shall not be
deemed a "successor" with respect to any liability of the Debtor unless
specifically assumed by VDC under such plan or otherwise; and it is further
ORDERED, that the Debtor and VDC be, and they hereby are, authorized and
directed to execute any and all documents necessary to consummate and perform
their respective obligations, including, without limitation, instruments of
title, bills of sale and assignments in form reasonably satisfactory to the
Debtor and VDC; and it is further
<PAGE>
ORDERED, that this Order shall be binding upon, and shall inure to the
benefit of the Debtor, the Committee, creditors and VDC and their respective
successors and assigns; and it is further
ORDERED, that MAC be and hereby is authorized and directed to deliver the
MAC Shares to the Debtor and/or VDC prior to the closing of the asset sale in
order to effectuate the Purchase Offer and this Order; and it is further
ORDERED, that the consideration payable by VDC under the Purchase Offer is
approved as being fair and reasonable.
Dated: Wilmington, Delaware
April 23, 1998
/s/ Peter J. Walsh
---------------------------------
PETER J. WALSH,
UNITED STATES BANKRUPTCY JUDGE
<PAGE>
EXHIBIT 10.9
MEMORANDUM OF UNDERSTANDING
by and among
VDC CORPORATION LTD.,
as Buyer,
and
PORTACOM WIRELESS, INC.,
as Seller
and
OFFICIAL COMMITTEE OF UNSECURED CREDITORS
OF PORTACOM WIRELESS, INC.
June 8, 1998
<PAGE>
MEMORANDUM OF UNDERSTANDING
---------------------------
This MEMORANDUM OF UNDERSTANDING (the "MOU") is made as of the 8th day
of June, 1998, by and among VDC CORPORATION LTD., a Bermuda corporation
("Buyer"), PORTACOM WIRELESS, INC., a Delaware corporation ("Seller") and the
OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF PORTACOM WIRELESS, INC. (the
"Committee").
WITNESSETH:
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and conditions hereafter set forth, certain of the assets of Seller as
described herein; and
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase
Agreement, dated as of March 23, 1998 (the "Prior Agreement"), as amended by two
Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and
April 23, 1998, respectively (collectively, the "Stipulations") and by an Escrow
Agreement among Seller, Buyer, the Committee and Klehr, Harrison, Harvey,
Branzburg & Ellers, LLP ("Escrow Agreement"), which Prior Agreement, as amended
(the "Amended Agreement"), superseded in its entirety the Asset Purchase
Agreement between Seller and Buyer dated as of November 25, 1997, as amended as
of February 16, 1998, concerning the subject matter hereof; and
WHEREAS, on March 23, 1998, Seller filed a voluntary petition for
relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") before the United States Bankruptcy Court for the District of Delaware
(or any other tribunal exercising jurisdiction over the Seller and property of
its estate, the "Court"); and
WHEREAS, Seller remains in possession of its property and in control
of its business pursuant to (S)(S) 1107 and 1108 of the Bankruptcy Code; and
WHEREAS, Seller and Buyer are parties to a Loan Agreement, Security
Agreement and Pledge Agreement, entered into on November 10, 1997, whereby Buyer
extended to Seller prior to the commencement of the case the principal sum of
$366,725 (together with all accrued interests, costs and fees, the "Pre-Petition
Indebtedness"); and
WHEREAS, Seller and Buyer are parties to a Debtor In Possession Loan,
Security and Pledge Agreement (the "DIP Financing Agreement"), entered into
after the commencement of the case, and approved by the Court on an interim
basis on April 3, 1998, and by a final order entered on or about April 23, 1998,
as amended by the Stipulations, whereby Buyer agreed to advance to Seller the
principal amount up to an additional $18,000, subject to the terms and
conditions set forth therein (together with all post-petition accrued interests,
costs and fees, the "Post-Petition Indebtedness" and together with the Pre-
Petition Indebtedness, the "Indebtedness"); and
2
<PAGE>
WHEREAS, the transactions contemplated hereby are other than in the
ordinary course of Seller's business and, therefore, require Court approval
pursuant to Bankruptcy Code (S) 363; and
WHEREAS, on or about April 23, 1998, the Court entered an order (the
"Order") approving the execution of the Amended Agreement and the consummation
of the transactions contemplated thereby and hereby; and
WHEREAS, the parties intend for this MOU to consolidate the Prior
Agreement, Stipulations and Escrow Agreement into one document and set forth the
parties' mutual interpretation of the Amended Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and representations and warranties herein contained, and
for other good and legal consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 When used in this MOU, the following terms, in their singular and
plural forms, shall have the meanings assigned to them below:
"Act" means the Securities Act of 1933, as amended.
---
"Allowed Claims" means the pre-petition unsecured claims, as defined
--------------
in Bankruptcy Code (S) 101(5), or portion thereof, that: (a) are allowed
pursuant to a final, non-appealable Order of the Court, or (b) are deemed
allowed pursuant to Bankruptcy Code (S) 1111(a), or (c) are the subject of pre-
petition settlement agreements, or post-petition settlements approved by the
Court, that provide for the payment of cash, in whole or in part, in settlement
and satisfaction thereof, and in such case, the cash portion thereof.
"Amended Agreement" is defined in the recitals to this MOU.
-----------------
"Assets" means all of Seller's right, title and interest in and to all
------
of the following described holdings:
(i) Two million shares of common stock, par value $.01 per share
("MAC Common Stock"), of Metromedia Asia Corporation ("MAC"), predecessor-in-
interest to Metromedia China Corporation, as evidenced by Stock Certificate
Number 59, dated February 28, 1997; and
(ii) Warrants ("MAC Warrants") to purchase four million shares of
common stock, par value $.01 per share, at $4.00 per share, of MAC, as evidenced
by Warrant Number 19.
3
<PAGE>
The term "Assets" shall also include all rights and privileges
pertaining to the MAC Common Stock and MAC Warrants, including, without
limitation, all securities and additional securities receivable in respect of or
in exchange for such securities, all rights to subscribe for securities incident
to or arising from ownership of such securities, all cash, interest, stock and
other dividends or distributions paid or payable on such securities, and
whatever is received when any of the foregoing is sold, exchanged or otherwise
disposed of, including any proceeds as such term is defined in the Uniform
Commercial Code of each state as enacted and in effect on the date hereof in
each applicable jurisdiction, and as the same may subsequently be amended from
time to time.
"Buyer" is defined in the initial paragraph hereof.
-----
"Cash Funds" is defined in Section 3.2(a) hereof.
---------- ------- ------
"Cash Purchase Escrow" means that segregated, interest bearing escrow
--------------------
account established and maintained by the Seller, funded by Buyer, in an amount
equal to $2,682,000. The Cash Purchase Escrow may be funded by any combination
of cash and stand-by letter of credit; provided, however, that the cash portion
shall be in the minimum amount of $1,250,000. The holders of administrative
claims to the extent of $82,000, and the holders of priority unsecured claims
and general unsecured claims shall be the beneficiaries of this fund.
"Claim" means a claim or demand for any and all Liabilities, damages,
-----
losses, obligations, deficiencies, encumbrances, penalties, costs and expenses,
including reasonable attorneys' fees, resulting from, related to or arising out
of (i) any misrepresentation, breach of warranty or non-fulfillment of any
covenant of Seller set forth in the Amended Agreement or in any Related
Document; (ii) Seller's ownership of the Assets; (iii) any and all actions,
suits, investigations, proceedings, demands, assessments, audits, judgments and
claims arising out of any of the foregoing.
"Closing" and "Closing Date" are defined in Section 6.1 hereof.
------- ------------ -----------
"Committee" is defined in the initial paragraph hereof.
---------
"Disclosure Schedule" is defined in Section 4.1 hereof.
------------------- ------------
"Disputed Claims" means any pre-petition, unsecured claim that is not
---------------
an Allowed Claim, by virtue of its being scheduled by the Seller as disputed,
contingent or unliquidated, and proof of which has not been timely filed, or as
to which an objection has been interposed and which is pending as of Closing.
"Escrow Agent" shall mean Klehr, Harrison, Harvey, Branzburg & Ellers
------------
LLP, as escrow agent under the Escrow Agreement.
"Escrow Agreement" is defined in the recitals to this MOU.
----------------
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<PAGE>
"GAAP" means generally accepted accounting principles in the United
----
States, consistently applied.
"Governmental Authority" means any foreign, federal, state, regional
----------------------
or local authority, agency, body, court or instrumentality, regulatory or
otherwise, which, in whole or in part, was formed by or operates under the
auspices of any foreign, federal, state, regional or local government.
"Indemnified Party" is defined in Section 10.4 hereof.
----------------- ------- ----
"Indemnifying Party" is defined in Section 10.4 hereof.
------------------ ------- ----
"Law" means any common law and any federal, state, regional, local or
---
foreign law, rule, statute, ordinance, rule, order or regulation.
"Liabilities" means liabilities, obligations, claims or debts of
-----------
Seller of any type or nature, whether matured, unmatured, contingent or unknown,
including, without limitation, tort, contract or other claims asserted against
Seller which are based on acts or omissions occurring on, before or after the
Closing Date.
"Lien" means any lien, charge, covenant, condition, easement, adverse
----
claim, demand, encumbrance, security interest, option, pledge, or any other
title defect, easement or restriction of any kind.
"MOU" is defined in the initial paragraph hereof.
---
"Purchase Price" is defined in Section 3.1 hereof.
-------------- ------- ---
"Registration Statement" is defined in Section 7.6 hereof.
---------------------- ------- ---
"Related Documents" means the Amended Agreement, Escrow Agreement and
-----------------
each document or instrument executed in connection with the consummation of the
transactions contemplated herein.
"Seller" is defined in the initial paragraph of this MOU.
------
"Settlements" means the pre-petition settlement agreements and post-
-----------
petition settlements approved by the Court which provide for the payment of
securities of Buyer or cash.
"Termination Agreement" means that certain Termination Agreement,
---------------------
dated September 11, 1996, by and among Seller, MAC, as successor-in-interest to
Asian American Telecommunications Corporation and predecessor-in-interest to
Metromedia China Corporation, and Max E. Bobbitt, as Agent.
"VDC Shares" is defined in Section 3.2(b) hereof.
---------- --------------
5
<PAGE>
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Purchase Assets. Subject to the terms and
-------------------------------------
conditions hereof and on the basis of and in reliance upon the covenants,
agreements and representations and warranties set forth herein, on the Closing
Date Seller shall sell the Assets to Buyer, and Buyer shall purchase the Assets
from Seller. The Assets shall be sold, transferred and conveyed by Seller to
Buyer free and clear of any and all claims, Liens, encumbrances and the rights
of others, including, without limitation, any restrictions upon resale under
applicable federal or state securities rules, regulations or laws.
2.2 Responsibility for Liabilities. Buyer shall not assume any Liabilities
------------------------------
of Seller by virtue of the Amended Agreement or otherwise. Notwithstanding
anything herein, in the Amended Agreement or in any Related Document to the
contrary, except as otherwise expressly provided herein, Buyer is neither
assuming nor agreeing to pay or discharge any of the claims against, or
Liabilities or obligations of, the Seller, Seller's bankruptcy estate or of any
other party and nothing in any such document or the Order shall be construed to
the contrary. All claims against, and Liabilities and obligations of Seller, and
Seller's bankruptcy estate, whether known or unknown, suspected or unsuspected,
direct or contingent, in litigation, threatened or not yet asserted or existing
with respect to any aspect of the Assets, Seller's bankruptcy case or estate, or
the Amended Agreement, arising or existing prior to or on the Closing Date are
and shall remain the responsibility of Seller and Seller's bankruptcy estate,
and such Liabilities or obligations arising after Closing with respect to any
aspect of the Assets shall be the responsibility of the Buyer. The Order entered
by the Court approving the Amended Agreement specifically provides that the
Buyer is not liable for pre-Closing claims, Liabilities or obligations and is
not liable as a successor-in-interest to creditors of Seller or Seller's
bankruptcy estate.
ARTICLE 3
PAYMENT OF THE PURCHASE PRICE
3.1 Purchase Price. The purchase price ("Purchase Price") for the Assets
--------------
shall consist of (i) the Administrative Advance (as such term is defined in
Section 3.4(i) below), (ii) the Closing Purchase Price (as such term is defined
in Section 3.2 below) and (iii) the Deferred Purchase Price (as such term is
defined in Section 3.5 below), if any.
3.2 Closing Purchase Price. The Closing Purchase Price (the "Closing
----------------------
Purchase Price") shall be paid or delivered by Buyer at or before Closing in the
following manner:
(a) Subject to adjustment pursuant to Section 3.4 hereof, Buyer has
delivered the Cash Purchase Escrow (the "Cash Funds") to the Escrow Agent for
the benefit of Seller and Buyer; and
(b) At Closing, subject to adjustment provided for in Section 3.4
hereof, Buyer shall deliver to the Escrow Agent 5,300,000 newly issued shares of
common stock, par
6
<PAGE>
value $2.00 per share, of Buyer in accordance with the provisions of Sections
3.3 and 7.7 hereof (the "VDC Shares"). After Closing, the number of VDC Shares
to be issued to Seller, and subsequently transferred to Seller's creditors and
equity security holders, in consideration hereof shall equal the difference
between (i) 5,300,000 and (ii) the difference between the principal amount of
the Cash Purchase Escrow delivered to Seller (subject to and in accordance with
the terms of Section 3.4 hereof) and the Indebtedness, divided by the value of
the Buyer's stock valued consistently with paragraph 14 of the Motion to (A) to
Establish Bidding Procedures and Approve a Break-Up Fee in Connection with the
Sale of the Debtor's Interest in Certain Property of the Estate and (B) to
Approve the Form and Manner of Notice, dated March 23, 1998, which is attached
hereto as Exhibit "B" (the "Procedures Motion"). For example, if the funds of
the Cash Purchase Escrow delivered to Seller are in the amount of $1,400,000,
the Indebtedness is $400,000 and the value of the VDC Shares is $6.00, the
number of VDC Shares to be issued to Seller is equal to 5,133,334 shares
(5,300,000 - ((1,400,000 - 400,000)/6)); and
(c) Post Closing and after Buyer has received from the Escrow Agent
that portion of the Cash Purchase Escrow, together with all accrued interest and
other earnings thereon, as well as the Returned Shares (as such term is defined
in Section 3.4(h)(i) hereof), pursuant to Sections 3.4(e), (f) and (h) hereof
and Section 8(b) of the Escrow Agreement, Buyer shall, within fifteen (15)
business days thereafter, mark the notes evidencing the Indebtedness satisfied
and deliver the same to Seller.
3.3 Distribution of VDC Shares. In addition to Section 7.6 and subject to
--------------------------
Section 7.7, Seller shall retain the VDC Shares delivered from the Escrow Agent
until such time as an transfer or other disposition of such shares occurs to
Seller's creditors and stockholders pursuant to (a) a confirmed plan of
reorganization providing for the transfer of the VDC Shares pursuant to the
exemption set forth in Bankruptcy Code (S) 1145, or (b) an effective
Registration Statement in accordance with the provisions of Section 7.6 hereof.
3.4 Closing and Post-Closing Adjustments of Cash Purchase Escrow and VDC
--------------------------------------------------------------------
Shares.
