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Stock And Asset Acquisition Agreement

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Sectors: Telecommunications
Governing Law: Delaware, View Delaware State Laws
Effective Date: August 08, 2003
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EXECUTION COPY


STOCK AND ASSET ACQUISITION AGREEMENT


Between


CLEARBLUE TECHNOLOGIES, INC.


and


NAVISITE, INC.
TABLE OF CONTENTS


Section Page 1. Acquisition of the Shares and Other Actions............................1
1.01. Acquisition of the Shares and the Transferor Contracts from the
Transferor.......................................................1
1.02. Further Assurances...............................................2
1.03. Consideration for the Shares and the Transferor Contracts........2
1.04. Partial Share Escrow Securing Warranties.........................3
1.05. Closing..........................................................3
1.06. Consents to Assignment...........................................3


2. Representations of the Transferor Regarding the Shares and the
Transferor Contracts...................................................4


3. Representations of the Transferor Regarding the Transferor and the
Companies..............................................................4
3.01. Organization.....................................................5
3.02. The Companies....................................................5
3.03. Authorization....................................................5
3.04. Financial Statements.............................................6
3.05. Absence of Undisclosed Liabilities...............................6
3.06. Litigation.......................................................6
3.07. Personal Property................................................6
3.08. Intangible Property..............................................7
3.09. Leases...........................................................8
3.10. Real Estate......................................................8
3.11. Accounts Receivable..............................................8
3.12. Tax Matters......................................................8
3.13. Contracts and Commitments........................................9
3.14. Compliance with Agreements and Laws.............................10
3.15. Employee Relations..............................................11
3.16. Employee Benefit Plans..........................................11
3.17. Customers and Suppliers.........................................12
3.18. Indebtedness to and from Officers, Directors and Stockholders...12
3.19. Conflicts of Interest...........................................12
3.20. Investment Representation.......................................13
3.21. Full Disclosure.................................................13
3.22. Solvency........................................................13
3.23 Outsourcing Agreement...........................................12
3.24. Limitation on Representations and Warranties....................13


4. Representations of the Transferee.....................................14
4.01. Organization and Authority......................................14
4.02. Capitalization of the Transferee................................14
4.03. Authorization...................................................14
4.04. Regulatory Approvals............................................13
4.05. Investment Representation.......................................14
4.06. Litigation......................................................15
4.07. Broker's Fee....................................................15


-i- Section Page
4.08. Outsourcing Agreement...........................................15


5. Access to Information.................................................15


6. Conditions to Obligations of the Transferee...........................15
6.01. Continued Truth of Representations and Warranties of the
Transferor; Compliance with Covenants and Obligations...........15
6.02. Performance by the Transferor...................................16
6.03. Corporate Proceedings...........................................16
6.04. Governmental Approvals..........................................16
6.05. Consent of Lenders, Lessors and Other Third Parties.............16
6.06. Adverse Proceedings.............................................16
6.07. Adverse Change in Business......................................15
6.08. Closing Deliveries..............................................15
6.09. Due Diligence...................................................17


7. Conditions to Obligations of the Transferor...........................17
7.01. Continued Truth of Representations and Warranties of the
Transferee; Compliance with Covenants and Obligations...........17
7.02. Corporate Proceedings...........................................17
7.03. Governmental Approvals..........................................17
7.04. Consents of Lenders, Lessors and Other Third Parties............17
7.05. Adverse Proceedings.............................................17
7.06. Closing Deliveries..............................................18


8. Other Covenants.......................................................18
8.01. Consents........................................................18
8.02. Ordinary Course of Business.....................................18
8.03. Employees and Employee Benefit Plans............................18


9. Indemnification.......................................................19
9.01. By the Transferor...............................................19
9.02. By the Transferee...............................................19
9.03. Claims for Indemnification......................................19
9.04. Defense by the Indemnifying Party...............................20
9.05. Payment of Indemnification Obligation...........................20
9.06. Survival of Representations; Claims for Indemnification.........20


10. Restrictive Covenants.................................................20
10.01. Noncompetition.................................................20


