EXHIBIT 2.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "AMENDMENT") is
made and entered into as of June 10, 2004 (the "AMENDMENT DATE") between
NaviSite, Inc., a Delaware corporation ("PARENT"), Lexington Acquisition Corp.,
a Delaware corporation ("Buyer", and together with Parent, "NAVISITE"), and
Surebridge, Inc., a Delaware corporation (Surebridge, and together with its
Subsidiaries (as defined in Section 2.3 of the Purchase Agreement (defined
below), the "COMPANY").
WHEREAS, Parent, Buyer and Surebridge are parties to that certain Asset
Purchase Agreement dated as of May 6, 2004 (the "PURCHASE AGREEMENT");
WHEREAS, Section 10.6 of the Purchase Agreement provides that the Purchase
Agreement may be amended by NaviSite and the Company; and
WHEREAS, the parties wish to amend the Purchase Agreement as set forth
herein.
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:
I. AMENDMENT OF THE PURCHASE AGREEMENT.
1. Exhibit B-1 (Primary Note) and Exhibit B-2 (Escrow Note) of the
Purchase Agreement shall be replaced with Exhibit B-1 and Exhibit B-2 attached
hereto.
2. The phrase "180 days" in the proviso of the first sentence of Section
5.11(b) is hereby amended to read "270 days."
3. ARTICLE IX of the Purchase Agreement is hereby amended to add new
Section 9.2A to read as follows:
"SECTION 9.2A SPECIAL INDEMNITY. With respect to the customer contracts of
the Company set forth on Exhibit A-1 to this Amendment, (collectively, the
"PRIMARY CUSTOMER CONTRACTS"), if (i) the Company fails to obtain a
Necessary Consent or, if applicable, a waiver of a customer's right to
terminate a Primary Customer Contract as a result of the consummation of
the transactions contemplated by this Agreement (a "TERMINATION RIGHT"),
and (ii) a Primary Customer Contract is terminated by the applicable
customer based on either the Company's failure to obtain the Necessary
Consent or, if applicable, the customer's exercise of its Termination
Right for any reason, but, in either case prior to the Applicable
Measurement Date (as herein defined), then, notwithstanding anything to
the contrary contained in this Article IX, NaviSite
shall be indemnified by the Company for the applicable Lost Revenue (as
herein defined). The foregoing indemnification obligation of the Company
shall not be subject to, and Lost Revenue shall not count towards nor be
subject to, (a) the Threshold set forth in Section 9.2(a) hereof (i.e.
NaviSite shall be entitled to recover all Lost Revenue referred to in this
Section 9.2A including, but not limited to, Lost Revenue totaling an
amount less than $250,000), and (b) the Indemnification Cap set in forth
in Section 9.2(b) hereof. The indemnification obligation of the Company
under this Section 9.2A shall otherwise be subject to the provisions of
this Article IX including, but not limited to, Section 9.3 (Procedure for
Indemnification of NaviSite), provided that any reference to "Losses" in
Section 9.3 shall be read to pertain to "Lost Revenue" in connection with
any indemnification claim brought pursuant to this Section 9.2A. The
indemnification obligations set forth in this Section 9.2A shall be the
sole and exclusive remedy for NaviSite in connection with any claim for
Losses related to any termination of the Primary Customer Contracts.
For purposes of this Section 9.2A, the following definitions shall apply:
"APPLICABLE MEASUREMENT DATE" shall mean, with respect to a particular
Primary Customer Contract, the earlier of (i) the date identified on
Exhibit A-1 or (ii) the date on which NaviSite enters into a new agreement
with the respective customer, including any material amendment or
extension regarding the financial terms or the term of the current Primary
Customer Contract. "LOST REVENUE" shall mean, with respect to a particular
Primary Customer Contract, an amount equal to fifty percent (50%), or
seventy-five percent (75%) with respect to a Primary Customer Contract
identified with an asterisk on Exhibit A-1 hereto, of the remaining gross
revenues that such customer would have been obligated to pay under such
Primary Customer Contract (as set forth on Exhibit A-1) for the duration
of the remaining term of such Primary Customer Contract (as set forth on
Exhibit A-1) had the Primary Customer Contract not been terminated (the
"BASE AMOUNT"); provided that the aggregate amount of any other revenue
that such customer becomes contractually obligated to pay to NaviSite as a
result of an amendment, extension or new contract entered into between the
customer and NaviSite shall be deducted from such Base Amount.
