Document:

Exhibit 10.3

 

EXECUTION COPY

 

MANAGEMENT CONSULTANCY SERVICES AGREEMENT

 

This MANAGEMENT
CONSULTANCY SERVICES AGREEMENT (“Agreement”), dated August 26,
2005 (the “Effective Date”), is made by and between Mawlaw 653
Limited, a company organised under the laws of England &
Wales (registered number 05391411) whose registered office is at Walbrook
Building, 195 Marsh Wall, London E14 9SG, United Kingdom (“Provider”),
and VIA NET.WORKS, Inc., a company
incorporated in Delaware, the United States whose registered office is at 1013
Centre Road, Wilmington, Delaware 19805, United States (“Recipient”).

 

W I T N E S S E T
H

 

WHEREAS, Provider and
Recipient, along with certain subsidiaries of Recipient, have entered into an
Sale and Purchase Agreement, dated as of the date hereof (the “Purchase
Agreement”), pursuant to which Provider will purchase substantially all the
assets of Recipient on the terms and subject to the conditions set forth in the
Purchase Agreement.  Capitalized terms
and expression used in this Agreement shall, unless expressly stated otherwise,
have the meanings set out in the Purchase Agreement.

 

WHEREAS, Provider and
Recipient, along with certain subsidiaries of Recipient have entered into a
Facility Agreement, dated as of the date hereof (the “Facility Agreement”),
pursuant to which Provider has agreed to provide two facilities, Facility A and
Facility B (as defined in the Facility Agreement), on the terms and subject to
the conditions set forth in the Facility Agreement.

 

WHEREAS, Provider desires to begin integration of
Recipient’s business into Provider’s business and to provide advice and
assistance in relation to the day to day operational activities of Recipient’s
operating subsidiaries (the “Subs” and, individually, each a “Sub”)
on the terms and conditions contained herein;

 

WHEREAS, in connection therewith, Recipient desires that
Provider provide, and Provider is willing to provide to Recipient, certain
services during the term of this Agreement as provided herein; and

 

NOW, THEREFORE, in consideration of the foregoing
premises, and the mutual covenants of the parties hereinafter set forth,
Recipient and Provider hereby agree as follows:

 

1.                                       Services to be Rendered.  From
and after the date hereof until this Agreement expires or terminates in accordance
with Section 8 hereof, Provider shall provide management consultancy
services to Recipient and the Subs. Such management consultancy services,
including the integration activities described in Section 1(b) below
(the “Integration Services”), are referred to herein as the “Management
Consultancy Services” and shall be as more fully set out in Sections 1(a) and
1(b).

 

(a)                                  Provider shall provide the services set out in Schedule 1
hereto to Recipient and Subs.  It shall
also provide advice, support and assistance to the boards of directors (which
term, for the purposes of this Agreement, in relation to entities which are not
English companies, shall be deemed to include all bodies and boards constituted
in relation to those entities with

 

 

analogous or similar rights and duties) of Recipient and the Subs
in relation to (i) the management of the business and business
relationships of the Subs, including maintaining relationships with, providing
services to or receiving services from and making payments to and receiving
payments from customers, vendors, suppliers and other persons with whom the
Subs do business, (ii) continuing the operations of Recipient’s and the
Subs’ network, facilities, “back office” operations and technical personnel, (iii) overseeing
the Subs’ sales force, distributors, marketing and similar matters, and (iv) continuing
the other aspects of the Subs’ business and operations.  Provider shall provide such personnel as are
necessary in order to properly conduct and provide the Management Consultancy
Services.  In performing the Management
Consultancy Services, Provider shall give consideration as to whether it would
be appropriate for the Subs or any of them to enter into new or amended
business arrangements with customers, vendors, suppliers and other persons with
whom such entity does business (always having regard to the importance of
maintaining the Subs’ business and relationships in good and proper standing in
the ordinary course).  Provider shall
also give consideration as to whether it would be appropriate for the Subs or
any of them to outsource any part of Recipient’s or the Subs’ business
operations to Provider or another third party provider pursuant to a written
contract on commercially reasonable terms and conditions.

 

(b)                                 Provider
shall provide advice, support and
assistance in relation to the actions required to reconfigure circuits
and other network components; restructure “back office” operations; hire,
reassign, or terminate employees and contractors; amend or otherwise alter
customer agreements on behalf of a Sub as it considers reasonably necessary or
desirable to reduce operating costs of Recipient or the Subs.  In
anticipation of the completion of the Purchase Agreement, Provider shall
provide advice, support and assistance in
relation to the actions required to make Recipient’s operations function more
efficiently in conjunction with those of Provider whilst maintaining all
existing critical or significant functions and the level of Recipient’s
business and its customer relationships in good and proper standing in the
ordinary course.

 

(c)                                  For the
avoidance of doubt, in performing Management Consultancy Services hereunder,
Provider shall have no authority to make any decisions or take any action for
and on behalf of Recipient or any Sub or to otherwise bind or commit Recipient
or any Sub.

 

2.                                       Standards.  Provider shall provide the
Management Consultancy Services in accordance with standards, practices,
methods and procedures conforming with (a) all applicable laws and
regulations, (b) the degree of care, skill, diligence, prudence and
foresight which Provider employs in managing its own business (which shall not
be less than reasonable care).  In
providing the Management Consultancy Services, Provider shall at all times act
in good faith and shall have regard to Recipient’s overriding objectives to (i) preserve
the goodwill, customers and business relationships of the Subs, and (ii) prevent
any creditor of a Sub from filing an involuntary petition in bankruptcy or a
petition seeking reorganization, composition, arrangement with creditors,
liquidation or similar relief under any federal or state law or regulation with
respect to a Sub, or appointing a receiver, trustee or liquidator for all or a
substantial part of the assets of any Sub.

 

3.                                       Payment for Management Consultancy
Services.

 

(a)                                  In consideration for the Management
Consultancy Services to be provided by Provider and for all out of pocket
expenses incurred by Provider in connection with providing such services Recipient
shall pay $400,000, payable by the issue within seven (7) days of the
Effective Date, of 10,810,811 shares of VIA.NETWORKS, Inc. common stock,
par value $0.001 (“Stock”) of

 

2

 

Recipient to Provider (or
to Mawlaw 660 Limited (registered number 5396159) at the discretion of
Provider) (the “Management Fee”).

 

4.                                       Management Consultancy Services Obligations. 
Nothing herein shall in any way preclude Provider or its officers,
employees, agents, representatives, members or affiliates from engaging in any
business activities or from performing services for its or their own account or
for the account of others, including for companies that may be in competition
with the business conducted by the Company; provided that the foregoing
sentence shall in no way limit the obligations of Provider hereunder.

 

5.                                       Access.  To the extent reasonably
necessary in order to provide the Management Consultancy Services, Recipient
shall provide Provider and its representatives with reasonable access to
Recipient, its properties and facilities (including, without limitation, access
to the information technology systems and programmes).  Recipient shall also provide Provider and its
representatives with reasonable access to its books, records, information
technology systems and programmes, and shall cooperate with Provider to provide
any and all documents and take such actions reasonably requested by Provider to
enable it to provide the Management Consultancy Services.  All information of Recipient provided to or
obtained by Provider pursuant to this Section 5 or otherwise in
connection with the performance of the Management Consultancy Services shall be
treated in accordance with the terms of confidentiality set forth in Section 12.

 

6.                                       Representations and Warranties.  Each
party hereto represents and warrants to the other party hereto that:

 

(a)                                  Due
Formation.  Such party (i) is
a corporation formed, and validly existing under the laws of the jurisdiction
noted in the introductory paragraph above, (ii) has the requisite
corporate power and corporate authority to own its properties and carry on its
business as now being conducted and currently proposed to be conducted and to
execute, deliver and perform its obligations under this Agreement, and (iii) is
qualified to do business in every jurisdiction in which failure so to qualify
would be reasonably likely to have a material adverse effect on the business,
operations or conditions (financial or otherwise) of the party.

