Exhibit 10.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
By and Between
StayOnline, Inc.,
a Delaware corporation
as Seller
and
LodgeNet Entertainment Corporation,
a Delaware corporation
as Buyer

 

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TABLE OF CONTENTS
Page No.

         
Article 1 Defined Terms
    1  
 
       
Article 2 The Transaction
    6  
2.1 Sale and Purchase of Acquired Assets
    6  
2.2 Excluded Liabilities
    7  
 
       
Article 3 Purchase Consideration
    7  
3.1 Purchase Price
    7  
3.2 Deposit
    8  
3.3 Working Capital Adjustment
    9  
3.4 Adjustments for Delays in Closing
    11  
3.5 Allocation of Purchase Price
    11  
3.6 Escrow
    11  
 
       
Article 4 Representations and Warranties of Seller
    12  
4.1 Organization
    12  
4.2 Effect of Agreement
    12  
4.3 Financial and Corporate Records
    12  
4.4 Compliance with Law
    13  
4.5 Financial Statements
    13  
4.6 Acquired Assets; Sufficiency
    13  
4.7 Absence of Undisclosed Liabilities
    14  
4.8 Operations Since December 31, 2005
    14  
4.9 Accounts Receivable
    14  
4.10 Tangible Property
    14  
4.11 Real Property
    14  
4.12 Software
    15  
4.13 Intellectual Property Assets
    16  
4.14 Significant Contracts
    17  
4.15 Employees and Independent Contractors
    18  
4.16 Employee Benefit Plans
    19  
4.17 Customers, Prospects and Suppliers
    19  
4.18 Taxes
    20  

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Page No.

         
4.19 Proceedings and Judgments
    20  
4.20 Insurance
    21  
4.21 Questionable Payments
    21  
4.22 Related Party Transactions
    21  
4.23 Brokerage Fees
    22  
4.24 Full Disclosure
    22  
4.25 Litigation
    22  
4.26 Environmental Matters
    22  
 
       
Article 5 Representations and Warranties of Buyer
    23  
5.1 Organization
    23  
5.2 Effect of Agreement
    23  
5.3 Brokerage Fees
    23  
5.4 Litigation
    23  
5.5 Availability of Funds
    23  
 
       
Article 6 Covenants of Seller Prior to Closing
    23  
6.1 Access And Investigation
    23  
6.2 Operation of the Business of Seller
    24  
6.3 Negative Covenant
    24  
6.4 Notification
    25  
6.5 Monthly Financial Statements
    25  
6.6 Change of Name
    25  
6.7 Payment of Liabilities
    25  
6.8 Shareholder Meeting
    25  
 
       
Article 7 Covenant of Buyer Prior to Closing
    26  
 
       
Article 8 Conditions to Buyer’s Obligation to Close
    26  
8.1 Accuracy of Representations
    26  
8.2 Seller’s Performance
    26  
8.3 Consents
    26  
8.4 Additional Documents
    26  
8.5 No Proceedings
    28  
8.6 Permits
    28  
8.7 No Material Adverse Effect
    28  
8.8 Financial Statements
    28  
8.9 Deliveries
    28  

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Page No.

         
Article 9 Conditions To Seller’s Obligation To Close
    29  
9.1 Accuracy of Representations
    29  
9.2 Buyer’s Performance
    29  
9.3 Consents
    29  
9.4 Shareholder Approval
    29  
9.5 Additional Documents
    29  
9.6 No Proceedings
    30  
9.7 Purchase Price
    30  
9.8 Deliveries
    30  
 
       
Article 10 Termination
    30  
10.1 Termination Events
    30  
10.2 Effect of Termination
    30  
10.3 Termination in Response to Superior Proposal
    31  
 
       
Article 11 Additional Covenants
    31  
11.1 Employees and Employee Benefits
    31  
11.2 Payment of All Taxes Resulting from Sale of Assets by Seller
    33  
11.3 Restrictions on Seller Dissolution and Distributions
    33  
11.4 Removing Excluded Assets
    33  
11.5 Reports and Returns
    33  
11.6 Assistance In Proceedings
    33  
11.7 Customer and Other Business Relationships
    33  
11.8 Retention of and Access to Records
    33  
11.9 Further Assurances
    33  
11.10 Reconciliations and Allocations
    34  
11.11 Tax Matters
    34  
11.12 Confidentiality
    35  
11.13 Announcement
    36  
11.14 Exclusivity
    36  
11.15 Audit Fees
    37  
11.16 Auditor’s Consent and Audit Preparation
    37  
 
       
Article 12 Closing
    38  
12.1 Closing
    38  
 
       
Article 13 Indemnification
    38  
13.1 Seller’s Indemnification
    38  

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Page No.

         
13.2 Buyer’s Indemnification
    38  
13.3 Indemnification Procedures
    39  
13.4 Survival Periods
    41  
13.5 Shareholder/Partner Suits
    42  
13.6 Limitations on Indemnification Obligation
    42  
13.7 Insurance and Tax Benefits
    42  
13.8 Exclusive Remedy
    42  
 
       
Article 14 Other Provisions
    42  
14.1 Fees and Expenses
    42  
14.2 Notice
    43  
14.3 Entire Understanding
    43  
14.4 Parties in Interest
    43  
14.5 Waivers
    43  
14.6 Severability
    44  
14.7 Counterparts; Facsimile
    44  
14.8 Section Headings
    44  
14.9 References
    44  
14.10 Controlling Law
    44  
14.11 No Third-Party Beneficiaries
    44  
14.12 Neutral Construction
    44  
14.13 Dispute Resolution
    44  
14.14 Schedules
    45  

