ASSET PURCHASE AGREEMENT

Exhibit 10.1

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

by and among

NAVISITE, INC.,
as Parent,

NAVI ACQUISITION CORP. ,
as Buyer,

and

ALABANZA, LLC and HOSTING VENTURES, LLC ,
as the Sellers

August 10, 2007

TABLE OF CONTENTS

		Page
ARTICLE I — PURCHASE AND SALE OF ASSETS; CLOSING			1
Section 1.1. Purchase and Sale of Assets			1
Section 1.2. Consideration			3
Section 1.3. Assumption of Liabilities			4
Section 1.4. Time and Place of Closing			6
Section 1.5. Working Capital Adjustment			6
Section 1.6. Allocation			8
ARTICLE II — REPRESENTATIONS AND WARRANTIES OF THE SELLERS			8
Section 2.1. Existence; Good Standing; Authority; Subsidiaries			8
Section 2.2. No Conflict, Consents			10
Section 2.3. Financial Statements			10
Section 2.4. Absence of Certain Changes			11
Section 2.5. Consents and Approvals			12
Section 2.6. Litigation			12
Section 2.7. Taxes			12
Section 2.8. Employee Benefit Plans			15
Section 2.9. Real and Personal Property			17
Section 2.10 Labor and Employment Matters			18
Section 2.11. Customers; Vendors			19
Section 2.12. Contracts and Commitments			19
Section 2.13. Intellectual Property			21
Section 2.14. Environmental Matters			24
Section 2.15. Insurance			25
Section 2.16. Brokers			25
Section 2.17. Compliance with Laws			25
Section 2.18. Transactions with Affiliates			26
Section 2.19. Product Warranties and Liabilities			26
Section 2.20. Knowledge			26
ARTICLE III — REPRESENTATIONS AND WARRANTIES OF NAVISITE			27
Section 3.1. Existence; Good Standing; Authority			27
Section 3.2. No Conflict			28
Section 3.3. Consents and Approvals			28
Section 3.4. Brokers			28
Section 3.5. Financial Capabilities			28
Section 3.6. Knowledge			28
ARTICLE IV — CERTAIN COVENANTS OF THE PARTIES			29
Section 4.1. Confidentiality			29
Section 4.2. Further Action			29
Section 4.3. Press Releases			29
Section 4.4. Conveyance Taxes; Costs			29

		Page
Section 4.5. Books and Records			30
Section 4.6. Approval of Transactions			30
Section 4.7. FIRPTA Certification			30
Section 4.8. Use of Name; Use of Network			30
Section 4.9. Endorsement of Checks, Etc			30
Section 4.10 Consents			31
Section 4.11. Certain Tax Matters			31
ARTICLE V — EMPLOYEE MATTERS			32
Section 5.1. Employees; Benefits			32
ARTICLE VI — CONDITIONS TO CLOSING			33
Section 6.1. Conditions to Obligations of the Sellers			33
Section 6.2. Conditions to Obligations of NaviSite			34
Section 6.3. Deliveries at Closing			35
ARTICLE VII — SURVIVAL; INDEMNIFICATION			37
Section 7.1. Survival			37
Section 7.2. Indemnification of NaviSite			37
Section 7.3. Indemnification of Sellers			38
Section 7.4. Procedure for Indemnification of NaviSite-Two Party Claims			38
Section 7.5. Procedure for Indemnification of Sellers — Two Party Claims			39
Section 7.6. Method of Asserting Third-Party Claims			40
Section 7.7. Remedies Exclusive			41
ARTICLE VIII — GENERAL PROVISIONS			42
Section 8.1. Notices			42
Section 8.2. Fees and Expenses			43
Section 8.3. Certain Definitions			43
Section 8.4. Interpretation			43
Section 8.5. Counterparts and Facsimile Signatures			44
Section 8.6. Amendments and Waivers			44
Section 8.7. Entire Agreement; Severability			44
Section 8.8. Third Party Beneficiaries			44
Section 8.9. Governing Law			45
Section 8.10. Assignment			45
Section 8.11. Consent to Jurisdiction			45
Section 8.12. Mutual Drafting			45
Section 8.13. Remedies			45
Section 8.14. Bulk Sales Law			45

EXHIBITS

Exhibit A		Form of Escrow Agreement
Exhibit B		Form of Non-Competition Agreement
Exhibit C		Form of Sublease
Exhibit D		Form of Assignment and Assumption Agreement
Exhibit E		Form of Bill of Sale
Exhibit F		Form of Transition Services Agreement

SCHEDULES

EXECUTION VERSION

ASSET PURCHASE AGREEMENT

     This ASSET PURCHASE AGREEMENT (this “ Agreement ”) is dated as of August 10, 2007 by and among (i) NaviSite, Inc. , a Delaware corporation (“ Parent ”); (ii) Navi Acquisition Corp. , a Delaware corporation (“ Buyer” , and together with Parent, “ NaviSite ”); and (iii) Alabanza, LLC , a Maryland limited liability company ( “Alabanza” ), and Hosting Ventures, LLC , a Maryland limited liability company (“ Hosting ”, and together with Alabanza, the “ Sellers ” and each a “Seller” ).

     WHEREAS, Sellers own and operate dedicated and shared web hosting businesses, including without limitation that certain proprietary platform consisting of the major modules of Domain System Manager, Control Panel Software and Security and System Administration Tools (the “Businesses” ); and

     WHEREAS, Sellers desires to sell, and NaviSite desires to buy, substantially all of the assets of Sellers related to the Businesses, on the terms and subject to the conditions set forth herein; and

     WHEREAS, as a condition and inducement to NaviSite to enter into this Agreement and Buyer to assume the liabilities set forth herein, at the Closing (as defined in Section 1.4), NaviSite, Sellers and the escrow agent named therein (the “ Escrow Agent ”) shall enter into an escrow agreement substantially in the form attached hereto as Exhibit A (with such changes as the Escrow Agent may reasonably request, the “ Escrow Agreement ”), pursuant to which Parent shall place the Escrowed Funds (as defined in Section 1.2(a)(i)) in an escrow account (the “Escrow Account” ) to secure certain indemnification obligations to NaviSite.