 

(b)                                 Authorization;
Enforceability. 
Such party has taken all action necessary to authorize it to execute,
deliver and perform under this Agreement. 
This Agreement constitutes a legal, valid and binding obligation of the
party enforceable in accordance with its terms, subject to bankruptcy,
reorganization, moratorium or other similar laws affecting the enforcement of
the rights of creditors generally and subject to general principles of equity.

 

(c)                                  No Conflict.  The execution, delivery and performance by
such party of this Agreement does not and will not (i) violate in any
material respect any legal requirements applicable to the party, (ii) result
in any material breach of the party’s constituent documents or (iii) conflict
with, violate or result in a breach of or constitute a default under any
agreement or instrument to which the party or any of its properties or assets
are bound or result in the imposition or creation of any lien or security
interest in or with respect to any of the party’s property or assets.

 

(d)                                 No
Authorization. 
No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body (other than those
which have been obtained) is required for the due execution, delivery and
performance by such party of this Agreement.

 

3

 

(e)                                  Litigation.  Such party is not a party to any legal,
administrative, arbitration, or other proceeding, or, to the party’s knowledge,
is such a proceeding threatened, which, if decided adversely to the party,
would materially and adversely affect the party’s ability to perform under this
Agreement.

 

7.                                       Term and Termination.

 

(a)                                  This Agreement shall commence on the date
hereof and shall continue in full force and effect until the earliest to occur
of any of the following events:

 

(i)                                     the termination of the Purchase Agreement;

 

(ii)                                  mutual written agreement duly authorized by
the boards of directors of each of Provider and Recipient to terminate this
Agreement; and

 

(iii)                               by Recipient, if Provider has breached any
its covenants or agreements set forth in this Agreement, the Purchase
Agreement, the Facility Agreement or any other related transaction documents,
and such breach is not (where capable of cure) cured within 5 business days
after written notice thereof.

 

(b)                                 If this Agreement is terminated prior to
Closing, then without prejudice to any other rights available to either party,
Recipient shall be entitled to demand (and Provider shall promptly provide (or
procure that Mawlaw 660 Limited shall promptly provide) a return of the portion
of the Management Fee as follows:

 

	
  Percentage of Management Fee
  (%)

  	
   

  	
  Day (all dates inclusive)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  100

  	
   

  	
  Day of issue (“n”)
  to (n+30)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  66.66

  	
   

  	
  (n+31) to (n+60)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  33.33

  	
   

  	
  (n+61) to (n+90)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  0

  	
   

  	
  From (n+91)

  	
   

  

 

(c)                                  In the case that Provider (or Mawlaw 660
Limited) is obliged to return a portion of the Management Fee, Provider may
fulfil such obligations either by delivering (or procuring that Mawlaw 660
Limited delivers) an equivalent portion of the Stock received or by Provider paying
cash.

 

8.                                       No Third Party Rights.  A
person who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of, or enjoy any benefit
under, this Agreement.  Mawlaw 660
Limited shall have no rights under this Agreement and in particular shall not
have any rights of consultation or approval if the parties hereto agree to
amend or waive any provision of this Agreement.

 

9.                                       Amendment.  This Agreement may be amended
only by a written instrument signed by each of the parties hereto.

 

10.                                 Assignment.  Neither party may assign this
Agreement without the prior written consent of the other party.  Notwithstanding the foregoing, Provider may
assign this Agreement or

 

4

 

assign or delegate its
rights and obligations under this Agreement to (i) a successor to all or
substantially all of its business or assets relating to this Agreement whether
by sale, merger, operation of law or otherwise, or (ii) a wholly owned
subsidiary.

 

11.                                 Independent Contractor. 
Nothing contained herein shall be construed or deemed to create a joint
venture, contract of employment or partnership of any kind between the parties
hereto.  All debts and liabilities to and
contracts or agreements incurred or entered into by Provider on behalf of
Recipient consistent with the terms of this Agreement shall be the sole debt
and liability of, and shall be binding upon Recipient.  PROVIDER SHALL NOT BE LIABLE TO ANY PERSON
FOR ANY DEBT, LIABILITY OR OBLIGATION OF RECIPIENT INCURRED OR CREATED PURSUANT
TO AND IN ACCORDANCE WITH THE AUTHORITY GRANTED TO PROVIDER OR SOLELY BY REASON
OF ITS PROVISION OF SERVICES HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF
UNLESS PROVIDER, BY WRITTEN AGREEMENT, EXPRESSLY ASSUMES OR GUARANTEES ANY SUCH
LIABILITY.  PROVIDER SHALL NOT BE
REQUIRED, UNDER ANY CIRCUMSTANCES, TO GUARANTEE OR ASSUME ANY OBLIGATION OR
LIABILITY OF RECIPIENT.

 

12.                                 Confidentiality.  The
terms of the Confidentiality Agreement shall be deemed, amended as appropriate,
to apply to this Agreement as if set out in full herein.

 

13.                                 Whole Agreement.  This
Agreement contains the whole agreement between the parties relating to the
subject matter of this Agreement at the date hereof to the exclusion of any
terms implied by law which may be excluded by contract and supersedes any
previous written or oral agreement between the parties in relation to the
matters dealt with in this Agreement. 
For the purposes of this Section 14, “this Agreement” shall
be deemed to include the Purchase Agreement, the Facility Agreement and any
agreements entered into pursuant to this Agreement.

 

14.                                 Limitation of Liability.  The
maximum aggregate liability of Recipient for any breach of this Agreement and
all or any of the Transaction Documents shall be the Aggregate Purchaser Liability.

 

15.                                 Notices. 

 

(a)                                  Any notice or other communication in
connection with this Agreement (each, a “Notice”) shall be:

 

(i)                   in writing in English;

 

(ii)                delivered by hand, fax, registered post or by
courier using an internationally recognised courier company.

 

(b)                                 A Notice to the Sellers or to either of them
shall be sent to the following address, or such other person or address as the
Sellers or VIA Inc. may notify to the Relevant Purchasers from time to time:

 

VIA NET.WORKS Inc

H. Walaardt Sacrestraat 401-403

1117 BM Schiphol

The Netherlands

Fax:                                                  +31 205 020 0001

 

5

 

Attention:                                         Matt Stuart Nydell (Senior Vice President and
General Counsel and Secretary)

 

with a copy to:

 

Hogan & Hartson

One Angel Court

London EC2R 7HJ

United Kingdom

Fax:                                                                           +44 20 7367 0220

Attention:              John M.
Basnage

 

(c)                                  A Notice to the Relevant Purchasers shall be
sent to the following address, or such other person or address as the Relevant
Purchasers may notify to the Sellers from time to time:

 

Interoute Communications Holdings S.A.

Walbrook Building,

195 Marsh Wall,

London E14 9SG

United Kingdom

Fax:                                                                           +44 20 7025 9855

Attention:                                         General Counsel

 

(d)                                 A Notice shall be effective upon receipt and
shall be deemed to have been received:

 

(i)                                     at the time of delivery, if delivered by
hand, registered post or courier;

 

(ii)                                  at the time of transmission in legible form,
if delivered by fax.

 

16.                                 Invalidity.  If any provision in this
Agreement shall be held to be illegal, invalid or unenforceable, in whole or in
part, the provision shall apply with whatever deletion or modification is
necessary so that the provision is legal, valid and enforceable and gives
effect to the commercial intention of the parties.  To the extent it is not possible to delete or
modify the provision, in whole or in part, under the first part of this Section 16,
then such provision or part of it shall, to the extent that it is illegal,
invalid or unenforceable, be deemed not to form part of this Agreement and the
legality, validity and enforceability of the remainder of this Agreement shall,
subject to any deletion or modification made under this Section 16,
not be affected.

 

17.                                 Counterparts.  This
Agreement may be entered into in any number of counterparts, all of which taken
together shall constitute one and the same instrument. Any party may enter into
this Agreement by signing any such counterpart.

 

18.                                 Governing Law and Submission to Jurisdiction.  This
Agreement shall be governed by the laws of England and Wales.

