MEMORANDUM OF UNDERSTANDING
by and among
VDC CORPORATION LTD.,
as Buyer,
and
PORTACOM WIRELESS, INC.,
as Seller
and
OFFICIAL COMMITTEE OF UNSECURED CREDITORS
OF PORTACOM WIRELESS, INC.
June 8, 1998
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING (the "MOU") is made as of the 8th day of
June, 1998, by and among VDC CORPORATION LTD., a Bermuda corporation ("Buyer"),
PORTACOM WIRELESS, INC., a Delaware corporation ("Seller") and the OFFICIAL
COMMITTEE OF UNSECURED CREDITORS OF PORTACOM WIRELESS, INC. (the "Committee").
WITNESSETH:
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and conditions hereafter set forth, certain of the assets of Seller as
described herein; and
WHEREAS, Seller and Buyer are parties to that certain Asset Purchase
Agreement, dated as of March 23, 1998 (the "Prior Agreement"), as amended by two
Stipulations and Orders in Lieu of Objection, dated as of April 3, 1998 and
April 23, 1998, respectively (collectively, the "Stipulations") and by an Escrow
Agreement among Seller, Buyer, the Committee and Klehr, Harrison, Xxxxxx,
Xxxxxxxxx & Xxxxxx, 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(the "Amended Agreement"), superseded in its entirety the Asset Purchase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 xx.xx. 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
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WHEREAS, the transactions contemplated hereby are other than in the
ordinary course of Seller's business and, therefore, require Court approval
pursuant to Bankruptcy Code ss. 363; and
WHEREAS, on or about April 23, 1998, the Court entered an order (the
"Order") approving the execution of the Amended Agreement and the consummation
of the transactions contemplated thereby and hereby; and
WHEREAS, the parties intend for this MOU to consolidate the Prior
Agreement, Stipulations and Escrow Agreement into one document and set forth the
parties' mutual interpretation of the Amended Agreement; and
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,
agreements and representations and warranties herein contained, and for other
good and legal consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 When used in this MOU, the following terms, in their singular and
plural forms, shall have the meanings assigned to them below:
"Act" means the Securities Act of 1933, as amended.
"Allowed Claims" means the pre-petition unsecured claims, as defined in
Bankruptcy Code ss. 101(5), or portion thereof, that: (a) are allowed pursuant
to a final, non-appealable Order of the Court, or (b) are deemed allowed
pursuant to Bankruptcy Code ss. 1111(a), or (c) are the subject of pre-petition
settlement agreements, or post-petition settlements approved by the Court, that
provide for the payment of cash, in whole or in part, in settlement and
satisfaction thereof, and in such case, the cash portion thereof.
"Amended Agreement" is defined in the recitals to this MOU.
"Assets" means all of Seller's right, title and interest in and to all
of the following described holdings:
(i) Two million shares of common stock, par value $.01 per share
("MAC Common Stock"), of Metromedia Asia Corporation ("MAC"),
predecessor-in-interest to Metromedia China Corporation, as evidenced by Stock
Certificate Number 59, dated February 28, 1997; and
(ii) Warrants ("MAC Warrants") to purchase four million shares of
common stock, par value $.01 per share, at $4.00 per share, of MAC, as evidenced
by Warrant Number 19.
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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, Xxxxxx, Branzburg & Xxxxxx
LLP, as escrow agent under the Escrow Agreement.
"Escrow Agreement" is defined in the recitals to this MOU.
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"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 Xxx X. Xxxxxxx, as Agent.
"VDC Shares" is defined in Section 3.2(b) hereof.
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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
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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, xxxx the notes evidencing the Indebtedness satisfied
and deliver the same to Seller.
3.3 Distribution of VDC Shares. In addition to Section 7.6 and subject to
Section 7.7, Seller shall retain the VDC Shares delivered from the Escrow Agent
until such time as a transfer or other disposition of such shares occurs to
Seller's creditors and stockholders pursuant to (a) a confirmed plan of
reorganization providing for the transfer of the VDC Shares pursuant to the
exemption set forth in Bankruptcy Code ss. 1145, or (b) an effective
Registration Statement in accordance with the provisions of Section 7.6 hereof.
3.4 Closing and Post-Closing Adjustments of Cash Purchase Escrow and VDC
Shares.
(a) Forgiveness of the Indebtedness shall constitute a portion of the
Closing Purchase Price, and, as such, shall be applied towards the Closing
Purchase Price under the Amended Agreement upon or after the Closing Date, as
the case may be.
(b) At or before Closing, the Seller shall deliver to the Escrow Agent
a schedule containing the amounts and names of the holders of all priority
unsecured and general unsecured claims for which, as of the Closing Date,
proof(s) of claim have been filed in the scheduled or a lesser amount ("Closing
Date Claims"). At Closing, the Escrow Agent shall deliver to Seller from the
Cash Funds an amount equal to the Closing Date Claims for distribution to the
holders of Closing Date Claims pursuant to further order of the Court.
(c) Upon the later of (i) Closing or (ii) the entry of a final,
non-appealable Order by the Court approving or ratifying the Settlements, or
otherwise authorizing a settlement and compromise upon the terms of, the
Settlements, including an Order confirming a plan of
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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
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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:
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(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
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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 X-0, X-0, 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
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that such inclusion would adversely affect the marketing of the securities to be
sold by the Buyer therein. Notwithstanding the foregoing, the Buyer may withdraw
any registration statement referred to in this Section 3.5(b) without thereby
incurring liability to the Seller.
(ii) The following provisions of this Section 3.5(b) shall also be
applicable:
(A) The Buyer shall bear the entire cost and expense of any
registration of securities initiated by it under subsection (i) of this Section
3.5(b) notwithstanding that Deferred Purchase Price Shares may be included in
any such registration. The Seller shall, however, bear the fees of its own
counsel and any registration fees, transfer taxes or underwriting discounts or
commissions applicable to the Deferred Purchase Price Shares sold by it pursuant
to any registration statement pursuant to this Section 3.5(b) and bear any other
costs imposed by applicable federal or state securities laws, rules or
regulations.