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LIST OF SCHEDULES

     
Schedule 1.1
  Accounts Receivable
Schedule 1.2
  Excluded Contracts
Schedule 1.9
  Excluded Assets
Schedule 2.1(b)(ii)(A)
  Trade Accounts Payable – Current
Schedule 2.1(b)(ii)(B)
  Trade Accounts Payable – Past Due
Schedule 2.1(b)(iii)
  Assumed Obligations
Schedule 2.2
  Excluded Liabilities
Schedule 4.1
  Qualified to do Business; Corporate Name; Subsidiaries
Schedule 4.2
  Effect of Agreement
Schedule 4.3
  Exceptions to Financial and Corporate Records
Schedule 4.4
  Permits Relating to Business
Schedule 4.5
  Internal Control Matters and Seller’s NAICS Codes
Schedule 4.6
  Exceptions to Title; Encumbrances
Schedule 4.7
  Undisclosed Liabilities
Schedule 4.8
  Conduct of Business; Material Adverse Effects
Schedule 4.11
  Facilities
Schedule 4.12
  Software
Schedule 4.13(a)
  Intellectual Property Assets
Schedule 4.13(b)
  Encumbrances on Intellectual Property
Schedule 4.14
  Significant Contracts
Schedule 4.15
  Officer Terminations; Employees
Schedule 4.16
  Employee Benefit Plans
Schedule 4.17
  Fifteen Largest Customers
Schedule 4.18
  Taxes
Schedule 4.19
  Proceedings and Judgments
Schedule 4.20
  Insurance
Schedule 4.22
  Related Party Transactions
Schedule 4.23
  Brokerage Fees
Schedule 8.3
  Buyer’s Consents
Schedule 9.3
  Seller’s Consents

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LIST OF EXHIBITS

     
Exhibit 3.1
  Wire Transfer Instructions
Exhibit 3.2(a)
  Escrow Agreement
Exhibit 4.13(b)(ii)
  Form of Employee Confidentiality Agreement
Exhibit 8.4(a)
  Bill of Sale
Exhibit 8.4(b)
  Assignment and Assumption Agreement
Exhibit 8.4(c)
  Assignment of Trademark
Exhibit 8.4(g)
  Non-Competition Agreement

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ASSET PURCHASE AGREEMENT
     This Asset Purchase Agreement (this “Agreement”), is made as of
November 14, 2006, by and between StayOnline, Inc., a Delaware corporation with
its principal executive offices at 120 Interstate North Parkway, Suite 160,
Atlanta, Georgia 30339 (“Seller”), and LodgeNet Entertainment Corporation, a
Delaware corporation with principal executive offices at 3900 West Innovation
Street, Sioux Falls, South Dakota 57107 (“Buyer”).
RECITALS
     A. Seller is in the business of developing, marketing, selling, installing
and servicing wireless broadband Internet access systems and related products
and services to hotels and other locations (the “Business”).
     B. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Business and substantially all of the assets associated therewith,
in exchange for the consideration specified in this Agreement, and in accordance
with the terms and conditions set forth herein.
AGREEMENT
     NOW, THEREFORE, in consideration of the covenants, representations,
warranties and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
ARTICLE 1
DEFINED TERMS
     In addition to certain terms defined elsewhere in this Agreement, the
following capitalized terms shall have the meanings set forth as follows:
     1.1 “Accounts Receivable” means all trade accounts receivable and other
rights to payment from customers of Seller, including but not limited to all
trade accounts receivables listed on Schedule 1.1 and all trade accounts
receivable representing amounts receivable in respect of goods shipped or
products sold or services rendered to customers of Seller.
     1.2 “Assumed Contracts” means all of the Contracts to which Seller is a
party or by which Seller is bound, including, unless otherwise designated, the
Contracts listed on Schedule 4.14; but excluding (a) Contracts of Seller
evidencing Indebtedness other than capital leases listed on Schedule 4.14,
(b) Contracts that constitute Employee Benefit Plans listed on Schedule 4.16,
(c) oral Contracts with employees for “at will” employment, (d) Contracts that
constitute Insurance Policies listed on Schedule 4.20, (e) Contracts that relate
to Seller’s equity securities, including any buy-sell agreements, stock option
and warrant agreements, (f) this Agreement and all Related Agreements entered
into or to be entered into between Seller and Buyer, or among Seller, Buyer and
other parties in connection herewith, (g) at the election of Buyer, any Contract
which violates a representation or warranty contained in this Agreement, and
(h) the Contracts listed on Schedule 1.2 attached hereto.

 

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     1.3 “Contract” means any written or oral contract, agreement, instrument,
order, arrangement, commitment or understanding of any nature, including, but
not limited to, sales orders, purchase orders, leases, subleases, data
processing agreements, maintenance agreements, license agreements, sublicense
agreements, loan agreements, promissory notes, security agreements, pledge
agreements, deeds, mortgages, guaranties, indemnities, warranties, employment
agreements, consulting agreements, sales representative agreements, joint
venture agreements, buy-sell agreements, options or warrants.
     1.4 “Employee Benefit Plan” means any employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), or any other plan, program, policy or arrangement for or regarding
bonuses, commissions, incentive compensation, vacation, deferred compensation,
pensions, profit sharing, retirement, payroll savings, stock options, stock
purchases, stock awards, stock ownership, phantom stock, stock appreciation
rights, medical/dental expense payment or reimbursement, disability income or
protection, sick pay, group insurance, self insurance, death benefits, employee
welfare or fringe benefits of any nature.
     1.5 “Encumbrance” means any lien, security interest, pledge, mortgage,
easement, covenant, restriction, reservation, conditional sale, prior
assignment, or other encumbrance, claim, burden or charge of any nature.
     1.6 “Environmental Claims” means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or violation (in each
case in writing) by any Person (including any Governmental Authority), alleging
noncompliance, violation or potential liability (including potential
responsibility or liability for costs of enforcement, investigation, cleanup,
governmental response, removal or remediation, for natural resources damages,
property damage, personal injuries or penalties or for contribution,
indemnification, cost recovery, compensation or injunctive relief) arising out
of, or related to the presence, release or threatened release of any Hazardous
Substances at any location, whether or not owned or operated by Seller.
     1.7 “Environmental Laws” means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
as affected by the environment or natural resources, including, without
limitation, those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Substances or noise, odor, wetlands, pollution or contamination
(including any and all National Environmental Protection Act requirements).
     1.8 “Escrow Agent” means U.S. Bank, National Association.
     1.9 “Excluded Assets” means (a) all rights of Seller under its Insurance
Policies; (b) cash; (c) Seller’s Employee Benefit Plans; and (d) those assets
identified on Schedule 1.9 attached hereto.