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

ARTICLE I — PURCHASE AND SALE OF ASSETS; CLOSING

      Section 1.1. Purchase and Sale of Assets .

          (a) Except as otherwise provided below and subject to the terms and conditions of this Agreement, Sellers shall sell, convey, transfer, assign and deliver to Buyer at the Closing, free and clear of all Liens (as hereinafter defined), except for the Permitted Liens (as hereinafter defined), all of the assets and properties of every kind, nature and description of Sellers related to the Businesses (all of such assets and properties being referred to herein as the “ Purchased Assets ”). The Purchased Assets shall include, but shall not be limited to, the following assets of the Sellers:

                    (i) all of the tangible personal property, machinery, equipment, tools, machine and electric parts, supplies, computers, appliances, office furniture and fixtures and vehicles, wherever located, owned or used by Sellers primarily in connection with the Businesses;

                    (ii) all of the rights, tangible and intangible, of Sellers existing under the contracts, agreements, leases, licenses, instruments or commitments of Sellers relating to the Businesses, including without limitation those listed in Schedule 1. 1(a)(ii) attached hereto, including without limitation any contracts or agreements with Cybage Software Pvt. Ltd., all customer contracts, and all signature authorizations given to any Seller permitting such Seller to charge the credit cards of end-user customers to the extent such signature authorizations are legally and contractually assignable (collectively, the “Assumed Contracts” ), it being understood by the parties that all of the Assumed Contracts listed on such Schedule 1. 1(a)(ii) that are in the name of Alabanza Corporation as of the date hereof shall be included in the Purchased Assets and the Assumed Contracts, and Sellers shall cause Alabanza Corporation to execute an Assignment, to transfer such assets to Buyer at the Closing;

                    (iii) all rights in and to any governmental and private permits, licenses, franchises and authorizations, to the extent assignable, used in connection with the Businesses;

                    (iv) all raw materials, work-in progress and finished-goods inventories, and all repair and replacement parts and materials, and all other parts and materials, used in or relating to the Businesses, including, without limitation, all inventories of computer program code (in all media) and materials and program documentation (collectively, the “Inventory” );

                    (v) all rights in and to any requirements, processes, formulations, methods, technology, know-how, formulae, trade secrets, trade dress, designs, inventions and other proprietary rights and all documentation embodying, representing or otherwise describing any of the foregoing, owned or held by Sellers in connection with the Businesses, including without limitation all rights in the Businesses’ proprietary platform consisting of the major modules of Domain System Manager, Control Panel Software and Security and System Administration Tools (the assets described in Sections 1.1(v) through 1.1(viii), which shall all be delivered by Sellers to Buyer in electronic form to a computer(s) or server(s) designated by NaviSite, by remote telecommunication, are referred to as the “Intangible Property Rights” );

                    (vi) all registered and pending patents, copyrights, domain names (including without limitation “alabanza.com”), trade names, trademarks and service marks of Sellers used in the Businesses, including without limitation those listed on Schedule 1. 1(a)(vi) , all unregistered trade names, trademarks, brand names (including but not limited to “One on One Internet” and “Linux Web Host”) and service marks of Sellers used in the Businesses, and all documentation embodying, representing or otherwise describing any of the foregoing, and all internet protocol address space associated with the Businesses to the extent owned by the Sellers;

                    (vii) all rights in and to the customer lists, parts lists, vendor lists, promotion lists, marketing data and other compilations of names and data of Sellers developed in connection with the Businesses, and which shall be delivered by or on behalf of Sellers to Buyer at or prior to the Closing;

                    (viii) all of Sellers’ rights in and to the computer software programs (including software licensed to Sellers) used in connection with the Businesses or developed or under development by, or on behalf of, Sellers in connection with the Businesses, including without limitation those identified on Schedule 1. 1(a)(viii) , including the source code and object

code for such software, and all technical and descriptive materials (other than Inventory) relating to the acquisition, design, development, use or maintenance of computer code and program documentation and materials in any and all languages ( “Technical Documentation” ), in each case to the extent that Sellers possess and have a right to possess and transfer the same;

                    (ix) all accounts and notes receivable, negotiable instruments of or made payable to Sellers, advanced payments, claims for refunds and deposits and other prepaid items of Sellers, including all customer security deposits and all security deposits made by Sellers pursuant to any vendor contracts;

                    (x) all accounts receivable schedules, lists, files, books, publications, and other records and data of Sellers used in connection with the Businesses;

                    (xi) all causes of action, claims, suits, proceedings, judgments or demands, of whatsoever nature, of or held by Sellers against any third parties with respect to the Businesses; and

                    (xii) all goodwill of Sellers associated with the Businesses and the Purchased Assets, including the Intangible Property Rights.

          (b) Notwithstanding the foregoing, Sellers shall not transfer to Buyer, and the Purchased Assets shall not include, (i) the articles of organization, operating agreements, minute books, record books, tax identification numbers, and other organizational documents of Sellers; (ii) Sellers’ rights under this Agreement and any other agreement, document or instrument entered into pursuant to this Agreement; and (iii) any of the assets listed on Schedule 1.1(b) (collectively, “Excluded Assets” ).

          (c) As used herein, “Liens” mean liens, rights or options of any third party to acquire assets, security interests, mortgages, encumbrances and restrictions of any kind. As used herein, “Permitted Liens” means (i) such imperfections of title, easements or Liens which do not materially impair the current use of the Purchased Assets, (ii) materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s and other like Liens arising in the ordinary course of business, or deposits to obtain the release of such Liens, (iii) Liens for taxes not yet due and payable, or being contested in good faith, (iv) purchase money Liens incurred in the ordinary course of business, and (v) the Liens listed on Schedule 1.1(c) .

      Section 1.2. Consideration .