- -------
(a) Forgiveness of the Indebtedness shall constitute a portion of the
Closing Purchase Price, and, as such, shall be applied towards the Closing
Purchase Price under the Amended Agreement upon or after the Closing Date, as
the case may be.
(b) At or before Closing, the Seller shall deliver to the Escrow
Agent a schedule containing the amounts and names of the holders of all priority
unsecured and general unsecured claims for which, as of the Closing Date,
proof(s) of claim have been filed in the scheduled or a lesser amount ("Closing
Date Claims"). At Closing, the Escrow Agent shall deliver to Seller from the
Cash Funds an amount equal to the Closing Date Claims for distribution to the
holders of Closing Date Claims pursuant to further order of the Court.
(c) Upon the later of (i) Closing or (ii) the entry of a final, non-
appealable Order by the Court approving or ratifying the Settlements, or
otherwise authorizing a settlement and compromise upon the terms of, the
Settlements, including an Order confirming a plan of
7
<PAGE>
reorganization providing for such approval, ratification, or authorization, the
Escrow Agent shall deliver to Seller or the disbursing agent under such plan, as
the case may be, cash and a portion of the VDC Shares in an amount equal to that
to be distributed pursuant to the Settlements. The consideration payable to
third parties to any Settlement shall be deemed to constitute an Allowed Claim
having a value in the amount of such consideration. In the event Seller fails to
obtain a final, non-appealable Order approving or ratifying any of the
Settlements, or otherwise authorizing a settlement and compromise upon the terms
of such Settlement, then any resulting claim asserted against the Seller's
bankruptcy estate shall constitute a Disputed Claim and be treated in accordance
with paragraph 3.4(e) below.
(d) Upon the later of (i) Closing or (ii) within seven (7) days after
May 15, 1998 (the "Bar Date"), Seller shall deliver to the Escrow Agent, Buyer
and the Committee a schedule containing the amounts and names of holders of all
claims, other than the Closing Date Claims, as to which, as of the Bar Date, are
scheduled by the Seller as fixed and liquidated, unsecured claims against the
Seller's bankruptcy estate and for which no proof(s) of claim has been filed or
for which proof(s) of claim have been filed in the scheduled or a lesser amount
than that which was scheduled by the Seller (collectively, the "Bar Date
Claims"). The Bar Date Claims shall be deemed to constitute Allowed Claims.
Within five (5) days after delivery by the Seller of such schedule, but not
before Closing, the Escrow Agent shall deliver to Seller from the Cash Funds an
amount equal to the Bar Date Claims for distribution to the holders of Bar Date
Claims pursuant to further order of the Court.
(e) All claims against the Seller's bankruptcy estate other than the
Closing Date Claims, claims resolved through the Settlements and the Bar Date
Claims constitute "Disputed Claims." From time to time after Closing, and to
the extent that any Disputed Claim becomes an Allowed Claim pursuant to a final,
non-appealable Order of the Court ("Other Allowed Claim(s)"), the Escrow Agent
shall deliver to Seller or the disbursing agent under a plan of reorganization
confirmed in the Seller's case, as the case may be, for distribution to the
holder(s) thereof, cash and/or a portion of the VDC Shares having an aggregate
value equal to the aggregate amount of such Other Allowed Claim pursuant to
further order of the Court; and shall disburse to Buyer the 60% Credit without
further order of the Court (as defined in Section 3.4(f) below) on account of
each such Other Allowed Claim.
(f) 60% Credit. The "60% Credit" shall equal 60% of the disallowed
----------
portion of any Disputed Claim and constitute a reduction, from time to time and
prior to the final disbursement provided for in section 3.4(g) below, in Buyer's
liability under the standby letter of credit used to fund the Cash Purchase
Escrow (the "Letter of Credit") and/or a payment in cash to Buyer, whichever
Buyer may from time to time elect in writing (Buyer, having funded the Cash
Purchase Escrow in full in cash is deemed to elect a payment in cash to Buyer of
the 60% Credit). In the event Buyer has elected to receive a reduction in its
liability under the Letter of Credit, the Escrow Agent shall as is necessary to
implement Section 3.4(g) hereof, send written notice of the 60% Credit(s) to the
financial institution issuing the Letter of Credit.
(g) Upon the later of (i) Closing or (ii) following the entry of an
order confirming a plan of reorganization in the Case that provides for the
consummation of the Amended
8
<PAGE>
Agreement and sale of the Assets to Buyer, then the Escrow Agent may disburse to
Seller not more than one million VDC Shares of the First Series of VDC Shares,
as defined in Section 7.7(a)(i) below, that may be alienated by Seller pursuant
to Sections 7.6 and 7.7 hereof, which VDC Shares may be liquidated by Seller,
and the proceeds thereof available to pay administrative expenses or otherwise
distributed to creditors (such VDC Shares shall be referred to as the
"Administrative Shares").
(h) After payment of all Closing Date Claims, Settlements, Bar Date
Claims, and Other Allowed Claims, the Escrow Agent shall make a final
distribution of the Cash Purchase Escrow and VDC Shares:
(i) To the Buyer: (A) of cash in an amount equal to the sum
of the disallowed amount of Disputed Claims not previously disbursed as part of
the 60% Credit, plus the Cash Portion funded in the Escrow Account in excess of
the cash required to pay the Closing Date Claims, Bar Date Claims, cash paid
under Settlements, and cash paid to holders of Other Allowed Claims, plus all
interest and other earnings on the Cash Funds, and (B) of the "Returned Shares,"
defined as a portion of the VDC Shares in an amount equal to the difference
between (x) the total amount of the Cash Funds distributed on account of the
Closing Date Claims, Bar Date Claims, Settlements, Other Allowed Claims and
Administrative Advance, as defined below, and (y) the Indebtedness, plus the fee
incurred by Buyer to obtain the Letter of Credit, divided by the value of the
shares of stock of Buyer valued consistently with paragraph 14 of the Procedures
Motion; and
(ii) To the Seller: of all of the VDC Shares remaining after
distribution of the Returned Shares to Buyer and the Administrative Shares, or
portion thereof, to Seller.
(i) The Cash Funds shall comprise in part the amount of $82,000.00,
which amount may be disbursed by the Escrow Agent to the Seller from time to
time for the payment of administrative claims ("Administrative Advance"). The
Administrative Advance may be disbursed as a result of the entry of the Order,
and may be disbursed prior to Closing under the Amended Agreement, as a non-
refundable deposit on account of the Closing Purchase Price. Thereafter, the
Seller shall submit advance requests to the Escrow Agent and legal counsel for
the Committee and funds from the Administrative Advance will be disbursed by the
Escrow Agent to the Seller in amounts approved by the Committee, which approval
shall not be unreasonably withheld, subject to all terms of the Escrow
Agreement. The Committee shall be deemed to approve any advance requests as to
which it has not notified the Seller's counsel and Escrow Agent of an objection
thereto within three (3) business days of its receipt of any such request.
3.5 Deferred Purchase Price.
-----------------------
(a) For the purposes of this Section 3.5, the terms listed below
shall have the following meanings:
9
<PAGE>
(i) "MAC Base Price" means $12.00 per share for each share of
MAC common stock;
(ii) "MAC Market Price" means
(A) If MAC's common stock is traded in the over-the-counter
market and not on any national securities exchange or in the NASDAQ Reporting
System, the market price shall be the average of the mean between the last bid
and ask prices per share, as reported by the National Quotation Bureau, Inc. or
an equivalent generally accepted reporting service, for the consecutive 20
trading days following the one year anniversary of the Closing Date, or if not
so reported, the average of the closing bid and asked prices for a share of MAC
common stock for the consecutive 20 trading days following the one year
anniversary of the Closing Date as furnished to MAC by any member of the
National Association of Securities Dealers, Inc., selected by MAC for that
purpose.
(B) If MAC's common stock is traded on a national
securities exchange or in the NASDAQ Reporting System, the market price shall be
the simple average of the closing prices of a share of MAC's common stock, as
quoted on the NASDAQ Reporting System or its other principal exchange for the
consecutive 20 trading days following the one year anniversary of the Closing
Date.
(C) If the market price cannot be determined by MAC's
common stock on such date on either of the foregoing bases, the market price
shall be the fair market value as reasonably determined by an investment banking
firm selected by Seller and Buyer, with the cost therefor to be borne equally by
Seller and Buyer.
(iii) "VDC Base Price" means $5.00 per share for each share of
VDC common stock; and
(iv) "VDC Market Price" means
(A) If VDC's common stock is traded in the over-the-counter
market and not on any national securities exchange nor in the NASDAQ Reporting
System, the market price shall be the average of the mean between the last bid
and ask prices per share, as reported by the National Quotation Bureau, Inc. or
an equivalent generally accepted reporting service, for the consecutive 20
trading days following the one year anniversary of the Closing Date, or if not
so reported, the average of the closing bid and asked prices for a share of VDC
common stock for the consecutive 20 trading days following the one year
anniversary of the Closing Date as furnished to VDC by any member of the
National Association of Securities Dealers, Inc., selected by VDC for that
purpose.
(B) If VDC's common stock is traded on a national
securities exchange or in the NASDAQ Reporting System, the market price shall be
the simple average of the closing prices at which a share of VDC's common stock
traded, as quoted on the NASDAQ
10
<PAGE>
Reporting System or its other principal exchange for the consecutive 20 trading
days following the one year anniversary of the Closing Date.
(C) If the market price cannot be determined by VDC's common
stock on such date on either of the foregoing bases, the market price shall be
the fair market value as reasonably determined by an investment banking firm
selected by Seller and Buyer, with the cost therefor to be borne equally be
Seller and Buyer.
(b) In the event that on the one year anniversary of the Closing
Date, MAC is a publicly held company whose shares are registered with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended (the "1934 Act"), Buyer shall pay and deliver to Seller the
Deferred Purchase Price (the "Deferred Purchase Price") calculated in accordance
with Section 3.5(c) below, if any, within ninety (90) days following the one
year anniversary of the Closing Date. The Deferred Purchase Price shall be paid,
at VDC's sole option, in either (i) immediately available funds in the form of
cash, cashier's check or wire transfer, or (ii) shares of VDC common stock. In
the event that VDC elects to pay the Deferred Purchase Price in the form of
shares of VDC common stock (the "Deferred Purchase Price Shares"), the value of
such stock for the purposes of such determination, shall be computed at the
higher of $5.00 per share or the VDC Market Price per share. The following
registration rights shall apply with respect to the resale of the Deferred
Purchase Price Shares by Seller:
(i) The Buyer shall advise the Seller by written notice prior to
the filing of a registration statement under the Act (excluding registration on
Forms S-8, S-4, or any successor forms thereto), covering securities of the
Buyer to be offered and sold by the Buyer to the public generally and shall,
upon the request of the Seller given at least seven (7) business days prior to
the filing of such registration statement, include in any such registration
statement such information as may be required to permit a public offering of the
Deferred Purchase Price Shares. The Buyer shall supply prospectuses, qualify the
Deferred Purchase Price Shares for sale in such states as the Buyer qualified
its securities and furnish indemnification in the manner as set forth in
subsection (ii)(B) of this Section 3.5(b); provided, however, that the Buyer
-----------------
will not be required to maintain the registration of the Deferred Purchase Price
Shares for any longer period than it shall require for its own purposes. The
Seller shall furnish such information as may be reasonably requested by the
Buyer in order to include such Deferred Purchase Price Shares in the
registration statement. The Buyer need not include the resale of the Deferred
Purchase Price Shares in any underwritten offering; the sole obligation of the
Buyer being to include the resale of such shares in a registration statement,
not to ensure their method of distribution. Towards that end, the Buyer shall
have no obligation whatsoever to (a) assist or cooperate in the offering or
disposition of the Deferred Purchase Price Shares; (b) obtain a commitment from
an underwriter relative to the sale of the Deferred Purchase Price Shares; or
(c) include the Deferred Purchase Price Shares within an underwritten offering
of the Buyer. In the event that any registration pursuant to this Section
3.5(b) shall be, in whole or in part, an underwritten public offering of common
stock of Buyer, the number of Deferred Purchase Price Shares to be included in
such underwriting may be reduced (and the registration of such Deferred Purchase
Price Shares may be postponed by the Buyer for up to 180 days following the
completion of any such underwritten offering) if and to the extent the managing
underwriter shall be of the opinion
11
<PAGE>
that such inclusion would adversely affect the marketing of the securities to be
sold by the Buyer therein. Notwithstanding the foregoing, the Buyer may withdraw
any registration statement referred to in this Section 3.5(b) without thereby
incurring liability to the Seller.
(ii) The following provisions of this Section 3.5(b) shall also
be applicable:
(A) The Buyer shall bear the entire cost and expense of any
registration of securities initiated by it under subsection (i) of this Section
3.5(b) notwithstanding that Deferred Purchase Price Shares may be included in
any such registration. The Seller shall, however, bear the fees of its own
counsel and any registration fees, transfer taxes or underwriting discounts or
commissions applicable to the Deferred Purchase Price Shares sold by it pursuant
to any registration statement pursuant to this Section 3.5(b) and bear any other
costs imposed by applicable federal or state securities laws, rules or
regulations.
(B) The Buyer shall indemnify and hold harmless the Seller
and each underwriter, within the meaning of the Act, who may purchase from or
sell for the Seller any Deferred Purchase Price Shares from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under the Act filed by or at the direction of the Buyer or any
prospectus included therein required to be filed or furnished by reason of this
Section 3.5(b) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims damages or
liabilities are caused by any such untrue statement or omission or alleged
omission based upon information furnished or required to be furnished in writing
to the Buyer by the Seller or underwriter expressly for use therein, which
indemnification shall include each person, if any, who controls any such
underwriter within the meaning of such Act; provided, however, that the Buyer
-----------------
shall not be obliged so to indemnify the Seller or underwriter or controlling
person unless the Seller or underwriter shall at the same time indemnify the
Buyer, its directors, each officer signing the related registration statement
and each person, if any, who controls the Buyer within the meaning of such Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or any prospectus required to be filed or furnished
by reason of this Section 3.5(b) or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Buyer by the Seller or underwriter
expressly for use therein.
(c) The Deferred Purchase Price shall be calculated in accordance
with the following formula:
MAC Market Price - VDC Market Price x $5,000,000
----------------- ----------------
MAC Base Price VDC Base Price
12
<PAGE>
For example, assuming that the MAC Market Price is $13.20, and the VDC
Market Price is $5.00, the Deferred Purchase Price would equal (10% - 0%) x
($5,000,000) = $500,000.
If the number calculated from the above formula is negative, there is no
Deferred Purchase Price.
(d) Notwithstanding anything to the contrary contained herein, in the
event that on the one year anniversary of the Closing Date, MAC is not a
publicly held company whose shares are registered with the SEC under the 1934
Act, Buyer shall have no obligation to pay the Deferred Purchase Price.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Disclosure Schedule. Seller has delivered or caused to be delivered to
-------------------
Buyer, prior to the execution of this MOU, disclosure schedules, and documents
relating thereto, which include the numbered schedules specifically referred to
in this MOU and which are attached hereto (collectively, the "Disclosure
Schedule"). To the best of Seller's knowledge, the information contained in the
Disclosure Schedule is complete and accurate in all material respects and all
documents that are attached to the Disclosure Schedule are complete and accurate
copies of the genuine original documents they purport to represent as in effect
on the date hereof. Capitalized terms used in the Disclosure Schedule and not
otherwise defined therein have the meanings ascribed to such terms in this MOU.
