FUNDING AGREEMENT
                                -----------------

                  THIS FUNDING AGREEMENT (the "Agreement"),  is dated as of June
14, 2000 by and between Voice & Data  Communications  (Latin  America),  Inc., a
Delaware  corporation  (the  "Sub"),  and VDC  COMMUNICATIONS,  INC., a Delaware
corporation (the "Company").

                              W I T N E S S E T H:
                              --------------------

         WHEREAS,  pursuant to a Merger Agreement by and among the Company,  the
Sub,  Rare  Telephony,  Inc.,  a Nevada  corporation  (f/k/a  Washoe  Technology
Corporation)  ("Rare  Telephony"),  and the  holders  of all of the  outstanding
shares of common stock of Rare  Telephony  dated May 25, 2000, as amended,  (the
"Merger Agreement"),  Rare Telephony merged with and into the Sub (the "Merger")
for shares of common stock of the Company;

         WHEREAS,  the terms of the Merger Agreement  provided for the execution
of this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein  contained  and other good and  valuable  consideration,  the receipt and
sufficiency of which are hereby acknowledged,  the parties hereto,  intending to
be legally bound, hereby agree as follows:

1.       Establishment of Accounts.
         --------------------------

         (a)      The  Sub  shall  open  up  a  bank  account  (or,  in its sole
discretion,  a money market fund  account) the purpose of which shall be to hold
certain funds which shall be used exclusively to fund the business operations of
Sub and Cash Back Rebates LD.com,  Inc., a Delaware  corporation (the "Cash Back
Account").  The sole  signatory  on the Cash Back  Account  shall be  Clayton F.
Moran.

         (b)      The Sub shall open up a bank account to hold certain funds the
sole purpose of which is to fund the  development  of a robust web site for Free
dot  Calling.com,  Inc.  (the "Free  Account").  The sole  signatory on the Free
Account shall be Clayton F. Moran.

2.       Funding of Accounts.
         --------------------

         (a)      The Company  has agreed to provide up to ONE  MILLION  DOLLARS
AND NO/100 ($1,000,000.00) (the "Commitment") for the operations of Sub (and its
predecessor  Rare  Telephony)  and Cash Back  Rebates  LD.com,  Inc., a Delaware
corporation  ("Cash  Back").  As of the  date  of  this  Agreement,  in  partial
satisfaction  of the  Commitment,  the Company has loaned to Rare  Telephony and
Cash Back, SIX HUNDRED  THOUSAND  DOLLARS AND NO/100  ($600,000.00)  (the "Prior
Loans"). Within five (5) business days of the "Effective Time" of the Merger (as
defined in the Merger  Agreement),  the Company  shall  deposit in the Cash Back
Account,  FOUR  HUNDRED  THOUSAND  DOLLARS  AND  NO/100  ($400,000.00)  in  full
satisfaction of the Commitment.

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<PAGE>

         (b)      The  Company  has  committed to providing ONE HUNDRED THOUSAND
DOLLARS  AND NO/100  ($100,000.00)  (the "Free  Commitment")  to the Sub for the
development of a robust web site for Free.  Within five (5) business days of the
Effective  Time of the Merger,  the Company shall  deposit ONE HUNDRED  THOUSAND
DOLLARS AND NO/100  ($100,000.00)  into the Free Account in full satisfaction of
the Free Commitment.

         (c)      The  "Effective  Time"  of  the  Merger  for  purposes of this
Agreement shall be the Effective Time indicated on an Effective Time Certificate
executed by the Company at the closing of the Merger.

         (d)      Notwithstanding  the  foregoing,  prior to the Company  having
any  obligation to deposit any funds in either the Cash Back Account or the Free
Account,  Sub shall  execute a promissory  note in the form  attached  hereto as
Exhibit "A" for the full  amount to be funded in both the Cash Back  Account and
the Free  Account.  The note shall have a maturity  date of four (4) years after
the  Effective  Time and shall  provide  for an  interest  rate of 8% per annum.
Additionally,  Sub,  Cash  Back and  Free  shall  execute  any  other  documents
reasonably  requested by the Company in connection  with the funding of the Cash
Back  Account and the Free  Account.  Without  limiting  the  generality  of the
foregoing, it is understood and agreed by the parties hereto, that the documents
referenced  in the  preceding  sentence  may  include  guarantees  and  that the
Company, at any time in the Company's sole discretion, may require that the Sub,
Cash Back,  and/or Free (in the Company's  sole  discretion)  execute a Security
Agreement and a UCC-1  covering all items that the Company views as necessary or
reasonable to protect the indebtedness of Sub to the Company.

3.       Disbursement of the Funds in the Cash Back Account.
         ---------------------------------------------------

         (a)      The funds in the Cash  Back  Account  shall be used to pay for
the  normal and  customary  business  expenses  of Cash Back  including  but not
limited to the expenses listed on Exhibit "B" hereto and incorporated  herein by
reference.