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     1.10 “GAAP” means generally accepted accounting principles in the United
States as set forth in the opinions and pronouncements of the Accounting
Principles Board (and its predecessors), the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants, and the
Securities and Exchange Commission (“SEC”) that are applicable to the
circumstances as of the date of determination.
     1.11 “Governmental Authority” means any nation or government, any state,
municipality or other political subdivision thereof and any entity, body,
agency, commission or court, whether domestic, foreign or multinational,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any executive official thereof.
     1.12 “Hazardous Substances” means any substance, waste, contaminant,
pollutant or material that has been determined by any United States federal
government authority, or any state or local government authority having
jurisdiction over Seller’s Real Property, to be capable of posing a risk of
injury or damage to health, safety, property or the environment, including, but
not limited to (a) all substances, wastes, contaminants, pollutants and
materials defined or designated as hazardous, dangerous or toxic pursuant to any
Law of any state in which any of Seller’s Real Property is located or any United
States Law, and (b) asbestos, polychlorinated biphenyls (“PCBs”) and petroleum.
     1.13 “Indebtedness” means, with respect to any Person, without duplication
(a) every liability of such Person (i) for borrowed money, including all amounts
that may be payable in order to extinguish the debt, including items such as
prepayment penalties, breakage costs, early termination fees and cost
reimbursements required to obtain releases from lenders, and amounts payable on
termination of any interest rate swap arrangements, (ii) evidenced by notes,
bonds, debentures or similar instruments (whether or not negotiable),
(iii) capital leases, or (iv) any contingent reimbursement obligations or
amounts outstanding pursuant to any letters of credit or similar facilities
issued for the account of such Person, and (b) every liability of any other
Person of the kind described in the preceding clause (a) that such Person has
guaranteed.
     1.14 “Information Technology Systems” means any combination of computer
software, firmware, computer hardware (whether general or special purpose),
telecommunications capabilities (including all voice, data and video networks)
and/or other similar or related items of automated, computerized, and/or
software systems and any other networks or systems and related services that are
used or relied on by Seller for operations.
     1.15 “Insurance Policy” means any public liability, product liability,
general liability, comprehensive, property damage, vehicle, life, hospital,
medical, dental, disability, worker’s compensation, key man, fidelity bond,
theft, forgery, errors and omissions, directors’ and officers’ liability, or
other insurance policy of any nature.
     1.16 “Intellectual Property Assets” means any name, corporate name, assumed
fictitious business name, trade name, trade dress, brand, slogan, design, logo,
registered and unregistered trademark, service mark and application for the
registration of any of the foregoing (collectively, “Trademarks”); all patents
(including all provisional, divisionals, continuations, continuations in part,
and reissues), patent applications and inventions and discoveries that may be
patentable or unpatentable and whether or not reduced to practice (collectively,
“Patents”); all

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registered and unregistered copyrights in both published works and unpublished
works, copyright applications, and copyrightable subject matter (collectively,
“Copyrights”); all rights in mask works; all know-how, trade secrets,
confidential or proprietary information, customer and vendor lists, Proprietary
Software, Software, technical information, data, process technology, plans,
drawings and blue prints, processes, methods and techniques, research and
development information, industry analyses, drawings, algorithms, etherware,
specifications, proposals, models, financial and accounting data, business and
marketing plans, business method, product right, or other intangible asset of
any nature (collectively, “Trade Secrets”); and all rights in internet web sites
and internet domain names (collectively “Net Names”).
     1.17 “Judgment” means any order, writ, injunction, citation, award, decree
or other judgment of any nature of any Governmental Authority or arbitration
tribunal.
     1.18 A party to this Agreement shall be deemed to have “Knowledge” of a
fact or other matter only if an officer of such party has or had actual
awareness of such fact or other matter or reasonably ought to have actual
awareness of such fact or other matter in the ordinary course of the performance
of his duties as an officer, without any duty to inquire or investigate.
     1.19 “Law” means any provision of any federal, state or local law, statute,
ordinance, charter, constitution, rule or regulation.
     1.20 “Material Adverse Effect” means any change, event or effect that,
individually or in the aggregate, is materially adverse to the financial
condition, financial performance or business prospects of the Business or the
Acquired Assets or materially increases Seller’s Obligations under any of the
Assumed Liabilities, regardless of whether such effect (i) was reasonably
foreseeable; or (ii) is of a type or nature inherent in the business or
operations of the party; other than any such effect attributable to or resulting
(a) directly and solely from the public announcement or consummation of the
transactions contemplated by this Agreement, including loss of vendors,
customers or employees resulting directly therefrom, (b) from the compliance by
any party with its obligations under the Agreement, or (c) from any act or
omission taken at the specific written request of the other party to this
Agreement.
     1.21 “Multiemployer Plan” means a multiemployer plan as defined in
Section 3(37) or Section 4001(a)(3) of ERISA.
     1.22 “Multiple Employer Plan” means any employee pension benefit plan (as
defined in Section 3(2) of ERISA) sponsored by more than one employer, at least
two of whom are not under common control as described in Sections 4063 of ERISA
or 4064 of ERISA or Section 413(c) of the Code.
     1.23 “Obligation” means any debt, liability or obligation of any nature,
whether secured, unsecured, recourse, nonrecourse, liquidated, unliquidated,
accrued, absolute, fixed, contingent, ascertained, unascertained, known, unknown
or otherwise.
     1.24 “Permit” means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature, granted, issued, approved or
allowed by any foreign, federal, state or local governmental body,
administrative agency or regulatory authority.