          (a) As consideration for the sale to Buyer of the Purchased Assets, Parent shall pay to Sellers an aggregate amount equal to Six Million Eight Hundred Fifty Thousand Dollars ($6,850,000) (the “Purchase Price” ) (subject to adjustment as set forth in Section 1.5), payable as follows:

                    (i) Parent shall deliver to, and cause to be directly deposited with, Mellon Bank, N.A. (the “Escrow Agent” ), for the account and future potential benefit of Sellers, cash in the amount of Six Hundred and Eighty Five Thousand ($685,000), which amount, together with all interest and other amounts earned thereon, shall be referred to as the “Escrowed Funds” ; and

                    (ii) Parent shall pay the balance of the Purchase Price to the Sellers at Closing by wire transfer of immediately available funds (the “Closing Payment” ).

          (b) The Escrowed Funds shall be held by the Escrow Agent pursuant to the terms and conditions of the Escrow Agreement for the purpose of satisfying working capital adjustments pursuant to Section 1.5 hereof and indemnification claims pursuant to Article VII hereof. Unless disbursed in accordance with Section 1.5 or Article VII, the Escrowed Funds shall be held by the Escrow Agent until 5:00 p.m., Boston time, on that date which is the six-month anniversary of the Closing Date (as defined in Section 1.4) and shall be maintained and used strictly in accordance with the terms of this Agreement and the Escrow Agreement. At the six-month anniversary of the Closing Date, the Escrowed Funds, with such adjustments as set forth in Section 1.5 and Article VII, shall be disbursed to Sellers in accordance with the Escrow Agreement. Notwithstanding the foregoing, in the event that a working capital adjustment to the Purchase Price is in dispute pursuant to Section 1.5 as of the time of such anniversary, or NaviSite has delivered written notice to Sellers of an indemnification claim as set forth in Article VII and such claim has not been resolved in accordance with Article VII prior to such anniversary, the amount necessary to satisfy such dispute or claim shall not be disbursed and shall continue to be held by the Escrow Agent pursuant to the Escrow Agreement until such dispute or claim is resolved as provided in Section 1.5 or Article VII, as the case may be, and all other Escrowed Funds shall be disbursed to Sellers at that time.

      Section 1.3. Assumption of Liabilities .

          (a) Buyer shall assume only: (i) those Liabilities specifically set forth in Schedule 1.3(a) (collectively, the “Assumed Liabilities” ); and (ii) those Liabilities arising after the Closing Date under the Assumed Contracts (which, together with the Assumed Liabilities, shall sometimes be referred to herein collectively as the “Assumed Obligations” ). The Assumed Obligations shall not include, and Sellers covenant that Buyer shall not be liable or responsible for, any obligations or liabilities arising out of any act or omission of Sellers occurring prior to Closing under any Assumed Contract, regardless of when such liability or obligation is asserted. “Liabilities” include all debts, liabilities, commitments or obligations of any kind, character or nature whatsoever, whether known or unknown, secured or unsecured, fixed, absolute, contingent or otherwise, and whether due or to become due.

          (b) Except for the Assumed Obligations, Buyer shall not assume or perform, and Sellers shall remain responsible for any and all Liabilities of Sellers, whether known or unknown, and regardless of when such Liabilities arise or are asserted, including, without limitation, any obligations or liabilities of Sellers with respect to the following (all Liabilities other than Assumed Obligations shall be referred to herein as the “Excluded Liabilities” ):

                    (i) any compensation or benefits payable to employees of Sellers, including, but not limited to, any Liabilities arising under any employee pension or profit sharing plan or other employee benefit plan, any severance pay or other termination costs due to employees of any Seller or any of Sellers’ obligations to their employees for salaries and holiday and sick pay, accrued and unpaid as of the Closing Date, other than as set forth in Section 5.1;

                    (ii) all federal, state, local, non-U.S. or other taxes, including without limitation any income, sales, use, personal property and other taxes which may become payable as a result of the transactions contemplated by this Agreement;

                    (iii) injuries to or the death of any person, or any employee of any Seller, that (A) has occurred or may occur, prior to Closing, in connection with the Businesses, or (B) has occurred prior hereto or may occur hereafter in connection with any business other than the Businesses conducted, or any operations other than the operations of the Businesses, engaged in by Sellers, even if not discovered until after the Closing Date;

                    (iv) all liens, claims and encumbrances on any of the Purchased Assets (other than the Permitted Liens assumed by the Buyer) and all obligations and liabilities secured thereby;

                    (v) all obligations of Sellers for borrowed money, or incurred in connection with the purchase, lease or acquisition of any assets, and any obligations of a similar nature incurred by Sellers;

                    (vi) any accounts or notes payable or similar indebtedness incurred by Sellers;

                    (vii) any claims, demands, actions, suits, legal proceedings, obligations or liabilities arising from Sellers’ operation of the Businesses, including, but not limited to, those set forth in Schedule 2.6 , or arising from any other business or operations of Sellers other than the Businesses, whether conducted prior to or after the Closing, whether such claims, demands, actions, suits, legal proceedings, obligations or liabilities are presently pending or threatened or are threatened or asserted at any time after the date hereof and whether before or after the Closing;

                    (viii) fees payable to Sellers’ agents, brokers or representatives for strategic partnerings, or other transactions, including without limitation any fees due to RBC Daniels L.P.;

                    (ix) any legal, accounting or other fees or expenses of Sellers or their members relating to or arising from the transactions contemplated hereby; and

                    (x) any Liabilities set forth on Schedule 1. 3(b) .

      Section 1.4. Time and Place of Closing . The closing (the “ Closing ”) of the purchase and sale of the Purchased Assets and the other transactions contemplated by this Agreement shall be held at the offices of Saul Ewing LLP, 222 Delaware Avenue, Wilmington, Delaware 19899, effective as of the date hereof at 5:00pm, or at such other time as NaviSite and the Sellers may mutually determine. The date on which the Closing actually occurs is sometimes referred to herein as the “ Closing Date .”

      Section 1.5. Working Capital Adjustment .