4.2 Organization and Standing of Seller. Seller is a corporation duly
-----------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Subject only to approval by the Court, Seller has all requisite
corporate power and authority to sell the Assets, free and clear of any and all
Liens, including, without limitation, any restrictions upon resale under
applicable federal or state securities rules, regulations or laws. A certified
copy of Seller's Articles of Incorporation and Bylaws are attached to Schedule
--------
4.2 of the Disclosure Schedule.
- ---
4.3 Encumbrances Created by the Amended Agreement. The execution and
---------------------------------------------
delivery of the Amended Agreement and each of the Related Documents does not,
and the consummation of the transactions contemplated hereby or thereby will not
create (i) any Liens on any assets (including the Assets) of Seller in favor of
third parties, or (ii) any restrictions upon resale of the Assets under
applicable federal or state securities rules, regulations or laws.
4.4 Title to Assets. Seller and Seller's bankruptcy estate own and hold
---------------
of record the entire right, title and interest in and to all of the Assets, free
and clear of any and all Liens, including, without limitation, any restrictions
upon resale under applicable federal or state securities rules, regulations or
laws, except the Liens held by Buyer and interests held by MAC which are to be
released upon the Closing.
13
<PAGE>
4.5 VDC Shares to Be Transferred Pursuant to Plan or Constitute Restricted
----------------------------------------------------------------------
Securities. Seller represents and warrants: (I) (a) that it has prepared and
- ----------
filed a plan of reorganization and disclosure statement pertaining thereto
within the original period fixed by (S) 1121(b) of the Bankruptcy Code, (b) that
the Amended Agreement, the transactions contemplated thereby and the
distribution of the VDC Shares are and will be under and in accordance with such
plan as contemplated by (S) 1145 of the Bankruptcy Code, or (II) upon Seller's
failure to obtain a declaration from the Court that the offer, sale or transfer
of the VDC Shares is exempt from registration pursuant to Bankruptcy Code (S)
1145 in accordance with a plan of reorganization, (a) that it has reviewed the
annual and periodic reports of Buyer, as filed by Buyer with the SEC pursuant to
the Securities Exchange Act of 1934, and that it has such knowledge and
experience in financial and business matters that it is capable of utilizing the
information set forth therein concerning Buyer to evaluate the risks of
investing in the VDC Shares; (b) that it has been advised that the VDC Shares to
be issued by Buyer constitute "restricted securities" as defined in Rule 144
promulgated under the Securities Act, and accordingly, have not been and will
not be registered under the Securities Act except as otherwise set forth in the
Amended Agreement, and, therefore, it may not be able to sell or otherwise
dispose of such VDC Shares except if the VDC Shares are subject to an effective
Registration Statement filed with the SEC, in compliance with Rule 144 or
otherwise pursuant to an exemption from registration under the Act; (c) that the
VDC Shares so issued are being acquired by them for their own benefit and on
their own behalf for investment purposes and not with a view to, or for sale or
for resale in connection with, a public offering or re-distribution thereof,
except in accordance with and pursuant to a confirmed plan of reorganization and
confirmation order entered by the Court; (d) that the VDC Shares so issued will
not be resold (i) without registration thereof under the Securities Act (unless
an opinion of counsel acceptable to VDC, or to Buyer, an exemption from such
registration is available), (ii) in violation of any law; and (e) that the
certificate or certificates representing the VDC Shares to be issued will be
imprinted with a legend in form and substance as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION,
OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION,
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON
AN OPINION LETTER OF COUNSEL FOR THE COMPANY OR A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.
and Buyer is hereby authorized to notify the transfer agent of the status of the
VDC Shares, and to take such other action including, but not limited to, the
placing of a "stop transfer" order on the books and records of Buyer's transfer
agent to ensure compliance with the foregoing and Sections 7.6 and 7.7 hereof.
4.6 Brokers' Fees. No broker, finder or other person or entity acting in a
-------------
similar capacity has participated on behalf of Seller in connection with the
transactions contemplated by
14
<PAGE>
the Amended Agreement. Seller has not incurred any Liability for brokers' fees,
finders' fees, agents' commissions or other similar forms of compensation in
connection with the Amended Agreement or the transactions contemplated thereby.
4.7 Avoidance. The transactions contemplated hereby are not subject to
---------
avoidance as fraudulent transfers or fraudulent conveyances under applicable
non-bankruptcy law or the Bankruptcy Code.
4.8 Fair Value. Seller acknowledges and agrees that the Purchase Price
----------
constitutes fair, adequate and reasonably equivalent consideration in exchange
for the Assets.
4.9 Settlements. To the best of Seller's knowledge, the Settlements are
-----------
enforceable in Seller's bankruptcy case, and Seller will vigorously attempt to
enforce them in Seller's Chapter 11 bankruptcy case, to the extent necessary.
4.10 Full Disclosure. No representation or warranty by Seller in the
---------------
Amended Agreement or this MOU and no statement contained in any Disclosure
Schedule to the Amended Agreement or this MOU contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are
made, not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization and Standing of Buyer. Buyer is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Bermuda.
5.2 Authorization and Enforceability. Buyer has all requisite corporate
--------------------------------
power and authority to enter into the Amended Agreement and the Related
Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. All
necessary and appropriate action has been taken by Buyer with respect to the
execution and delivery of the Amended Agreement and each of the Related
Documents and the performance of its obligations hereunder and thereunder. The
execution and delivery of the Amended Agreement and the Related Documents and
the consummation of the contemplated transactions by Buyer will not (a) result
in the breach of any of the terms or conditions of, or constitute a default
under, the Memorandum of Association or the Bye-Laws of Buyer or (b) violate any
Law or any order, writ, injunction or decree of any Governmental Authority. The
Amended Agreement and any Related Documents to which Buyer is a party constitute
valid and binding obligations of Buyer enforceable against Buyer in accordance
with their respective terms.
5.3 VDC Shares. The VDC Shares delivered by Buyer at Closing will be
----------
validly and legally issued, free and clear of any and all Liens, and will be
fully paid and non-assessable. The
15
<PAGE>
VDC Shares constitute "restricted securities" as such term is defined in Rule
144 under the Act and may not be subsequently offered, sold or transferred
without registration under the Act except pursuant to Bankruptcy Code (S) 1145
or pursuant to an exemption from registration under the Act. The VDC Shares are
also subject to the restrictions on resale set forth in Section 7.7 hereof.
5.4 Approval. The Board of Directors of the Buyer has approved the
--------
execution of the Amended Agreement and the transactions contemplated thereby.
5.5 Brokers' Fees. Buyer has not incurred any liability for brokers'
-------------
fees, finders' fees, agents' commissions or other similar form of compensation
in connection with the Amended Agreement and the transactions contemplated
hereby for which Seller shall have any responsibility.
5.6 Full Disclosure. No representation or warranty by Buyer in this MOU
---------------
or the Amended Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading.
ARTICLE 6
CLOSING
6.1 Closing. Subject to satisfaction or waiver of all conditions
-------
precedent set forth in Articles 8 and 9 of the Amended Agreement, the closing of
the transactions contemplated by the Amended Agreement (the "Closing") shall
take place at the offices of Buchanan Ingersoll Professional Corporation, at
10:00 a.m., local time the day on which the last of the conditions precedent set
forth in either Article 8 or 9 of the Amended Agreement is fulfilled (the
"Closing Date") or at such other time, date and place as the parties may agree,
but in no event shall such date be later than July 1, 1998.
6.2 Obligations of Seller. At or prior to the Closing, Seller shall
---------------------
deliver to Buyer, in each case, in form and substance satisfactory to Buyer:
(a) a newly issued share certificate issued in the name of Buyer, free
of any restriction on transfer thereof, representing 2,000,000 shares of common
stock, par value $.01 per share, of Metromedia China Corporation;
(b) a newly issued warrant certificate issued in the name of Buyer,
free of any restriction on transfer thereof, representing the right to purchase
4,000,000 shares of common stock, par value $.01 per share, of Metromedia China
Corporation, at $4.00 per share;
(c) a written release by all of the parties to the Termination
Agreement agreeing to the release of the MAC Common Stock to the Buyer;
16
<PAGE>
(d) written evidence from MAC confirming that, as of the Closing Date,
no part of the Assets pledged as collateral under the Termination Agreement has
been sold, assigned, transferred or otherwise disposed of or subject to any
action for any of the foregoing (other than the transaction contemplated in the
Amended Agreement), and that, as of the Closing Date, neither MAC nor its parent
corporation, Metromedia International Group, Inc., contemplates taking any of
the foregoing actions;
(e) such other instruments of transfer as shall be necessary or
appropriate to vest in the Buyer good and marketable title to the Assets;
(f) such other documents as may be described in Article 8 of this MOU;
---------
and
(g) a certified copy of the Order approving the Amended Agreement and
authorizing Seller to consummate the transactions contemplated hereby and all
certifications of service and publication filed in connection therewith.
6.3 Obligations of Buyer. At the Closing, Buyer shall deliver:
--------------------
(a) the Purchase Price in accordance with Article 3 of this MOU;
---------
(b) such other documents as may be described in Article 9 of this MOU;
---------
and
(c) the Deferred Purchase Price Note.
6.4 Further Documents or Necessary Action. Buyer and Seller each agree to
-------------------------------------
take all such further actions on or after the Closing Date as may be necessary,
desirable or appropriate in order to confirm or effectuate the transactions
contemplated by this MOU and the Amended Agreement.
ARTICLE 7
COVENANTS AND AGREEMENTS
Seller covenants to and agrees with Buyer, and Buyer covenants to and
agrees with Seller, as follows:
7.1 Conduct of Business Pending the Closing. During the period from the
---------------------------------------
date of the Amended Agreement to the Closing Date, Seller shall conduct its
business operations in the ordinary and usual course and to maintain its records
and books of account in a manner consistent with prior periods. Seller shall,
without purporting to make any commitment on behalf of Buyer, exercise
reasonable efforts to preserve intact the present business organization and
personnel of Seller and the present goodwill of Seller with persons having
business dealings with them. Except as otherwise required or contemplated
hereby, Seller further covenants and agrees that, from the date of the Amended
Agreement to the Closing Date, it shall not, without the written consent of
Buyer:
17
<PAGE>
(a) enter into any negotiations, discussions or agreements
contemplating, affecting or respecting the Assets or Seller's ability to
transfer the Assets;
(b) enter into any negotiations, discussions or agreements
contemplating or respecting the acquisition of Seller or any material asset
thereof (other than in the ordinary course of business), whether through a sale
of stock, a merger or consolidation, the sale of all or substantially all of the
assets of Seller, any type of recapitalization or otherwise, with the exception
of the Seller's interest in and to its Cambodian venture, the disposition of
which has been discussed with the Buyer;
(c) incur any Liabilities or take any action that would diminish the
value of the Assets;
(d) take any action which would interfere with or prevent performance
of this MOU or the Amended Agreement; or
(e) engage in any activity or enter into any transaction which would
be inconsistent in any respect with any of the representations, warranties or
covenants set forth in this MOU or the Amended Agreement as if such
representations, warranties and covenants were made at a time subsequent to such
activity or transaction and all references to the date of this MOU or the
Amended Agreement, as the case may be, were deemed to be such later date.
7.2 Access By Buyer; Confidentiality. During the period from the date of
--------------------------------
the Amended Agreement to the Closing Date, Seller shall cause Buyer, its agents
and representatives to be given full access during normal business hours to the
premises, buildings, offices, books, records, assets (including the Assets),
Liabilities, operations, contracts, files, personnel, financial and tax
information and other data and information of Seller, and shall cooperate with
Buyer in conducting its due diligence investigation of Seller; provided that
--------
such access shall not unreasonably interfere with the normal operations and
employee relationships of Seller. All information provided to or learned by
Buyer as a result of such access or otherwise in connection with the
transactions contemplated by this MOU and the Amended Agreement shall be held in
confidence, except as otherwise disclosed by Seller in its bankruptcy case.
7.3 Access By Seller; Confidentiality. During the period from the date of
---------------------------------
the Amended Agreement to the Closing Date, Buyer shall cause Seller, its agents
and representatives to be given full access during normal business hours to the
premises, buildings, offices, books, records, assets, liabilities, operations,
contracts, files, personnel, financial and tax information and other data and
information of Buyer, and shall cooperate with Seller in conducting its due
diligence investigation of Buyer; provided that such access shall not
--------
unreasonably interfere with the normal operations and employee relationships of
Buyer. Buyer shall provide Seller with copies of all reports and/or findings
made with the SEC from the date hereof through the Closing. All information
provided to or learned by Seller as a result of such access or otherwise in
connection with the transactions contemplated by this MOU and the Amended
Agreement shall be held in confidence.
18
<PAGE>
7.4 Notice of Breach or Failure of Condition. Seller and Buyer agree to
----------------------------------------
give prompt notice to the other of the occurrence of any event or the failure of
any event to occur that might preclude or interfere with the timely satisfaction
of any condition precedent to the obligations of Seller or Buyer under the
Amended Agreement.
7.5 Best Efforts. Seller and Buyer shall use their respective best efforts
------------
to obtain all consents or approvals necessary to bring about the satisfaction of
the conditions required to be performed, fulfilled or complied with by them
pursuant to the Amended Agreement and to take or cause to be taken all action,
and to do or cause to be done all things, necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
by the Amended Agreement as expeditiously as practicable.
7.6 Resales and Transfers of VDC Shares. Buyer and Seller contemplate
-----------------------------------
that an offer and sale of the VDC Shares to Seller and any resale or transfer
thereof by or on behalf of Seller will be exempt from registration by virtue of
Section 1145 of the Bankruptcy Code. Buyer agrees that, to the extent, and only
to the extent, that an offer, sale, resale or transfer of the VDC Shares is
subject to the registration requirements of the Act, then within forty-five (45)
days after the entry of an order of the Court confirming a plan of
reorganization of the Seller, Buyer shall, at its sole expense, file with the
SEC a registration statement (the "Registration Statement") which shall register
the offer, sale, resale, transfer or distribution of the VDC Shares from VDC to
PortaCom, and by or on behalf of PortaCom to its stockholders and creditors
pursuant to such a plan, thereafter shall use its best efforts to cause such
Registration Statement to become effective in accordance with the requirements
of the Act and to remain effective until the earlier of (i) one year after the
date such Registration Statement becomes effective or (ii) PortaCom has
transferred and distributed the VDC Shares in accordance with such plan of
reorganization.
7.7 Restrictions on Resale of VDC Shares.
------------------------------------
(a) Resale of the VDC Shares, regardless of whether such shares may
be sold, offered or transferred by Seller pursuant to Section 1145 of the
Bankruptcy Code or pursuant to an effective registration statement filed
pursuant to Section 7.6 above, shall be subject to the following additional
limitations:
(i) 25% of the VDC Shares, inclusive of the Administrative
Shares disbursed pursuant to Section 3.4(g) above (the "First
Series"), may only be sold, offered or transferred upon the earlier of
(A) confirmation of a plan of reorganization of Seller providing an
exemption from the registration requirements of the Act Section 1145
of the Bankruptcy Code or (B) the effectiveness of the Registration
Statement provided in Section 7.6 above (the "First Resale Date");
(ii) 25% of the VDC Shares (the "Second Series") may only be
sold, offered or transferred upon the six month anniversary of the
First Resale Date; and
19
<PAGE>
(iii) the remaining 50% of the VDC Shares (the "Third Series")
may only be sold, offered or transferred upon the one year anniversary
of First Resale Date.