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     1.25 “Permitted Encumbrances” shall mean (i) liens for current Taxes not
yet due and payable, (ii) mechanics’, carriers’, workers’, repairers’,
materialmen’s, warehousemen’s and other similar liens arising or incurred in the
ordinary course of the Business or which are not material in amount, and
(iii) any Encumbrances set forth on Schedule 4.6.
     1.26 “Person” means any individual, sole proprietorship, joint venture,
partnership, limited liability company, corporation, association, cooperative,
trust, estate, governmental body, administrative agency, regulatory authority or
other entity of any nature.
     1.27 “Proceeding” means any demand, claim, suit, action, litigation,
investigation, arbitration, administrative hearing or other proceeding of any
nature.
     1.28 “Proprietary Software” means Software (whether general or special
purpose) that is used or relied on by Seller for its operations that it (either
directly or through a third party) has developed, customized or enhanced or is
in the process of doing the same, to the extent of Seller’s proprietary interest
therein.
     1.29 “Real Property” means any real estate, land, building, structure or
other real property of any nature and all appurtenant and ancillary rights
thereto, including, but not limited to, easements, covenants, water rights,
sewer rights and utility rights.
     1.30 “Software” means any computer program, operating system, applications
system, firmware or software of any nature, including all object code, source
code, technical manuals, user manuals and other documentation therefor, whether
in machine-readable form, programming language or any other language or symbols,
and whether stored, encoded, recorded or written on disk, tape, film, memory
device, paper or other media of any nature.
     1.31 “Superior Proposal” means any bona fide written Acquisition Proposal
(as defined in Section 11.14) that the Board of Directors of Seller determines
in good faith, after consultation with its legal and financial advisers, to be
more favorable to Seller than the transaction contemplated by this Agreement,
taking into account (i) all financial and strategic considerations, including
legal, financial, regulatory and other aspects of such Acquisition Proposal and
the transaction contemplated by this Agreement, deemed relevant by the Board of
Directors, and (ii) all the terms and conditions of such Acquisition Proposal
and of the transaction contemplated by this Agreement.
     1.32 “Tangible Property” means any furniture, fixtures, leasehold
improvements, vehicles, office equipment, computer equipment, other equipment,
machinery, tools, forms, supplies or other tangible personal property of any
nature.
     1.33 “Tax” means any foreign, federal, state or local income, earnings,
profits, gross receipts, franchise, capital stock, net worth, sales, use,
occupancy, general property, real property, personal property, intangible
property, transfer, fuel, excise, payroll, withholding, unemployment
compensation, social security or other tax of any nature, or any deficiency,
interest or penalty imposed with respect to any of the foregoing.
     1.34 “Tax Return” means any return (including any information return),
report, statement, schedule, notice, form, declaration, claim for refund or
other document or information filed with or submitted to, or required to be
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Authority in connection with the determination, assessment, collection or
payment of any Tax or in connection with the administration, implementation or
enforcement of or compliance with any Law relating to any Tax.
ARTICLE 2
THE TRANSACTION
     2.1 Sale and Purchase of Acquired Assets. On the Closing Date (as defined
in Section 12.1), effective to the fullest extent possible at 5:00 p.m. Eastern
time on the Closing Date, and subject to the other terms and conditions of this
Agreement, Seller shall sell, transfer, assign and convey to Buyer, and Buyer
shall purchase, all right, title and interest in and to the Acquired Assets (as
defined in Section 2.1(a)), free and clear of all Encumbrances other than
Permitted Encumbrances, and Seller shall assign to Buyer, and Buyer shall
assume, the Assumed Liabilities.
     (a) Acquired Assets. The “Acquired Assets” means all assets, properties and
Intellectual Property Rights of Seller other than the Excluded Assets,
including, without limitation, all assets used by Seller in or for its Business,
wherever located and whether or not reflected on Seller’s books and records,
including, but not limited to, the following assets:
     (i) All of the assets reflected on Seller’s balance sheet, as of the
Closing Date, including but not limited to, Seller’s Accounts Receivable,
prepaid expenses, security deposits, rent escrows, and other prepayments,
deposits and escrows, provided that if Closing occurs on or prior to January 15,
2007 Seller may retain any cash or cash equivalents on Seller’s balance sheet.
     (ii) All of Seller’s Tangible Property and Intellectual Property Assets,
including, but not limited to, all Proprietary Software and all rights in and to
the name “StayOnline” and all derivations thereof, but excluding Seller’s rights
as licensee in and to commonly available off-the-shelf Software licensed by
Seller, to the extent the same are not transferable.
     (iii) All rights of Seller under the Assumed Contracts.
     (iv) All of Seller’s rights under any noncompetition, nondisclosure or
other restrictive covenant made for the benefit of Seller in any Contract with
current or former employees of Seller, regardless of whether any such current
employee accepts an offer of employment from Buyer pursuant to Section 11.1(b).
     (v) All transferable rights under all of Seller’s Permits granted or issued
to Seller or otherwise held by Seller relating to or for the benefit of Seller,
and all transferable rights to the Software used in the Business.
     (vi) All of Seller’s rights in Real Property as specified in Section 4.11.
     (vii) All of Seller’s rights with respect to telephone numbers, telephone
directory listings and advertisements.

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     (viii) All of Seller’s goodwill and customer lists, prospect lists,
supplier lists, data bases, computer media, sales and marketing materials,
invoices, correspondence, files, books and records relating to the Acquired
Assets or the Business.
     (ix) All of Seller’s claims, causes of action and other legal rights and
remedies, whether or not known as of the Closing Date, relating to Seller’s
ownership of the Acquired Assets and/or the operation of the Business.
     (x) All of Seller’s claims, causes of action, contract rights, powers and
remedies and other legal rights and remedies, whether or not known as of the
Closing Date, arising under the Assumed Contracts and all indemnification rights
under such Assumed Contracts.
     (b) Assumed Liabilities. Buyer shall assume and pay, perform and discharge
only the following liabilities of Seller and not any of the Excluded Liabilities
(as defined in Section 2.2), in accordance with the respective terms and subject
to the respective conditions thereof (collectively, the “Assumed Liabilities”):
     (i) The Obligations of Seller under those Assumed Contracts to which Seller
is a party solely to the extent such liabilities accrue or arise from and after
the Closing.
     (ii) All trade accounts payable and normal recurring accrued liabilities
that are not Excluded Liabilities that arose in the ordinary course of business
and that are included as a current liability on Seller’s books and records as
consistently maintained and that are listed on Schedule 2.1(b)(ii)(A) other than
those accounts payable and accrued liabilities for which the original payment
due date is past, unless such accounts are listed on Schedule 2.1(b)(ii)(B).
     (iii) Any Obligation of Seller described on Schedule 2.1(b)(iii).
     2.2 Excluded Liabilities. Buyer shall not assume, and shall have no
liability for, any Obligations of Seller including but not limited to those set
forth on Schedule 2.2 other than the Assumed Liabilities (the “Excluded
Liabilities”). The Excluded Liabilities shall remain the sole responsibility of
Seller. Seller shall promptly pay, discharge and perform all Excluded
Liabilities in accordance with their terms.
ARTICLE 3
PURCHASE CONSIDERATION
     3.1 Purchase Price. In consideration of the sale and transfer by Seller to
Buyer of the Acquired Assets, Buyer shall pay to Seller Fifteen Million and
No/100 Dollars ($15,000,000), subject to adjustment pursuant to Section 3.1(b),
Section 3.3 and Section 3.4 (the “Purchase Price”), payable as follows:
     (a) Concurrently with the execution and delivery of this Agreement, Buyer
shall deliver to Escrow Agent One Million Dollars ($1,000,000) (the “Deposit”),
by wire