          (a) For purposes of this Agreement, “ Net Working Capital ” shall mean as of any particular date (i) the value of all current assets, net of provision for bad debt, plus restricted cash (to the extent not duplicative) of the Sellers as of that date, less (ii) the amount of all current liabilities, including accrued current liabilities not yet due, of the Sellers as of that date determined in each case in accordance with U.S. generally accepted accounting principles, consistently applied ( “GAAP” ), and excluding (iii) cash accounts, inter-company accounts, operating lease payments due after the Closing Date, obligations under capital leases, deferred revenue, any accounts receivable related to Excluded Assets, accrued payroll and payroll taxes due by the Sellers at the Closing Date and any vacation liabilities due by the Sellers for employees not hired by the Buyer. A calculation of Net Working Capital as of June 30, 2007 based on the June Balance Sheet (as defined in Section 2.3) is attached hereto as Schedule 1.5(a) . Notwithstanding the foregoing, the Net Working Capital as of the Closing shall exclude current liabilities pursuant to Sections 4.4 and 8.2 of this Agreement, and any bonuses paid or to be paid to any employees of Sellers in connection with or in contemplation of the transactions contemplated by this Agreement.

          (b) Within forty-five (45) days following the Closing Date, NaviSite shall deliver to Sellers a written statement showing NaviSite’s calculation of the Net Working Capital as of the Closing Date in accordance with GAAP and applying the same accounting principles, policies and practices that were used in the creation of the June Balance Sheet and Schedule 1.6 (the “ Closing Statement ”). NaviSite shall provide Sellers and their representatives with reasonable access to such books and records relating to the Businesses through the Closing Date and NaviSite personnel as Sellers reasonably request in order to permit Sellers to analyze the Closing Statement.

          (c) If, within ten (10) days following delivery of the Closing Statement to Sellers, Sellers have not given NaviSite written notice of their objection as to the calculation of Net Working Capital as of the Closing Date as reflected on the Closing Statement (which notice shall state the basis of Sellers’ objection), then the Net Working Capital as of the Closing Date as so reflected on the Closing Statement shall be binding and conclusive on the parties and shall be the “ Closing Net Working Capital. ”

          (d) If Sellers give NaviSite written notice in accordance with Section 1.5(c) of objection to the calculation of the Net Working Capital as of the Closing Date as reflected on the Closing Statement, NaviSite and Sellers shall attempt in good faith to agree upon the Net Working Capital as of the Closing Date, and if such agreement is reached the Net Working Capital so agreed upon shall be the Closing Net Working Capital. If Sellers and NaviSite fail to resolve the issues raised by such objection within ten (10) days of NaviSite’s receipt of such

objection, Sellers and NaviSite shall submit the issues remaining in dispute to binding resolution by either (i) an independent accounting firm selected within five (5) days thereafter by agreement of Sellers and Buyer or (ii) in the event Sellers and NaviSite have been unable to select a firm by agreement within the prescribed time period, a “Big Four” accounting firm selected by lot, after eliminating any “Big Four” accounting firm that has, in the prior three years, been engaged to provide accounting or tax advisory services to Sellers or NaviSite or any of their respective subsidiaries or affiliates. The accounting firm selected in accordance with this Section 1.5(d) is referred to herein as the “Review Accountants” . If issues are submitted to the Review Accountants for resolution, (A) Sellers and NaviSite shall furnish or cause to be furnished to the Review Accountants and to the other party such work papers and other documents and information relating to the disputed issues as the Review Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Review Accountants any material relating to the disputed issues and to discuss the issues with the Review Accountants; (B) the determination by the Review Accountants of the Net Working Capital as of the Closing Date, as set forth in a notice to be delivered to both Sellers and NaviSite within sixty (60) days of the submission to the Review Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be the Closing Net Working Capital; and (iii) NaviSite and Sellers shall each pay one-half of the fees and expenses of any Review Accountants selected to resolve any such dispute.

          (e) If, after the final determination according to this Section 1.5, the Closing Net Working Capital is greater than Seventy-Five Thousand Dollars ($75,000) (the “Target Amount” ), then the Purchase Price shall be increased by an amount equal to the amount by which the Closing Net Working Capital exceeds the Target Amount (the “Increase Amount” ), and Parent shall promptly pay the Increase Amount to Sellers by wire transfer of immediately available funds. Alternatively, if the Closing Net Working Capital is less than the Target Amount, then the Purchase Price shall be reduced by an amount equal to the amount by which the Target Amount exceeds the Closing Net Working Capital (the “Reduction Amount” ), and NaviSite and Sellers shall jointly direct the Escrow Agent to offset the Reduction Amount, if any, against the Escrowed Funds and to promptly disburse the Reduction Amount to Parent, all in accordance with the Escrow Agreement. Notwithstanding the foregoing, the Reduction Amount shall in no event exceed the then remaining amount of the Escrowed Funds and the sole source of recovery therefore shall be the Escrowed Funds under the Escrow Agreement.

      Section 1.6. Allocation . NaviSite and Sellers shall mutually allocate the purchase price (and all other capitalized costs) among the Purchased Assets (and the Sellers shall allocate the purchase price between each other) in accordance with Schedule 1.6 , or as the parties otherwise agree in writing no later than seventy-five (75) days after Closing. Such allocation shall be made in accordance with the provisions of Section 1060 of the Internal Revenue Code of 1986, as amended (the “ Code ”), and shall be binding upon NaviSite and Sellers for all purposes (except to the extent that GAAP requires that NaviSite assign a different value to any asset for financial reporting purposes). The fair market value of each of the Assets shall be equal to its book value and any purchase price in excess of the book value shall be allocated to goodwill. In the event that the Purchase Price is increased or decreased in accordance with Section 1.5(e), Schedule 1.6 shall be amended, consistent with the intent of this Section 1.6, to reflect such increase or decrease.