         (b)      The funds in the Cash  Back  Account  shall not be used to pay
for extraordinary and non-customary  business or other expenses  including,  but
not  limited  to,  payments  to  employees  outside  the terms of an  employee's
employment  agreement,  loans  or  advances  to  employees,  and  other  similar
expenditures.  Without  limiting the generality of the  foregoing,  it is agreed
that  the  funds  in the  Cash  Back  Account  shall  not be used for any of the
following purposes (unless otherwise approved in advance in writing by the Chief
Executive Officer of the Company):

                  (1)      To make any loan or advance to, or purchase,  acquire
or own any stock,  bonds,  notes or securities of, or any  partnership  interest
(whether general or limited) in, or any other investment or interest in, or make
any capital contribution to, any other person or entity;

                  (2)      To make  any  dividend or other  distribution  of any
nature on account of or in respect of the shares of capital  stock of Sub,  Cash
Back or Fee (collectively  referred to as the "Rare Companies") or on account of
the purchase,  redemption,  retirement or  acquisition of said shares of capital
stock (or warrants, options or rights therefor);

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<PAGE>

                  (3)      To lease or purchase  any new  equipment in excess of
$1,000 for use in the operations of any of the Rare Companies;

                  (4)      To make a payment in settlement  of  any  litigation,
investigation, arbitration, or dispute to which any one of the Rare Companies is
a party or of which any one of the Rare  Companies (or its officers,  directors,
or employees) is aware as of the execution of this Agreement;

                  (5)      To  make  any  payment  for  any   obligation,  lien,
liability,  or  indebtedness  that is  represented  as not existing  (whether by
affirmative  representation,  omission of reference, or otherwise) in the Merger
Agreement; or

                  (6)      To  pay  more  than 1/2 of the legal fees  charged by
Fuhro & Hanley or Walter E. Hanley,  III, in  connection  with or arising out of
the Merger or the Merger Agreement or the Exhibits or Schedules thereto.

         (c)      Attached  hereto  as  Exhibit "C" and  incorporated  herein by
reference  is an  anticipated  schedule  of  disbursements  from the  Cash  Back
Account.

         (d)      The  funds  in  the  Cash Back Account  shall be  disbursed in
accordance  with the terms set  forth in this  Section  3. The funds in the Cash
Back Account shall not be remitted to the Company unless, upon written direction
from the Sub's Chief Executive  Officer,  said funds are remitted to the Company
in repayment of either the Commitment or the Fee Commitment.

4.       Disbursements of the Funds in the Free Account.
         -----------------------------------------------

         The funds in the Free Account shall be used exclusively for the purpose
of  developing a robust web site for Free.  The funds in the Free Account  shall
not be remitted to the Company  unless,  upon written  direction  from the Sub's
Chief Executive Officer,  said funds are remitted to the Company in repayment of
either the Commitment or the Fee Commitment.

5.       Prior Loans.
         ------------

         On the Effective  Time, the Sub shall execute a promissory  note in the
form attached hereto as Exhibit "A" for the full aggregate  principal  amount of
the Prior  Loans (the "New  Note").  The New Note shall  provide for an interest
rate of 8% per annum and a maturity date of four years after the Effective Time.
Upon execution of the New Note,  the original  documents  documenting  the Prior
Loans shall be returned to Sub and all personal  guarantees  given in connection
with the Prior Loans shall be canceled.

6.       Miscellaneous.
         --------------

         (a) The  failure  of  either  party at any  time or  times  to  require
performance  of any  provision  hereof shall in no manner  affect the right at a
later time to enforce the same. To be effective, any waiver must be contained in
a written  instrument signed by the party waiving  compliance by the other party

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<PAGE>

of the term or covenant as  specified.  The waiver by either party of the breach
of any term or covenant  contained herein,  whether by conduct or otherwise,  in
any one or more instances, shall not be deemed to be, or construed as, a further
or continuing  waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.

         (b)      This Agreement shall be binding  upon and inure to the benefit
of the parties hereto and their respective heirs, successors and assigns.

         (c)      Sub  shall not assign this Agreement to any other corporation,
firm or person without the express and written prior consent of the Company. The
Company may assign this Agreement without Sub's consent.

         (d)      This Agreement  may not be  amended  except  by an  instrument
in writing, executed by both parties hereto.

         (e)      If any term or provision of this Agreement  is  determined  to
be illegal,  unenforceable,  or invalid in whole or in part for any reason by an
arbitrator or court of competent jurisdiction,  such illegal,  unenforceable, or
invalid  provisions or part(s) thereof shall be stricken from this Agreement and
such provision shall not affect the legality, enforceability, or validity of the
remainder of this section, then the stricken provision shall be replaced, to the
extent  possible,  with a legal,  enforceable,  and valid  provision  that is as
similar in tenor to the stricken provision as is legally possible.

         (f)      This Agreement may be executed in multiple  counterparts  each
of which shall be an original but all of which together shall constitute one and
the same  instrument.  This  Agreement  may also be executed  and  delivered  by
exchange of facsimile  copies showing the  signatures of the parties,  and those
signatures  need not be affixed to the same copy.  The facsimile  copies showing
the signatures of the parties will  constitute  originally  signed copies of the
Agreement requiring no further execution.