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transfer of immediately available funds to the Escrow Account in accordance with
the Escrow Agreement (as such terms are defined in Section 3.2(a));
     (b) At the Closing, Buyer shall (i) pay an amount equal to Twelve Million
Dollars ($12,000,000), plus or minus (1) an amount equal to the Closing Purchase
Price Adjustment, as defined in Section 3.3(b), plus (2) an amount equal to the
Audit Fees, as defined in Section 11.15, plus (3) an amount equal to the Delay
Adjustment, if any, as defined in Section 3.4, minus (4) an amount equal to the
Deposit plus income actually earned thereon from the date hereof to the Closing
Date, in the aggregate, by wire transfer of immediately available funds, in the
amounts and to the accounts of those Persons identified on Exhibit 3.1, and
(ii) pay Three Million Dollars ($3,000,000) (the “Escrow Amount”) by wire
transfer of immediately available funds to the Escrow Account pursuant to
Section 3.6. Seller shall provide Buyer with written wire transfer instructions
for the payment of the Purchase Price, or shall update Exhibit 3.1 to include
such instructions, at least forty-eight (48) hours prior to the Closing.
Notwithstanding the foregoing, Seller shall have the option, exercisable by
notice to Buyer not later than ten (10) business days prior to the Closing Date,
to permit certain stockholders of Seller and/or their affiliates who have
guaranteed Seller’s obligations to Technology Investment Capital Corp. (the
“Guarantors”) to, by separate written agreement reasonably acceptable to Buyer
and the Guarantors, jointly and severally guarantee Seller’s indemnity
obligations to Buyer under Section 13.1 of this Agreement up to the Escrow
Amount and for the period contemplated by the Escrow Agreement (as hereinafter
defined) rather than having Buyer pay the Escrow Amount into the Escrow Account
as contemplated by Section 3.1(b)(ii). In that event, (i) to support such
guarantee, the Guarantors and Buyer will either enter into an escrow agreement,
containing substantially the same principal terms and provisions as the Escrow
Agreement, provided that the Guarantors shall designate a representative to act
on behalf of the Guarantors under the Agreement, and deposit Three Million
Dollars ($3,000,000) cash into escrow under such new agreement, or provide
irrevocable, clean letter of credit arrangements with a term of not less than
eighteen (18) months from the Closing Date (“Letters of Credit”) in the amount
of $3,000,000, which arrangements are satisfactory in form and substance to
Buyer in its sole discretion, not later than the Closing Date; (ii) the deposit
of the Escrow Amount into the Escrow Account by Buyer, as contemplated by
Section 3.1(b)(ii), will not be made; and (iii) the portion of the Purchase
Price payable by Buyer at Closing pursuant to Section 3.1(b)(i) will be
increased by Three Million Dollars ($3,000,000).
     3.2 Deposit.
     (a) Concurrently with the execution and delivery of this Agreement, Seller
and Buyer shall execute and deliver an escrow agreement substantially in the
form of Exhibit 3.2(a) attached hereto, by and among Seller, Buyer and Escrow
Agent (the “Escrow Agreement”). The Deposit shall be held in escrow in an
account (the “Escrow Account”) of immediately available funds in accordance with
the applicable terms and conditions of this Agreement and of the Escrow
Agreement and will be disbursed as provided herein and in the Escrow Agreement.
     (b) If the transactions contemplated by this Agreement are consummated,
then the Deposit plus income actually earned thereon as contemplated by the
Escrow

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Agreement shall be released from escrow and paid to Seller by Escrow Agent and
credited against the Purchase Price payable by Buyer to Seller at the Closing
pursuant to Section 3.1(b).
     (c) If the transactions contemplated by this Agreement are not consummated
by reason of a default by Buyer under the terms of this Agreement, then Seller
shall be entitled to retain the Deposit, plus income actually earned thereon, as
liquidated damages for such default. For purposes of this Section 3.2(c), Buyer
shall be deemed in default if Buyer (i) shall fail to materially perform any of
the covenants or agreements of Buyer contained in this Agreement, (ii) shall
fail to satisfy any of the conditions set forth in Sections 9.1, 9.2, 9.7, or
9.8 within ten (10) business days after Seller has satisfied the conditions set
forth in Sections 8.1, 8.2, 8.3, 8.4, 8.7, 8.8, and 8.9, or (iii) shall refuse
to consummate, or have insufficient funds to consummate, the transactions
contemplated by this Agreement when Seller has shown itself able and willing to
consummate such transactions and has performed all the covenants and agreements
required to have been performed by Seller hereunder; provided, however, that
Buyer shall not be deemed to be in default under clause (ii) or (iii) of this
sentence until one hundred eighty (180) days have elapsed from the date of this
Agreement. The parties agree that time is of the essence for the consummation of
the transactions contemplated by this Agreement and that the amount of damages
caused by a default by Buyer hereunder would be very difficult to calculate.
Accordingly, the parties agree that the provision for liquidated damages
contained in this Section 3.2 shall not be construed as a penalty provision. The
retention by Seller of the Deposit plus income actually earned thereon shall be
Seller’s sole and exclusive remedy hereunder.
     (d) If the transactions contemplated by this Agreement are not consummated
for reasons that do not entitle Seller to retain the Deposit pursuant to
Section 3.2(c), then Buyer shall be entitled to an immediate return of the
Deposit plus income actually earned thereon through the date of such return,
which shall be Buyer’s sole and exclusive remedy hereunder unless Seller has
committed a breach or default under this Agreement and the transactions
contemplated by this Agreement are not consummated as a result of Seller’s
willful and wrongful failure to consummate such transactions under circumstances
under which all conditions to the obligations of Seller set forth in Article 9
have been satisfied or waived (other than any conditions that have not been
satisfied as a result of any action or inaction on the part of Seller), in which
event Buyer shall be entitled to pursue any rights or remedies existing at law
or in equity with respect to such default.
     3.3 Working Capital Adjustment.
     (a) “Working Capital” as of a given date shall mean as recorded on the
balance sheet as of that date in accordance with GAAP the net of accounts
receivable (net of reserve for doubtful accounts) plus inventory (net of reserve
for obsolescence) plus other current assets minus Assumed Liabilities and minus
other deferred revenue of Seller. The anticipated Working Capital of Seller as
of the signing of this Agreement shall be $250,000 (the “Target Working
Capital”). Seller shall, not less than three (3) business days prior to the
Closing, estimate the Working Capital as of Closing, based on the balance sheet
of Seller as of the prior month-end, but brought forward to include any