ARTICLE II — REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     The Sellers Disclosure Schedule shall be arranged in sections and subsections corresponding to the numbered and lettered sections and subsections contained in this Article II. The disclosures in any section or subsection of the Sellers Disclosure Schedule shall qualify other sections and subsections in this Article II to the extent it is reasonably apparent from a reading of the disclosure that such disclosure is applicable to such other sections and subsections. Disclosure of any matter in the Sellers Disclosure Schedule shall not constitute an expression of a view that such matter is material or is required to be disclosed pursuant to this Agreement. To the extent that any representation or warranty set forth in this Agreement is qualified by the materiality of the matter(s) to which the representation or warranty relates, the inclusion of any matter in the Disclosure Schedule does not constitute a determination by any Seller that any such matter is material. The disclosure of any information concerning a matter in the Disclosure Schedule does not imply that any other undisclosed matter that has a greater significance or value is material. Except as set forth in the Sellers Disclosure Schedule attached hereto and delivered by Sellers, each of the Sellers hereby jointly and severally represents and warrants to NaviSite as of the date hereof (or, if made as of a specified date, as of such date) and as of the Closing Date, as follows:

      Section 2.1. Existence; Good Standing; Authority; Subsidiaries .

          (a) Each of the Sellers is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Maryland. Each of the Sellers has all requisite power and authority and all necessary governmental licenses, authorizations, consents and approvals to own, operate, lease and encumber its properties and carry on its business as currently operated and conducted. Each of the Sellers is duly licensed or qualified to do business as a foreign corporation and is in good standing under the laws of each other jurisdiction in which the character or ownership of its properties or in which the transaction or character of its business makes such qualification necessary, except where the failure to be so licensed or qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. Schedule 2.1 hereto sets forth a true, correct and complete list of all foreign jurisdictions in which each Seller is so qualified or licensed and in good standing. The copies of the articles of organization and operating agreements (collectively, the “Organizational Documents” ) of each Seller, each as amended to date and in full force and effect, have been

provided or made available to NaviSite’s counsel, and are complete and correct, and no amendments thereto are pending. Neither Seller is in violation of any provision of its Organizational Documents. The books and records, minute books, membership unit record books and other similar records of Sellers, all of which have been made available to NaviSite’s counsel and NaviSite, are true, correct and complete.

          (b) Each of the Sellers has all power and authority to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of Sellers pursuant to this Agreement and the Ancillary Agreements and to carry out the transactions contemplated hereby and thereby. The execution and delivery of this Agreement by each of the Sellers, the performance by each of the Sellers of its obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action on the part of each of the Sellers. This Agreement has been duly executed and delivered by each of the Sellers and, assuming the due authorization, execution and delivery of this Agreement by NaviSite, this Agreement constitutes a legal, valid and binding obligation of each of the Sellers, enforceable against each of the Sellers in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity. No other action on the part of any Seller is necessary to authorize the execution and delivery of this Agreement by the Sellers or the consummation by the Sellers of the transactions contemplated hereby.

          (c) Neither of the Sellers has any subsidiaries or any ownership interest in any other securities or in any other corporation, limited liability company, partnership, association or other business entity.

      Section 2.2. No Conflict, Consents . Neither the execution and delivery by Sellers of this Agreement and the other agreements, documents and instruments contemplated hereby, nor the consummation by Sellers of the transactions in accordance with the terms hereof and thereof, conflicts with or results in a breach of any provisions of the Organizational Documents of Sellers. Except as set forth on Schedule 2.2 and assuming the consents, approvals and authorizations contemplated by Section 3.3 are obtained and are in full and effect and notices have been duly given, none of the execution, delivery or the performance by Sellers of this Agreement and the other agreements, documents and instruments contemplated hereby, nor the consummation by the Sellers of the transactions contemplated hereby: (a) results in the creation or imposition of any Lien on any of the property held by any of the Sellers; (b) requires consent to assignment or otherwise, as a result of the transactions contemplated hereby (including without limitation to maintain in full force and effect any of the Material Contracts (as defined in Section 2.12) as a result of the transactions contemplated hereby), violates, or conflicts with, or results (or will violate, conflict with or result) in a breach of any provision of, or constitutes a default (or an event which, with or without notice or lapse of time or both, would constitute a default) or gives rise to any right of termination, cancellation or acceleration, change of control rights, modification, notification, enhancement of rights of third parties, revocation of grant of rights or assets, placement into or release from escrow of any assets of any Seller or acceleration of any right or obligation of any Seller or a loss of any benefit to which any Seller is entitled under any of the terms, conditions or provisions of any Material Contract; or (c) violates any order, writ, injunction, decree, statute, law, rule or regulation applicable to any Seller.

Section 2.3. Financial Statements .

          (a) Sellers have delivered to NaviSite the following financial statements of each Seller (collectively, the “ Financial Statements ”):

                    (i) Unaudited consolidated balance sheets as of December 31, 2005 and December 31, 2006, and consolidated statements of income and retained earnings and consolidated statements of cash flows for each of the fiscal years then ended; and

                    (ii) Unaudited consolidated balance sheet as of June 30, 2007 (the “June Balance Sheet” ), and the related unaudited consolidated statements of income and retained earnings and cash flows for the month and year to date period then ended.

          (b) Subject to the absence of footnotes and normal year-end audit adjustments with respect to any unaudited Financial Statements which are consistent in nature and amount with adjustments made in prior years, the Financial Statements have been (and those statements to be delivered for periods ending subsequent to the date hereof will be) prepared from, and in accordance with, the information contained in the books and records of Sellers, which have been regularly kept and maintained in accordance with Sellers’ normal and customary practices and applicable legal and accounting practices and fairly present, in all material respects, the financial condition of each of the Sellers and the Businesses as of the dates thereof and results of operations and cash flows for the periods referred to therein, and have been prepared in accordance with GAAP consistently applied throughout all periods indicated, and present fairly (or when delivered will present fairly) in all material respects the consolidated financial condition, cash flows and operating results of each of the Sellers and the Businesses as of the

dates and for the periods indicated therein, and are consistent with the books and records of Sellers.

          (c) As of the date hereof, all liabilities of Sellers of a type that would be required to be shown on the Financial Statements (including the notes thereto, where applicable) in accordance with GAAP (whether direct, indirect, accrued, absolute, contingent, asserted, unasserted or otherwise) have been (i) stated or adequately reserved or accrued against on the June Balance Sheet or the notes thereto, (ii) reflected on Schedule 2.3 , or (iii) incurred after the date of the June Balance Sheet in the ordinary course of business consistent with past practices.