10.02. Nonsolicitation................................................21


10.03. Confidentiality................................................21


10.04. Additional Terms...............................................21


11. Termination of Agreement..............................................22
11.01. Termination by Agreement of the Parties........................22


-ii-
11.02. Termination by Reason of Breach................................22


12. Notices...............................................................22


13. Successors and Assigns................................................23


14. Entire Agreement; Amendments; Attachments.............................23


15. Severability..........................................................23


16. Investigation of the Parties..........................................23


17. Approval of Special Committee of the Transferee.......................23


18. Expenses..............................................................23


19. Governing Law.........................................................24


20. Section Headings......................................................24


21. Counterparts..........................................................24


-iii- Exhibits


Exhibit 1.04 - Escrow Agreement


Exhibit 6.08(g) - Legal Opinion of Heller Ehrman White & McAuliffe LLP


Exhibit 6.08(h) - Bill of Sale and Assignment and Assumption Agreement


Exhibit 7.06(f) - Legal Opinion of Hale and Dorr LLP


Schedules to be provided by the Transferor


I - The Shares II - Transferor Contracts 3.02 - The Companies 3.03 - Third Party Consents 3.04 - Financial Statements 3.05 - Undisclosed Liabilities 3.06 - Litigation 3.07 - Personal Property 3.08 - Intangible Property 3.09 - Leases 3.11 - Accounts Receivable 3.13 - Contracts 3.16 - Employee Plans 3.17 - Customers and Suppliers 3.18 - Indebtedness to and from Officers, Directors and Stockholders 3.19 - Conflicts of Interest


Schedules to be provided by the Transferee


4.03 - Third Party Consents


-iv-
STOCK AND ASSET ACQUISITION AGREEMENT


Agreement (the "Agreement") made as of the 8th day of August, 2003 by and among NaviSite, Inc., a Delaware corporation (the "Transferee"), ClearBlue Technologies, Inc., a Delaware corporation (the "Transferor"), and the following subsidiaries of the Transferor (each of the following a "Deferred Entity" and collectively the "Deferred Entities"): ClearBlue Technologies/New York, Inc., a Delaware corporation, ClearBlue Technologies/Santa Clara, Inc., a Delaware corporation, ClearBlue Technologies/Dallas, Inc., a Delaware corporation, and ClearBlue Technologies/San Francisco, Inc., a Delaware corporation.


Preliminary Statement


1. The Transferor owns the issued and outstanding shares (collectively, the "Shares") of the capital stock of each of the companies (the "Companies" and each individually, a "Company") set forth opposite each such Company's name on Schedule I attached hereto, which Shares in the aggregate represent all of the issued and outstanding shares of capital stock of the Companies.


2. The Transferee desires to acquire, and the Transferor desire to transfer, the Shares and other assets of the Transferor representing substantially all of the Transferor's assets (within the meaning of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code")), including without limitation all of Transferor's operating assets, as of the date hereof for the consideration in the transaction contemplated hereunder. This Agreement shall serve as the Plan of Reorganization (the "Plan") for each of the Transferee and the Transferor. It is intended that the transaction contemplated hereunder, together with certain other transactions by and between the Transferor and each of its stockholders to be effected pursuant to the Plan (the "Stockholder Transactions"), will qualify as a reorganization under Section 368(a)(1)(D) of the Code.


3. The Transferee and the Transferor acknowledge that upon consummation of the transaction contemplated hereunder and the Stockholder Transactions, the Transferor will distribute all of its assets, including the 1.1 million shares of common stock, $.01 par value per share, of Transferee that the Transferor will receive as part of the consideration hereunder, to the Transferor's stockholders in exchange for their shares of the Transferor common stock to effect and complete the liquidation and dissolution of the Transferor under the Plan and the reorganization under Section 368(a)(1)(D) of the Code.


NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:


1. Acquisition of the Shares and Other Actions


1.01. Acquisition of the Shares and the Transferor Contracts from the Transferor. (a) Subject to and upon the terms and conditions of this Agreement, at the closing of the transactions contemplated by this Agreement (the "Closing"), the Transferor shall sell, transfer, convey, assign and deliver to the Transferee, and the Transferee shall purchase, acquire and accept from the Transferor, the Shares, as set forth on Schedule I attached hereto (but not including the Shares of the Deferred Entities (the "Deferred Shares"), which shall be transferred pursuant to Section 1.01(c) hereof). At the Closing the Transferor shall deliver to the Transferee certificates evidencing the Shares (other than the Deferred Shares) duly endorsed in blank or with stock powers duly executed by the Transferor.
(b) At the Closing, the Transferor shall also sell, assign and transfer all of its right, title and interest in any and all contracts, arrangements, assets, liabilities or obligations, or leases relating to, or connected with, any of the Companies or their respective businesses (including, without limitation, any and all cash or other collateral securing letters of credit with lessors) (collectively, the "Transferor Contracts"). Schedule II attached hereto contains a true, complete and correct list of the "Transferor Contracts".


(c) On the six-month anniversary of the Closing Date (or on such earlier date as the Transferee may request) (the "Deferred Shares Transfer Date"), the Transferor shall sell, transfer, convey, assign and deliver to the Transferee, and the Transferee shall purchase, acquire and accept from the Transferor, the Deferred Shares, without any additional consideration therefor. On the Deferred Shares Transfer Date, the Transferor shall deliver to the Transferee certificates evidencing the Deferred Shares duly endorsed in blank or with stock powers duly executed by the Transferor. Between the Closing and the Deferred Shares Transfer Date, the Transferee shall have the full power and authority to operate and manage the Deferred Entities, which power and authority shall include, without limitation, the right to enforce the rights and carry out the obligations of the Deferred Entities under all contracts and agreements, to control the budget for the operations of the Deferred Entities, to use and dispose of assets and acquire new assets for the operations of the Deferred Entities, and to hire and fire, determine the compensation of, and direct all activities of the employees of the Deferred Entities. Between the Closing Date and the Deferred Shares Transfer Date, all cash received by the Deferred Entities shall be paid to or as directed by the Transferee as a management fee, and the Transferee shall be responsible for the payment of all cash obligations of the Deferred Entities arising in the ordinary course of business between the Closing Date and the Deferred Shares Transfer Date. Effective as of the Closing Date, the Transferor and each of the Deferred Entities hereby appoint the Transferee as its lawful attorney-in-fact, with full power of substitution, to take any and all actions which the Transferee may deem necessary or advisable to carry out the intent of this Section 1.01(c). The Transferor and each of the Deferred Entities acknowledge that the foregoing powers are coupled with an interest and shall be irrevocable by it in any manner or for any reason.


1.02. Further Assurances. At any time and from time to time after the Closing, at the Transferee's request and without further consideration, the Transferor and each of the Deferred Entities shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Transferee may reasonably request, more effectively to transfer, convey and assign to the Transferee, and to confirm the Transferee's title to, the Transferor Contracts and the Shares to put the Transferee in actual possession and operating control of the assets, properties and business of the Companies, to assist the Transferee in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement.


1.03. Consideration for the Shares and the Transferor Contracts. In consideration for the sale and transfer of the Shares and the Transferor Contracts, and subject to the terms and conditions of this Agreement, Transferee shall on the Closing Date (a) issue to Transferor 1.1 million (1,100,000) shares of common stock, $.01 par value per share, of Transferee, (b) release all inter-company advances from the Transferee to the Transferor in an amount up to Three Hundred Thousand Dollars ($300,000), (c) assume all of the Transferor's obligations under the Transferor Contracts for periods from and after the Closing Date, and (d) release the Transferor from payment obligations owed to the Transferee pursuant to the Outsourcing Services Agreement dated as of January 1, 2002 by and between the Transferee and the Transferor (the "Outsourcing Agreement"), in an amount not to exceed Two Hundred Sixty-Three Thousand Dollars ($263,000) ((a), (b), (c) and (d) collectively, the "Consideration").