 

Each
of the parties irrevocably agrees that the courts of England are to have
exclusive jurisdiction to settle any dispute which may arise out of or in
connection with this

 

6

 

Agreement and the documents
to be entered into pursuant to it and that accordingly any proceedings arising
out of or in connection with this Agreement and the documents to be entered
into pursuant to it shall be brought in such courts. Each of the parties
irrevocably submits to the jurisdiction of such courts and waives any objection
to proceedings in any such court on the ground of venue or on the ground that
proceedings have been brought in an inconvenient forum.

 

7

 

SCHEDULE 1

 

SERVICES

 

 

	
  Service Title

  	
   

  	
  Service
  Description

  
	
   

  	
   

  	
   

  
	
  1. Resource Optimisation

  	
   

  	
  Review Recipient’s business operational model, high
  level processes, day to day operations and associated organisational
  structure, headcount and resource skills. Provide Recipient with
  recommendations for operational and management structure restructuring,
  organisational restructuring and staff reallocation and termination to reduce
  operating cost while maintaining service quality. Provide advice on technical
  operational issues. 

  
	
   

  	
   

  	
   

  
	
  2. Services Optimisation

  	
   

  	
  Review all major external service contracts
  including those for the provision of bandwidth services, IP transit,
  technical and office space lease and equipment maintenance. Utilise sector
  and industry knowledge and seek to leverage Interoute supplier relations in
  order to recommend changes to service providers and/or contract terms to
  minimise network and operating expenditure and provide advice in relation to
  service stabilisation with existing customers and suppliers. Provide
  Interoute upstream or other connectivity for no charge during the term of the
  Agreement where VIA or PSINet Europe can terminate existing relationships for
  no charge or penalty. 

  
	
   

  	
   

  	
   

  
	
  3. Market Expansion

  	
   

  	
  Utilise Interoute customer relations and market
  knowledge to provide contact lists for Recipient’s sales organisation to
  assist with pipeline and revenue growth. 

  
	
   

  	
   

  	
   

  
	
  4. Accounts Payable Outsource

  	
   

  	
  In light of Recipient’s plan to terminate its
  outsource contract for transaction processing of its Accounts Payable
  function and other basic General Ledger accounting for VIA Spain, VIA
  Germany, VIA France and VIA Inc. Advise Recipient concerning an alternative
  outsource service to manage such functions. Where available and as needed,
  support Recipient and the VIA companies with Provider personnel for no
  additional charge during the term of the Agreement. 

  
	
   

  	
   

  	
   

  
	
  5. Consolidated Reporting

  	
   

  	
  In light of Recipient’s plan to close down its
  Netherlands corporate entity and terminate associated staff responsible for
  consolidated financial reporting at the group level, liaise with Recipient
  concerning capability to consolidate subsidiary financials necessary for
  statutory reporting requirements. 

  
	
   

  	
   

  	
   

  
	
  6. Billing Operations Support

  	
   

  	
  Given the dependence of Recipient on a small number
  of staff and contractors in Warrington, UK (a country where Recipient has no
  other business) to execute billing for the group, there is a need to de-risk
  the billing process. Provider to review the billing process and systems and
  provide suggestions to support billing execution until established in
  Recipient’s Geneva office. 

  
	
   

  	
   

  	
   

  
	
  7. Business Systems Support

  	
   

  	
  In conjunction with 6 above, and Recipient’s short
  term plan to migrate its system functions from its Warrington, UK site and
  its corporate Netherlands office to Geneva, provide migration advice and
  support in relation to this proposal. 

  

 

8

 

	
  8. Product Standardisation Program

  	
   

  	
  In order to minimise operational resource and
  maximise potential business value in the international market, Recipient will
  benefit from an increased level of standardisation of it products and
  associated systems across Data Centres (DCs). Provider to review services
  being delivered from each of Recipient’s DCs and recommend a common DC
  product set and migration path.

  

 

9

 

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

 

	
   

  	
  Provider

  
	
   

  	
  Mawlaw
  653 Limited

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Recipient

  
	
   

  	
  VIA
  NET.WORKS, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

10Exhibit 10.4

 

Execution Copy

 

SUBSCRIPTION AGREEMENT

 

THIS
AGREEMENT is made as of 26 August 2005 by and among VIA NET.WORKS, INC., a
company incorporated in Delaware, the United States whose registered office is
at 1013 Centre Road, Wilmington, Delaware 19805, United States (“Company”) and Mawlaw 660 Limited, a company organized under
the laws of England and Wales (registered number 5396159), whose registered
office is at Walbrook Building, 195 Marsh Wall, London E14 9SG, United Kingdom
(“Investor”).

 

WHEREAS,
Mawlaw 653 Limited (“Mawlaw”),
Interoute Communications Holdings SA (“Interoute”), and Company are
concurrently entering into the
Sale and Purchase Agreement dated as of the date hereof (the “Purchase Agreement”), pursuant to which Mawlaw and Interoute
(collectively, the “Purchasers”) will purchase certain subsidiaries and
substantially all the assets of Company on the terms and subject to the
conditions set forth in the Purchase Agreement;

 

WHEREAS, in connection with the Purchase Agreement, (i) Mawlaw
has committed to lend to Company and certain of its subsidiaries up to
$7,200,000 under a Facility Agreement (the “Facility
Agreement”) upon the terms and conditions contained therein, in
connection with which Company has agreed to pay to Mawlaw a commitment fee of
$525,000 (the “Commitment Fee”), payable in cash,
or at the election of Company, 14,189,189 shares (the “Commitment
Shares”) of common stock, par value $0.001 per share of Company (“Common Stock”), (ii) Mawlaw and Company have entered
into Management Consultancy Services Agreement (the “Management
Agreement”) pursuant to
which Mawlaw will provide certain management consultancy services in connection
with the day-to-day operational activities of Company and its subsidiaries upon
the terms and conditions contained therein, in connection with which Company
has agreed to pay Mawlaw a fee of $400,000 (the “Management Fee”), payable in cash, or at the election of
Company, 10,810,811 shares (the “Management Service Shares”)
of Common Stock and (iii) Investor has agreed to provide $400,000 of funding (the “Common Purchase Price”) to Company in consideration for the issuance to Investor of 10,810,811
shares of Common Stock and on the terms and conditions set forth in this
Agreement (the “Common
Investment Shares”, and together with the Commitment Shares and the
Management Services Shares, the “Aggregate Common Shares”);

 

WHEREAS, Company has elected to pay the Commitment
Fee and the Management Fee by the issuance of the Commitment Shares and the
Management Services Shares on the terms and conditions set forth herein, and
Mawlaw has requested that Company issue such shares to and in the name of
Investor;

 

WHEREAS,
Investor desires to subscribe for and purchase from Company, and Company
desires to issue and sell to Investor, 5,454,545
shares (the “Preferred Shares”) of a new class
of preferred stock of Company to be designated Series A Convertible
Preferred Stock, par value $0.001 per share (the “Preferred Stock”), for an aggregate purchase price of
$2,400,000 (the “Preferred Purchase Price”) and on
the terms and conditions set forth in this Agreement; and

 

 

WHEREAS,
in consideration of the issuance of the Preferred Stock and the Aggregate
Common Shares to Investor, Investor is willing to accept the Aggregate Common
Shares and the Preferred Shares provided for in this Agreement and is willing
to abide by the obligations imposed on Investor by this Agreement.

 

NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto do hereby agree as follows:

 

1.             Issuance
of the Shares.

 

(a)           Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations made
herein, Company shall issue and sell to Investor and Investor shall purchase
from Company the Preferred Shares for an aggregate purchase price equal to the
Preferred Purchase Price.  Company has
filed or shall file promptly after execution of this Agreement, a certificate
of designations in substantially the form set forth on Exhibit A attached
hereto (the “Certificate of Designations”),
which contains the rights, powers, preferences and other terms of the Preferred
Stock.

 

(b)           Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations made herein,
Company shall issue to Investor the Common Investment Shares for an aggregate
purchase price equal to the Common Purchase Price.