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known changes in the components of Working Capital since such prior month-end,
supporting documentation for all of which shall be provided to Buyer for its
review (the “Estimated Working Capital”). Within sixty (60) days following the
Closing, Buyer shall calculate the Working Capital as of the date of the Closing
(the “Actual Working Capital”). On or prior to the thirtieth (30th) day after
Seller receives Buyer’s calculation of the Actual Working Capital, Seller may
give Buyer a written notice that it objects (an “Objection Notice”) to Buyer’s
calculation. Any Objection Notice shall specify the dollar amount of any
objection and a reasonably detailed summary of the basis for objection. Except
to the extent Seller timely objects to a specific determination set forth in
Buyer’s calculation of the Actual Working Capital pursuant to an Objection
Notice delivered to Buyer within such thirty (30) day period, Buyer’s
calculation of the Actual Working Capital will be conclusive and binding upon
the parties. If Seller delivers a timely Objection Notice, then Buyer and Seller
shall negotiate in good faith to resolve their disputes raised pursuant to a
timely Objection Notice. If Buyer and Seller are unable to resolve any disputes
related to the calculation of the Actual Working Capital within thirty (30)
business days following the delivery of the Objection Notice, then Buyer shall
retain a mutually-acceptable accounting firm (“Independent Accounting Firm”) to
resolve the dispute as soon as practicable, and in any event within thirty
(30) days after Buyer retains such firm. The Actual Working Capital as
determined by the Independent Accounting Firm will be conclusive and binding
upon the Parties hereto and will constitute the Actual Working Capital for all
purposes of this Agreement. The fees and expenses of the Independent Accounting
Firm in connection with its review of the Actual Working Capital shall be paid
one-half by Seller and one-half by Buyer.
     (b) If, as of the Closing Date, the Estimated Working Capital is (i) less
than the Target Working Capital, the Purchase Price payable at the Closing will
be reduced by the difference between the Estimated Working Capital and the
Target Working Capital or (ii) more than the Target Working Capital, the
Purchase Price payable at the Closing will be increased by the difference
between the Estimated Working Capital and the Target Working Capital (such
increase or decrease, the “Closing Purchase Price Adjustment”). If the Actual
Working Capital is (i) less than the Estimated Working Capital, the Purchase
Price will be reduced by the difference between the Estimated Working Capital
and the Actual Working Capital or (ii) more than the Estimated Working Capital,
the Purchase Price will be increased by the difference between the Estimated
Working Closing and the Actual Working Capital (the “Final Purchase Price
Adjustment”). In the event of a reduction to the Purchase Price pursuant to the
Final Purchase Price Adjustment, Seller will be liable for the amount of the
reduction and will pay to Buyer, within five (5) business days of the
calculation of the Actual Working Capital being declared final pursuant to
Section 3.3(a) (the “Balance Sheet Date”), the amount of such reduction plus
interest accruing on such amount at a rate of six percent (6%) per annum from
the Closing Date until such amount is paid, in immediately available funds to an
account specified by Buyer. In the event of an increase to the Purchase Price
pursuant to the Final Purchase Price Adjustment, Buyer will pay to Seller,
within five (5) business days of the Balance Sheet Date, the amount of such
increase plus interest accruing on such amount at a rate of six percent (6%) per
annum from the Closing Date until such amount is paid, in immediately available
funds to an account specified by Seller. Any amount paid pursuant to this
Section 3.3(b) will be treated as an adjustment to the Purchase Price for all
purposes. Notwithstanding the foregoing, in the event of a net

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reduction to the Purchase Price pursuant to this Section 3.3(b), Seller’s
obligations will first be satisfied from the Escrow Account, with any additional
payment being made directly by Seller, and Buyer and Seller shall promptly
execute the necessary documents instructing Escrow Agent to make the applicable
payment to Buyer.
     3.4 Adjustments for Delays in Closing. If the transactions contemplated by
this Agreement are not consummated by the later of (i) January 15, 2007 or
(ii) five (5) business days after Seller satisfies all of the conditions to
closing under Article 8, for any reason other than the failure by Seller to
perform any of the covenants or agreements of Seller contained in this Agreement
((i) or (ii), whichever occurs later, is hereinafter referred to as the “Trigger
Date”), then an amount equal to the aggregate of the Delay Adjustments (as
defined below) shall be added to the Purchase Price payable at Closing pursuant
to Section 3.1(b). The Delay Adjustment for each 30-day period that elapses
after the Trigger Date, until the Closing Date shall be equal to the lesser of
(i) Two Hundred Fifty Thousand Dollars ($250,000) or (ii) the amount invested
in, contributed to or lent to Seller by its stockholders during such 30-day
period.
     3.5 Allocation of Purchase Price.Buyer shall prepare an allocation of the
Purchase Price among each of the Acquired Assets and the Assumed Liabilities.
Buyer shall deliver such allocation to Seller within ninety (90) days after the
Closing Date. Seller shall provide its consent to such allocation within fifteen
(15) days of delivery; such consent not to be unreasonably withheld. Such
allocation shall be reported by both Buyer and Seller on Internal Revenue
Service Form 8594, Asset Acquisition Statement, which will be filed with Buyer’s
and Seller’s Federal Income Tax Return for the tax year that includes the
Closing Date. The agreed-upon allocation shall be conclusive and binding upon
Buyer and Seller for all purposes, and neither Buyer nor Seller shall file any
Tax Return or other document with, or make any statement or declaration to, any
Governmental Authority that is inconsistent with such allocation. If the
Purchase Price is adjusted pursuant to the applicable provisions of this
Agreement, such allocation shall be revised to reflect such adjustment in a
manner mutually acceptable to Buyer and Seller.
     3.6 Escrow.Absent an election by Seller pursuant to Section 3.1 to permit
Buyer and the Guarantors to enter into a separate arrangement to secure the
indemnity obligations of Seller, the following provisions shall apply. On or
prior to the Closing Date, Buyer shall deliver to Escrow Agent the Escrow
Amount. The Escrow Amount will be held by Escrow Agent in the Escrow Account, to
secure the indemnity obligations of Seller under Section 13.1 of this Agreement,
in accordance with the applicable terms and conditions of this Agreement and of
the Escrow Agreement. The Escrow Amount will be held in the Escrow Account for
such purpose for a period of eighteen (18) months following the Closing Date or
such shorter period as Buyer may agree, and at the end of such period, all
amounts not theretofore released to or upon the instruction of Buyer in respect
of Losses (as defined in Section 13.1) for which Seller is obligated to
indemnify the Buyer Indemnified Parties (as defined in Section 13.1), together
with all income actually earned thereon, shall be released to or upon the
instruction of Seller, all in accordance with the applicable terms and
conditions of this Agreement and of the Escrow Agreement, provided that an
amount equal to the amount claimed by Buyer pursuant to any unresolved
indemnification claims shall remain in the Escrow Account until such claims are
resolved. The fees and expenses of Escrow Agent shall be paid first out of
income actually earned on amounts held in the Escrow Account (including the
Deposit and the Escrow Amount), and to the extent such income is not sufficient
therefor, such fees and expenses shall be paid one-