(B) The Buyer shall indemnify and hold harmless the Seller and
each underwriter, within the meaning of the Act, who may purchase from or sell
for the Seller any Deferred Purchase Price Shares from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under the Act filed by or at the direction of the Buyer or any
prospectus included therein required to be filed or furnished by reason of this
Section 3.5(b) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims damages or
liabilities are caused by any such untrue statement or omission or alleged
omission based upon information furnished or required to be furnished in writing
to the Buyer by the Seller or underwriter expressly for use therein, which
indemnification shall include each person, if any, who controls any such
underwriter within the meaning of such Act; provided, however, that the Buyer
shall not be obliged so to indemnify the Seller or underwriter or controlling
person unless the Seller or underwriter shall at the same time indemnify the
Buyer, its directors, each officer signing the related registration statement
and each person, if any, who controls the Buyer within the meaning of such Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or any prospectus required to be filed or furnished
by reason of this Section 3.5(b) or caused by any omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, insofar as such losses, claims, damages or liabilities
are caused by any untrue statement or alleged untrue statement or omission based
upon information furnished in writing to the Buyer by the Seller or underwriter
expressly for use therein.
(c) The Deferred Purchase Price shall be calculated in accordance with
the following formula:
MAC Market Price - VDC Market Price x $5,000,000
---------------- ----------------
MAC Base Price VDC Base Price
12
For example, assuming that the MAC Market Price is $13.20, and the VDC
Market Price is $5.00, the Deferred Purchase Price would equal (10% - 0%) x
($5,000,000) = $500,000.
If the number calculated from the above formula is negative, there is no
Deferred Purchase Price.
(d) Notwithstanding anything to the contrary contained herein, in the
event that on the one year anniversary of the Closing Date, MAC is not a
publicly held company whose shares are registered with the SEC under the 1934
Act, Buyer shall have no obligation to pay the Deferred Purchase Price.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
4.1 Disclosure Schedule. Seller has delivered or caused to be delivered to
Buyer, prior to the execution of this MOU, disclosure schedules, and documents
relating thereto, which include the numbered schedules specifically referred to
in this MOU and which are attached hereto (collectively, the "Disclosure
Schedule"). To the best of Seller's knowledge, the information contained in the
Disclosure Schedule is complete and accurate in all material respects and all
documents that are attached to the Disclosure Schedule are complete and accurate
copies of the genuine original documents they purport to represent as in effect
on the date hereof. Capitalized terms used in the Disclosure Schedule and not
otherwise defined therein have the meanings ascribed to such terms in this MOU.
4.2 Organization and Standing of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Subject only to approval by the Court, Seller has all requisite
corporate power and authority to sell the Assets, free and clear of any and all
Liens, including, without limitation, any restrictions upon resale under
applicable federal or state securities rules, regulations or laws. A certified
copy of Seller's Articles of Incorporation and Bylaws are attached to Schedule
4.2 of the Disclosure Schedule.
4.3 Encumbrances Created by the Amended Agreement. The execution and
delivery of the Amended Agreement and each of the Related Documents does not,
and the consummation of the transactions contemplated hereby or thereby will not
create (i) any Liens on any assets (including the Assets) of Seller in favor of
third parties, or (ii) any restrictions upon resale of the Assets under
applicable federal or state securities rules, regulations or laws.
4.4 Title to Assets. Seller and Seller's bankruptcy estate own and hold of
record the entire right, title and interest in and to all of the Assets, free
and clear of any and all Liens, including, without limitation, any restrictions
upon resale under applicable federal or state securities rules, regulations or
laws, except the Liens held by Buyer and interests held by MAC which are to be
released upon the Closing.
13
4.5 VDC Shares to Be Transferred Pursuant to Plan or Constitute Restricted
Securities. Seller represents and warrants: (I) (a) that it has prepared and
filed a plan of reorganization and disclosure statement pertaining thereto
within the original period fixed by ss. 1121(b) of the Bankruptcy Code, (b) that
the Amended Agreement, the transactions contemplated thereby and the
distribution of the VDC Shares are and will be under and in accordance with such
plan as contemplated by ss. 1145 of the Bankruptcy Code, or (II) upon Seller's
failure to obtain a declaration from the Court that the offer, sale or transfer
of the VDC Shares is exempt from registration pursuant to Bankruptcy Code ss.
1145 in accordance with a plan of reorganization, (a) that it has reviewed the
annual and periodic reports of Buyer, as filed by Buyer with the SEC pursuant to
the Securities Exchange Act of 1934, and that it has such knowledge and
experience in financial and business matters that it is capable of utilizing the
information set forth therein concerning Buyer to evaluate the risks of
investing in the VDC Shares; (b) that it has been advised that the VDC Shares to
be issued by Buyer constitute "restricted securities" as defined in Rule 144
promulgated under the Securities Act, and accordingly, have not been and will
not be registered under the Securities Act except as otherwise set forth in the
Amended Agreement, and, therefore, it may not be able to sell or otherwise
dispose of such VDC Shares except if the VDC Shares are subject to an effective
Registration Statement filed with the SEC, in compliance with Rule 144 or
otherwise pursuant to an exemption from registration under the Act; (c) that the
VDC Shares so issued are being acquired by them for their own benefit and on
their own behalf for investment purposes and not with a view to, or for sale or
for resale in connection with, a public offering or re-distribution thereof,
except in accordance with and pursuant to a confirmed plan of reorganization and
confirmation order entered by the Court; (d) that the VDC Shares so issued will
not be resold (i) without registration thereof under the Securities Act (unless
an opinion of counsel acceptable to VDC, or to Buyer, an exemption from such
registration is available), (ii) in violation of any law; and (e) that the
certificate or certificates representing the VDC Shares to be issued will be
imprinted with a legend in form and substance as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION,
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, BASED ON AN OPINION
LETTER OF COUNSEL FOR THE COMPANY OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION.
and Buyer is hereby authorized to notify the transfer agent of the status of the
VDC Shares, and to take such other action including, but not limited to, the
placing of a "stop transfer" order on the books and records of Buyer's transfer
agent to ensure compliance with the foregoing and Sections 7.6 and 7.7 hereof.