         (g)      The  recitals  to  this  Agreement  constitute  part  of  this
Agreement.

         (h)      All notices,  requests,  instructions,   consents   and  other
communications  to be given pursuant to this  Agreement  shall be in writing and
shall be deemed received (i) on the same day if delivered in person, by same-day
courier or by telegraph,  telex or facsimile  transmission  (receipt  confirmed)
(provided that telegraph,  telex or facsimile notice shall be deemed received on
the next business day if received after 5:00 p.m. Eastern  Standard Time),  (ii)
on the next day if delivered by overnight mail or courier,  or (iii) on the date
indicated on the return  receipt,  or if there is no such receipt,  on the third
calendar day (excluding  Sundays) if delivered by certified or registered  mail,
postage prepaid,  to the party for whom intended to the following  addresses (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other party):

                  (1)      if to Sub at:

                           Frederick A. Moran


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<PAGE>

                           Voice & Data Communications (Latin America), Inc.
                           75 Holly Hill Lane
                           Greenwich,  CT  06830
                           Facsimile: (203) 552-0908

                           with a copy to:

                           Thomas J. Vrabel
                           657 Main Street, Suite 301
                           P.O. Box 9101
                           Passaic, NJ  07055-9101
                           Facsimile: (973) 779-7991

                  (2)      if to the Company at:

                           Frederick A. Moran
                           VDC Communications, Inc.
                           75 Holly Hill Lane
                           Greenwich,  CT  06830
                           Facsimile: (203) 552-0908

                           with a copy to:

                           Louis D. Frost, Esq.
                           VDC Communications, Inc.
                           75 Holly Hill Lane
                           Greenwich,  CT  06830
                           Facsimile: (203) 552-0908


         (i)      This  Agreement  shall  be  governed  by  and  construed   and
interpreted in accordance  with the laws of the State of Connecticut  applicable
to  contracts  executed  and to be  performed  entirely  within said State.  All
controversies  or claims arising out of or relating to this  Agreement  shall be
determined by binding arbitration applying the laws of the State of Connecticut.
The  arbitration  shall be  conducted  at the  Company's  offices in  Greenwich,
Connecticut,  or at such other  location  designated by the Company,  before the
American  Arbitration  Association.  The decision of the arbitrator(s)  shall be
final and binding upon the parties,  and judgment may be obtained thereon in any
court of competent jurisdiction. Each party shall bear the cost of preparing and
presenting  its own case.  The cost of the  arbitration,  including the fees and
expenses of the  arbitrator(s),  shall be shared  equally by the parties  hereto
unless the award otherwise provides.  Nothing herein shall preclude a party from
seeking  injunctive  relief to restrain any breach or  threatened  breach of the
covenants  and  agreements  set forth in this  Agreement  or otherwise to obtain
specific performance of any such covenant or agreement, without the necessity of
posting bond or security in connection therewith.

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<PAGE>

         (j)      This Agreement  shall not be construed  more strictly  against
one party then against the other by virtue of the fact that drafts may have been
prepared  by  counsel  for one of the  parties,  it being  recognized  that this
Agreement  is the  product of  negotiations  between  the  parties  and that the
parties have contributed to the final preparation of this Agreement.

         (k)      Within ten (10) calendar days of receipt of a written  request
from the Company,  Sub shall  provide the Company with a statement  (sworn to by
the  President  or CEO of Sub before a Notary  Public and signed by said  Notary
Public and said  President or CEO) that, as of the date of said  statement,  Sub
has complied with all material terms of this Agreement and has used the funds in
accordance with Section 3 or Section 4, as the case may be.

         (l)      Each party acknowledges that (i) it has  carefully  read  this
Agreement,  (ii) it has had the assistance of legal counsel of its choosing (and
such other  professionals and advisors as it has deemed necessary) in the review
and  execution  hereof,  (iii) the meaning  and effect of the various  terms and
provision  hereof have been fully  explained to it by such counsel,  (iv) it has
conducted such investigation,  review and analysis as it has deemed necessary to
understand the provisions of this  Agreement and the  transactions  contemplated
hereby, and (v) it has executed this Agreement of its own free will.

         IN WITNESS WHEREOF,  the parties have executed this Agreement as of the
day and year first above written.

ATTEST:                                     COMPANY:

/s/ Louis D. Frost                          VDC COMMUNICATIONS, INC.
---------------------------
Signature

Louis D. Frost                              By:      /s/ Frederick A. Moran
---------------------------                    ---------------------------------
Print Name                                           Frederick A. Moran
                                                     Chief Executive Officer


ATTEST:                                     SUB:

                                            Voice & Data Communications
/s/ Clayton F. Moran                        (Latin America), Inc.
---------------------------
Signature

Clayton F. Moran                            By:      /s/ Frederick A. Moran
---------------------------                    ---------------------------------
Print Name                                           Frederick A. Moran
                                                     Chief Executive Officer



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