(b) Notwithstanding the rights granted hereunder, Buyer shall have no
obligation whatsoever to:
(i) assist or cooperate in the offering or disposition of the
VDC Shares;
(ii) indemnify or hold harmless the holders of the VDC Shares or
any underwriter designated by such security holders;
(iii) obtain a commitment from an underwriter relative to the
sale of the VDC Shares; or
(iv) include the VDC Shares within an underwritten offering of
Buyer.
(c) The VDC Shares representing the First Series (which shall include
the Administrative Shares) distributed to Seller and its stockholders shall bear
the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON RESALE AS SET FORTH IN SECTION 7.6(a)(i)
OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998
BETWEEN THE COMPANY AND PORTACOM WIRELESS, INC. ("PORTACOM"),
AS AMENDED, AND SECTION 7.7(a)(i) OF A CERTAIN MEMORANDUM OF
UNDERSTANDING ("MOU") DATED JUNE 8, 1998 BETWEEN THE COMPANY,
PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS OF PORTACOM
(COLLECTIVELY, THE "AGREEMENT"). THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON RESALE AS
SET FORTH IN SECTION 7.7(a)(i) OF A CERTAIN AMENDED AGREEMENT,
DATED JUNE 8, 1998, AMONG THE COMPANY, PORTACOM WIRELESS, INC.
AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF PORTACOM
WIRELESS, INC. (THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY
BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE
AGREEMENT, WHICH PROHIBITS THE SALE, TRANSFER OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS DEFINED IN
SECTION 7.7(a)(i) OF THE MOU AGREEMENT).
(d) The VDC Shares representing the Second Series distributed to
Seller and its stockholders shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON RESALE AS SET FORTH IN
20
<PAGE>
SECTION 7.6(a)(ii) OF A CERTAIN ASSET PURCHASE AGREEMENT
DATED MARCH 23, 1998 BETWEEN THE COMPANY AND PORTACOM
WIRELESS, INC. ("PORTACOM"), AS AMENDED, AND SECTION
7.7(a)(ii) OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU")
DATED JUNE 8, 1998 BETWEEN THE COMPANY, PORTACOM AND THE
COMMITTEE OF UNSECURED CREDITORS OF PORTACOM (COLLECTIVELY,
THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY BE OBTAINED AT
THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE
AGREEMENT, WHICH PROHIBITS THE SALE, TRANSFER OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS
DEFINED IN SECTION 7.7(a)(i) OF THE MOU).
(e) The VDC Shares representing the Third Series distributed to Seller
and its stockholders shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON RESALE AS SET FORTH IN SECTION
7.6(a)(iii) OF A CERTAIN ASSET PURCHASE AGREEMENT DATED
MARCH 23, 1998 BETWEEN THE COMPANY AND PORTACOM WIRELESS,
INC. ("PORTACOM") AND SECTION 7.7(a)(iii) OF A CERTAIN
MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998
BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED
CREDITORS OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A
COPY OF THE AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY. THESE SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OTHER THAN IN
ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH PROHIBITS
THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE
DATE" (AS SUCH TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE
MOU).
7.8 Loans. Buyer has made advances to the Seller under and in accordance
-----
with the Loan, Security and Pledge Agreement in the aggregate principal amount
of $384,725 as of the date hereof and is under no obligation to, and may not
pursuant to order of the Court, make additional advances to Seller. The
Indebtedness shall be applied on account of the Purchase Price pursuant to
Section 3.4 hereof.
21
<PAGE>
7.9 Exclusive Dealing. In consideration of Buyer expending considerable
-----------------
time and expenses in connection with the transactions contemplated in the
Amended Agreement, including those incurred for due diligence inquiries and
legal fees, Seller hereby covenants and agrees that until the date on which the
Amended Agreement is terminated pursuant to Sections 11.1, 11.2 or 11.3, Seller
will not, directly or indirectly, through any representative or otherwise,
solicit or entertain offers from, negotiate with or in any manner encourage,
discuss, accept or consider any proposal of any other person relating to the
acquisition of the Assets, in whole or in part, whether directly or indirectly,
through purchase, merger, consolidation or otherwise, except as otherwise may be
required by law or order of the Court.
7.10 Good Faith. Seller and Buyer have each acted and negotiated this MOU
----------
in good faith. This MOU represents an arms-length agreement among the parties,
absent collusion, coercion or duress. The Purchase Price to be paid by the
Buyer for the Assets in accordance herewith, represents the fair and reasonably
equivalent value of and for the Assets. Further, the Order approving the
Amended Agreement shall provide that the reversal or modification or appeal
thereof will not affect the validity of the Closing of the sale of the Assets to
Buyer under and in accordance with such Order by virtue of specific findings
that the Buyer purchased the Assets in good faith, unless such Order is stayed
prior to the Closing.
7.11 Bidding Procedures. [Intentionally omitted].
------------------
7.12 Cooperation. Seller and Buyer agree that they will cooperate in good
-----------
faith with respect to all proceedings before the Court in the case in connection
with the approval and consummation of the Amended Agreement and this MOU and the
transactions contemplated hereby.
7.13 Cash Purchase Escrow. Interest and all other earnings on the Cash
--------------------
Purchase Escrow shall inure to the benefit of Buyer. The excess Cash Purchase
Escrow, or any portion thereof, shall be returned to Buyer from time to time at
such time as any Disputed Claim becomes an Allowed Claim, as provided for in
Section 3.4 hereof. All other terms and conditions of the escrow are set forth
in the Escrow Agreement. The Escrow Agreement, except Section 8(a) thereof as
expressly modified by Section 3.4(b) hereof, shall remain in full force and
effect; provided, however, that the terms of Section 10 of the Escrow Agreement
shall remain in full force and effect notwithstanding anything to the contrary
contained herein..
7.14 Post-Closing Agreement. Seller and Buyer covenant and agree to enter
----------------------
into a Post-Closing Agreement on the Closing Date that shall include an
obligation on the part of Seller to file an amended plan of reorganization with
the Court identifying the sale, offer, transfer or distribution of the VDC
Shares from Buyer to Seller and from Seller to Seller's creditors and
stockholders as exempt from registration under Section 1145 of the Bankruptcy
Code consistent with the terms hereof.
7.15 Non-Refundable Deposit. The Administrative Advance and, by virtue of
----------------------
the entry of the Order, $260,000 of the Cash Purchase Escrow shall be non-
refundable as to Buyer, except in the event of a default by Seller under the
Amended Agreement.
22
<PAGE>
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under the Amended Agreement are subject to
the satisfaction by Seller at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Buyer:
8.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of Seller contained in this MOU shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made again on the Closing Date.
8.2 Performance. Seller shall have performed and complied in all material
-----------
respects with all agreements and conditions required by this MOU and the Amended
Agreement to be performed or complied with by Seller prior to or at the Closing,
including, without limitation, the delivery to Buyer of the documents listed in
Section 6.2.
8.3 No Adverse Changes. Except as contemplated by this MOU, there shall
------------------
have been no material adverse change in the condition, prospects, business or
operations, financial or otherwise, of Seller from the date of the Amended
Agreement to the Closing Date.
8.4 Litigation. On the Closing Date, there shall not be any pending or
----------
threatened litigation in any court or any proceedings by or before any
Governmental Authority with a view to seek, or in which it is sought, to
restrain or prohibit the consummation of the transactions contemplated by this
MOU or in which it is sought to obtain divestiture, rescission or damages in
connection with the transactions contemplated by this MOU and no investigation
by any Governmental Authority shall be pending which might result in any such
litigation or other proceeding.
8.5 Necessary Consents. All statutory requirements for the valid
------------------
consummation by Buyer of the transactions contemplated by this MOU shall have
been fulfilled and all authorizations, consents, waivers, approvals or other
actions by any Governmental Authority or third party which are required for the
consummation of the transactions contemplated by this MOU shall have been
received and shall be in full force and effect.
8.6 Stockholder Approval. To the extent required by the laws of Bermuda,
--------------------
the stockholders of Buyer shall have approved the transactions contemplated by
this MOU.
8.7 Certificate. Seller shall have delivered to Buyer a certificate,
-----------
dated as of the Closing Date, of the Seller to the effect that the conditions
set forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.8 have been satisfied.
-------- --- --- --- --- ---
8.8 Consents. Seller shall have provided written consents to the
--------
acquisition of the Assets by Buyer from all appropriate Governmental Authorities
(to the extent so required by law) in form and substance reasonably acceptable
to Buyer.
23
<PAGE>
8.9 Due Diligence. Buyer shall have completed, to its satisfaction, a due
-------------
diligence review of the financial condition, results of operations, properties,
assets, liabilities, business and prospects of Seller.
8.10 Satisfaction of Claims. The Settlements shall be determined to be
----------------------
enforceable against the non-Seller parties thereto in accordance with their
terms in the Seller's bankruptcy case. Seller shall use its best efforts to
resolve claims against its bankruptcy estate as soon as is practicable.
8.11 Court Approval. The Court has entered the Order. The Order shall
--------------
not be subject to a pending appeal, or motion for reconsideration, modification,
vacation or stay, and as to which any appeal or motion, the time to file such
appeal or motion has expired, or any such appeal or motion that may have been
filed has been dismissed with prejudice or otherwise disposed of without
impacting negatively the validity and enforceability of the Order contemplated
hereby.
8.12 Escrow Agreement. The Committee and Escrow Agent shall have executed
----------------
this MOU, agreeing to the amendment and modification of Section 8(a) of the
Escrow Agreement by Section 3.4(b) hereof. There shall not have occurred and be
continuing an uncured event of default under the Escrow Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
All obligations of Seller under the Amended Agreement are subject to
the satisfaction by Buyer at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Seller:
9.1 Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties of Buyer contained in this MOU shall have been true and correct
in all material respects when made and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made again on the Closing Date; provided, however, that if Buyer changes its
jurisdiction of incorporation from the Commonwealth of Bermuda to the State of
Delaware on or before the Closing Date, Buyer shall be deemed to represent in
Section 5.1 that it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
9.2 Performance. Buyer shall have performed and complied, in all material
-----------
respects, with all agreements and conditions required by this MOU and the
Amended Agreement to be performed or complied with by Buyer prior to or at the
Closing.
9.3 No Adverse Changes. Except as contemplated by this MOU, there shall
------------------
have been no material adverse change in the condition, business or operations,
financial or otherwise, of Buyer from the date of the Amended Agreement to the
Closing Date.
24
<PAGE>
9.4 Necessary Consents. All statutory requirements for the valid
------------------
consummation by Seller of the transactions contemplated by this MOU shall have
been fulfilled and all authorizations, consents, waivers, approvals or other
actions by any Governmental Authority or third party which are required for the
consummation of the transactions contemplated by this MOU shall have been
received and shall be in full force and effect.
9.5 Certificate. Buyer shall have delivered to Seller a certificate,
-----------
dated as of the Closing Date, to the effect that the conditions set forth in
Sections 9.1, 9.2 and 9.3 have been satisfied.
--- --- ---
9.6 Indebtedness. Seller shall be obligated to perform hereunder and
------------
Close the transactions contemplated hereby notwithstanding the occurrence of an
Event of Default under the documents evidencing the Indebtedness or Buyer's
exercise of any rights or remedies thereunder.
9.7 Escrow Agreement. The Committee and Escrow Agent shall have executed
----------------
this MOU, agreeing to the amendment and modification of Section 8(a) of the
Escrow Agreement by Section 3.4(b) hereof. There shall not have occurred and be
continuing an uncured event of default under the Escrow Agreement.
ARTICLE 10
INDEMNIFICATION AND RELATED MATTERS
10.1 Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in the Amended Agreement and this MOU, the schedules and
exhibits hereto, and any agreement, document, instrument or certificate
delivered hereunder, including the Related Documents, shall survive the Closing
Date. Except as otherwise provided in Section 7.15 hereof, this Article 10
----------
constitutes the sole and exclusive remedy of Buyer and Seller with respect to
any subject matter addressed herein, and Buyer and Seller hereby waive and
release the other from any and all claims and other causes of action, including
without limitation claims for contribution, relating to any such subject matter.
10.2 Indemnification by Seller.
-------------------------
(a) Seller agrees to indemnify Buyer against and hold it harmless
from:
(i) all liability, loss, damage or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation or
warranty by Seller in the Amended Agreement or this MOU, in any
Related Document to which Seller was a signatory or in any other
agreement or document delivered by or on behalf of Seller in
connection with the transactions contemplated by this MOU and the
Amended Agreement;
(ii) all liability of Seller not expressly assumed by Buyer;
25
<PAGE>
(iii) all liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Seller in the Amended Agreement or this
MOU, in any Related Document to which Seller was a signatory or in any
other agreement or document delivered by or on behalf of Seller in
connection with the transactions contemplated by this MOU and the
Amended Agreement; and
(iv) any and all reasonable costs and expenses (including
reasonable legal and accounting fees) related to any of the foregoing.
In the event that Buyer makes a Claim which is determined by a court
of competent jurisdiction to be without reasonable basis in law or
fact, Buyer shall bear all reasonable costs and expenses (including
court costs and reasonable legal and accounting fees), incurred by
Seller in investigating and defending against such Claim,
which indemnification obligation of Seller shall be secured by the Deferred
Purchase Price and the VDC Shares that remain unissued in the possession of the
Escrow Agent or not further distributed to creditors or stockholders of Seller
and Buyer shall have the right of offset with respect thereto.
10.3 Indemnification by Buyer.
------------------------
(a) Buyer shall indemnify Seller against and hold it harmless from:
(i) all liability, loss, damage or deficiency resulting from
or arising out of any inaccuracy in or breach of any representation or
warranty by Buyer in the Amended Agreement or this MOU in any Related
Document or in any other agreement or document delivered by or on
behalf of Buyer in connection with the transactions contemplated by
this MOU and the Amended Agreement;
(ii) all liability, loss, damage or deficiency resulting from
or arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Buyer in the Amended Agreement and this
MOU, in any Related Document, or in any other agreement or document
delivered by or on behalf of Buyer in connection with the transactions
contemplated by this MOU and the Amended Agreement; and
(iii) any and all reasonable costs and expenses (including
reasonable legal and accounting fees) related to any of the foregoing.
In the event that Seller makes a Claim which is determined by a court
of competent jurisdiction to be without reasonable basis in law or
fact, Seller shall bear all reasonable costs and expenses (including
court costs and reasonable legal and accounting fees), incurred by
Buyer in investigating and defending against such Claim.