-2-
1.04. Partial Share Escrow Securing Warranties. At the Closing, Two Hundred Seventy-Five Thousand (275,000) shares equal to twenty-five percent (25%) of the Consideration (and a stock power executed in blank by the Transferor with respect thereto with signature guaranteed) shall be delivered to United States Trust Company of Boston, as escrow agent (the "Escrow Agent") pursuant to the Escrow Agreement in substantially the form of Exhibit 1.04 hereto (the "Escrow Agreement").


1.05. Closing. The Closing shall take place at the offices of Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109 at 1 p.m., Boston time, on August 8, 2003, or at such other place, time or date as may be mutually agreed upon in writing by the parties (the "Closing Date"). The transfer of the Shares (other than the Deferred Shares) and Transferor Contracts by the Transferor to the Transferee shall be deemed to occur at 12:01 a.m., Boston time, on the Closing Date.


1.06. Consents to Assignment. (a) Anything in this Agreement to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign or transfer any contract, lease, authorization, license or permit, or any claim, right or benefit arising thereunder or resulting therefrom, if an attempted assignment or transfer thereof, without the consent of a third party thereto or of the issuing Governmental Entity, as the case may be, would constitute a breach thereof and such consent has not been obtained. If such consent (a "Deferred Consent") is not obtained, or if an attempted assignment or transfer thereof would be ineffective or would affect the rights thereunder so that the Transferee would not receive, or the relevant Company would not continue to receive, all such rights, then, in each such case, (a) the contract, lease, authorization, license or permit to which such Deferred Consent relates (a "Deferred Item") shall be withheld from sale pursuant to this Agreement without any reduction in the Consideration, (b) from and after the Closing, the Transferor and the Transferee will cooperate, in all reasonable respects, to obtain such Deferred Consent as soon as practicable after the Closing, provided that neither the Transferor nor the Transferee shall be required to make any payments or agree to any material undertakings in connection therewith, and (c) until such Deferred Consent is obtained, the Transferor and the Transferee will cooperate, in all reasonable respects, to provide to the Transferee or the relevant Company all benefits under the Deferred Item to which such Deferred Consent relates (with the Transferee or relevant Company entitled to all the profits, rights and gains and responsible for all the losses, Taxes, liabilities and/or obligations thereunder). In particular, in the event that any such Deferred Consent is not obtained prior to the Closing, then the Transferee and the Transferor shall enter into such arrangements (including subleasing or subcontracting if permitted) to provide to the Transferee or relevant Company the economic and operational equivalent of obtaining such Deferred Consent and assigning or transferring such contract, lease, authorization, license or permit, including enforcement for the benefit of the Transferee of all claims or rights arising thereunder, and the performance by the Transferee of the obligations thereunder on a prompt and punctual basis.


(b) Without limiting the generality of the foregoing, the Transferor and the Transferee, without the exchange of any additional consideration therefor, hereby agree that from and after the Closing the Transferee will be entitled to all rights and will pay all obligations of the Transferor under that certain capital equipment Sublease Agreement by and among the Transferor (as Sublessee), Powerware Corporation (as sublessor) ("Powerware"), and CCA Financial (as original lessor) ("CCA") dated January 29, 2001, as amended (the "Powerware Contract") until such time as (i) the Transferor obtains the written consent of each of Powerware and CCA to effect the assignment of the Transferor's right, title and interest under the Powerware Contract to the Transferee or (ii) the Powerware Contract expires pursuant to its terms. At or prior to any such expiration, at the direction of the Transferee, the Transferor shall exercise any purchase option under the Powerware Contract as directed by the Transferee and transfer any equipment purchased thereunder to the Transferee for a price equal to any amount paid


-3- by the Transferor to Powerware pursuant to such option exercise. Effective as of the Closing Date, the Transferor hereby appoints the Transferee as its lawful attorney-in-fact, with full power of substitution, to take any and all actions which the Transferee may deem necessary or advisable to carry out the intent of the Powerware Contract.


