Cherry Tree advises netASPx in its sale to NaviSite

Adds Lawson and Kronos Services to its Oracle and Microsoft Application Management Portfolio

NaviSite, Inc.,, NASDAQ: NAVI,a leading provider of applications management and managed hosting solutions, has entered into a definitive merger agreement to acquire privately-owned applications management service provider netASPx for $40.5 million, consisting of approximately $15.5 million in cash and $25.0 million in Convertible Preferred Stock. The transaction is expected to close by the end of the business day today.

Headquartered in Herndon, VA, netASPx is a leading provider of applications management services with a focus on Lawson Enterprise Resource Planning (ERP) and Kronos Workforce Management and Business Intelligence Applications. In addition, netASPx maintains the infrastructure necessary to support these applications within its 18,000 square foot data center in Minneapolis.

The acquisition brings Lawson and Kronos solutions to NaviSite and broadens its existing portfolio of applications management expertise, which already includes the Oracle product family (Oracle E-Business, PeopleSoft, Siebel, JD Edwards and Fusion), Microsoft Dynamics, and Exchange. By acquiring netASPx, NaviSite also expands its customer base, creating new up-sell and cross-sell opportunities for both its current clients and those of netASPx. Finally, the addition of the netASPx data center in Minneapolis bolsters NaviSite’s presence in the Midwest with significant available capacity.

“Priced at better than five times expected synergistic annual EBITDA and two times the recorded application management revenues, we are pleased with the addition of this fine company, its talented professionals and capabilities to our portfolio. NetASPx will contribute Lawson and Kronos expertise and customers that will significantly enhance our market position as a leading provider of application management services. The netASPx monthly ARPU (Average Revenue Per User) of approximately $19,000 and revenue per square foot of over $8,000 illustrate the value being provided to their customers,“ said Arthur Becker, Chief Executive Officer of NaviSite. “We also expect that the current NaviSite portfolio of application and hosting related competencies will offer new service opportunities to these new customers.”

The acquisition was financed through a $20 million addition to NaviSite’s current Senior Term Facility and the issuance of $25.0 million of Series A Convertible Preferred Stock. The Senior Term loan interest rate has been reset to LIBOR plus 4%. The Convertible Preferred is redeemable, has an 8% PIK (non cash) coupon that increases to 12% on the 18 month anniversary of the closing date and is convertible at the price of $8.00 per share 18 months from the closing date.

The company plans to update its Fiscal 2008 guidance when it reports fourth quarter and full year 2007 results on September 25, 2007.

About netASPx
Headquartered in Herndon, Virginia, netASPx is a leading provider of Managed Application Services, or “MAS” and focuses on Enterprise Resource Planning (Lawson) and Work Force Management (Kronos) solutions that automate critical business functions for mid-market companies. The company maintains the facilities and infrastructure necessary to support customer back-office applications, including Finance, Human Resources, Accounting, Payroll and Supply Chain Management, using primarily Kronos and Lawson Software. For more information, please Tree does not maintain, endorse, or make any representations as to the content accuracy or quality of this website.)

About NaviSite
NaviSite is a leading provider of applications management and managed hosting solutions. Customers depend on NaviSite for application development, implementation and management on its web infrastructure platforms in 15 state-of-the art data centers supported by more than 600 professionals. NaviSite provides customized and scalable solutions leveraging its broad range of application development capabilities, packaged software implementation expertise, deep portfolio of best in class technologies and a full suite of web-hosting and internet infrastructure options. For more information, please visit Tree does not maintain, endorse, or make any representations as to the content accuracy or quality of this website.)

This press release contains forward-looking statements that are inherently uncertain. These forward looking statements, such as the anticipated timing of completion of the acquisition, and statements made by Mr. Vollman and Ms. Beckwith, including the anticipated benefits of broader integration of the Adesso Solutions and Gelco products and services, are based on current expectations and involve many risks and uncertainties that could cause actual results to differ materially from current expectations.

Adesso Solutions assumes no obligation to update the forward-looking information contained in this press release.

Cherry Tree & Associates provides investment banking services through our FINRA-licensed broker dealer.