10.4 Third Party Claims. If any action, suit, investigation or proceeding
------------------
(including without limitation negotiations with federal, state, local or foreign
tax authorities) shall be threatened or commenced by a third party in respect of
which a party (an "Indemnified Party")
26
<PAGE>
may make a Claim hereunder, the Indemnified Party shall notify the party
obligated to indemnify such party hereunder (the "Indemnifying Party") to that
effect with reasonable promptness (so as to not prejudice such party's rights)
after the commencement or threatened commencement of such action, suit,
investigation or proceeding, and the Indemnifying Party shall have the
opportunity to defend against such action, suit, investigation or proceeding
(or, if the action, suit, investigation or proceeding involves to a significant
extent matters beyond the scope of the indemnity agreement contained herein,
those claims that are covered hereby) subject to the limitations set forth
below. If the Indemnifying Party elects to defend against any action, suit,
investigation or proceeding (or, as described in the preceding parenthetical,
one or more claims relating thereto), the Indemnifying Party shall notify the
Indemnified Party to that effect with reasonable promptness. In such case, the
Indemnified Party shall have the right to employ its own counsel and participate
in the defense of such matter, but the fees and expenses of counsel shall be at
the expense of the Indemnified Party unless the employment of such counsel at
the expense of the Indemnifying Party shall have been authorized in writing by
the Indemnifying Party. Any party granted the right to direct the defense of a
threatened or actual suit, investigation or proceeding hereunder shall: (i) keep
the other fully informed of material developments in the action, suit,
investigation or proceeding at all stages thereof; (ii) promptly submit to the
other copies of all pleadings, responsive pleadings, motions and other similar
legal documents and papers received in connection with the action, suit,
investigation or proceeding; (iii) permit the other and its counsel, to the
extent practicable, to confer on the conduct of the defense of the action, suit,
investigation or proceeding; and (iv) to the extent practicable, permit the
other and its counsel an opportunity to review all legal papers to be submitted
prior to their submission. The parties shall make available to each other and
each other's counsel and accountants all of its or their books and records
relating to the action, suit, investigation or proceeding, and each party shall
render to the other such assistance as may be reasonably required in order to
insure the proper and adequate defense of the action, suit, investigation or
proceeding. The parties shall use their respective good faith efforts to avoid
the waiver of any privilege of either party. The assumption of the defense of
any matter by an Indemnifying Party shall not constitute an admission of
responsibility to indemnify or in any manner impair or restrict such party's
rights to later seek to be reimbursed its costs and expenses if indemnification
under the Amended Agreement or this MOU with respect to such matter was not
required. An Indemnifying Party may elect to assume the defense of a matter at
any time during the pendency of such matter, even if initially such party did
not elect to assume such defense, so long as such assumption at such later time
would not prejudice the rights of the Indemnified Party. No settlement of a
matter by the Indemnified Party shall be binding on an Indemnifying Party for
purposes of such party's indemnification obligations hereunder.
ARTICLE 11
TERMINATION
11.1 Termination by Mutual Consent. At any time on or prior to the
-----------------------------
Closing Date, the Amended Agreement and this MOU may be terminated by the mutual
written consent of Seller and Buyer without liability, including deposits not
paid, on the part of Seller or Buyer.
27
<PAGE>
11.2 Termination Upon Breach or Default. If Seller or Buyer shall
----------------------------------
materially default in the observance or in the due and timely performance of any
of the covenants contained in the Amended Agreement, or if there shall have been
a material breach by either of the parties of any of the representations or
warranties set forth in this MOU, the other party may, upon written notice and a
reasonably opportunity to cure, terminate the Amended Agreement, without
prejudice to its rights and remedies available at law, including the right to
recover expenses, costs and other damages.
11.3 Termination Based Upon Failure of Conditions. If any of the
--------------------------------------------
conditions of the Amended Agreement to be complied with or performed by a party
on or before the Closing Date, shall not have been complied with or performed in
all material respects by such date and such noncompliance or nonperformance
shall not have been waived in writing by the other party, the party to whom the
benefit of such condition runs may, upon written notice, terminate the Amended
Agreement, without prejudice to its or their rights and remedies available under
law, including the right to recover expenses, costs and other damages, and, upon
a breach of this Section 11.3 by Seller, Buyer shall be entitled to retain all
unpaid deposits.
11.4 Break-Up Fees. Notwithstanding anything to the contrary contained
-------------
within this MOU or the Amended Agreement, in the event Seller is unable to, or
elects not to complete the transactions contemplated by this MOU for any reason,
except: (i) a breach by Buyer of any of its representations, warranties and
covenants contained herein or (ii) a material adverse development in the
business or operations of Buyer between the date of the Amended Agreement and
the Closing Date, then, and in that event, Seller shall pay Buyer a break-up fee
equal to One Million Dollars ($1,000,000) ("Break-Up Fee") in order to reimburse
Buyer for its time and expenses incurred in connection with the transactions
contemplated in this MOU and the Amended Agreement, as well as for any lost
opportunity costs and direct and indirect consequential damages. Payment of the
Break-Up Fee shall be made by wire transfer of immediately available funds to an
account designated by Buyer not later than five (5) days after receipt by Seller
of a written demand for the Break-Up Fee by Buyer, but in no case later than
Seller's receipt of proceeds from the sale or other disposition of the Assets,
directly or indirectly. Seller acknowledges that any payment of the Break-Up
Fee will be treated as one for liquidated damages and not a penalty, such being
agreed between Buyer and Seller to be a necessary condition to this MOU and the
Amended Agreement to compensate Buyer for expenses and expenditures incurred and
made in connection herewith and otherwise for Seller's non-compliance with this
MOU and the Amended Agreement.
11.5 Final Expiration. The Amended Agreement shall automatically expire if
----------------
the Closing does not occur on or before July 1, 1998, or, upon such later date
as VDC in its sole discretion may determine; provided, however, that such later
date shall not be later than December 31, 1998.
28
<PAGE>
ARTICLE 12
GENERAL
12.1 Entire Agreement. Subject to Section 12.10, this MOU, and the
------ ---------
exhibits and schedules hereto (including the Disclosure Schedule), and the
agreements specifically referred to herein, including the Escrow Agreement, as
amended by Section 3.4(b) hereof, and the documents evidencing the Indebtedness,
set forth the entire agreement and understanding of Seller and Buyer in respect
of the transactions contemplated hereby and, except with respect to the
provisions of Section 13 of the Letter of Intent and the no shop provisions set
forth in Section 8 of the Letter of Intent, supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
Seller or Buyer that is not embodied in this MOU or in the documents
specifically referred to herein and neither Seller nor Buyer shall not be bound
by or liable for any alleged representation, promise, inducement or statement of
intention not so set forth.
12.2 Binding Effect; Benefits; Assignment. By virtue of the entry of the
------------------------------------
Order by the Court approving the Amended Agreement, all of the terms of the
Amended Agreement are binding upon, inure to the benefit of and are enforceable
by and against Seller and its successors and authorized assigns, and Buyer and
its successors and authorized assigns. Nothing in this MOU or the Amended
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this MOU or the Amended Agreement
except as expressly indicated herein. Neither Seller nor Buyer shall assign any
of their respective rights or obligations under this MOU or the Amended
Agreement to any other person, firm or corporation without the prior written
consent of the other party, except that Buyer may assign its rights and
obligations under this MOU or the Amended Agreement to a direct or indirect
wholly-owned subsidiary of Buyer, although Buyer shall remain fully responsible
for all of its obligations under this MOU or the Amended Agreement.
12.3 Construction. The headings of the sections and paragraphs of this
------------
MOU have been inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or provisions hereof. The
language used in this MOU shall be deemed to be the language chosen by the
parties to this MOU and the Amended Agreement to express their mutual intent,
and no rule of strict construction shall be applied against any party.
12.4 Amendment and Waiver. This MOU may be amended, modified, superseded
--------------------
or canceled and any of the terms, covenants, representations, warranties or
conditions hereof may be waived only by a written instrument executed by Seller
and Buyer or, in the case of a waiver, by or on behalf of the party waiving
compliance.
12.5 Governing Law. This MOU shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware as applicable to contracts
made and to be performed in Delaware, without regard to conflict of laws
principles.
12.6 [Intentionally omitted].
29
<PAGE>
12.7 Notices. All notices, requests, demands and other communications to
-------
be given pursuant to the terms of this MOU shall be in writing and shall be
deemed to have been duly given if hand delivered, sent by overnight mail by a
nationally recognized overnight delivery service or mailed first class, postage
prepaid:
(a) If to Seller:
Michael Richard, President
PortaCom Wireless, Inc.
10061 Talbert Avenue, Suite 200
Fountain Valley, CA 92708
Telephone: (714) 593-3234
Telecopier: (714) 593-3264
with a copy to:
Francis A. Monaco, Jr., Esquire
Walsh and Monzack, P.A.
1201 Orange Street, Suite 400
Wilmington, DE 19899
Telephone: (302) 656-8162
Telecopier: (302) 656-2769
and
Jeffrey Kurtzman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
Telephone: (215) 568-4493
Telecopier: (215) 568-6603
b) If to Buyer:
Frederick A. Moran, Chief Executive Officer
VDC Corporation Ltd.
27 Doubling Road
Greenwich, CT 06830
Telephone: (203) 661-9600
Telecopier: (203) 869-1430
with a copy to:
Stephen M. Cohen, Esq.
Stuart M. Brown, Esq.
30
<PAGE>
Buchanan Ingersoll Professional Corporation
Eleven Penn Center, 14th Floor
1835 Market Street
Philadelphia, Pennsylvania 19103
Telephone: (215) 665-3873
Telecopier: (215) 665-8760
c) if to the Committee:
Francis J. Lawall, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4481
Telecopier: (215) 981-4750
Either party may change its address by prior written notice to the other party.
12.8 Counterparts. This MOU may be executed in counterparts, each of
------------
which when so executed shall be deemed to be an original and such counterparts
shall together constitute one and the same instrument.
12.9 Expenses. Each party shall pay their own respective expenses, costs
--------
and fees incurred in connection with the negotiation, preparation, execution and
delivery of this MOU and the Amended Agreement and each of the Related Documents
and the consummation of the transactions contemplated hereby, including, without
limitation, the fees and expenses of their respective legal counsel, accountants
and financial advisors.
12.10 Survival of Prior Agreement. Seller and Buyer intend for this MOU
---------------------------
to set forth their mutual interpretation of the Amended Agreement and the Escrow
Agreement; provided, however, if a separate order of the Court is not entered
approving this MOU and to the extent that any of the parties hereto seek to
enforce any of the provisions of this MOU which are inconsistent with the
Amended Agreement or the Escrow Agreement, then the Amended Agreement and the
Escrow Agreement, shall survive and remain in full force and effect for that
purpose.
31
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this MOU to be duly
executed as of the day and year first above written.
VDC CORPORATION LTD.
By: /s/ Frederick A. Moran
----------------------
Frederick A. Moran, Chief Executive Officer
PORTACOM WIRELESS, INC.
By: /s/ Michael A. Richard
----------------------
Michael A. Richard, President
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF PORTACOM WIRELESS, INC.
(the "Committee")
By: /s/ Francis J. Lawall
---------------------
Name: Francis J. Lawall, Esquire
Title: Pepper Hamilton LLP
This document is being executed on behalf of the Committee for the limited
purpose of approving paragraphs 3.4(b) and 3.4(d) hereof. The Committee's
execution hereof does not constitute a consent to or ratification of any other
provision of this document.
Intending to be legally bound hereby, the Escrow Agent hereby agrees that
Section 8(a) of the Escrow Agreement is and shall be amended and modified
consistent with the terms of Section 3.4(b) of the foregoing MOU, and that the
Escrow Agreement, as amended and modified, shall remain in full force and
effect.
ESCROW AGENT -
KLEHR, HARRISON, HARVEY, BRANZBURG
& ELLERS LLP
By: /s/ Jeffrey Kurtzman
--------------------
Name: Jeffrey Kurtzman
Title: A Member of the Firm
32
<PAGE>
EXHIBIT A
Indebtedness of Seller to be satisfied from proceeds of the Purchase Price
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Source of Proceeds
------------------
- --------------------------------------------------------------------------------
Cash Funds VDC Shares
Creditor/Claimant Amount (amount) (Number)
- ----------------- ------ -------- --------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
EXHIBIT B
Procedures Motion
34
<PAGE>
EXHIBIT C
Sale Motion
35
<PAGE>
EXHIBIT 10.10
ESCROW AGREEMENT
----------------
This ESCROW AGREEMENT ("Agreement") is made as of the 16 day of April,
1998, by and among VDC Corporation Ltd. ("Buyer"), PortaCom Wireless, Inc.
("Debtor"), the Official Committee of Unsecured Creditors of PortaCom Wireless,
Inc. ("Committee"), and Klehr, Harrison, Harvey, Branzburg & Ellers LLP ("Escrow
Agent").
BACKGROUND
----------
A. On March 23, 1998, Debtor filed a Voluntary Petition for relief under
Chapter 11 of Title 11 of the United States Code ("Code"), commencing a case in
the United States Bankruptcy Court for the District of Delaware (the "Court"),
which is pending at number 98-661 (the "Case").
B. The Office of the United States Trustee thereafter appointed the
Committee.
C. Prior to the commencement of the Case, Debtor and Buyer were parties
to an asset purchase agreement and amendments thereto, pertaining to Debtor's
agreement to sell to Buyer its interest in and to 2,000,000 shares of common
stock ("MAC Shares") of Metromedia Asia Corporation ("MAC") and warrants to
purchase an additional 4,000,000 shares of MAC common stock with a strike price
of $4.00 per share ("MAC Warrants").
D. Debtor and Buyer negotiated the terms of an asset purchase agreement
to be entered into in the Case and approved by the Court ("Purchase Agreement")
and agreed upon the procedures pursuant to which the Purchase Agreement would be
submitted to the Court for approval.
E. Together with the petition commencing the Case, the Debtor filed the
Motion Of Debtor (A) To Establish Bidding Procedures And To Approve A Break-Up
Fee In Connection With The Sale Of The Debtor's Interest In Certain Property Of
The Estate And (B) To Approve The Form And Manner Of Notice ("Procedures
Motion") with respect to the Purchase Agreement, and the Debtor's Motion for
Approval of the Sale of the Debtor's Interest in Property of the Estate Free and
Clear of Liens, Claims and Encumbrances Pursuant to 11 U.S.C. (S) 363(b) and (f)
and Federal Rule of Bankruptcy Procedure 6004 ("Sale Motion")
F. The Committee expressed its intention to object to various provisions
of the Procedures Motion and Notice and the Sale Motion, which objections were
resolved through the modification of the terms of the Purchase Agreement as set
forth in the Stipulation and Order in Lieu of Objection, entered by the Court on
or about April 6, 1998 ("Stipulation").
G. The Stipulation provides for the creation and funding of an escrow
account in connection with the Purchase Agreement. This Agreement is delivered
in furtherance of the Stipulation.
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, intending to be legally bound, the parties hereto do
hereby agree as follows:
1. The foregoing recitals are hereby incorporated in this Agreement as
though set forth at length herein.
2. Appointment of Escrow Agent. Debtor, Buyer and the Committee hereby
---------------------------
appoint Escrow Agent, and Escrow Agent hereby accepts such appointment, as the
escrow agent hereunder. Escrow Agent agrees to comply with the terms and
conditions hereof. The Escrow Agent's appointment hereunder shall terminate as
provided in paragraph 3.