 

(c)           Upon the terms and subject to the
conditions set forth in this Agreement and upon the representations made
herein, Company shall issue to Investor the Commitment Shares and the
Management Services Shares.

 

(d)           The purchase and sale of the
Preferred Shares and the issuance of the Aggregate Common Shares shall take
place on a date promptly following the execution and delivery of this
Agreement, the Purchase Agreement, the Facility Agreement and the Management
Agreement, and the filing and effectiveness of the Certificate of Designations
(the “Subscription Date”), expected to occur
on 26 August 2005.  All payments by
Investor shall be by means of a wire transfer of immediately available funds to
an account previously designated by Company to Investor in writing.  Company shall deliver to Investor, on the
Subscription Date, (x) a certificate in the name of Investor or its designee
representing the Preferred Shares, (y) one or more certificates in the name of
Investor or its designee representing the Aggregate Common Shares and (z) a
opinion of counsel to Company in substantially the form of Exhibit B
attached hereto.  The certificates will
bear the legends described below in Section 3 and such other legends
required by the Delaware General Corporation Law (the “DGCL”)
and the United States Securities Act of 1933, as amended (“Securities Act”).

 

2.             Representations
and Warranties.  Each
party hereto represents and warrants to the other party hereto that:

 

(a)           Such party (i) is a corporation
or private limited company, as the case may be, formed, and validly existing
under the laws of jurisdiction noted in the introductory paragraph above, (ii) has
the requisite corporate power and corporate authority to own its properties and
carry 

 

2

 

on its business as now being conducted and currently proposed to be
conducted and to execute, deliver and perform its obligations under this
Agreement, and (iii) is qualified to do business in every jurisdiction in
which failure so to qualify would be reasonably likely to have a material
adverse effect on the business, operations or conditions (financial or
otherwise) of the party.

 

(b)           Such party has taken all action
necessary to authorize it to execute, deliver and perform under this
Agreement.  This Agreement constitutes a
legal, valid and binding obligation of the party enforceable in accordance with
its terms, subject to bankruptcy, reorganization, moratorium or other similar
laws affecting the enforcement of the rights of creditors generally and subject
to general principles of equity.

 

(c)           The execution, delivery and
performance by such party of this Agreement does not and will not (i) violate
in any material respect any legal requirements applicable to the party, (ii) result
in any material breach of the party’s constituent documents, or (iii) conflict
with, violate or result in a breach of or constitute a default under any
agreement or instrument to which the party or any of its properties or assets
are bound or result in the imposition or creation of any lien or security
interest in or with respect to any of the party’s property or assets.

 

(d)           No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body (other than those which have been obtained) is required for the
due execution, delivery and performance by such party of this Agreement.

 

(e)           Such party is not a party to any
legal, administrative, arbitration, or other proceeding, or, to the party’s
knowledge, is such a proceeding threatened, which, if decided adversely to the
party, would materially and adversely affect the party’s ability to perform
under this Agreement.

 

3.             Additional Investor
Representations. 
In connection with the issuance of the Preferred Shares and the
Aggregate Common Shares (collectively, the “Securities”)
hereunder and under the Management Agreement and Facility Agreement, Investor
represents and warrants to Company that:

 

(a)           Investor is acquiring the Securities
for its own account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act.

 

(b)           Investor is an accredited investor,
as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act.

 

(c)           Investor has sufficient investment
knowledge and experience of Company’s business and companies similar in size
and financial condition as Company to enable Investor to evaluate the risks and
merits of its investment in Company, and Investor is able financially to bear
the risks thereof.  Investor is a
sophisticated investor for purposes of applicable foreign and U.S. federal and
state securities laws and regulations and is able to evaluate the risks and
benefits of the investment in the Securities.

 

(d)           Investor is able to bear the economic
risk of its investment in the Securities for an indefinite period of time.  Investor understands that the Securities have
not been registered under the Securities Act by reason of its issuance in a
transaction exempt from the 

 

3

 

registration requirements of the Securities Act pursuant to Section 4(2) thereof
or Rule 506 promulgated under the Securities Act, and that Company’s
reliance on such exemption is predicated on Investor’s representations set
forth herein.  Investor understands that
Investor may have to bear the risk of holding the Securities until such time as
they are tradable under the Securities Act and the rules and regulations
promulgated thereunder.

 

(e)           Investor understands that (i) because
the Securities have not been registered under the Securities Act, they cannot
be sold unless subsequently registered under the Securities Act or unless an
exemption from the requirement for such registration is available, (ii) the
Securities will bear a legend to such effect, and (iii) Company will make
a notation on its transfer books to such effect.

 

(f)            Investor agrees not to sell,
transfer, or otherwise dispose of the Securities in violation of the Securities
Act.

 

(g)           Investor has had an opportunity to
ask questions and receive answers concerning the business, operations and
financial condition of Company and the terms and conditions of the offering of
the Securities and has had full access to such other information concerning
Company as Investor has requested.

 

4.             Additional
Company Representations.  In connection with the
issuance of the Securities hereunder, Company represents and warrants to the
Investor that:

 

(a)           Upon issuance of the Securities in
accordance with the terms of this Agreement, the Securities shall be validly
issued, fully paid and nonassessable, and free from all liens, encumbrances and
preemptive rights.  Upon conversion of
the Preferred Shares into Common Stock in accordance with the Certificate of
Designations, the shares of Common Stock so issued shall be validly issued,
fully paid and nonassessable, and free and clear from all liens, encumbrances
and preemptive rights.

 

(b)           Without
giving effect to the share issuances contemplated by the Section 1 of this
Agreement, the authorized capital stock of Company consists of 142,500,000
shares of capital stock, which consists of (i) 125,000,000 shares of
Common Stock, of which 65,284,651 shares are issued and outstanding (excluding 1,520,789 shares held by the Company as treasury shares)  as
of August 26, 2005, (ii) 7,500,000 shares of non voting common stock,
par value $0.001 per share, of which no shares are issued and outstanding as of
the date hereof, and (iii) 10,000,000 shares of preferred stock, par value
$0.001, of which no shares are issued and outstanding as of the date hereof,
but of which 125,000 shares have been designated Series A junior participating
preferred stock.  All of the issued and
outstanding shares of Company’s capital stock were validly issued and are fully
paid and nonassessable, were issued in compliance with all applicable state and
federal laws concerning the issuance of securities and are free from all taxes,
liens and charges with respect to the issuance thereof.  Other than options to purchase 7,444,133
shares of Common Stock outstanding as of the date hereof issued under Company’s
incentive stock option and equity incentive plans, no options, warrants,
subscriptions, convertible securities, phantom stock, stock appreciation rights
or other rights to acquire any shares of capital stock of Company or other
securities are authorized, issued or outstanding, nor is Company obligated in
any other manner to issue 

 

4

 

shares of its capital stock or other securities, except as contemplated
by this Agreement, the Facility Agreement, the Management Agreement and the
Sorbie Release.

 

(c)           All reports, statements, schedules,
forms and other documents required to have been filed by Company with the
Securities and Exchange Commission (the “SEC”) since January 1,
2004 have been so filed (the “SEC Filings”).  As of their respective dates (or, if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such amendment or superseding filing): (i) each of the SEC Filings
complied in all material respects with the applicable requirements of the
Securities Act or the United
States Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(as the case may be); and (ii) none of the SEC Filings contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except as to information concerning or relating to (y) the proposed
transaction with Claranet Group Limited which was not consummated, the (z) the
proposal to approve and adopt the dissolution and plan of complete liquidation
and dissolution of Company which was not approved or adopted).