1.07 Tax Treatment. For purposes of this transaction, the Transferee and the Transferor have agreed that for tax purposes the transaction contemplated hereunder shall be treated under the Code as if the Seller exchanged all of its assets, including without limitation, its existing shares of the common stock of the Transferee, for new shares of the Transferee's common stock.


2. Representations of the Transferor Regarding the Shares and the Transferor Contracts.


The Transferor represents and warrants to the Transferee as follows:


(a) The Transferor has good and marketable title to the Shares and the Transferor Contracts, free and clear of any and all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever. Schedule I attached hereto sets forth a true and correct description of all the Shares.


(b) The Transferor has the full right, power and authority to enter into this Agreement and to transfer, convey and sell to the Transferee at the Closing the Shares and the Transferor Contracts and, upon consummation of the purchase contemplated hereby, the Transferee will acquire from the Transferor good and marketable title to the Shares and the Transferor Contracts, free and clear of all covenants, conditions, restrictions, voting trust arrangements, liens, charges, encumbrances, options and adverse claims or rights whatsoever.


(c) The Transferor is not a party to, subject to or bound by any agreement or any judgment, order, writ, prohibition, injunction or decree of any court or other governmental body which would prevent the execution or delivery of this Agreement by the Transferor or the transfer, conveyance and sale of the Shares or the Transferor Contracts to the Transferee pursuant to the terms hereof.


(d) No broker or finder has acted for the Transferor in connection with this agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finder's fee or other commissions in respect of such transactions based upon agreements, arrangements or understandings made by or on behalf of the Transferor.


(e) True and complete copies of the Transferor Contracts have been delivered to Transferee and each of the Transferor Contracts is a valid and binding obligation of the Transferor and is in full force and effect. Transferor is not in default under any of the Transferor Contracts, and, to the Transferor's knowledge, no third party is in default under any of the Transferor Contracts. The Transferor Contracts, together with the assets held by the Companies, constitute all of the assets necessary to operate the business of the Transferor and the Companies as currently conducted.


3. Representations of the Transferor Regarding the Transferor and the Companies.


The Transferor represents and warrants to the Transferee as follows:


-4-
3.01. Organization. The Transferor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority (corporate and other) to own its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby.


3.02. The Companies. Schedule 3.02 attached hereto sets forth: (i) the name of each Company; (ii) the jurisdiction of incorporation of each Company; (iii) the names of the officers and directors of each Company; and (iv) the jurisdictions in which each Company is qualified or holds licenses to do business as a foreign corporation.


(a) Each of the Companies is a corporation duly organized and validly existing and in good standing under the laws of the state of its incorporation or organization and has all requisite power and authority to own its properties and carry on its business as now being conducted. Each of the Companies is duly qualified to do business and in good standing in all jurisdictions in which its ownership of property or the character of its business requires such qualification, except where any failure to be in good standing would not result in, individually or in the aggregate, a Material Adverse Effect (as defined in Section 3.12). Copies of the charter, bylaws and other governing instruments of the Companies, each as amended to date, have been delivered to the Transferee, are complete and correct, and no amendments have been made thereto or have been authorized since the date of such delivery. The Shares have been duly and validly issued and are fully paid and non-assessable.


(b) Except as set forth in Schedule 3.02, none of the Companies holds shares of its capital stock in its treasury, and there are not, and on the Closing Date there will not be, outstanding any (i) options, warrants or other rights with respect to the capital stock of any of the Companies, (ii) any securities convertible into or exchangeable for shares of such stock, or (iii) any other commitments of any kind for the issuance of additional shares of capital stock or options, warrants or other securities of any of them. The Shares constitute 100% of the outstanding stock of each Company.


3.03. Authorization. The execution and delivery by the Transferor and the Deferred Entities of this Agreement and the agreements provided for herein, and the consummation by the Transferor and the Deferred Entities of all transactions contemplated hereunder and thereunder by the Transferor and the Deferred Entities, have been duly authorized by all requisite corporate action. This Agreement has been duly executed by the Transferor and the Deferred Entities. This Agreement and all other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which the Transferor or any Deferred Entity is a party constitute the valid and legally binding obligations of the Transferor or such Deferred Entit
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