3. Term of Agreement; Termination and Appointment of Successor Agent.
-----------------------------------------------------------------
This Agreement shall automatically terminate upon the latest to occur of:
a. The latest to occur of any of the following conditions
("Failure Conditions"): (i) Buyer is not the Successful Bidder (as defined
in the Procedures Motion and the Sale Motion) at the auction to be held on
or about April 23, 1998, or any time thereafter as the Court may direct;
(ii) the sale of the MAC Shares and MAC Warrants to Buyer is not confirmed
by the Court after the auction takes place; (iii) the sale of the MAC
Shares and MAC Warrants to Buyer does not close within the time
contemplated and required by the Purchase Agreement; or (iv) after
approval of the Purchase Agreement by a final, non-appealable Order of the
Court, the occurrence of any terminating event specified in Article 11 of
the Purchase Agreement. Upon termination of this Agreement as a result of
the occurrence of one of the Failure Conditions, the Escrow Agent shall
immediately (x) distribute all of the Escrowed Funds and any and all
accrued interest and earnings thereon to Buyer and (y) surrender the
Letter of Credit (as defined below) to Buyer and neither Buyer nor the
issuer of the Letter of Credit shall have any further liability under the
Letter of Credit, at which time the Escrow Agent's appointment shall
automatically terminate.
b. In the event none of the Failure Conditions shall occur, the
Escrow Agent's appointment shall automatically terminate upon the
distribution of all of the Escrowed Funds and VDC Shares in accordance
herewith. Prior to the automatic termination as provided for in this
paragraph 3(b), the appointment of the Escrow Agent may be terminated upon
the written consent of (i) Buyer and (ii) either (x) Debtor or (y) the
Committee, and a successor escrow agent shall be appointed satisfactory to
Buyer, Debtor and the Committee.
4. Escrowed Funds. The "Escrowed Funds" shall comprise a fund to be
--------------
created by Buyer equal to $2.6 million. The Escrowed Funds shall be established
with a minimum amount of cash in the amount of $1.25 million ("Cash Portion"),
and the balance may be funded in cash or through an unconditional and
irrevocable standby letter of credit for the benefit of Debtor ("Letter of
Credit"), or such other structure reasonably acceptable to the Committee. The
Escrow Agent
2
<PAGE>
shall hold the Escrowed Funds for the payment of Closing Date Claims, Bar Date
Claims, Pre-Petition Settlements and Other Allowed Claims (each as defined
below).
5. Delivery of Escrowed Funds and VDC Shares to Escrow Agent. The
---------------------------------------------------------
Escrowed Funds shall be delivered to the Escrow Agent within two (2) business
days after the date upon which this Agreement is fully executed. At Closing (as
defined in the Purchase Agreement), the Buyer shall deliver to the Escrow Agent
in furtherance of Section 4(b) of the Stipulation and subject to adjustment
provided for in paragraph 8 below, 5.3 million newly issued shares of common
stock, par value $2.00 per share, of Buyer (the "VDC Shares").
6. Investment of Escrowed Funds. Escrow Agent shall deposit the Cash
----------------------------
Portion in a money market account(s) in Escrow Agent's name for the benefit of
Seller and Buyer (such account(s) shall be referred to hereinafter as "Escrow
Account"). Escrow Agent shall invest the Cash Portion in a money market or
federally-backed investment in Buyer's discretion. Escrow Agent agrees at all
times to maintain and keep the Cash Portion and any and all interest and
earnings thereon in the Escrow Account and to otherwise invest and disburse the
Escrowed Funds and any and all interest and earnings thereon in accordance
herewith. Escrow Agent shall keep the Escrowed Funds received by it hereunder
and any and all interest and earnings thereon separate and distinct from funds
owned by itself or others. Interest and all other earnings on the Cash Portion
shall accrue and inure solely for the benefit of Buyer and shall not be added to
or become part of the Escrowed Funds.
7. Order of Escrowed Funds Distributed. The Escrow Agent shall first
-----------------------------------
utilize the entire Cash Portion of the Escrowed Funds to make distributions as
set forth herein prior to drawing upon the Letter of Credit to make such
distributions. The Escrow Agent shall not be responsible for the validity of the
Letter of Credit or the failure of the issuer to honor a draw request.
8. Distribution of the Escrowed Funds and VDC Shares.
-------------------------------------------------
a. At or before Closing, the Debtor shall deliver to the Escrow
Agent a schedule containing the amounts and names of the holders of all
priority unsecured and general unsecured claims which, as of the Closing
Date (as defined in the Purchase Agreement), are scheduled by the Debtor
as fixed and liquidated, unsecured claims against the Debtor's estate and
for which no proof(s) of claim has been filed or for which proof(s) of
claim have been filed in the scheduled or a lesser amount ("Closing Date
Claims"). At Closing, the Escrow Agent shall deliver to Debtor from the
Escrowed Funds cash in an amount equal to the Closing Date Claims for
distribution to the holders of Closing Date Claims.
b. Upon the later of (i) Closing or (ii) the entry of a final,
non-appealable Order by the Court approving or ratifying the settlement
agreements entered into by the Debtor prior to the commencement of the
Case ("Pre-Petition Settlements"), or otherwise authorizing a settlement
and compromise upon the terms of, the Pre-Petition Settlements, including
an Order confirming a plan of reorganization providing for such approval,
ratification, or authorization, the Escrow Agent shall deliver to Debtor
or the disbursing
3
<PAGE>
agent under such plan, as the case may be, cash and a portion of the VDC
Shares in an amount equal to that to be distributed pursuant to the Pre-
Petition Settlements. In the event Debtor fails to obtain a final, non-
appealable Order approving or ratifying any of the Pre-Petition
Settlements, or otherwise authorizing a settlement and compromise upon the
terms of such Pre-Petition Settlement, then any resulting claim asserted
against the Debtor's estate shall constitute a Disputed Claim and treated
in accordance with paragraph 8(d) below.
c. Within seven (7) days after May 15, 1998 (the "Bar Date"),
Debtor shall deliver to the Escrow Agent, Buyer and the Committee a
schedule containing the amounts and names of holders of all claims, other
than the Closing Date Claims, as to which, as of the Bar Date, proof(s) of
claim have been filed in the scheduled or a lesser amount than that which
was scheduled by the Debtor (collectively, the "Bar Date Claims"). Within
five (5) days after delivery by the Debtor of such schedule, the Escrow
Agent shall deliver to Debtor from the Escrowed Funds cash in an amount
equal to the Bar Date Claims for distribution to the holders of Bar Date
Claims.
d. All claims against the Debtor's estate other than the Closing
Date Claims, the Pre-Petition Settlements and the Bar Date Claims
constitute "Disputed Claims." From time to time, and to the extent that
any Disputed Claim becomes an allowed claim pursuant to a final, non-
appealable Order of the Court ("Other Allowed Claims"), the Escrow Agent
shall deliver to Debtor or the disbursing agent under a plan of
reorganization confirmed in the Debtor's case, as the case may be, for
distribution to the holder(s) thereof, cash and/or a portion of the VDC
Shares having an aggregate value equal to the aggregate amount of the
Other Allowed Claim; and shall disburse to Buyer the 60% Credit (as
defined below) for each Other Allowed Claim.
e. After payment of all Closing Date Claims, Pre-Petition
Settlements, Bar Date Claims, and Other Allowed Claims, the Escrow Agent
shall make a final distribution: (a) To the Buyer: (i) of cash in an
amount equal to the sum of the disallowed amount of Disputed Claims not
previously disbursed as part of the 60% Credit, plus the Cash Portion
funded in excess of the cash required to pay the Closing Date Claims, Bar
Date Claims, cash paid under Pre-Petition Settlements, and cash paid to
holders of Other Allowed Claims, plus all interest and other earnings on
the Escrowed Funds, and (ii) of the "Returned Shares," defined as a
portion of the VDC Shares in an amount equal to the difference between (x)
the total amount of the Escrowed Funds distributed on account of the
Closing Date Claims, Bar Date Claims, Pre-Petition Settlements and Other
Allowed Claims and (y) the Indebtedness (as defined in the Purchase
Agreement) plus the fee incurred by Buyer to obtain the Letter of Credit,
divided by the value of the VDC stock valued consistently with paragraph
14 of the Motion; and (b) To the Debtor: of all of the VDC Shares
remaining after distribution of the Returned Shares to Buyer (equal to
5,300,000 shares less the Returned Shares).
4
<PAGE>
9. 60% Credit. The "60% Credit" shall constitute a reduction in
----------
Buyer's liability under the Letter of Credit and/or a payment in cash to Buyer,
whichever Buyer may from time to time elect in writing, in an amount equal to
60% of the disallowed portion of any Disputed Claim. In the event Buyer has
elected to receive a reduction in its liability under the Letter of Credit, the
Escrow Agent shall as is necessary to implement paragraph 8(e) hereof, send
written notice of the 60% Credit(s) to the financial institution issuing the
Letter of Credit.
10. Consent to Distributions. Notwithstanding any other provision of
------------------------
the Agreement to the contrary, no distribution of the Escrowed Funds or VDC
Shares shall be made under this Agreement or otherwise, unless the Escrow Agent
has the written consent of Buyer, Debtor and the Committee to any such proposed
distribution, which consent shall not be unreasonably withheld.
11. Fees of Escrow Agent. The Escrow Agent shall not be entitled to
--------------------
any compensation or reimbursement of expenses on account of its services as
Escrow Agent directly from the Escrowed Funds; however, the Escrow Agent shall
be entitled to be compensated for its services from funds otherwise available
for distribution to the holders of administrative expense claims, subject to
Court approval under Code (S)(S) 330, 331, and/or 503.
12. Duties Ministerial. The duties of Escrow Agent are entirely
------------------
ministerial and not discretionary. Escrow Agent may rely upon any order of
court, not only as to its due execution, validity and effectiveness, but also as
to the truth and accuracy of any information contained therein, which the Escrow
Agent shall in good faith believe to be genuine, to have been entered of record.
13. Release of, and Covenant not to Sue, Escrow Agent. In consideration
-------------------------------------------------
for the Escrow Agent's agreement to perform its duties under this Agreement,
Buyer, Debtor and Committee, and their respective shareholders, partners,
officers, employees, agents, successors and assigns, jointly and severally,
hereby waive any suit, claim, demand or cause of action of any kind which any of
them may have or may assert against Escrow Agent arising out of or relating to
the execution or performance by Escrow Agent of its duties under this Agreement,
unless such suit, claim or demand or cause of action arises from the gross
negligence or willfulness of Escrow Agent. Buyer, Debtor and Committee, jointly
and severally, hereby irrevocably covenant not to sue or commence or join in any
proceedings, whether legal, equitable or otherwise, against Escrow Agent on
account of any act or omission to act on the part of Escrow Agent, unless such
action or omission was willful or grossly negligent. Further, to induce Escrow
Agent to act hereunder, the parties hereto agree to indemnify, defend and hold
Escrow Agent harmless from any liability incurred by any action taken or
omission by Escrow Agent, except for gross negligence or willful acts,
including, but not limited to its reasonable attorneys' fees and costs in
connection therewith.
14. Conflict Waiver. After consultation with their respective counsel,
---------------
the parties hereto waive any actual and/or potential conflict of interest
between the parties hereto and the Escrow Agent, or any future conflicts which
may arise during the course of performance of this Agreement or the
administration of the Case resulting from the Escrow Agent's execution and
performance of this Agreement.
5
<PAGE>
15. Disputes. In the event of any disputes regarding the Escrowed
--------
Funds, including without limitation their distribution, use, or ownership, the
Escrow Agent shall implead the Escrowed Funds to the Court.
16. Notices. All notices, demands, requests and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to be
delivered (a) when actually transmitted via facsimile, or (b) one day following
deposit with a nationally recognized overnight carrier, addressed to the
addressee as follows:
(a) If to Buyer: Frederick A. Moran, Chief Executive Officer
VDC Corporation, Ltd.
27 Doubling Road
Greenwich, CT 06830
(203) 869-1430 (Fax)
with copies to: Stuart M. Brown, Esquire
Buchanan Ingersoll Professional Corporation
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, PA 19103
(215) 665-8760 (Fax)
(b) If to Debtor: Michael Richard, President
PortaCom Wireless, Inc.
10061 Talbert Avenue, Suite 200
Fountain Valley, CA 92708
(714) 593-3264 (Fax)
with copies to: Francis A. Monaco, Jr., Esquire
Walsh and Monzack, P.A.
1201 Orange Street, Suite 400
Wilmington, DE 19899
(302) 656-2769 (Fax)
and
Michael C. Forman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6603 (Fax)
6
<PAGE>
(c) If to Committee: Francis J. Lawall, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
(215) 981-4750 (Fax)
(d) If to Escrow Agent: Jeffrey Kurtzman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6603 (Fax)
17. Substitution of Letter of Credit. In the event Buyer initially
--------------------------------
funds the entire Escrowed Funds in cash, Buyer may thereafter elect to
substitute up to $1.35 million of the Escrowed Funds with an unconditional and
irrevocable standby letter of credit for the benefit of Debtor, which shall be
presented upon terms reasonably acceptable to Debtor and the Committee, and
shall deliver such letter of credit to the Escrow Agent, who shall treat such
letter of credit as if it was the Letter of Credit and had been delivered to the
Escrow Agent initially under the terms of this Agreement. Upon receipt of such
letter of credit, the Escrow Agent shall release to Buyer cash from the Escrowed
Funds in an amount equal to the face value of such letter of credit.
18. Savings Clause. In the event that any provision of this Agreement
--------------
or its application to any person or circumstance shall be finally determined by
the court to be invalid or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
19. Interpretation. This Agreement shall be interpreted in accordance
--------------
with the laws of the Commonwealth of Pennsylvania for contracts made and
performed within the Commonwealth.
20. Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto, and their respective successors and assigns,
including any trustee appointed or elected pursuant to Code (S)(S) 701 and 702.
The terms and conditions of this Agreement, the rights and the obligations of
the parties and their respective successors and assigns shall survive any and
all breaches and/or defaults under this Agreement and any such other events as
may occur as herein provided.
21. Jurisdiction. The United States Bankruptcy Court for the District
------------
of Delaware, or any other court exercising jurisdiction over the Debtor's
estate, shall have exclusive jurisdiction to enforce the terms and conditions of
this Agreement and enter any and all appropriate injunctions, contempt orders,
orders for specific performance and other relief as may be just and equitable.
7
<PAGE>
22. Captions. The titles and captions used herein are for reference
--------
only and shall not constitute a part of this Agreement or construed as having
any legal effect.
23. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above-written.
VDC CORPORATION, LTD.
By: /s/ Frederick A. Moran
-----------------------
Frederick A. Moran,
Chairman and Chief Executive Officer
PORTACOM WIRELESS, INC.
By: /s/ Michael A. Richard
----------------------
Michael A. Richard
President
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS
By: /s/ J. MICHAEL CHRISTIANSEN
---------------------------
J. Michael Christiansen
Chairman
ESCROW AGENT -
KLEHR, HARRISON, HARVEY, BRANZBURG
& ELLERS LLP
By: /s/ JEFFREY KURTZMAN
--------------------
Jeffrey Kurtzman
A Member of the Firm
8
<PAGE>
EXHIBIT 10.11
CLOSING ESCROW AGREEMENT
------------------------
This CLOSING ESCROW AGREEMENT ("Agreement") is made as of the 8 day of
June, 1998, by and among VDC Corporation Ltd. ("Buyer"), PortaCom Wireless, Inc.
("Debtor"), Metromedia China Corporation ("MCC"), the Official Committee of
Unsecured Creditors of PortaCom Wireless, Inc. ("Committee"), and Klehr,
Harrison, Harvey, Branzburg & Ellers LLP ("Closing Escrow Agent").