 

(d)           As of their respective dates, the
financial statements of Company included in the SEC Filings complied as to form
(and will comply as to form) in all material respects with GAAP and the
published rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared
in accordance with GAAP, consistently applied, during the periods involved
(except in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements or as otherwise, in
each case, may be permitted by the SEC on Form 10-Q under the Exchange
Act) and fairly present in all material respects the consolidated financial
position of Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

 

 (e)          The board of directors of Company (the
“Board”) has approved the Purchase
Agreement, this Agreement, the Facility Agreement, the Management Agreement and
the transactions contemplated hereby and thereby, and in connection with such
approval has taken steps sufficient to render inapplicable to the transactions
contemplated hereby and thereby, the restrictions contained in Section 203
of the DGCL, and the rights of holders of Common Stock to acquire Common Stock
or any shares of capital stock of Company under Company’s Rights Agreement
dated January 29, 2004, and no other antitakeover or similar statute or
regulation of the State of Delaware or any other state or jurisdiction
restricts or would give rise to any adverse consequences to Investor with
respect to any such transactions.

 

(f)            Company
hereby confirms the Warranties set forth in Article 8.1 of the Purchase
Agreement, subject to the qualifications set forth in Articles 8.1 and 8.2 of
the Purchase Agreement.

 

(g)           Subject
to the accuracy of the representations and warranties of Investor set forth
herein, the Securities will be issued in accordance with the registration or
qualification provisions of the Securities Act and any relevant state
securities laws, or pursuant to valid exemptions therefrom.

 

5

 

5.             Additional
Investor and Company Agreements.

 

(a)           During
the term of this Agreement, at any meeting of the stockholders of Company
called to consider and vote upon the adoption or approval of the Purchase
Agreement (and at any and all postponements and adjournments thereof), and in
connection with any action to be taken in respect of the adoption or approval
of the Purchase Agreement by written consent of the stockholders of Company,
Investor will vote or cause to be voted (including by written consent, if
applicable) all Securities (i) in favor of the adoption and approval of
the Purchase Agreement and the transactions contemplated thereby; and (ii) against
any action or agreement that would result in a breach of any representation,
warranty, covenant or agreement or any other obligation of Company under the
Purchase Agreement or of Investor under this Agreement.  Notwithstanding the prior sentence, if the
Board accepts or recommends a Competing Proposal (as defined in the Purchase
Agreement) to Company’s stockholders in compliance with clauses 5.5.2 and 5.5.3
of the Purchase Agreement, the obligation of Investor to vote the Securities in
the manner set forth in the prior sentence shall not apply, and instead
Investor may cast in any manner determined by Investor the votes with respect
to the Securities aggregating not more than one third (1/3) of the total number
of votes eligible to be voted at the stockholders meeting (or counted for
purposes of a written consent) and Investor shall cause all remaining
Securities to be voted in a manner that is proportionate to the manner in which
all holders of shares of voting securities (other than Investor) vote in
respect of such matter; provided, however, that the foregoing
limitation on Investor’s voting rights shall apply only if, at the time of the
vote for the Competing Proposal, all amounts outstanding under the Facility
Agreement and all amounts due and payable to the Purchasers in connection with
the termination of the Purchase Agreement shall have been paid in full in
accordance with the terms of the Purchase Agreement.

 

(b)           During
the term of this Agreement and so long as the Board has not accepted or
recommended a Competing Proposal, Investor agrees that neither it nor any of
its affiliates shall, directly or indirectly, without the prior written consent
of Company:  (i) in any manner
acquire or offer to acquire or agree to acquire, directly or indirectly, by
purchase or otherwise, beneficial ownership of any securities of Company; (ii) ”solicit,”
or participate in the “solicitation” of, “proxies” (as such terms are defined
or used in Rule 14a-1 under the Exchange Act, and such terms to have such
meanings throughout this Agreement) in opposition to the recommendation of the
Board or become a participant in an election contest with respect to the
election of directors or other similar elected persons of Company, or otherwise
seek to influence or affect the vote of any stockholder of Company; (iii) form,
join or participate in a partnership, limited liability company, syndicate or
other group or enter into any contract, arrangement, understanding or
relationship or otherwise act in concert with any other person for the purpose
of acquiring, holding, voting or disposing of securities of Company; (iv) seek
to appoint, elect or remove any member of the Board or make any public
statements proposing or suggesting any change in the Board or management of
Company; or (v) disclose any intention, plan or arrangement to take any of
the actions enumerated in clauses (i) through (iv) above or
participate in, aid or abet or otherwise induce or attempt to induce or
encourage any person to take any of the actions enumerated in clauses (i) through
(iv) above.

 

(c)           Other
than the share issuances contemplated by the Section 1 of this
Agreement, from the date hereof
until after the record date set by the Board for the special meeting of the
Company’s stockholders to be called to approve the transactions provided
for in the Purchase Agreement, Company
shall not issue any additional shares of Common Stock or 

 

6

 

shares of other securities convertible into
Common Stock or have voting rights on any matter submitted to a vote of holders
of Common Stock other than pursuant to agreements or instruments in effect as
of the date hereof; provided, however, that Company may
issue up to 7,173,341 shares of Common Stock to Sorbie Europe B.V. or one of
its affiliates pursuant to the Cancellation and Release Agreement by and
between Company and Sorbie Europe B.V. entered into as of June 29, 2005
(the “Sorbie Release”).

 

7

 

6.             Preemptive Rights.

 

(a)           Investor
shall have a right of first refusal to purchase its pro rata share
of any Equity Securities (as defined below) that Company may, from time to time, propose
to sell and issue after the date of this Agreement, other than the Equity
Securities excluded by Section 6(e) hereof.  Investor’s pro rata share
is equal to the ratio of (a) the total number of votes attributable to all
shares of Common Stock and Preferred Stock held by Investor immediately prior
to the issuance of such Equity Securities to (b) the total number of votes
attributable to all shares of the Common Stock, Preferred Stock and any other
security of Company that votes together with the Common Stock that are
outstanding immediately prior to the issuance of the Equity Securities.   “Equity Securities”
means all shares of Common Stock, Preferred Stock or other security of
Company convertible into or exercisable or exchangeable for, any shares of
Common Stock, Preferred Stock or other security of Company that votes together with the Common Stock
(including any option, warrant or right to subscribe for or purchase such a
security or instrument).

 

(b)           If
Company proposes to issue any Equity Securities, it shall give Investor written
notice of its intention, describing the Equity Securities, the price and the
terms and conditions upon which Company proposes to issue the same.  Investor shall have ten (10) days from
the giving of such notice to agree to purchase its pro rata
share of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to Company and stating therein
the quantity of Equity Securities to be purchased.

 

(c)           If
Investor fails to exercise in full its rights under Section 6(a), Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which Investor’s rights were not exercised, at a price and upon general
terms and conditions materially no more favorable to the purchasers thereof
than specified in Company’s notice to Investor pursuant to Section 6(b) hereof.  If Company has not sold such Equity
Securities within ninety (90) days of the notice provided pursuant to Section 6(b),
Company shall not thereafter issue or sell any Equity Securities without first
offering such securities to Investor in the manner provided above.

 

(d)           The
rights of first refusal established by this Section 6 shall not apply to,
and shall terminate upon Investor’s sale, disposition or other transfer of
shares of Common Stock and/or Preferred Stock representing, in the aggregate
(taking into account all prior sales, dispositions or other transfers),
twenty-five (25%) or more of the total votes attributable to the shares of
Common Stock and Preferred Stock issued to Investor on the Subscription Date.

 

(e)           The
rights of Investor established by this Section 6 shall have no application
to the issuance of any of the following Equity Securities: (i) shares of
Common Stock issuable pursuant to the conversion or exercise of convertible or
exercisable securities that are outstanding as of the date hereof (including
shares of Common Stock issuable upon conversion of the Preferred Stock); (ii) options,
restricted stock or other securities issued pursuant to an employee incentive
plan or similar plan primarily designed for the compensation of directors,
officers, employees or consultants of Company and that is approved by the Board
(and any shares of Common Stock issuable pursuant to the conversion or exercise
of such options or other securities), (iii) shares of Common Stock issued
other than in connection with a Competing Proposal for consideration other than
cash pursuant to any merger, consolidation or similar business combination, any
of which must have been approved by the Board, and (iv) shares of 

 

8

 

Common Stock issued in connection with any
stock split, stock dividend or recapitalization by Company.