4.6 Brokers' Fees. No broker, finder or other person or entity acting in a
similar capacity has participated on behalf of Seller in connection with the
transactions contemplated by
14
the Amended Agreement. Seller has not incurred any Liability for brokers' fees,
finders' fees, agents' commissions or other similar forms of compensation in
connection with the Amended Agreement or the transactions contemplated thereby.
4.7 Avoidance. The transactions contemplated hereby are not subject to
avoidance as fraudulent transfers or fraudulent conveyances under applicable
non-bankruptcy law or the Bankruptcy Code.
4.8 Fair Value. Seller acknowledges and agrees that the Purchase Price
constitutes fair, adequate and reasonably equivalent consideration in exchange
for the Assets.
4.9 Settlements. To the best of Seller's knowledge, the Settlements are
enforceable in Seller's bankruptcy case, and Seller will vigorously attempt to
enforce them in Seller's Chapter 11 bankruptcy case, to the extent necessary.
4.10 Full Disclosure. No representation or warranty by Seller in the
Amended Agreement or this MOU and no statement contained in any Disclosure
Schedule to the Amended Agreement or this MOU contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances in which they are
made, not misleading.
.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Organization and Standing of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Bermuda.
5.2 Authorization and Enforceability. Buyer has all requisite corporate
power and authority to enter into the Amended Agreement and the Related
Documents to which it is a party and to carry out the transactions contemplated
hereby and thereby and to perform its obligations hereunder and thereunder. All
necessary and appropriate action has been taken by Buyer with respect to the
execution and delivery of the Amended Agreement and each of the Related
Documents and the performance of its obligations hereunder and thereunder. The
execution and delivery of the Amended Agreement and the Related Documents and
the consummation of the contemplated transactions by Buyer will not (a) result
in the breach of any of the terms or conditions of, or constitute a default
under, the Memorandum of Association or the Bye-Laws of Buyer or (b) violate any
Law or any order, writ, injunction or decree of any Governmental Authority. The
Amended Agreement and any Related Documents to which Buyer is a party constitute
valid and binding obligations of Buyer enforceable against Buyer in accordance
with their respective terms.
5.3 VDC Shares. The VDC Shares delivered by Buyer at Closing will be
validly and legally issued, free and clear of any and all Liens, and will be
fully paid and non-assessable. The
15
VDC Shares constitute "restricted securities" as such term is defined in Rule
144 under the Act and may not be subsequently offered, sold or transferred
without registration under the Act except pursuant to Bankruptcy Code ss. 1145
or pursuant to an exemption from registration under the Act. The VDC Shares are
also subject to the restrictions on resale set forth in Section 7.7 hereof.
5.4 Approval. The Board of Directors of the Buyer has approved the
execution of the Amended Agreement and the transactions contemplated thereby.
5.5 Brokers' Fees. Buyer has not incurred any liability for brokers' fees,
finders' fees, agents' commissions or other similar form of compensation in
connection with the Amended Agreement and the transactions contemplated hereby
for which Seller shall have any responsibility.
5.6 Full Disclosure. No representation or warranty by Buyer in this MOU or
the Amended Agreement contains any untrue statement of a material fact or omits
to state a material fact necessary to make the statements contained therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE 6
CLOSING
6.1 Closing. Subject to satisfaction or waiver of all conditions precedent
set forth in Articles 8 and 9 of the Amended Agreement, the closing of the
transactions contemplated by the Amended Agreement (the "Closing") shall take
place at the offices of Xxxxxxxx Xxxxxxxxx Professional Corporation, at 10:00
a.m., local time the day on which the last of the conditions precedent set forth
in either Article 8 or 9 of the Amended Agreement is fulfilled (the "Closing
Date") or at such other time, date and place as the parties may agree, but in no
event shall such date be later than July 1, 1998.
6.2 Obligations of Seller. At or prior to the Closing, Seller shall deliver
to Buyer, in each case, in form and substance satisfactory to Buyer:
(a) a newly issued share certificate issued in the name of Buyer, free
of any restriction on transfer thereof, representing 2,000,000 shares of common
stock, par value $.01 per share, of Metromedia China Corporation;
(b) a newly issued warrant certificate issued in the name of Buyer,
free of any restriction on transfer thereof, representing the right to purchase
4,000,000 shares of common stock, par value $.01 per share, of Metromedia China
Corporation, at $4.00 per share;
(c) a written release by all of the parties to the Termination
Agreement agreeing to the release of the MAC Common Stock to the Buyer;
16
(d) written evidence from MAC confirming that, as of the Closing Date,
no part of the Assets pledged as collateral under the Termination Agreement has
been sold, assigned, transferred or otherwise disposed of or subject to any
action for any of the foregoing (other than the transaction contemplated in the
Amended Agreement), and that, as of the Closing Date, neither MAC nor its parent
corporation, Metromedia International Group, Inc., contemplates taking any of
the foregoing actions;
(e) such other instruments of transfer as shall be necessary or
appropriate to vest in the Buyer good and marketable title to the Assets;
(f) such other documents as may be described in Article 8 of this MOU;
and
(g) a certified copy of the Order approving the Amended Agreement and
authorizing Seller to consummate the transactions contemplated hereby and all
certifications of service and publication filed in connection therewith.