BACKGROUND
----------
A. On March 23, 1998, Debtor filed a Voluntary Petition for relief
under Chapter 11 of Title 11 of the United States Code ("Code"), commencing a
case in the United States Bankruptcy Court for the District of Delaware (the
"Court"), which is pending at number 98-661 (the "Case").
B. The Office of the United States Trustee thereafter appointed the
Committee.
C. Prior to the commencement of the Case, Debtor and Buyer were
parties to an asset purchase agreement and amendments thereto, pertaining to
Debtor's agreement to sell to Buyer its interest in and to 2,000,000 shares of
common stock ("MAC Shares") of Metromedia Asia Corporation, predecessor in
interest to MCC ("MAC"), and warrants to purchase an additional 4,000,000 shares
of MAC common stock with a strike price of $4.00 per share ("MAC Warrants").
D. Debtor and Buyer negotiated the terms of an asset purchase
agreement to be entered into in the Case and approved by the Court ("Purchase
Agreement") and agreed upon the procedures pursuant to which the Purchase
Agreement would be submitted to the Court for approval. The Purchase Agreement
was amended by (a) two Stipulations and Orders in Lieu of Objection, dated as of
April 3, 1998 and April 23, 1998, respectively (collectively, the
"Stipulations"), by and among Debtor, VDC and the Committee; and (b) the Escrow
Agreement (the "Escrow Agreement"), dated April __, 1998, among Debtor, VDC, the
Committee and Klehr, Harrison, Harvey, Branzburg & Ellers LLP as Escrow Agent.
E. Together with the petition commencing the Case, the Debtor filed
the Motion Of Debtor (A) To Establish Bidding Procedures And To Approve A Break-
Up Fee In Connection With The Sale Of The Debtor's Interest In Certain Property
Of The Estate And (B) To Approve The Form And Manner Of Notice ("Procedures
Motion") with respect to the Purchase Agreement, and the Debtor's Motion for
Approval of the Sale of the Debtor's Interest in Property of the Estate Free and
Clear of Liens, Claims and Encumbrances Pursuant to 11 U.S.C. (S) 363(b) and (f)
and Federal Rule of Bankruptcy Procedure 6004 ("Sale Motion").
F. On April 23, 1998, the United States Bankruptcy Court for the
District of Delaware
1
<PAGE>
(the "Court") entered an order (the "Sale Order") approving the Purchase
Agreement and authorizing the sale of the MAC Shares and Warrants free and clear
of any liens or encumbrances, including MCC's first priority security interest
in the MCC Shares (the "MCC Lien"). Pursuant to the Sale Order and section 363
of the Bankruptcy Code, the MCC Lien attached to the sale proceeds (the
"Replacement Lien"), including certain shares of common stock of VDC (the "VDC
Shares").
G. Pursuant to that certain pledge agreement dated June 8, 1998
between the Debtor and MCC (the "Pledge Agreement"), MCC has agreed that the
Replacement Lien is limited to 50% of the Debtor's interest in the VDC Shares
deliverable to the Debtor under the Purchase Agreement dated March 23, 1998, as
amended. Pursuant to the Pledge Agreement, in order for MCC to perfect the
Replacement Lien, the Debtor has agreed that 2.65 million VDC Shares will be
pledged to MCC (the "Pledged Shares"), subject to the terms of the Pledge
Agreement.
H. Buyer has demanded that, as a condition for closing under the
Purchase Agreement, the Debtor deliver to Buyer a newly issued stock certificate
representing the MAC Shares and a newly issued warrant certificate representing
the MAC Warrants, each in the name of Buyer (collectively, the "Reissued Shares
and Warrants").
I. This Closing Escrow Agreement is delivered in furtherance of the
closing of the sale of the MAC Shares and Warrants, that commenced on June 8,
1998 at the offices of Buchanan Ingersoll Professional Corporation (the
"Closing").
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound, the parties hereto
do hereby agree as follows:
1. The foregoing recitals are hereby incorporated in this
Agreement as though set forth at length herein.
2. Appointment of Closing Escrow Agent. Debtor, Buyer, MCC and
-----------------------------------
the Committee hereby appoint Closing Escrow Agent, and Closing Escrow Agent
hereby accepts such appointment, as the escrow agent hereunder. Closing Escrow
Agent agrees to comply with the terms and conditions hereof. The Closing Escrow
Agent's appointment hereunder shall terminate as provided in paragraph 3.
3. Term of Agreement; Termination and Appointment of Successor
-----------------------------------------------------------
Agent. This Agreement shall automatically terminate upon the distribution by the
- -----
Closing Escrow Agent, of all of the Closing Escrowed Funds (as defined below),
MAC Shares, MAC Warrants, the Reissued Shares and Warrant and VDC Shares (as
defined below) in accordance herewith. Prior to the automatic termination as
provided for in this paragraph, the appointment of the Closing Escrow Agent may
be terminated upon the written consent of (i) Buyer and (ii) either (x) Debtor
or (y) the Committee and a successor escrow agent shall be appointed
satisfactory to Buyer, Debtor, MCC and the Committee.
2
<PAGE>
Notwithstanding termination of this Agreement, the Closing Escrow Agent shall
continue its obligations as Escrow Agent under the Escrow Agreement.
4. Delivery of Escrowed Funds. The "Closing Escrowed Funds"
--------------------------
comprise a portion of the Escrowed Funds, as defined in the Escrow Agreement, in
the sum of the Closing Date Claims and Bar Date Claims, as defined in the
Purchase Agreement, totaling $41,412.00. The Escrow Agent is in possession of
the Escrowed Funds and the Closing Escrow Agent hereby acknowledges constructive
receipt of the Closing Escrowed Funds.
5. Delivery of MAC Shares, MAC Warrants, VDC Shares and Other
----------------------------------------------------------
Deliverables to Closing Escrow Agent. At or before the Closing under the
- ------------------------------------
Purchase Agreement, the Buyer shall deliver to the Closing Escrow Agent, subject
to adjustment provided for in the Escrow Agreement and the Purchase Agreement,
three (3) share certificates representing the aggregate of 5,300,000 newly
issued shares of common stock, par value $2.00 per share, of Buyer (the "VDC
Shares"). The share certificates representing the VDC Shares shall be issued in
the name of the Debtor and shall be delivered by the Buyer to the Closing Escrow
Agent in the following designations, subject to adjustment as provided in the
Purchase Agreement and the Escrow Agreement: (i) 2,650,000 shares ("Certificate
1") which shall constitute the Pledged Shares, (ii) 1,325,000 shares
("Certificate 2") and (iii) 1,325,000 shares ("Certificate 3"). Buyer shall
cause its counsel to deliver its opinion to MCC regarding the applicability of
exemptions from registration required under the Securities Act of 1933, as
amended, to the transfer by Debtor to Buyer of the MAC Shares and MAC Warrants.
Debtor shall deliver to the Closing Escrow Agent its assignment of warrant and
stock power in blank relating to the transfer of the MAC Shares and MAC
Warrants to Buyer. Debtor and MCC shall deliver to the Closing Escrow Agent the
MAC Shares and Buyer shall deliver to the Closing Escrow Agent the MAC Warrants.
In connection with Certificate 1, Debtor and MCC shall, at or prior to Closing,
execute the Pledge Agreement in favor of MCC and deliver such Pledge Agreement
to the Closing Escrow Agent.
6. Delivery to MCC. MCC shall cause the MAC Warrants and the
----------------
certificates representing the MAC Shares, both of which are currently in the
name of Debtor, to be re-issued in the name of the Buyer, and MCC shall deliver
such new certificate and such new warrant to the Closing Escrow Agent in no
event later than seven (7) business days after the Closing in exchange for the
previously issued certificate and warrant. In order to effectuate the
reissuance of the MAC Shares as set forth in paragraph 5 above, at Closing, the
Closing Escrow Agent, with the assistance of MCC, shall deliver to MCC's
transfer agent the following documents: (a) the original certificate for the MAC
Shares issued in the name of the Debtor; (b) the irrevocable stock power
executed by the Debtor; (c) the opinion of counsel to VDC to the effect that the
offer and sale of the MAC Shares and MAC Warrants is exempt from registration;
(d) the written direction from MCC to reissue the MAC Shares and MAC Warrants in
the name of VDC and to deliver the Reissued Shares and Warrants to the Closing
Escrow Agent. The parties hereto acknowledge and agree that, if for any reason,
MCC's transfer agent cannot or will not reissue the MAC Shares and MAC Warrants
in the name of VDC, MCC will immediately direct its transfer agent to return to
the Closing Escrow Agent the original
3
<PAGE>
certificate for the MAC Shares and MAC Warrants, issued in the name of the
Debtor. At Closing, MCC shall deliver the Reissued Warrants to the Closing
Escrow Agent.
7. Distribution of Reissued Shares and Warrants, VDC Shares and
------------------------------------------------------------
Closing Escrowed Funds. Upon full performance under paragraphs 5 and 6 above,
- ----------------------
the Closing Escrow Agent shall (i) deliver the Reissued Shares and Warrants to
Buyer; (ii) deliver Certificate 1 and the Pledge Agreement to MCC, (iii) deliver
custody of Certificate 2 and Certificate 3 to the Escrow Agent; and (iv) deliver
the Closing Escrowed Funds to Debtor.
8. Failure to Close. The parties hereto agree to use their best
----------------
efforts to complete timely their respective performances under paragraphs 5, 6
and 7 above. In the event, however, that the Closing Escrow Agent does not
receive the Reissued Shares and Warrants within seven (7) business days of the
date hereof, or any other deliverables within such time period, except as
previously impleaded pursuant to paragraph 13 below, then the Closing Escrow
Agent shall return all deliverables in its possession to the respective party
from whom the Closing Escrow Agent received such deliverables, and the Closing
Escrow Agent's term and appointment shall be terminated thereafter, unless the
parties hereto consent in writing to extend such time of performance.
9. Fees of Escrow Agent. The Closing Escrow Agent shall not be
--------------------
entitled to any compensation or reimbursement of expenses on account of its
services as Closing Escrow Agent directly from the Escrowed Funds; however, the
Closing Escrow Agent shall be entitled to be compensated for its services from
funds otherwise available for distribution to the holders of administrative
expense claims, subject to Court approval under Code (SS) 330, 331, and/or 503.
10. Duties Ministerial. The duties of Closing Escrow Agent are
------------------
entirely ministerial and not discretionary. Closing Escrow Agent may rely upon
any order of court, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein, which the Closing Escrow Agent shall in good faith believe to
be genuine, to have been entered of record.
11. Release of, and Covenant not to Sue, Escrow Agent. In
-------------------------------------------------
consideration for the Closing Escrow Agent's agreement to perform its duties
under this Agreement, Buyer, Debtor, MCC and Committee, and their respective
shareholders, partners, officers, employees, agents, successors and assigns,
jointly and severally, hereby waive any suit, claim, demand or cause of action
of any kind which any of them may have or may assert against Closing Escrow
Agent arising out of or relating to the execution or performance by Closing
Escrow Agent of its duties under this Agreement, unless such suit, claim or
demand or cause of action arises from the gross negligence or willfulness of
Closing Escrow Agent. Buyer, Debtor and Committee, jointly and severally,
hereby irrevocably covenant not to sue or commence or join in any proceedings,
whether legal, equitable or otherwise, against Closing Escrow Agent on account
of any act or omission to act on the part of Closing Escrow Agent, unless such
action or omission was willful or grossly negligent. Further, to induce Closing
Escrow Agent to
4
<PAGE>
act hereunder, the parties hereto agree to indemnify, defend and hold Closing
Escrow Agent harmless from any liability incurred by any action taken or
omission by Closing Escrow Agent, except for gross negligence or willful acts,
including, but not limited to its reasonable attorneys' fees and costs in
connection therewith.
12. Conflict Waiver. After consultation with their respective
---------------
counsel, the parties hereto waive any actual and/or potential conflict of
interest between the parties hereto and the Closing Escrow Agent, or any future
conflicts which may arise during the course of performance of this Agreement or
the administration of the Case resulting from the Closing Escrow Agent's
execution and performance of this Agreement.
13. Disputes. In the event of any disputes regarding the Closing
--------
Escrowed Funds, the MAC Shares, the MAC Warrants, the Reissued Shares and
Warrants and/or the VDC Shares, including without limitation their distribution,
use, or ownership, the Closing Escrow Agent shall implead the Closing Escrowed
Funds, the MAC Shares, the MAC Warrants, the Reissued Shares and Warrants and/or
the VDC Shares, as applicable, to the Court.
14. Notices. All notices, demands, requests and other communications
-------
required or permitted hereunder shall be in writing and shall be deemed to be
delivered (a) when actually transmitted via facsimile, or (b) one day following
deposit with a nationally recognized overnight carrier, addressed to the
addressee as follows:
(a) If to Buyer: Frederick A. Moran, Chief Executive Officer
VDC Corporation, Ltd.
27 Doubling Road
Greenwich, CT 06830
(203) 869-1430 (Fax)
with copies to: Stuart M. Brown, Esquire
Buchanan Ingersoll Professional Corporation
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, PA 19103
(215) 665-8760 (Fax)
(b) If to Debtor: Michael Richard, President
PortaCom Wireless, Inc.
10061 Talbert Avenue, Suite 200
Fountain Valley, CA 92708
(714) 593-3264 (Fax)
5
<PAGE>
with copies to: Francis A. Monaco, Jr., Esquire
Walsh and Monzack, P.A.
1201 Orange Street, Suite 400
Wilmington, DE 19899
(302) 656-2769 (Fax)
and
Michael C. Forman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6603 (Fax)
(c) If to Committee: Francis J. Lawall, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
(215) 981-4750 (Fax)
(d) If to Closing
Escrow Agent: Jeffrey Kurtzman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6603 (Fax)
(d) If to
Escrow Agent: Jeffrey Kurtzman, Esquire
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, PA 19102
(215) 568-6603 (Fax)
(e) If to MCC:
Arnold L. Wadler, Esquire
General Counsel, Metromedia China Corporation
One Meadowlands Plaza
6
<PAGE>
East Rutherford, NJ 07073
(201) 531-2803 (Fax)
15. Savings Clause. In the event that any provision of this
--------------
Agreement or its application to any person or circumstance shall be finally
determined by the court to be invalid or unenforceable to any extent, the
remainder of this Agreement, and the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
16. Interpretation. This Agreement shall be interpreted in
--------------
accordance with the laws of the Commonwealth of Pennsylvania for contracts made
and performed within the Commonwealth.
17. Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto, and their respective successors and assigns,
including any trustee appointed or elected pursuant to Code (SS) 701 and 702.
The terms and conditions of this Agreement, the rights and the obligations of
the parties and their respective successors and assigns shall survive any and
all breaches and/or defaults under this Agreement and any such other events as
may occur as herein provided.
18. Jurisdiction. The United States Bankruptcy Court for the
------------
District of Delaware, or any other court exercising jurisdiction over the
Debtor's estate, shall have exclusive jurisdiction to enforce the terms and
conditions of this Agreement and enter any and all appropriate injunctions,
contempt orders, orders for specific performance and other relief as may be just
and equitable.
19. Captions. The titles and captions used herein are for reference
--------
only and shall not constitute a part of this Agreement or construed as having
any legal effect.
20. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same document.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above-written.
VDC CORPORATION, LTD.
By: /s/ Fred A. Moran
-------------------------------------
Name: Fred A. Moran
Title:
PORTACOM WIRELESS, INC.
By: /s/ Michael A. Richard
-------------------------------------
Name: Michael A. Richard
Title: Chief Executive Officer
METROMEDIA CHINA CORP.
By: /s/ Robert A. Maresca
-------------------------------------
Name: Robert A. Maresca
Title: Senior Vice President
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS
By: /s/ Francis Lawall, Esq.
-------------------------------------
Name: Francis Lawall, Esq.
Title: Counsel to Official Committee of
Unsecured Creditors
CLOSING ESCROW AGENT -
Klehr, Harrison, Harvey, Branzburg
& Ellers LLP
By: /s/ Jeffrey Kurtzman
-------------------------------------
Name: Jeffrey Kurtzman
Title: A Member of the Firm
8
<PAGE>
ESCROW AGENT -
Klehr, Harrison, Harvey, Branzburg
& Ellers LLP
By: /s/ Jeffrey Kurtzman
-------------------------------------
Name: Jeffrey Kurtman
Title: A Member of the Firm
9
<PAGE>
EXHIBIT 10.12
WAIVER
WAIVER (the "WAIVER") dated as of June 8 1998, by VDC CORPORATION LTD.,
a Bermuda Corporation ("VDC").
RECITALS
--------
WHEREAS, VDC and PORTACOM WIRELESS, INC. ("PORTACOM"), a Delaware
corporation ("PORTACOM"), are the parties to that certain Asset Purchase
Agreement dated as of March 23, 1998, as amended by two Stipulations and Orders
in Lieu of Objection, dated as of April 3, 1998 and April 23, 1998,
respectively, and the Escrow Agreement dated April 8, 1998, among PortaComr,
VDC, the Committee and Klehr, Harrison, Harvey, Branzburg & Ellers LLP as Escrow
Agent. (the "ASSET PURCHASE AGREEMENT").
WHEREAS, Section 8.10 of the Asset Purchase Agreement states that
VDC's obligations under the Asset Purchase Agreement are subject to the
condition, unless such condition is expressly waived in writing by VDC, that
"[PortaCom] shall have provided validly executed releases, waivers and/or
settlement agreements, satisfactory in form and substance to [VDC], evidencing
agreements for the satisfaction of substantially all indebtedness of, and claims
against, [PortaCom]."
WHEREAS, Section 6.2(a) of the Asset Purchase Agreement states that
"at or prior to the Closing, Seller shall deliver to Buyer. . . in form and
substance satisfactory to Buyer, a written release by all of the parties to the
Termination Agreement agreeing to the release of the MAC Common Stock to the
Buyer."
WHEREAS, Section 6.2(b) of the Asset Purchase Agreement states that
"at or prior to the Closing, Seller shall deliver to Buyer. . . in form and
substance satisfactory to Buyer, written evidence from MAC confirming that, as
of the Closing Date, no part of the Assets pledged as collateral under the
Termination Agreement has been sold, assigned, transferred or otherwise disposed
of or subject to any action for any of the foregoing (other than the transaction
contemplated in this Agreement), and that, as of the Closing Date, neither MAC
nor its parent corporation, Metromedia International Group, Inc., contemplates
taking any of the foregoing actions."
WHEREAS, Section 3.3(a) of the Asset Purchase Agreement states that
[PortaCom] will deliver a. . .Debt Schedule. . .identifying its indebtedness as
of the Closing Date."
WHEREAS, Section 10 of the Escrow Agreement states "notwithstanding
any other provision of the [Escrow] Agreement to the contrary, no distribution
of the Escrowed Funds or VDC Shares shall be made under this Agreement or
otherwise, unless the Escrow Agent has the written consent of Buyer, Debtor and
the Committee to any such proposed distribution, which consent shall not be
unreasonably withheld."
WHEREAS, VDC and PortaCom have mutually determined and agreed that the
<PAGE>
aforementioned conditions set forth in Sections 3.3(a), 6.2(a), 6.2(b) and 8.10
of the Asset Purchase Agreement are no longer applicable to the closing of the
transactions contemplated by the Asset Purchase Agreement.
WHEREAS, VDC and PortaCom have mutually determined and agreed that
Section 10 of the Escrow Agreement should not apply to distribution(s) of an
"Administrative Advance" as that term is defined in Section 3.4(i) of the Asset
Purchase Agreement.
NOW THEREFORE, VDC, intending to be legally bound hereby, hereby
waives (1) the satisfaction of the conditions set forth in Sections 3.3(a),
6.2(a), 6.2(b) and 8.10 of the Asset Purchase Agreement as a condition to VDC's
obligations under the Asset Purchase Agreement; and (2) Section 10 of the Escrow
Agreement as applicable to distribution(s) of an "Administrative Advance" as
that term is defined in Section 3.4(i) of the Asset Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Waiver as
of the date and year first written above.
VDC CORPORATION LTD.
By: /s/ Fred Moran
----------------------
Name: Fred Moran
Title: Chairman and CEO
<PAGE>
EXHIBIT 10.13
PORTACOM WIRELESS, INC
10061 TALBERT AVENUE, SUITE 200
FOUNTAIN VALLEY, CALIFORNIA 92708
(714) 593-3234 PHONE
(714) 593-3264 FAX
June 8, 1998
VIA TELECOPIER (201) 531-2803
AND OVERNIGHT COURIER
- -----------------------------
Metromedia China Corporation
One Meadowlands Plaza
East Rutherford, New Jersey 07073
RE: PORTACOM WIRELESS, INC.,
CASE NO. 98-661(PJW) (CHAPTER 11)
---------------------------------
Gentlemen:
This letter agreement (the "Letter Agreement") is made this 8 day of June,
1998 between Metromedia China Corporation, formerly Metromedia Asia Corporation
("MCC") and PortaCom Wireless, Inc. (the "Debtor") and is intended to clarify
and confirm the rights of MCC arising from the Order of the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") dated
April 23, 1998 ("Sale Order") authorizing the sale of the MAC Shares and the
Warrants (as defined in the Sale Order) to VDC Corporation, Ltd. ("VDC"), and is
further intended to conform that certain Escrow Agreement dated April __, 1998,
by and among VDC, Debtor, the Official Committee of Unsecured Creditors of
PortaCom Wireless, Inc. ("Committee") and Klehr, Harrison, Harvey, Branzburg &
Ellers LLP, as Escrow Agent ("Escrow Agreement") to the Sale Order.
Pursuant to that certain Termination Agreement dated September 11, 1996 by
and among the Debtor, MCC, and Max E. Bobbit (the "Termination Agreement"), MCC
held the MAC Shares as collateral to secure certain claims, if any, of MCC
against the Debtor, as provided therein.
The parties hereto understand, acknowledge and agree that, pursuant to the
Sale Order, MCC holds a valid, perfected, first-priority replacement lien only
on 50% of the VDC Shares (as defined in that certain Escrow Agreement)
deliverable to the Debtor in accordance with that certain Asset Purchase
Agreement dated March 23, 1998 by and between the Debtor and VDC, as amended by
<PAGE>
Metromedia China Corporation
June 8, 1998
Page 2
that certain Stipulation in Lieu of Objection dated April 3, 1998, approved by
the Bankruptcy Court on April 8, 1998, that certain Stipulation in Lieu of
Objection dated and approved by the Bankruptcy Court on April 23, 1998, the
Escrow Agreement and the Sale Order (the "Pledged Shares"), to secure the
satisfaction of the claim of MCC, if any, against the Debtor's bankruptcy estate
arising out of the Termination Agreement. Notwithstanding anything herein to
the contrary, MCC's interest in the Pledged Shares is limited to the Debtor's
interest in the Pledged Shares, which interest is subject to VDC's superior
reversionary rights under Section 8 of the Escrow Agreement and Section 3.4 of
the Asset Purchase Agreement, as amended (the "Reversionary Rights"). While
VDC's Reversionary Rights, if any, shall be satisfied first from those VDC
Shares which are not being pledged to MCC hereunder as the Pledged Shares, MCC
understands and acknowledges that, to the extent such non-pledged VDC Shares are
insufficient to satisfy VDC's Reversionary Rights, the Pledged Shares are
subject to the Reversionary Rights and such portion of the Pledged Shares
necessary to satisfy the Reversionary Rights shall be immediately returned to
VDC upon written notice from VDC and the Debtor certifying that such Pledged
Shares are necessary to satisfy the Reversionary Rights in accordance with this
letter or the entry of an appropriate order of a court of competent
jurisdiction. Accordingly, VDC is an intended third party beneficiary of the
letter agreement with notice and whose rights hereunder may not be impaired
without VDC's prior written consent.
Subject to the foregoing, the Debtor hereby agrees, and hereby authorizes
the Closing Escrow Agent (as defined in that certain Closing Escrow Agreement
dated June __, 1998 by and among the Debtor, VDC, Klehr, Harrison, Harvey
Branzburg & Ellers LLP and MCC), to deliver to MCC, as soon as practicable
following the Closing of the sale of the MAC Shares and Warrants, the Pledged
Shares, thereby perfecting MCC's interest therein. MCC agrees to possess the
Pledged Shares until the earliest to occur of the following ("Release
Conditions"): (i) the disallowance, if any, of MCC's claim, if any, against the
Debtor in its entirety, or estimation of such claim, if any, in the amount of
$0.00, pursuant to a final, non-appealable order ("Disallowance Order") of the
Bankruptcy Court; (ii) the allowance of MCC's claim against the Debtor's
bankruptcy estate, in whole or in part, pursuant to or in accordance with a
final, non-appealable order of the Bankruptcy Court and the satisfaction of the
allowed portion of such claim by the Debtor pursuant to or in accordance with a
final, non-appealable order of the Bankruptcy Court or confirmed plan of
reorganization (whether such satisfaction occurs as a result of payment by the
Debtor or as a result of repossession by MCC of the Pledged Shares in exercise
of its security interest therein); or (iii) the delivery of a certificate
asserting VDC's right to VDC's Reversionary Rights, as contemplated by the
foregoing paragraph; or (iv) January 1, 1999; provided, however, if any asserted
claim or litigation for which MCC is entitled to indemnification under the
Termination Agreement has not been resolved prior to the earlier of the date of
any Disallowance Order or January 1, 1999, then the Pledged Shares shall not be
released from the lien in favor of MCC and shall not be delivered to Debtor (or
its agent) until all such litigation has been finally resolved and all statutes
of limitations relevant to any claim
<PAGE>
Metromedia China Corporation
June 8, 1998
Page 3
asserted have expired. The Debtor agrees not to seek a final order adjudicating
the validity or extent of MCC's claim, if any, against the Debtor which would
become effective prior to January 1, 1999; MCC acknowledges and understands that
the Debtor does not control the actions of any third parties with respect to
MCC's claim, if any. The Debtor acknowledges and agrees that the agreement set
forth in the preceding sentence will not unduly delay the administration of the
Debtor's estate.
Upon the happening of any of the Release Conditions, the Pledged Shares, or
a portion thereof, shall be released from the lien in favor of MCC and from all
restrictions provided herein and shall be delivered to the Escrow Agent (as
defined herein), or VDC, as the case may be, and shall remain subject to the
terms and restrictions of the Escrow Agreement.
This Letter Agreement sets forth the entire agreement of the parties hereto
with respect to the subject matter hereof and may be amended only in writing
signed by each party hereto.
Very truly yours,
PORTACOM WIRELESS, INC.
By: /s/ Michael A. Richard
-----------------------------------------
Michael A. Richard, CEO
cc: Stephen J. Shimshak, Esquire (via telecopier 212-373-2366)
Stuart Brown, Esquire (via telecopier 215-665-8760)
Francis J. Lawall, Esquire (via telecopier 215-981-4750)
Francis Monaco, Jr., Esquire (via telecopier 302-656-2769)
Jeffrey D. Kurtzman, Esquire (via telecopier 215-568-6603)
Michael Forman, Esquire (via telecopier 215-568-6603)
AGREED AND ACCEPTED:
METROMEDIA CHINA CORPORATION
By: /s/ Robert A. Maresca
----------------------------
Robert A. Maresca
Senior Vice President
<PAGE>
EXHIBIT 99.1
PortaCom Wireless, Inc.
10061 Talbert Avenue, Ste. #200
Fountain Valley, CA 92708
FOR IMMEDIATE RELEASE
- ---------------------
June 15, 1998
Contact: Thomas Madden
(253) 815-1076
OTCBB: PCWR Email: [email protected]
VSE: PCW
PORTACOM ANNOUNCES CLOSING OF SALE OF EQUITY STAKE IN METROMEDIA CHINA
CORPORATION TO VDC CORPORATION, LTD.
PortaCom Wireless, Inc. ("PortaCom") announced today that it has completed
the sale to VDC Corporation, Ltd. (OTCBB: VDCLF) ("VDC") of its 2,000,000 shares
and warrants to acquire, at $4 per share, an additional 4,000,000 shares of
Metromedia China Corporation (formerly Metromedia Asia Corporation). In
consideration for the sale and subject to certain adjustment features, PortaCom
received a pool of up to 5,300,000 shares of VDC common stock and a maximum of
$3,000,000 in cash. To the extent that more than $384,725 of the cash is used
by PortaCom, the excess thereof will result in PortaCom returning to VDC a
certain number of shares of VDC common stock according to a predetermined
formula. The final amounts of the cash and VDC common stock received will be
determined by PortaCom, its creditors and the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court").
The combined cash and share components of the sale proceeds will be used to
fund PortaCom's plan of reorganization, which has been filed with the Bankruptcy
Court but remains subject to, among other things, the approval of impaired
creditors and stockholders under the United States Bankruptcy Code and
confirmation by the Bankruptcy Court.
Based on information provided by VDC, VDC is a development stage company
that intends to pursue opportunities to establish wireless, wired and cellular
telephony systems, operate international telephony gateways and become internet
service providers in certain areas of Eastern Europe and Asia, as well as Egypt
and the United States. VDC recently announced that it has entered into
agreements with Egypt's National Telecom Company to establish, and actively
manage, 50% owned Egyptian corporations whose purpose will be to provide
telecommunications and internet services in Egypt as well as billing services
for telecommunications and utility businesses in Egypt, the Middle East, and
Africa.
<PAGE>
VDC also manages and/or acts as agent for existing communications tower and
building top sites and markets the sites to communications companies, such as
wireless telephony, paging and cable television service providers, who require
the use of such sites for their communications transmitter and receiver
infrastructure.
Certain statements in this press release are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements made by the company involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to,
Bankruptcy Court actions or proceedings related to the bankruptcy, risks
associated with international operations, dependence on licenses, governmental
regulations, technological changes, intense competition, dependence on
management and the outcome of litigation to which the company is a party. Given
these uncertainties, investors are cautioned not to place undue reliance on such
forward-looking statements. PortaCom's management disclaims any obligation to
forward-looking statements contained herein to reflect any change in PortaCom's
expectation with regard thereto or any change in events, conditions,
circumstances or assumptions underlying such statements.
ON BEHALF OF THE BOARD OF DIRECTORS
/s/ Michael A. Richard
---------------------------------
Michael A. Richard
Chief Executive Officer
The Vancouver Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of the release.