 

7.             Right to
Designate an Observer.

 

(a)           Company
shall invite and shall allow one designee of Investor (the “Observer”), which Observer shall be reasonably acceptable to
Company, to attend all meetings of the Board in a non-voting observer
capacity.  In furtherance hereof, Company
shall give the Observer copies of all notices, minutes, consents and other
materials that it provides to all of the members of the Board.

 

(b)           Investor
agrees, and Investor will cause the Observer to agree, to hold in confidence
with respect to all information so provided and not use or disclose any
confidential information provided to or learned by it in connection with its
rights under this Section 6 other than for purposes reasonably related to
the Investor’s interests as a stockholder of Company and as a party to the
Transaction Documents.  Upon the
reasonable request of Company, Investor agrees that it will cause its Observer
to enter into a confidentiality agreement with Company on reasonable and
customary terms.  The provisions thereof
will survive any termination of this Agreement.

 

8.             No Third Party Rights.  Nothing in this Agreement, express or implied
is intended to confer upon any person, other than Company and Investor or their
successors, any rights or remedies under or by reason of this Agreement.

 

9.             Entire Agreement; Amendment; Termination.  This
Agreement, together with the Purchase Agreement, the Facility Agreement and the
Management Agreement, sets forth the entire agreement of the parties with
respect to the transactions contemplated hereby and thereby.  This Agreement may be amended only by a
written instrument signed by each of the parties hereto.  This Agreement will terminate on the earliest
to occur of (a) the Closing (as defined in the Purchase Agreement), (b) the
date the Purchase Agreement is terminated in accordance with its terms or (c) the
date on which Investor ceases to hold any Securities; provided that the representations
and warranties in the parties set forth in Sections 2, 3 and 4 shall survive
the termination hereof.  No such
termination shall affect the rights of Investor under the Certificate of
Designation.  This Agreement may be
earlier terminated by the mutual written consent of Company and Investor.  Except as set forth herein, in the event of
termination of this Agreement pursuant to this Section 9, this Agreement
will become null and void and of no effect with no liability on the part of any
party hereto; provided, however, that no such termination will relieve any
party hereto from any liability for any breach of this Agreement occurring
prior to such termination.

 

10.          Assignment.  Neither party may assign this Agreement
without the prior written consent of the other party.  Notwithstanding the foregoing, Investor may
assign this Agreement or assign or delegate its rights and obligations under
this Agreement to (a) a successor to all or substantially all of its
business or assets relating to this Agreement whether by sale, merger,
operation of law or otherwise, or (b) a wholly owned subsidiary.

 

11.          Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware.

 

9

 

12.          Enforcement.  Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.  Accordingly, the parties will be entitled to
an injunction or injunctions (without the necessity of a bond or other
security) to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.

 

13.          Severability. 
The provisions
of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability or the other provisions of this Agreement.  If any provision of this Agreement, or the
application of that provision to any person or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
for that provision in order to carry out, so far as may be valid and
enforceable, the intent and purpose of the invalid or unenforceable provision
and (b) the remainder of this Agreement and the application of the
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of the provision, or the application of
that provision, in any other jurisdiction.

 

14.          Headings.  The descriptive headings
contained herein are for convenience and reference only and will not affect in
any way the meaning or interpretation of this Agreement.

 

15.          Remedies Not Exclusive.  All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity will be cumulative
and not alternative, and the exercise of any thereof by either party will not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.

 

16.          Jurisdiction; Consent to Service of Process.

 

(a)           Each party hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the jurisdiction of the Chancery or
other courts of the State of Delaware (a “Delaware Court”),
and any appellate court from any such court, in any suit, action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment resulting from any suit, action or proceeding, and each party
hereby irrevocably and unconditionally agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in a Delaware
Court.

 

(b)           Each party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, (i) any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in a
Delaware Court, (ii) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court, and (iii) the
right to object, with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such party.  Each party irrevocably consents to service of
process in any manner permitted by law.

 

17.          Beneficial Ownership.  For purposes of this Agreement,
the term “beneficial owner” shall have the meaning ascribed to such term under Rule 13d-3
under the Exchange Act and the terms “beneficially own” and “beneficial
ownership” shall have correlative meanings therewith.

 

10

 

18.          Counterparts. 
This Agreement
may be executed in any number of counterparts, each such counterpart being
deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written above.

 

 

	
   

  	
   

  	
   

  	
   

  	
  VIA
  NET.WORKS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
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  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
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  MAWLAW 660 LIMITED

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
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  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

11

 

Exhibit A

 

Form of Certificate of Designations

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND

RIGHTS OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF

VIA NET.WORKS, INC.

 

Pursuant
to Section 151 of the

General Corporation Law of the State of Delaware

 

I, Matt S. Nydell,
Senior Vice President, General Counsel and Secretary of VIA NET.WORKS, Inc.,
a corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103
thereof, DO HEREBY CERTIFY:

 

That
pursuant to the authority conferred upon the Board of Directors by the Amended
and Restated Certificate of Incorporation of the said Corporation, the said
Board of Directors on August 23, 2005 adopted the following resolution
creating a series of Preferred Stock designated as Series A Convertible
Preferred Stock:

 

RESOLVED,
that pursuant to the authority granted to and vested in the Board of Directors
of this Corporation (the “Board”) in
accordance with the provisions of its Amended and Restated Certificate of
Incorporation, a series of Preferred Stock of the Corporation be and it hereby
is created, and that the designation and amount thereof and the voting rights
or powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:

 

Section 1.               Designation and Amount.  The shares of such series, par value $0.001
per share, shall be designated as “Series A Convertible
Preferred Stock” and the number of shares constituting such series
shall be 5,454,545.  Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Convertible Preferred Stock
to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights
or warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Convertible Preferred Stock.

 

A-1

 

Section 2.               Dividends and Distributions.

 

(A)          The holders of shares of Series A
Convertible Preferred Stock shall be entitled to receive with respect to each
share of Series A Convertible Preferred Stock, when, as and if declared by
the Board of Directors, out of funds legally available for the payment of
dividends, dividends at the rate of 12% per annum of the Original Purchase
Price thereof (the “Preferred Dividend”).  Preferred Dividends on a share of Series A
Convertible Preferred Stock shall accrue and shall be cumulative whether or not
declared from the date of issue of such share of Series A Convertible
Preferred Stock.

 

(B)           The amount of Preferred Dividends
payable on the Series A Convertible Preferred Stock shall be computed on
the basis of a 365-day year.  No
interest, or sum or money in lieu of interest, shall be payable in respect of
any dividend payment or payments on the Series A Convertible Preferred
Stock that may be in arrears.

 

(C)           No dividends on the Series A
Convertible Preferred Stock shall be declared by the Board of Directors or paid
or set apart for payment by the Corporation if at such time the terms and
provisions of any agreement of the Corporation, including any agreement
relating to its indebtedness, prohibits such declaration, payment or setting
apart for payment or provides that such declaration, payment or setting apart
for payment would constitute a breach thereof or a default thereunder, or if
such declaration or payment shall be restricted or prohibited by law.

 

(D)          Notwithstanding anything contained
herein to the contrary, dividends on the Series A Convertible Preferred
Stock shall accrue whether or not the Corporation has earnings, whether or not
there are funds legally available for the payment of such dividends, and
whether or not such dividends are declared.

 

(E)           So long as any Series A Preferred
Stock remains outstanding, the Corporation shall not pay any dividend (cash or
otherwise) on any other class of equity security without the consent of at
least a majority of the holders of the outstanding shares of Series A
Preferred Stock.