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half by Seller and one-half by Buyer. References in this Article 3 to the
release of amounts from the Escrow Account (including the application of the
Deposit to the Purchase Price pursuant to Section 3.1(b) and Section 3.2(b))
with income earned thereon shall be deemed to refer to the portion of such
income, if any, remaining after the satisfaction in full of the Escrow Agent’s
fees and expenses in accordance with the Escrow Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
     As of the date hereof, Seller represents and warrants to and for the
benefit of Buyer as follows:
     4.1 Organization. Seller is a corporation duly organized, validly existing
and in good standing under the Laws of Delaware. Seller has full corporate power
and authority to own the Acquired Assets, conduct the Business as and where
presently conducted, and enter into and perform this Agreement and the
Assignment and Assumption Agreement and all other agreements and documents
contemplated by this Agreement (the “Related Agreements”) to which Seller is a
party. Seller is duly qualified to do business in the jurisdictions listed on
Schedule 4.1, and Seller is not required to be qualified in any other
jurisdiction except where the failure to be so qualified would not have, and
could not reasonably be expected to have, a Material Adverse Effect.
Schedule 4.1 states: (a) Seller’s exact legal name; and (b) all fictitious,
assumed or other names that are registered or used by it or under which it or
its predecessors have done business at any time. Accurate and complete copies of
Seller’s certificate of incorporation and bylaws, each as amended to date
(“Organizational Documents”), have been delivered to Buyer. Except as set forth
on Schedule 4.1, Seller has no subsidiaries and does not own any securities of
any corporation or any other interest in any Person.
     4.2 Effect of Agreement. The execution, delivery and performance of this
Agreement and the Related Agreements by Seller and the consummation by Seller of
the transactions contemplated hereby and thereby: (a) have been duly authorized
by its Board of Directors and have been, or will be on or prior to the Closing
Date, duly authorized by its shareholders in accordance with Delaware law and
Seller’s Organizational Documents; (b) do not constitute a violation or default
under the Organizational Documents of Seller; (c) except as set forth on
Schedule 4.2, do not constitute a default or breach of (after the giving of
notice, passage of time or both), or result in the termination of any Assumed
Contract to which Seller is a party or by which Seller is bound; (d) do not
constitute a material violation of any Law or Judgment applicable to Seller or
the Acquired Assets; (e) except as stated on Schedule 4.2, do not require the
consent of any Person; (f) except as stated on Schedule 4.2, do not result in
the acceleration or adverse change in any material Obligation of Seller; and
(g) do not result in the creation of any Encumbrance upon, or give to any other
Person any interest in, any of the Acquired Assets. No Person has a right of
first refusal or other preemptive right to acquire the Business or the Acquired
Assets. This Agreement and the Related Agreements to which Seller is a party
constitute the valid and legally binding agreements of Seller, enforceable
against Seller in accordance with their respective terms.
     4.3 Financial and Corporate Records. Seller’s books and records are and
have been properly prepared and maintained in accordance with GAAP and, except
as set forth on Schedule 4.3, are accurate and complete in all material
respects.

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     4.4 Compliance with Law. The operation of the Business and Seller’s
ownership, possession and use of the Acquired Assets comply in all material
respects with all Laws applicable to Seller, the Business or the Acquired
Assets. Except as set forth on Schedule 4.4, Seller has obtained and holds all
Permits required for the lawful operation of the Business as and where the
Business is presently conducted, except where the failure to obtain and maintain
such Permits would not have a Material Adverse Effect. All Permits relating to
the Business held by Seller are listed on Schedule 4.4.
     4.5 Financial Statements. Seller has provided to Buyer a copy of the
audited balance sheet and notes thereto of Seller as of December 31, 2005, and
the unaudited balance sheet of Seller as of December 31, 2004, and unaudited
statement of cash flows, statement of income and statement of changes in
stockholders equity, and notes thereto of Seller for the fiscal year ended
December 31, 2005 (the “Annual Financial Statements”). Seller has provided to
Buyer copies of the unaudited balance sheet and statements of cash flows, income
and changes in stockholders equity of Seller as of and for the nine-month period
ended September 30, 2006 (the “Interim Financial Statements” and, together with
Annual Financial Statements, the “Financial Statements”). The Financial
Statements were prepared in accordance with GAAP and present fairly in all
material respects the financial condition and results of operation of Seller as
of such dates and for such periods. The financial statements to be delivered by
Seller to Buyer after the date hereof pursuant to Sections 6.5 and 8.8 hereof
will fairly present, in all material respects, the financial position of Seller,
as at the respective dates thereof and the results of operations and cash flows
for the respective periods then ended (subject in the case of unaudited
information to normal, recurring year-end adjustments that will not be material
either individually or in the aggregate and to any other adjustments described
therein) in conformity with GAAP. Except as set forth on Schedule 4.5, Seller’s
independent auditors have not advised Seller that they have identified any
control deficiency, significant deficiency or material weakness in the system of
internal control over financial reporting (each term as defined in Auditing
Standard No. 2 of the Public Company Accounting Oversight Board) utilized by
Seller. Neither Seller nor, to Seller’s Knowledge , any of its employees or
Seller’s independent auditors have identified or been made aware of (i) any
fraud, whether or not material, that involves Seller’s management or other
employees who have a role in the preparation of financial statements or the
internal control over financial reporting utilized by Seller or (ii) any claim
or allegation regarding the foregoing. Schedule 4.5 includes a list of all of
Seller’s revenues by NAICS codes for the years ended December 31, 2005 and
December 31, 2002 in the format required by item 5 of the Hart-Scott-Rodino
Notification and Report Form.
     4.6 Acquired Assets; Sufficiency. Seller has provided to Buyer a detailed
list of the Acquired Assets which is true and correct in all material respects.
Except as set forth on Schedule 4.6, Seller has good and marketable title to all
of the Acquired Assets and has the right to transfer all right, title and
interest in the Acquired Assets to Buyer, free and clear of any Encumbrance. The
Acquired Assets, together with the rights related thereto, shall provide Buyer
with the means and capability to perform, in all material respects, the
obligations of Buyer with respect to the Assumed Liabilities in substantially
the same manner as such obligations have been performed by Seller prior to the
Closing and otherwise to conduct the Business immediately after the Closing in
the ordinary course thereof and in accordance with past practices. Tangible
Property included in the Acquired Assets is in good and serviceable condition
(subject to normal wear and tear) and is suitable for the uses for which
intended.