6.3 Obligations of Buyer. At the Closing, Buyer shall deliver:
(a) the Purchase Price in accordance with Article 3 of this MOU;
(b) such other documents as may be described in Article 9 of this MOU;
and
(c) the Deferred Purchase Price Note.
6.4 Further Documents or Necessary Action. Buyer and Seller each agree to
take all such further actions on or after the Closing Date as may be necessary,
desirable or appropriate in order to confirm or effectuate the transactions
contemplated by this MOU and the Amended Agreement.
ARTICLE 7
COVENANTS AND AGREEMENTS
Seller covenants to and agrees with Buyer, and Buyer covenants to and
agrees with Seller, as follows:
7.1 Conduct of Business Pending the Closing. During the period from the
date of the Amended Agreement to the Closing Date, Seller shall conduct its
business operations in the ordinary and usual course and to maintain its records
and books of account in a manner consistent with prior periods. Seller shall,
without purporting to make any commitment on behalf of Buyer, exercise
reasonable efforts to preserve intact the present business organization and
personnel of Seller and the present goodwill of Seller with persons having
business dealings with them. Except as otherwise required or contemplated
hereby, Seller further covenants and agrees that, from the date of the Amended
Agreement to the Closing Date, it shall not, without the written consent of
Buyer:
17
(a) enter into any negotiations, discussions or agreements
contemplating, affecting or respecting the Assets or Seller's ability to
transfer the Assets;
(b) enter into any negotiations, discussions or agreements
contemplating or respecting the acquisition of Seller or any material asset
thereof (other than in the ordinary course of business), whether through a sale
of stock, a merger or consolidation, the sale of all or substantially all of the
assets of Seller, any type of recapitalization or otherwise, with the exception
of the Seller's interest in and to its Cambodian venture, the disposition of
which has been discussed with the Buyer;
(c) incur any Liabilities or take any action that would diminish the
value of the Assets;
(d) take any action which would interfere with or prevent performance
of this MOU or the Amended Agreement; or
(e) engage in any activity or enter into any transaction which would be
inconsistent in any respect with any of the representations, warranties or
covenants set forth in this MOU or the Amended Agreement as if such
representations, warranties and covenants were made at a time subsequent to such
activity or transaction and all references to the date of this MOU or the
Amended Agreement, as the case may be, were deemed to be such later date.
7.2 Access By Buyer; Confidentiality. During the period from the date of
the Amended Agreement to the Closing Date, Seller shall cause Buyer, its agents
and representatives to be given full access during normal business hours to the
premises, buildings, offices, books, records, assets (including the Assets),
Liabilities, operations, contracts, files, personnel, financial and tax
information and other data and information of Seller, and shall cooperate with
Buyer in conducting its due diligence investigation of Seller; provided that
such access shall not unreasonably interfere with the normal operations and
employee relationships of Seller. All information provided to or learned by
Buyer as a result of such access or otherwise in connection with the
transactions contemplated by this MOU and the Amended Agreement shall be held in
confidence, except as otherwise disclosed by Seller in its bankruptcy case.
7.3 Access By Seller; Confidentiality. During the period from the date of
the Amended Agreement to the Closing Date, Buyer shall cause Seller, its agents
and representatives to be given full access during normal business hours to the
premises, buildings, offices, books, records, assets, liabilities, operations,
contracts, files, personnel, financial and tax information and other data and
information of Buyer, and shall cooperate with Seller in conducting its due
diligence investigation of Buyer; provided that such access shall not
unreasonably interfere with the normal operations and employee relationships of
Buyer. Buyer shall provide Seller with copies of all reports and/or findings
made with the SEC from the date hereof through the Closing. All information
provided to or learned by Seller as a result of such access or otherwise in
connection with the transactions contemplated by this MOU and the Amended
Agreement shall be held in confidence.
18
7.4 Notice of Breach or Failure of Condition. Seller and Buyer agree to
give prompt notice to the other of the occurrence of any event or the failure of
any event to occur that might preclude or interfere with the timely satisfaction
of any condition precedent to the obligations of Seller or Buyer under the
Amended Agreement.
7.5 Best Efforts. Seller and Buyer shall use their respective best efforts
to obtain all consents or approvals necessary to bring about the satisfaction of
the conditions required to be performed, fulfilled or complied with by them
pursuant to the Amended Agreement and to take or cause to be taken all action,
and to do or cause to be done all things, necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
by the Amended Agreement as expeditiously as practicable.
7.6 Resales and Transfers of VDC Shares. Buyer and Seller contemplate that
an offer and sale of the VDC Shares to Seller and any resale or transfer thereof
by or on behalf of Seller will be exempt from registration by virtue of Section
1145 of the Bankruptcy Code. Buyer agrees that, to the extent, and only to the
extent, that an offer, sale, resale or transfer of the VDC Shares is subject to
the registration requirements of the Act, then within forty-five (45) days after
the entry of an order of the Court confirming a plan of reorganization of the
Seller, Buyer shall, at its sole expense, file with the SEC a registration
statement (the "Registration Statement") which shall register the offer, sale,
resale, transfer or distribution of the VDC Shares from VDC to PortaCom, and by
or on behalf of PortaCom to its stockholders and creditors pursuant to such a
plan, thereafter shall use its best efforts to cause such Registration Statement
to become effective in accordance with the requirements of the Act and to remain
effective until the earlier of (i) one year after the date such Registration
Statement becomes effective or (ii) PortaCom has transferred and distributed the
VDC Shares in accordance with such plan of reorganization.