      Section 2.4. Absence of Certain Changes . Except as set forth on Schedule 2.4 , from the date of the June Balance Sheet to the date of this Agreement, the Sellers have operated only in the ordinary course of business consistent with past practices and there has not been any:

          (a) to the knowledge of the Sellers, event, occurrence or development which would, individually or in the aggregate , reasonably be expected to have a Material Adverse Effect, other than developments generally in the industry in which the Sellers operate;

          (b) to the knowledge of the Sellers, event or development that would, individually or in the aggregate, reasonably be expected to prevent or materially delay the performance of this Agreement or any of the Ancillary Agreements by Sellers;

          (c) exchange in, reclassification, split or subdivision of any of the Sellers’ authorized or issued membership interests; grant of any option, right to purchase or similar right regarding the membership interests of any Seller; or purchase, redemption, retirement, or other acquisition by any Seller of any such membership interests; or

          (d) declaration or payment of any dividend or other distribution or payment in respect of the membership interests of the Sellers.

      Section 2.5. Consents and Approvals . Except as set forth on Schedule 2.5 , the execution, delivery and performance of this Agreement by Seller will not require any consent, approval, permit, authorization, waiver or other action by, or filing with or notification to, any federal, state, local, or any non-U.S. government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body (a “ Governmental Authority ”), except the notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), if applicable.

      Section 2.6. Litigation . Except as set forth on Schedule 2.6 , as of the date of this Agreement there is no litigation, action, suit, proceeding, inquiry, claim, arbitration or investigation pending or, to the knowledge of any Seller, threatened in writing against any Seller or any of its assets or property or any of its directors or officers in their capacities as such or for which any Seller is obligated to indemnify a third party. Neither Seller is a party to or subject to the provisions of any order, writ, injunction, judgment or decree of any court or Governmental Authority or any arbitration ruling or any settlement or similar agreement or written arrangement with ongoing obligations relating to a dispute (or the resolution of a dispute) with any third party.

Section 2.7. Taxes .

          (a) Except as set forth on Schedule 2.7 :

                    (i) Each of the Sellers has timely filed, or will timely file, all material Tax Returns required to be filed by such Seller with respect to the Businesses with respect to Taxes for any period ending on or before the date of this Agreement, taking into account any extension of time to file granted to or obtained on behalf of any Seller;

                    (ii) Each of the Sellers has paid or caused to be paid all Taxes and other assessments reflected in such Tax Returns that have become due and payable. Each of the Sellers has made provision, in accordance with GAAP, for all Taxes owed or accrued through the date of this Agreement;

                    (iii) Each of the Sellers has withheld and paid all Taxes required to be withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party under all applicable Tax Laws, and all Forms W-2 and 1099 required with respect thereto have been properly completed and timely filed and have, within the time and manner prescribed by Law, registered for the purpose of each withholding Tax in the relevant territory or jurisdiction;

                    (iv) There are no Liens for Taxes upon the assets or properties of the Sellers or the Businesses except for statutory Liens for current Taxes not yet due;

                    (v) No Seller has requested any extension of time within which to file any Tax Return in respect of any taxable year which has not since been filed, and no outstanding waivers or comparable consents regarding the application of the statute of limitations with respect to any Taxes or Tax Returns has been given by or on behalf of any Seller;

                    (vi) No Seller (A) is required to include in income in any taxable period ending after the Closing any adjustment pursuant to Section 481(a) of the Code, by reason

of any voluntary or involuntary change in accounting method (nor has any Governmental Authority proposed any such adjustment or change of accounting method); (B) has made an election, or is required, to treat any of its assets as tax-exempt bond financed property or tax-exempt use property under Section 168 of the Code or any comparable provision of non-U.S., state or local law; or (C) has filed a consent pursuant to former Section 341(f) of the Code for (or any corresponding provision of state or local law) or agreed to have former Section 341(f) of the Code (or any corresponding provision of state or local law) applied to the disposition of any asset;

                    (vii) No power of attorney has been granted by or with respect to any Seller with respect to any matter relating to Taxes;

                    (viii) No Seller is a party to any agreement, contract or arrangement that will result in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code and no action by any Seller, whether pursuant to this Agreement or otherwise, shall result in the making of any such payment;

                    (ix) No Seller has requested or received a ruling or determination from any Governmental Authority or signed a closing or other agreement with any Governmental Authority, in either case with respect to Taxes;

                    (x) No Seller is a party to, is bound by, or has any obligation under, any Tax sharing agreement, Tax indemnification agreement or similar contract or arrangement (collectively, “ Tax Indemnification Agreements ”); and as of the date of this Agreement, no Seller has knowledge of any potential Liability to any Person as a result of, or pursuant to, any such Tax Indemnification Agreement;

                    (xi) The Sellers have previously delivered or made available to NaviSite true, correct and complete copies of (A) all audit reports, letter rulings, technical advice memoranda and similar documents issued by a Governmental Authority relating to the United States federal, state, local or non-U.S. Taxes due from or with respect to any Seller or the Businesses, (B) all United States federal Tax Returns, and those state, local and non-U.S. Tax Returns filed by any Seller for tax periods ending on or after December 31, 2001 and (C) all closing agreements entered into by any Seller with any Governmental Authority with respect to Taxes; and the Sellers will deliver to NaviSite all materials with respect to the foregoing for all matters arising after the date hereof.