4. ARTICLE IX of the Purchase Agreement is hereby amended to add new
Section 9.5A to read as follows:
"SECTION 9.5A PAYMENTS OF SPECIAL INDEMNITY. With respect to any claim for
indemnification of Lost Revenue brought pursuant to Section 9.2A, NaviSite
shall, in the first instance, seek recovery of all such amounts as a Loss
Adjustment against the Escrow Note (the "INITIAL LOSS AMOUNT"); provided,
that if the aggregate amount of all Losses and Lost Revenue arising out of
claims for indemnification under Article IX brought or initiated prior to
the Cut-Off Date for which NaviSite is entitled to indemnification (the
"FIRST YEAR CLAIMS") exceeds the Escrow Account, the Company shall be
liable to NaviSite for the amount by which the aggregate amount of the
First Year Claims, due to the payment from
2
the Escrow Account of the Initial Loss Amount, exceeds the Escrow Account,
and such excess amount shall be satisfied by a setoff against the Primary
Note; provided that the Company's liability for Lost Revenue on a
particular Primary Customer Contract shall not exceed the amounts
identified on Exhibit A-1.
5. Section 10.2 of the Purchase Agreement is hereby deleted in its
entirety and replaced in its entirety with the following:
"SECTION 10.2 FEES AND EXPENSES. Except as provided otherwise herein, each
of NaviSite, on the one hand, and the Company, prior to Closing, on the
other hand, shall bear its own expenses in connection with the negotiation
and the consummation of the transactions contemplated by this Agreement.
Following the Closing, NaviSite shall pay any actual fees or expenses owed
by the Company to counsel for the Company that were not paid prior to
Closing, including such fees and expenses owed to counsel for the Company
related solely to the transaction contemplated hereby (the "COMPANY
COUNSEL FEE"). In addition, NaviSite shall pay the actual fees and
expenses of one counsel to the preferred stockholders of the Company with
respect to the transactions contemplated hereby (the "STOCKHOLDER COUNSEL
FEE"). To the extent the Company Counsel Fee exceeds $300,000 (such excess
amount, the "EXCESS COMPANY FEE") and/or the Stockholder Counsel Fee
exceeds $100,000 (such excess amount, the "EXCESS STOCKHOLDER FEE"),
NaviSite shall pay the Excess Company Fee and the Excess Stockholder Fee,
and, as a result of such payment, notwithstanding anything to the contrary
contained in this Agreement, in connection with determining the working
capital adjustment pursuant to Section 1.6 hereof, the Excess Company Fee
and the Excess Stockholder Fee shall be included in the current
liabilities of the Company for purposes of calculating the Net Working
Capital of the Company in accordance with Section 1.6 hereof."
II. MISCELLANEOUS.
1. Capitalized terms used herein but not otherwise defined herein shall
have the meanings set forth in the Purchase Agreement. All notices and
communications hereunder shall be given in the manner and to the addresses set
forth in the Purchase Agreement.
2. This Amendment amends, modifies and supersedes to the extent of any
inconsistencies, the provisions of the Purchase Agreement. Except as expressly
amended by this Amendment, the Purchase Agreement remains in full force and
effect. All references to the Purchase Agreement in documents delivered in
connection with the Purchase Agreement will be deemed to refer to the Purchase
Agreement, as amended by this Amendment.
3. Each of NaviSite and the Company hereby acknowledges and agrees that,
upon entering into this Amendment, all closing conditions set forth in Article
VII of the Purchase Agreement will be deemed satisfied in full or waived.
* * * * *
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
COMPANY:
SUREBRIDGE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President and COO
BUYER:
LEXINGTON ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
PARENT:
NAVISITE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
4