7.7 Restrictions on Resale of VDC Shares.
(a) Resale of the VDC Shares, regardless of whether such shares may be
sold, offered or transferred by Seller pursuant to Section 1145 of the
Bankruptcy Code or pursuant to an effective registration statement filed
pursuant to Section 7.6 above, shall be subject to the following additional
limitations:
(i) 25% of the VDC Shares, inclusive of the Administrative Shares
disbursed pursuant to Section 3.4(g) above (the "First Series"), may
only be sold, offered or transferred upon the earlier of (A)
confirmation of a plan of reorganization of Seller providing an
exemption from the registration requirements of the Act Section 1145 of
the Bankruptcy Code or (B) the effectiveness of the Registration
Statement provided in Section 7.6 above (the "First Resale Date");
(ii) 25% of the VDC Shares (the "Second Series") may only be
sold, offered or transferred upon the six month anniversary of the
First Resale Date; and
19
(iii) the remaining 50% of the VDC Shares (the "Third Series")
may only be sold, offered or transferred upon the one year anniversary
of First Resale Date.
(b) Notwithstanding the rights granted hereunder, Buyer shall have no
obligation whatsoever to:
(i) assist or cooperate in the offering or disposition of the VDC
Shares;
(ii) indemnify or hold harmless the holders of the VDC Shares or
any underwriter designated by such security holders;
(iii) obtain a commitment from an underwriter relative to the
sale of the VDC Shares; or
(iv) include the VDC Shares within an underwritten offering of
Buyer.
(c) The VDC Shares representing the First Series (which shall include
the Administrative Shares) distributed to Seller and its stockholders shall bear
the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON RESALE AS SET FORTH IN SECTION 7.6(a)(i) OF A CERTAIN
ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998 BETWEEN THE COMPANY AND
PORTACOM WIRELESS, INC. ("PORTACOM"), AS AMENDED, AND SECTION 7.7(a)(i)
OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998
BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS
OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY OF THE AGREEMENT
MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH
PROHIBITS THE SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH
TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE MOU).
(d) The VDC Shares representing the Second Series distributed to Seller
and its stockholders shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON RESALE AS SET FORTH IN
20
SECTION 7.6(a)(ii) OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH
23, 1998 BETWEEN THE COMPANY AND PORTACOM WIRELESS, INC. ("PORTACOM")
AND SECTION 7.7(a)(ii) OF A CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU")
DATED JUNE 8, 1998 BETWEEN THE COMPANY, PORTACOM AND THE COMMITTEE OF
UNSECURED CREDITORS OF PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY
OF THE AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF OTHER THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT,
WHICH PROHIBITS THE SALE, TRANSFER OR OTHER DISPOSITION OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE UNTIL THE "FIRST RESALE
DATE" (AS SUCH TERM IS DEFINED IN SECTION 7.7(a)(i) OF THE MOU).
(e) The VDC Shares representing the Third Series distributed to Seller
and its stockholders shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON RESALE AS SET FORTH IN SECTION 7.6(a)(iii) OF A CERTAIN
ASSET PURCHASE AGREEMENT DATED MARCH 23, 1998 BETWEEN THE COMPANY AND
PORTACOM WIRELESS, INC. ("PORTACOM") AND SECTION 7.7(a)(iii) OF A
CERTAIN MEMORANDUM OF UNDERSTANDING ("MOU") DATED JUNE 8, 1998 BETWEEN
THE COMPANY, PORTACOM AND THE COMMITTEE OF UNSECURED CREDITORS OF
PORTACOM (COLLECTIVELY, THE "AGREEMENT"). A COPY OF THE AGREEMENT MAY
BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF OTHER
THAN IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT, WHICH PROHIBITS THE
SALE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE UNTIL THE "FIRST RESALE DATE" (AS SUCH TERM IS DEFINED
IN SECTION 7.7(a)(i) OF THE MOU).
7.8 Loans. Buyer has made advances to the Seller under and in accordance
with the Loan, Security and Pledge Agreement in the aggregate principal amount
of $384,725 as of the date hereof and is under no obligation to, and may not
pursuant to order of the Court, make additional advances to Seller. The
Indebtedness shall be applied on account of the Purchase Price pursuant to
Section 3.4 hereof.
21
7.9 Exclusive Dealing. In consideration of Buyer expending considerable
time and expenses in connection with the transactions contemplated in the
Amended Agreement, including those incurred for due diligence inquiries and
legal fees, Seller hereby covenants and agrees that until the date on which the
Amended Agreement is terminated pursuant to Sections 11.1, 11.2 or 11.3, Seller
will not, directly or indirectly, through any representative or otherwise,
solicit or entertain offers from, negotiate with or in any manner encourage,
discuss, accept or consider any proposal of any other person relating to the
acquisition of the Assets, in whole or in part, whether directly or indirectly,
through purchase, merger, consolidation or otherwise, except as otherwise may be
required by law or order of the Court.
7.10 Good Faith. Seller and Buyer have each acted and negotiated this MOU
in good faith. This MOU represents an arms-length agreement among the parties,
absent collusion, coercion or duress. The Purchase Price to be paid by the Buyer
for the Assets in accordance herewith, represents the fair and reasonably
equivalent value of and for the Assets. Further, the Order approving the Amended
Agreement shall provide that the reversal or modification or appeal thereof will
not affect the validity of the Closing of the sale of the Assets to Buyer under
and in accordance with such Order by virtue of specific findings that the Buyer
purchased the Assets in good faith, unless such Order is stayed prior to the
Closing.
7.11 Bidding Procedures. [Intentionally omitted].
7.12 Cooperation. Seller and Buyer agree that they will cooperate in good
faith with respect to all proceedings before the Court in the case in connection
with the approval and consummation of the Amended Agreement and this MOU and the
transactions contemplated hereby.