                    (xii) No Seller has any Liability for Taxes of another Person under Section 1.1502-6 of the Treasury regulations promulgated under the Code (the “ Treasury Regulations ”) or any similar provision under state, local or non-U.S. Law, by contract or otherwise;

                    (xiii) No Seller has any deferred intercompany gain or loss arising as a result of a deferred intercompany transaction within the meaning of Section 1.1502-13 of the Treasury Regulations (or similar provision under state, local or non-U.S. Law) or any excess loss account under Section 1.1502-19 of the Treasury Regulations (or similar provision of state, local or non-U.S. Law);

                    (xiv) Since December 31, 2006, no Seller has incurred any Liability for Taxes other than in the ordinary course of business;

                    (xv) No claim has been made, nor does any Seller reasonably expect that a claim will be made by a Governmental Authority in a jurisdiction where such Seller does not file Tax Returns that such Seller is or may be subject to taxation by that jurisdiction;

                    (xvi) No Seller has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period described in Section 897(c)(1)(A)(ii) of the Code;

                    (xvii) Neither the Internal Revenue Service (the “ IRS ”) nor any other Governmental Authority is asserting as of the date of this Agreement by written notice to any Seller or, to any Seller’s knowledge, threatening in writing as of the date of this Agreement to assert against any Seller, any deficiency or claim for any amount of additional Taxes; and

                    (xviii) No federal, state, local or non-U.S. audits or other administrative proceedings or court proceedings are pending as of the date of this Agreement with regard to any Taxes or Tax Returns of any Seller, and no Seller has received a written notice prior to the date of this Agreement of any actual or threatened in writing audits or proceedings or is otherwise aware of any such audits or proceedings.

                    (xix) Each of the Sellers qualifies as a “disregarded entity” for Federal income tax purposes.

          (b) For the purposes of this Agreement:

                    (i) “ Taxes ” shall mean any United States federal, state or local or non-U.S. income, gross receipts, occupation, premium, environmental (including taxes under Code Section 59A), customs, profits, registration, alternative or add-on minimum, estimated, withholding, payroll, employment, unemployment, social security (or similar), excise, sales, use, value-added, occupancy, franchise, real property, personal property, business and occupation, windfall profits, capital stock, stamp or transfer tax or duty or any other tax, charge, fee or imposition in the nature of Taxes, computed on a separate basis, including any interest, penalties, additions or assessments with respect thereto, whether disputed or not;

                    (ii) “ Tax Law ” shall mean the Law (including any applicable regulations or any administrative pronouncement) of any Governmental Authority relating to any Tax;

                    (iii) “ Tax Returns ” shall mean any U.S. federal, state, local or non-U.S. return, declaration, report, claim for refund, amended return or information return, and any schedule, exhibit, attachment or other materials submitted with any of the foregoing, and any amendment thereto; and

                    (iv)  “Law” means any non-U.S. or United States federal, state or local law, statute, rule, regulation, ordinance, standard, requirement, administrative ruling, order or process (including any zoning or land use law or ordinance, building code, Environmental Law,

securities, stock exchange, blue sky, civil rights, employment, labor or occupational health and safety law or regulation or any law, order, rule or regulation applicable to federal contractors) or administrative interpretation..

Section 2.8. Employee Benefit Plans .

          (a) Schedule 2.8 contains a true, correct and complete list of each deferred compensation and each bonus or other incentive compensation, stock purchase, stock option and other equity or equity based compensation plan, program, agreement or arrangement; each severance or termination pay, medical, surgical, hospitalization, life insurance and other “welfare plan,” fund or program (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)); each profit sharing, stock bonus or other “pension plan,” fund or program (within the meaning of Section 3(2) of ERISA); each employment, “change in control,” termination or severance agreement; and each other employee benefit plan, fund, program, agreement or arrangement, in each case, that is sponsored, maintained or contributed to or required to be contributed to by any Seller or by any trade or business, whether or not incorporated (an “ ERISA Affiliate ”), that together with any Seller would be deemed a “single employer” within the meaning of Section 414(b), (c), (m) or (o) of the Code, or to which any Seller or an ERISA Affiliate is party, whether written or oral, for the benefit of any employee or former employee of any Seller (the “ Employee Plans ”); provided that with respect to Employee Plans established or maintained primarily for employees or former employees working outside the United States only material Employee Plans are listed. “ Former Employee Plan ” shall mean any Employee Plans of any Seller sponsored, maintained, or contributed to within the last three years, notwithstanding that such plans are not listed on Schedule 2.8 . No Seller or ERISA Affiliate of any Seller has any commitment or formal plan, whether legally binding or not, to create any additional material employee benefit plans or modify or change, in any material way, any existing Employee Plans and no condition exists which would prevent any Seller from terminating any Employee Plans (other than Employee Plans required to be maintained under applicable Law) without material Liability to such Seller (other than for benefits accrued at the time of such termination), except to the extent limited by Law.

          (b) Each Employee Plan and Former Employee Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and the trusts maintained thereunder are exempt from taxation under Section 501(a) of the Code and, to the knowledge of the Sellers, no event has occurred or circumstance exists that would reasonably be expected to affect such qualified status. Each Employee Plan and Former Employee Plan intended to satisfy the requirements of Section 501(c)(9) of the Code has satisfied such requirements.

          (c) None of the Employee Plans or Former Employee Plans is a “multiemployer plan,” as such term is defined in Section 3(37) of ERISA (a “Multiemployer Plan”), nor is or was any Employee Plan or Former Employee Plan subject to Section 302 or Title IV of ERISA or Section 412 of the Code. No Liability under Title IV or Section 302 of ERISA has been incurred by any Seller or ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a material risk to any Seller or ERISA Affiliate of incurring any such Liability. No Seller or ERISA Affiliate sponsors, maintains, contributes to or has an

obligation to contribute to, or has at any time sponsored, maintained, contributed to or had an obligation to contribute to, any Multiemployer Plan or any pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA.

          (d) Except as set forth on Schedule 2.8 , no Seller or, to the knowledge of any Seller, any Employee Plan, any Former Employee Plan, any trust created thereunder, or any trustee or administrator thereof, has engaged in a transaction in connection with which any Seller, any Employee Plan, any Former Employee Plan, any such trust, or any trustee or administrator thereof, or any party dealing with any Employee Plan or any Former Employee Plan or any such trust could be subject to either a material civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code. To the knowledge of the Sellers, there has been no prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code and other than a transaction that is exempt under a statutory or administrative exemption) with respect to any Employee Plan or any Former Employee Plan that could result in any material liability to any Seller or ERISA Affiliate.