 

Section 3.               Voting Rights.  The holders of shares of Series A
Convertible Preferred Stock shall have the following voting rights:

 

(A)          Except
as otherwise expressly required by law, and as long as the Sale and Purchase Agreement, dated 26
August 2005 among Mawlaw
653 Limited (“Mawlaw”), Interoute Communications
Holdings SA “Interoute” and together with Mawlaw, the “Purchasers”)
and the Corporation (the “Purchase Agreement”)
has not been terminated pursuant to Section 5.4.3 of the Purchase
Agreement or, if the Corporation has purported to terminate the same, legal
proceedings have not been initiated by the Purchasers (or any one of them)
challenging such termination, each holder of Series A Convertible
Preferred Stock shall be entitled to vote on all matters submitted to a vote of
the holders of shares of Common Stock and shall be entitled to that number of
votes equal to the number of whole shares of Common Stock into which such
holder’s Series A Convertible Preferred Stock is convertible (whether or
not shares of unissued common stock are available for such conversion) pursuant
to the provisions of Section 5 on the 

 

A-2

 

record date for the
determination of stockholders entitled to vote on such matter or, if no record
date is established, on the date such vote is taken or any written consent of
stockholders is first executed.  Except
as otherwise expressly provided below in this Section 3 or as
required by law, the holders of Series A Convertible Preferred Stock and
Common Stock shall vote together as a single class on all matters, and neither
the Common Stock nor the Series A Convertible Preferred Stock shall be
entitled to vote as a separate class on any matter to be voted on by
stockholders of the Corporation.

 

(B)           So long as the Series A
Convertible Preferred Stock remain outstanding, the Corporation shall not,
without the affirmative vote of the holders of at least a majority of the
outstanding Series A Convertible Preferred Stock, authorize or designate,
whether by reclassification or otherwise, any new class or series of shares or
any other securities convertible into equity securities of the Corporation that
has rights, preferences, or privileges senior to or pari  passu
with the Series A Convertible Preferred Stock.

 

(C)           Except as set forth herein or as
required by law, holders of Series A Convertible Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.

 

Section 4.               Reacquired Shares.  Any shares of Series A Convertible
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof.  All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.

 

Section 5.               Conversion.

 

(A)          Each holder of the Series A
Convertible Preferred Stock may at any time, subject to the provisions of
paragraphs (B) and (C) below, upon surrender of the certificates
therefor, convert all or any portion of his or its Series A Convertible
Preferred Stock into fully paid and nonassessable Common Stock of the
Corporation at the Conversion Ratio set forth below, plus declared and unpaid
dividends thereon.

 

(B)           The holders acknowledge that at the
time of issuance of the Series A Convertible Preferred Stock the
Corporation does not have a sufficient number of shares of Common Stock
authorized and available for issuance to effect the conversion of the shares of
the Series A Convertible Preferred Stock. 
If, at the time any holder of Series A Convertible Preferred Stock
requests a conversion of any shares of Series A Convertible Preferred
Stock in compliance with this Section 5 and the Corporation does not
have available a sufficient number of authorized but unissued shares of Common
Stock to effect such conversion, as soon as practicable thereafter, the
Corporation will issue such number of shares of Common Stock as are available
for issuance, and take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite

 

A-3

 

stockholder approval of any necessary amendment to the Corporation’s
Amended and Restated Certificate of Incorporation.

 

A-4

 

(C)           Before any holder of Convertible
Preferred Stock shall be entitled to convert the same into full shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, endorsed or accompanied by written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or by his, her or its attorney duly authorized in writing, at
the office of the Corporation or of any transfer agent for the Series A
Convertible Preferred Stock, and shall give written notice to the Corporation
at its office that the holder elects to convert the same and shall state
therein the holder’s name or the names of the nominees in which the holder
wishes the certificate or certificates for shares of Common Stock to be
issued.  As soon as practicable
thereafter, the Corporation shall issue and deliver at its office to the holder
of the Series A Convertible Preferred Stock, or to the holders nominee or
nominees, a certificate or certificates for the number of shares of Common
Stock to which the holder shall be entitled as aforesaid, together with cash in
lieu of any fraction of a share.  A
conversion shall be deemed to have been made immediately prior to the close of
business on the date of the surrender of the shares of Series A
Convertible Preferred Stock to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of the shares of Common Stock
at the close of business on that date. 
From and after that date, all rights of the holder with respect to the Series A
Convertible Preferred Stock so converted shall terminate, except only the right
of the holder to receive certificates for the number of shares of Common Stock
issuable-upon conversion thereof and cash for fractional shares.

 

(D)          Conversion
Ratio.  Subject to adjustment as
provided in paragraph (E) below, each share of the Series A
Convertible Preferred Stock may be converted into five shares of Common Stock
or, in case any adjustment of such conversion ratio has taken place pursuant to
the provisions of this Section 5, by the conversion ratio as last
adjusted and in effect on the date any shares of Series A Convertible
Preferred Stock are surrendered for conversion (such conversion ratio, or such
conversion ratio as last adjusted, being referred to herein as the “Conversion
Ratio”).

 

(E)           Adjustments.  The Conversion Ratio at which the Series A
Convertible Preferred Stock may or shall be converted into Common Stock shall
be subject to adjustment from time to time in certain cases as follows:

 

(i)            In
case the Corporation shall (a) pay a dividend on its Common Stock in
shares of its capital stock, (b) subdivide its outstanding Common Stock, (c) combine
its outstanding Common Stock into a smaller number of shares, or (d) issue
in any recapitalization, reorganization or reclassification of its Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation) any shares of
its capital stock, the Conversion Ratio in effect immediately prior thereto
shall be adjusted proportionately so that the holder of any Series A
Convertible Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number and kind of shares of capital stock of the
Corporation which such holder would have owed or have been entitled to receive
after the occurrence of such event, had such Series A Convertible
Preferred Stock been converted immediately prior to the occurrence of such
event.  Such adjustment shall be made
whenever any of such events shall occur. 
An adjustment made pursuant to this paragraph (i) shall become
effective, retroactively to the record date, immediately after the payment date
in the case of a stock dividend and shall become effective immediately after
the 

 

A-5

 

effective date in the case of a subdivision, combination,
recapitalization, reorganization, or reclassification.

 

(ii)           In
the event that, at any time, as a result of an adjustment made pursuant to
paragraph (i) above, the holder of any Series A Convertible Preferred
Stock thereafter surrendered for conversion shall become entitled to receive any
shares of capital stock of the Corporation other than its Common Stock,
thereafter the number of such other shares so receivable upon conversion shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in paragraph (i) above.

 

(iii)          Whenever
the amount of Common Stock or other securities deliverable upon the conversion
of the Series A Convertible Preferred Stock shall be adjusted pursuant to the
provisions hereof, the Corporation shall forthwith file, at its principal
office and with any transfer agent or agents for the Series A Convertible
Preferred Stock and for Common Stock, and with any stock exchange on which such
Series A Convertible Preferred Stock or Common Stock are listed, a
statement, signed by its President or one of its Vice Presidents or its
Secretary or Treasurer, stating the adjusted number of its Common Stock or
other securities deliverable per share of Series A Convertible Preferred
Stock upon conversion thereof calculated to the nearest share and setting forth
in reasonable detail the method of calculation and the facts requiring such
adjustment and upon which such calculation is based, and shall give notice
thereof by mail, postage prepaid, to the holders of record of the Series A
Convertible Preferred Stock.  Each
adjustment shall remain in effect until a subsequent adjustment hereunder is
required.

 

(F)           No fractional Common Stock shall be
issued upon a conversion of the Series A Convertible Preferred Stock.  If any fractional interest in a Common Stock
share would be deliverable upon the conversion of any Series A Convertible
Preferred Stock, the Corporation shall round such fractional interest to the
nearest whole share, in lieu of delivering the fractional share therefor.

 

Section 6.               Liquidation, Dissolution or Winding Up.

 

(A)          In the event of any liquidation
(voluntary or otherwise), dissolution, or winding up of the Corporation or any
Sale Event (each a “Liquidation Event”), each holder of Series A
Convertible Preferred Stock shall be entitled to be paid out of the assets of
the Corporation available for distribution to holders of the Corporation’s
capital stock, before any payment or declaration and setting apart for payment
of any amount shall be made in respect of any of the Corporation’s shares of
capital stock (other than the Series A Convertible Preferred Stock), a per
share amount equal to the Original Purchase Price (as adjusted to reflect any
share split, combination, reclassification, or similar event involving the Series A
Convertible Preferred Stock), plus all accrued but unpaid dividends thereon
(whether or not declared), to and including the date full payment shall be
tendered to the holders of the Series A Convertible Preferred Stock with
respect to such Liquidation Event (the “Liquidation Preference”).