7.13 Cash Purchase Escrow. Interest and all other earnings on the Cash
Purchase Escrow shall inure to the benefit of Buyer. The excess Cash Purchase
Escrow, or any portion thereof, shall be returned to Buyer from time to time at
such time as any Disputed Claim becomes an Allowed Claim, as provided for in
Section 3.4 hereof. All other terms and conditions of the escrow are set forth
in the Escrow Agreement. The Escrow Agreement, except Section 8(a) thereof as
expressly modified by Section 3.4(b) hereof, shall remain in full force and
effect; provided, however, that the terms of Section 10 of the Escrow Agreement
shall remain in full force and effect notwithstanding anything to the contrary
contained herein.
7.14 Post-Closing Agreement. Seller and Buyer covenant and agree to enter
into a Post-Closing Agreement on the Closing Date that shall include an
obligation on the part of Seller to file an amended plan of reorganization with
the Court identifying the sale, offer, transfer or distribution of the VDC
Shares from Buyer to Seller and from Seller to Seller's creditors and
stockholders as exempt from registration under Section 1145 of the Bankruptcy
Code consistent with the terms hereof.
7.15 Non-Refundable Deposit. The Administrative Advance and, by virtue of
the entry of the Order, $260,000 of the Cash Purchase Escrow shall be
non-refundable as to Buyer, except in the event of a default by Seller under the
Amended Agreement.
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ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
All obligations of Buyer under the Amended Agreement are subject to the
satisfaction by Seller at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Buyer:
8.1 Representations and Warranties True at Closing. The representations and
warranties of Seller contained in this MOU shall have been true and correct in
all material respects when made and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made again on the Closing Date.
8.2 Performance. Seller shall have performed and complied in all material
respects with all agreements and conditions required by this MOU and the Amended
Agreement to be performed or complied with by Seller prior to or at the Closing,
including, without limitation, the delivery to Buyer of the documents listed in
Section 6.2.
8.3 No Adverse Changes. Except as contemplated by this MOU, there shall
have been no material adverse change in the condition, prospects, business or
operations, financial or otherwise, of Seller from the date of the Amended
Agreement to the Closing Date.
8.4 Litigation. On the Closing Date, there shall not be any pending or
threatened litigation in any court or any proceedings by or before any
Governmental Authority with a view to seek, or in which it is sought, to
restrain or prohibit the consummation of the transactions contemplated by this
MOU or in which it is sought to obtain divestiture, rescission or damages in
connection with the transactions contemplated by this MOU and no investigation
by any Governmental Authority shall be pending which might result in any such
litigation or other proceeding.
8.5 Necessary Consents. All statutory requirements for the valid
consummation by Buyer of the transactions contemplated by this MOU shall have
been fulfilled and all authorizations, consents, waivers, approvals or other
actions by any Governmental Authority or third party which are required for the
consummation of the transactions contemplated by this MOU shall have been
received and shall be in full force and effect.
8.6 Stockholder Approval. To the extent required by the laws of Bermuda,
the stockholders of Buyer shall have approved the transactions contemplated by
this MOU.
8.7 Certificate. Seller shall have delivered to Buyer a certificate, dated
as of the Closing Date, of the Seller to the effect that the conditions set
forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.8 have been satisfied.
8.8 Consents. Seller shall have provided written consents to the
acquisition of the Assets by Buyer from all appropriate Governmental Authorities
(to the extent so required by law) in form and substance reasonably acceptable
to Buyer.
23
8.9 Due Diligence. Buyer shall have completed, to its satisfaction, a due
diligence review of the financial condition, results of operations, properties,
assets, liabilities, business and prospects of Seller.
8.10 Satisfaction of Claims. The Settlements shall be determined to be
enforceable against the non-Seller parties thereto in accordance with their
terms in the Seller's bankruptcy case. Seller shall use its best efforts to
resolve claims against its bankruptcy estate as soon as is practicable.
8.11 Court Approval. The Court has entered the Order. The Order shall not
be subject to a pending appeal, or motion for reconsideration, modification,
vacation or stay, and as to which any appeal or motion, the time to file such
appeal or motion has expired, or any such appeal or motion that may have been
filed has been dismissed with prejudice or otherwise disposed of without
impacting negatively the validity and enforceability of the Order contemplated
hereby.
8.12 Escrow Agreement. The Committee and Escrow Agent shall have executed
this MOU, agreeing to the amendment and modification of Section 8(a) of the
Escrow Agreement by Section 3.4(b) hereof. There shall not have occurred and be
continuing an uncured event of default under the Escrow Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
All obligations of Seller under the Amended Agreement are subject to
the satisfaction by Buyer at or before the Closing of all of the following
conditions, except to the extent expressly waived in writing by Seller:
9.1 Representations and Warranties True at Closing. The representations and
warranties of Buyer contained in this MOU shall have been true and correct in
all material respects when made and shall be true and correct in all material
respects on the Closing Date as though such representations and warranties were
made again on the Closing Date; provided, however, that if Buyer changes its
jurisdiction of incorporation from the Commonwealth of Bermuda to the State of
Delaware on or before the Closing Date, Buyer shall be deemed to represent in
Section 5.1 that it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
9.2 Performance. Buyer shall have performed and complied, in all material
respects, with all agreements and conditions required by this MOU and the
Amended Agreement to be performed or complied with by Buyer prior to or at the
Closing.
9.3 No Adverse Changes. Except as contemplated by this MOU, there shall
have been no material adverse change in the condition, business or operations,
financial or otherwise, of Buyer from the date of the Amended Agreement to the
Closing Date.
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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;
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(iii) all liability, loss, damage or deficiency resulting from or
arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Seller in the Amended Agreement or this
MOU, in any Related Document to which Seller was a signatory or in any
other agreement or document delivered by or on behalf of Seller in
connection with the transactions contemplated by this MOU and the
Amended Agreement; and
(iv) any and all reasonable costs and expenses (including
reasonable legal and accounting fees) related to any of the foregoing.