          (e) Except as set forth on Schedule 2.8 , each Employee Plan and Former Employee Plan has been operated and administered in all material respects in accordance with its terms and applicable Law, including but not limited to ERISA and the Code, and all contributions required to be made under the terms of any of the Employee Plans or any Former Employee Plan as of the date of this Agreement have been timely made or, if not yet due, have been properly reflected on the Financial Statements except for any failure to do so which would not reasonably be expected to result in any material liability to any Seller or ERISA Affiliate.

          (f) Except as set forth on Schedule 2.8 , no Employee Plan or Former Employee Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of any Seller for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any “pension plan,” or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). The Sellers and each ERISA Affiliate are in material compliance with (A) the requirements of the applicable health care continuation and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the regulations (including proposed regulations) thereunder and any similar state law and (B) the applicable requirements of the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations (including proposed regulations) thereunder.

          (g) Except as set forth on Schedule 2.8 , the consummation of the transactions contemplated hereby will not (i) entitle any current or former employee or officer of any Seller to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of compensation or benefits due any such employee or officer or (iii) prevent any Seller from amending or terminating any Employee Plan or Former Employee Plan.

          (h) Except as set forth on Schedule 2.8 , there are no pending or, to the knowledge of any Seller, threatened in writing or anticipated claims by or on behalf of any Employee Plan or Former Employee Plan, by any employee or beneficiary covered under any

such Employee Plan or Former Employee Plan with respect to such plan, or otherwise involving any such Employee Plan or Former Employee Plan, including any audit or inquiry by the IRS or United States Department of Labor (other than routine claims for benefits).

                    (i) There are no Employee Plans or Former Employee Plans that are subject to the Law of any jurisdiction outside the United States.

      Section 2.9. Real and Personal Property .

          (a) Schedule 2.9(a) sets forth a description of the real property and facilities leased in connection with the Businesses (the “ Leased Real Property ”) and the address, approximate square footage, annual base rent and expiration date thereof. A true and complete copy of the lease for such Leased Real Property (including all amendments, subordination and non-disturbance agreements, estoppel certificates and related documents) (together, the “ Lease ”) has been delivered or made available to NaviSite. With respect to the Lease:

                    (i) Alabanza Corporation (the “Lessee” ), which is the tenant under such Lease, has good, valid and enforceable leasehold interests to the leasehold estate in the Leased Real Property used by such Seller or Sellers, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity; and

                    (ii) the Lease has been duly authorized and executed, is in full force and effect and there is no existing material default by the Lessee under the Lease.

          (b) Schedule 2.9(b) sets forth a true, correct and complete list of all equipment, fixtures and trade fixtures of the Sellers as of June 30, 2007. Except as set forth on Schedule 2.9(b) , each Seller has good title to all of its tangible personal property and assets shown on the June Balance Sheet or acquired after the date of the June Balance Sheet, free and clear of any mortgage, pledge, Lien, conditional sale agreement, security title, encumbrance or other charge (collectively, “ Encumbrances ”), except for (i) assets which have been disposed of to nonaffiliated third parties since June 30, 2007 in the ordinary course of business, (ii) Encumbrances reflected in the June Balance Sheet, (iii) Encumbrances for current Taxes not yet due and payable, and (iv) Permitted Liens. The assets set forth on Schedule 2.9(b) constitute all of the tangible personal property assets necessary for the operation of the Businesses as conducted by the Sellers immediately prior to Closing, other than the network infrastructure assets which constitute Excluded Assets and certain other Excluded Assets (the benefit of which NaviSite will be provided during the transition period under and in accordance with the terms of the Transition Services Agreement, as hereinafter defined).

          (c) No Seller owns or has owned any real property.

      Section 2.10. Labor and Employment Matters . Except as set forth in Schedule 2.10 hereto:

          (a) There is no:

                    (i) collective bargaining agreement or any other agreement, whether in writing or otherwise, with any labor organization, union, group or association (“ Labor Organization ”) applicable to the employees of any Seller and no Seller is subject to any charge, demand, petition or representation proceeding seeking to compel, require or demand it to bargain with any labor union or labor organization nor, as of the date of this Agreement, is there pending or, to any Seller’s knowledge, threatened, any material labor strike, dispute, walkout, work stoppage, slow down or lockout involving any Seller or action or dispute by or with respect to any employees of any Seller;

                    (ii) unfair labor practice complaint pending or, to the knowledge of any Seller, threatened in writing against any Seller before the National Labor Relations Board or any other federal, state local or non-U.S. agency;

                    (iii) pending or, to the knowledge of any Seller, threatened representation question or union or labor organizing activities with respect to employees of any Seller.

          (b) During the past three years, no Seller has effectuated (i) a “plant closing” (as defined in the WARN Act, which is defined in Section 5.1(d)) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of any Seller; or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site of employment or facility of any Seller; nor has any Seller been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state, local or non-U.S. Law. No employees of any Seller have suffered an “employment loss” (as defined in the WARN Act) since three months prior to the date of this Agreement.

          (c) Each of the Sellers has at all times and in all material respects properly classified each of its respective employees as employees and each of its independent contractors as independent contractors, as applicable, and no indication has been received from any Governmental Authority that such contractors would be considered employees for employment law or tax purposes at any time.

          (d) Each of the Sellers has at all times paid its respective employees in conformance with applicable federal, state, local and non-U.S. wage and hour laws. There are not presently pending, or to the knowledge of the Sellers threatened, in writing, any claims with respect to working hours or the payment of wages, overtime or any other form of employee compensation.

          (e) Each of the Sellers does not, formally or informally, have a custom or practice of making ex gratia severance payments to employees.

      Section 2.11. Customers; Vendors .

          (a) Schedule 2.11(a) sets forth a true, complete and correct list of the top 25 customers (and their known affiliates) of the Sellers and the Businesses (the “ Top Customers ”) based on revenues for the period beginning January 1, 2007 and ended May 31, 2007. Sellers, to t