 

(B)           If the assets of the Corporation
shall be insufficient to permit the payment in full to the holders of the Series A
Convertible Preferred Stock of the amounts thus distributable, then the entire
assets of the Corporation available for such distribution shall 

 

A-6

 

be distributed ratably among the holders of the Series A
Convertible Preferred Stock in proportion to the preferential amount that each
such holder is otherwise entitled to receive based upon the aggregate
Liquidation Preference of the Series A Convertible Preferred Stock held by
each such holder and the aggregate Liquidation Preference of all Series A
Convertible Preferred Stock.  After such
payment shall have been made in full to the holders of the Series A
Convertible Preferred Stock or funds necessary for such payment shall have been
set aside by the Corporation in trust for the account of holders of the Series A
Convertible Preferred Stock so as to be available for such payment, the holders
of Series A Convertible Preferred Stock shall not have any right to
participate in the remaining distributions on the Corporation’s capital stock.

 

(C)           For purposes of this Section 6,
a Liquidation Event of this Corporation shall be deemed to be occasioned by, or
to include, by means of any transaction or series of related transactions (each
a “Sale Event”): (i) the acquisition
of the Corporation by another entity (including, without limitation, any
reorganization, merger, or consolidation but, excluding any merger effected
exclusively for the purpose of changing the domicile of the Corporation); or (ii) the
sale of all or substantially all of the capital stock or assets of the
Corporation, unless the Corporation’s stockholders of record, as constituted
immediately prior to such acquisition or sale will, immediately after such
acquisition or sale (by virtue of securities issued as consideration for the
Corporation’s acquisition or sale or otherwise), hold at least 50% of the
voting power of the surviving or acquiring entity.

 

Section 7.               Optional
Redemption.

 

(A)          The Series A
Convertible Preferred Stock may be redeemed for cash, in whole or in part, at
the option of the Corporation, at any time after the Purchase Agreement has
been terminated pursuant to Section 5.4.3 thereof so long as at the time
that the redemption thereof is scheduled to occur in accordance with this Section 7,
no legal proceedings shall be pending pursuant to which the Purchasers (or any
one of them) has challenged such termination, at a
redemption price equal to the Original Purchase Price per share, plus any
dividends accrued but unpaid thereon (whether or not declared) (the “Redemption Price”).

 

(B)           Not
less than ten (10) days nor more than thirty (30) days prior to the date
on which the Series A Convertible Preferred Stock is to be redeemed (the “Redemption Date”), the Corporation shall mail written notice (a “Redemption Notice”), postage prepaid,
to each holder of record of Series A Convertible Preferred Stock at the
holder’s post office address last shown on the records of the Corporation.  Each Redemption Notice shall state:

 

(i)            the
number of outstanding shares of Series Convertible A Preferred Stock to be
redeemed on such Redemption Date;

 

(ii)           the
number of shares of the Series A Convertible Preferred Stock held by the
holder which the Corporation shall redeem on such Redemption Date in accordance
with the provisions hereof;

 

A-7

 

(iii)          that
the shares of Series A Convertible Preferred Stock, as applicable, to be
redeemed by the Corporation shall be redeemed on such Redemption Date, which
shall be specified as a calendar date and shall be a business day; and

 

(iv)          the
time and manner in, and place at, which the holder is to surrender to the
Corporation the certificate or certificates representing the shares of Series A
Convertible Preferred Stock to be redeemed on the Redemption Date.

 

(C)           On
or before each Redemption Date, each holder of Series A Convertible
Preferred Stock to be redeemed pursuant to this Section 7 shall
surrender to the Corporation the certificate or certificates representing the
shares to be redeemed on such Redemption Date, in the manner and at the place
designated in the Redemption Notice, and upon each such Redemption Date the
Redemption Price for such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof, or
to such payee as such owner may designate in writing to the Corporation prior
to each such Redemption Date, and each surrendered certificate shall be
canceled and retired.  If the applicable
redemption is for less than all of the shares of Series A Preferred Stock
represented by the certificate or certificates, the Corporation shall issue and
deliver to the holder a new certificate representing the balance of the shares
of Series A Preferred Stock not subject to redemption.

 

Section 8.               Mandatory
Redemption.

 

(A)          The
Corporation will, at the option of the holders of the Series A Preferred
Stock, redeem for cash any or all of the Series A Preferred Stock held by
such holder at the Redemption Price upon termination of the Purchase Agreement
in accordance with the terms thereof, other than as a result of the termination
thereof by the Corporation resulting from Purchasers’ (as defined in the
Purchase Agreement) material breach of its obligations thereunder or under the
other Transaction Documents.  Notice of
mandatory redemption (the “Mandatory Redemption
Notice”) under this Section 8 shall be given to the
Corporation not less than ten (10) days prior to the date designated by a
holder of Series A Preferred Stock for redemption (the “Mandatory Redemption Date”). 
Any such notice of redemption shall specify the number of shares of Series A
Preferred Stock to be redeemed.

 

(B)           On
or before the Mandatory Redemption Date, each holder of Series A Preferred
Stock who has elected to have shares redeemed under this Section 8
shall surrender to the Corporation the certificate or certificates representing
the shares to be redeemed on the Mandatory Redemption Date in the manner and
place designated in the Mandatory Redemption Notice, and upon such Mandatory
Redemption Date the Redemption Price for such shares shall be payable to the
order of the person whose name appears on the certificate as the owner thereof,
or to such payee as such owner may designate in writing to the Corporation
prior to the Mandatory Redemption Date, and each surrendered certificate shall
be canceled and retired.  If the
applicable redemption is for less than all of the shares of Series A
Preferred Stock represented by the certificate or certificates, the Corporation
shall issue and deliver a new certificate representing the balance of the
shares of Series A Preferred Stock not subject to redemption.

 

A-8

 

Section 9.               Amendment. The Amended and
Restated Certificate of Incorporation of the Corporation shall not be further
amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Convertible Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
at least a majority of the outstanding shares of Series A Convertible
Preferred Stock, voting separately as a class.

 

Section 10.             Fractional Shares.  Series A Convertible Preferred Stock may
be issued in fractions of a share which shall entitle the holders, in proportion
to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Convertible Preferred Stock.

 

Section 11.             Definitions.  Unless the context otherwise requires, when
used herein the following terms shall have the meaning indicated.

 

“Common Stock”
means any shares of the common stock, par value $.001 per share, of the
Corporation now or hereafter authorized to be issued, and any and all securities
of any kind whatsoever of the Corporation which may be exchanged for or
converted into Common Stock, any and all securities of any kind whatsoever of
the Corporation which may be issued on or after the date hereof in respect of,
in exchange for, or upon conversion of shares of Common Stock pursuant to a
merger, consolidation, stock split, stock dividend, recapitalization of the
Corporation or otherwise.

 

“Original Purchase
Price” means, with respect to a share of Series A Convertible
Preferred Stock, U.S. $0.44.

 

“Transaction
Documents” means (i) the Purchase Agreement, (ii) the Facility
Agreement, dated as of August 26,
2005, between the Corporation and Mawlaw 653 Limited, (iii) the Management
Agreement, dated as of August 26, 2005, between
the Corporation and Mawlaw 653 Limited, and (iv) the Subscription
Agreement, dated as of August 26, 2005, between
the Corporation and Mawlaw 660 Limited.

 

IN WITNESS WHEREOF, I
have executed and subscribed this Certificate and do affirm the foregoing as
true under the penalties of perjury this     day of August 2005.

 

 

	
   

  	
   

  	
  VIA NET.WORKS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Matt S. Nydell

  	
   

  
	
   

  	
   

  	
   

  	
  Senior Vice
  President, General

  	
   

  
	
   

  	
   

  	
   

  	
  Counsel and
  Secretary

  	
   

  

 

A-9

 

Exhibit B

 

Opinion of Counsel

 

See Attached.

 

B-1

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