In the event that Buyer makes a Claim which is determined by a court
of competent jurisdiction to be without reasonable basis in law or
fact, Buyer shall bear all reasonable costs and expenses (including
court costs and reasonable legal and accounting fees), incurred by
Seller in investigating and defending against such Claim,
which indemnification obligation of Seller shall be secured by the Deferred
Purchase Price and the VDC Shares that remain unissued in the possession of the
Escrow Agent or not further distributed to creditors or stockholders of Seller
and Buyer shall have the right of offset with respect thereto.
10.3 Indemnification by Buyer.
(a) Buyer shall indemnify Seller against and hold it harmless from:
(i) all liability, loss, damage or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation or
warranty by Buyer in the Amended Agreement or this MOU in any Related
Document or in any other agreement or document delivered by or on
behalf of Buyer in connection with the transactions contemplated by
this MOU and the Amended Agreement;
(ii) all liability, loss, damage or deficiency resulting from or
arising out of any breach or nonperformance of any covenant or
obligation made or incurred by Buyer in the Amended Agreement and this
MOU, in any Related Document, or in any other agreement or document
delivered by or on behalf of Buyer in connection with the transactions
contemplated by this MOU and the Amended Agreement; and
(iii) any and all reasonable costs and expenses (including
reasonable legal and accounting fees) related to any of the foregoing.
In the event that Seller makes a Claim which is determined by a court
of competent jurisdiction to be without reasonable basis in law or
fact, Seller shall bear all reasonable costs and expenses (including
court costs and reasonable legal and accounting fees), incurred by
Buyer in investigating and defending against such Claim.
10.4 Third Party Claims. If any action, suit, investigation or proceeding
(including without limitation negotiations with federal, state, local or foreign
tax authorities) shall be threatened or commenced by a third party in respect of
which a party (an "Indemnified Party")
26
may make a Claim hereunder, the Indemnified Party shall notify the party
obligated to indemnify such party hereunder (the "Indemnifying Party") to that
effect with reasonable promptness (so as to not prejudice such party's rights)
after the commencement or threatened commencement of such action, suit,
investigation or proceeding, and the Indemnifying Party shall have the
opportunity to defend against such action, suit, investigation or proceeding
(or, if the action, suit, investigation or proceeding involves to a significant
extent matters beyond the scope of the indemnity agreement contained herein,
those claims that are covered hereby) subject to the limitations set forth
below. If the Indemnifying Party elects to defend against any action, suit,
investigation or proceeding (or, as described in the preceding parenthetical,
one or more claims relating thereto), the Indemnifying Party shall notify the
Indemnified Party to that effect with reasonable promptness. In such case, the
Indemnified Party shall have the right to employ its own counsel and participate
in the defense of such matter, but the fees and expenses of counsel shall be at
the expense of the Indemnified Party unless the employment of such counsel at
the expense of the Indemnifying Party shall have been authorized in writing by
the Indemnifying Party. Any party granted the right to direct the defense of a
threatened or actual suit, investigation or proceeding hereunder shall: (i) keep
the other fully informed of material developments in the action, suit,
investigation or proceeding at all stages thereof; (ii) promptly submit to the
other copies of all pleadings, responsive pleadings, motions and other similar
legal documents and papers received in connection with the action, suit,
investigation or proceeding; (iii) permit the other and its counsel, to the
extent practicable, to confer on the conduct of the defense of the action, suit,
investigation or proceeding; and (iv) to the extent practicable, permit the
other and its counsel an opportunity to review all legal papers to be submitted
prior to their submission. The parties shall make available to each other and
each other's counsel and accountants all of its or their books and records
relating to the action, suit, investigation or proceeding, and each party shall
render to the other such assistance as may be reasonably required in order to
insure the proper and adequate defense of the action, suit, investigation or
proceeding. The parties shall use their respective good faith efforts to avoid
the waiver of any privilege of either party. The assumption of the defense of
any matter by an Indemnifying Party shall not constitute an admission of
responsibility to indemnify or in any manner impair or restrict such party's
rights to later seek to be reimbursed its costs and expenses if indemnification
under the Amended Agreement or this MOU with respect to such matter was not
required. An Indemnifying Party may elect to assume the defense of a matter at
any time during the pendency of such matter, even if initially such party did
not elect to assume such defense, so long as such assumption at such later time
would not prejudice the rights of the Indemnified Party. No settlement of a
matter by the Indemnified Party shall be binding on an Indemnifying Party for
purposes of such party's indemnification obligations hereunder.
ARTICLE 11
TERMINATION
11.1 Termination by Mutual Consent. At any time on or prior to the Closing
Date, the Amended Agreement and this MOU may be terminated by the mutual written
consent of Seller and Buyer without liability, including deposits not paid, on
the part of Seller or Buyer.
27
11.2 Termination Upon Breach or Default. If Seller or Buyer shall
materially default in the observance or in the due and timely performance of any
of the covenants contained in the Amended Agreement, or if there shall have been
a material breach by either of the parties of any of the representations or
warranties set forth in this MOU, the other party may, upon written notice and a
reasonably opportunity to cure, terminate the Amended Agreement, without
prejudice to its rights and remedies available at law, including the right to
recover expenses, costs and other damages.
11.3 Termination Based Upon Failure of Conditions. If any of the conditions
of the Amended Agreement to be complied with or performed by a party on or
before the Closing Date, shall not have been complied with or performed in all
material respects by such date and such noncompliance or nonperformance shall
not have been waived in writing by the other party, the party to whom the
benefit of such condition runs may, upon written notice, terminate the Amended
Agreement, without prejudice to its or their rights and remedies available under
law, including the right to recover expenses, costs and other damages, and, upon
a breach of this Section 11.3 by Seller, Buyer shall be entitled to retain all
unpaid deposits.
11.4 Break-Up Fees. Notwithstanding anything to the contrary contained
within this MOU or the Amended Agreement, in the event Seller is unable to, or
elects not to complete the transactions contemplated by this MOU for any reason,
except: (i) a breach by Buyer of any of its representations, warranties and
covenants contained herein or (ii) a material adverse development in the
business or operations of Buyer between the date of the Amended Agreement and
the Closing Date, then, and in that event, Seller shall pay Buyer a break-up fee
equal to One Million Dollars ($1,000,000) ("Break-Up Fee") in order to reimburse
Buyer for its time and expenses incurred in connection with the transactions
contemplated in this MOU and the Amended Agreement, as well as for any lost
opportunity costs and direct and indirect consequential damages. Payment of the
Break-Up Fee shall be made by wire transfer of immediately available funds to an
account designated by Buyer not later than five (5) days after receipt by Seller
of a written demand for the Break-Up Fee by Buyer, but in no case later than
Seller's receipt of proceeds from the sale or other disposition of the Assets,
directly or indirectly. Seller acknowledges that any payment of the Break-Up Fee
will be treated as one for liquidated damages and not a penalty, such being
agreed between Buyer and Seller to be a necessary condition to this MOU and the
Amended Agreement to compensate Buyer for expenses and expenditures incurred and
made in connection herewith and otherwise for Seller's non-compliance with this
MOU and the Amended Agreement.
11.5 Final Expiration. The Amended Agreement shall automatically expire if
the Closing does not occur on or before July 1, 1998, or, upon such later date
as VDC in its sole discretion may determine; provided, however, that such later
date shall not be later than December 31, 1998.
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ARTICLE 12
GENERAL
12.1 Entire Agreement. Subject to Section 12.10, this MOU, and the exhibits
and schedules hereto (including the Disclosure Schedule), and the agreements
specifically referred to herein, including the Escrow Agreement, as amended by
Section 3.4(b) hereof, and the documents evidencing the Indebtedness, set forth
the entire agreement and understanding of Seller and Buyer in respect of the
transactions contemplated hereby and, except with respect to the provisions of
Section 13 of the Letter of Intent and the no shop provisions set forth in
Section 8 of the Letter of Intent, supersede all prior agreements, arrangements
and understandings relating to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by Seller or Buyer
that is not embodied in this MOU or in the documents specifically referred to
herein and neither Seller nor Buyer shall not be bound by or liable for any
alleged representation, promise, inducement or statement of intention not so set
forth.
12.2 Binding Effect; Benefits; Assignment. By virtue of the entry of the
Order by the Court approving the Amended Agreement, all of the terms of the
Amended Agreement are binding upon, inure to the benefit of and are enforceable
by and against Seller and its successors and authorized assigns, and Buyer and
its successors and authorized assigns. Nothing in this MOU or the Amended
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies under or by reason of this MOU or the Amended Agreement
except as expressly indicated herein. Neither Seller nor Buyer shall assign any
of their respective rights or obligations under this MOU or the Amended
Agreement to any other person, firm or corporation without the prior written
consent of the other party, except that Buyer may assign its rights and
obligations under this MOU or the Amended Agreement to a direct or indirect
wholly-owned subsidiary of Buyer, although Buyer shall remain fully responsible
for all of its obligations under this MOU or the Amended Agreement.
12.3 Construction. The headings of the sections and paragraphs of this MOU
have been inserted for convenience of reference only and shall in no way
restrict or otherwise modify any of the terms or provisions hereof. The language
used in this MOU shall be deemed to be the language chosen by the parties to
this MOU and the Amended Agreement to express their mutual intent, and no rule
of strict construction shall be applied against any party.
12.4 Amendment and Waiver. This MOU may be amended, modified, superseded or
canceled and any of the terms, covenants, representations, warranties or
conditions hereof may be waived only by a written instrument executed by Seller
and Buyer or, in the case of a waiver, by or on behalf of the party waiving
compliance.
12.5 Governing Law. This MOU shall be governed by and construed in
accordance with the laws of the State of Delaware as applicable to contracts
made and to be performed in Delaware, without regard to conflict of laws
principles.
12.6 [Intentionally omitted].
29
12.7 Notices. All notices, requests, demands and other communications to be
given pursuant to the terms of this MOU shall be in writing and shall be deemed
to have been duly given if hand delivered, sent by overnight mail by a
nationally recognized overnight delivery service or mailed first class, postage
prepaid:
(a) If to Seller:
Xxxxxxx Xxxxxxx, President
PortaCom Wireless, Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, Xx., Esquire
Xxxxx and Monzack, P.A.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
and
Xxxxxxx Xxxxxxxx, Esquire
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
b) If to Buyer:
Xxxxxxxxx X. Xxxxx, Chief Executive Officer
VDC Corporation Ltd.
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
30
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxx Xxxxxxxxx Professional Corporation
Eleven Xxxx Xxxxxx, 00xx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
c) if to the Committee:
Xxxxxxx X. Xxxxxx, Esquire
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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.
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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/ Xxxxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxxxx X. Xxxxx, Chief Executive Officer
PORTACOM WIRELESS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Xxxxxxx X. Xxxxxxx, President
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF PORTACOM WIRELESS, INC.
(the "Committee")
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx, Esquire
Title: Xxxxxx Xxxxxxxx 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, XXXXXX, BRANZBURG
& XXXXXX LLP
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: A Member of the Firm
32
EXHIBIT A
Indebtedness of Seller to be satisfied from proceeds of the Purchase Price
-------------------------------------------------------------------------------
Source of Proceeds
-------------------------------------------------------------------------------
Cash Funds VDC Shares
Creditor/Claimant Amount (amount) (Number)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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EXHIBIT B
Procedures Motion
34