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     4.7 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 4.7, Seller has not incurred, and neither the Acquired Assets nor
Seller is subject to, any material Obligations (whether accrued, absolute,
contingent or otherwise) which are not shown or reflected on the Financial
Statements.
     4.8 Operations Since December 31, 2005. Except as set forth on
Schedule 4.8, from December 31, 2005 (or such other date indicated below) to the
date of this Agreement, Seller has conducted its business in the ordinary course
consistent with past practice and:
     (a) Seller has not (i) created or assumed any Encumbrance upon any of the
Acquired Assets; (ii) incurred any Obligation in excess of $50,000; (iii) made
any loan or advance to any Person (other than advances of travel expenses to
employees in the ordinary course of business); (iv) assumed, guaranteed or
otherwise become liable for any Obligation of any Person; (v) committed for any
capital expenditure in excess of $50,000; (vi) purchased, leased, sold,
abandoned or otherwise acquired or disposed of any asset or property identified
within the Acquired Assets having a value in excess of $50,000; (vii) waived any
right or canceled any debt or claim; (viii) assumed or entered into any
Significant Contract, other than those included in the Significant Contracts
listed on Schedule 4.14, (ix) declared, set aside or paid any dividend or
distribution on any class of its equity securities, (x) since September 30,
2006, increased compensation payable or to become payable to its officers or
employees or any increase in any bonus, insurance, pension or other benefit,
payment or arrangement made to, for or with such officers or employees,
(xi) changed accounting methods, principles or practices except in accordance
with GAAP (all of which changes are set forth on Schedule 4.8), or (xii) taken
any action that, if taken during the period from the date hereof through
Closing, would constitute a breach of Sections 6.2 and 6.3 hereof.
     (b) There has been no Material Adverse Effect affecting Seller or the
Acquired Assets.
     4.9 Accounts Receivable. All of Seller’s Accounts Receivable arose in the
ordinary course of business and are proper and valid accounts receivable. There
are no material (individually or in the aggregate) refunds, discounts or rights
of setoff or assignment affecting any such Accounts Receivable that are not
reflected on the Financial Statements. Proper amounts of deferred revenues
appear on Seller’s books and records, in accordance with GAAP. None of the
Accounts Receivable are from Governmental Authorities subject to Assignment of
Claims Act or any state law counterparts.
     4.10 Tangible Property. Except as set forth on Schedule 4.6, Seller has
good and valid title to all of its Tangible Property, free and clear of any
Encumbrances other than Permitted Encumbrances. All of Seller’s Tangible
Property is located at the Facilities (as defined in Section 4.11) or to the
extent not material, is in the possession of Seller’s field personnel, and
Seller has the full and unqualified right to require the immediate return of any
of its Tangible Property that is not located at the Facilities.
     4.11 Real Property. Seller owns no Real Property. Schedule 4.11 lists all
Real Property leased by Seller (the “Facilities”), showing location, rental
cost, landlord, square footage and lease expiration date of each respective
leased Real Property, together with details of

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any security deposit and other prepaid amounts made or owing in respect of each
Real Property lease. To Seller’s Knowledge, the Real Property is not subject to
any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations on use of any nature, except for zoning laws and
other land use restrictions, which would prohibit the operation of Seller’s
Business as presently conducted. Seller has heretofore delivered or made
available to Buyer true, correct and complete copies of all Real Property
leases, including all modifications, amendments and supplements thereto. Each
Real Property lease is valid, binding and in full force and effect, and as of
the Closing all amounts currently owing pursuant to the Real Property leases
will have been paid in full. Seller is not in default or breach in any material
respect under any Real Property lease and no event or circumstance has occurred
that, with notice or lapse of time or both, would constitute any material event
of default thereunder. Seller has not received notice of, nor has there been
any, threatened default by any landlord under any Real Property lease. All
required consents, approvals or authorization of, filing with, or notice to, any
party to any Real Property lease in connection with the transactions
contemplated by this Agreement have been completed or will be obtained prior to
Closing.
     4.12 Software. Schedule 4.12 is an accurate and complete list and
description of all Software and Proprietary Software owned, marketed, licensed,
used or under development by Seller. Except as otherwise provided on
Schedule 4.12, Seller has good and valid title to all Proprietary Software
listed on Schedule 4.12 and has the full right to use and transfer to Buyer all
of Seller’s Software and Proprietary Software listed on Schedule 4.12, free and
clear of any Encumbrance (except for restrictions contained in licensed
commercially available Software other than Proprietary Software). None of
Seller’s Proprietary Software listed on Schedule 4.12, or Seller’s uses of such
Proprietary Software, has violated or infringed upon, or is violating or
infringing upon, any Software or other intellectual property of any Person. To
Seller’s Knowledge, no Person is violating or infringing upon, or has violated
or infringed upon at any time, any of Seller’s Proprietary Software listed on
Schedule 4.12. To the Knowledge of Seller, the documentation and source code
with its embedded commentary, descriptions, and indicated authorship, the
specifications and the other informational materials that describe the
operation, functions, and technical characteristics applicable to the
Proprietary Software listed on Schedule 4.12 is complete in all material
respects and sufficient to permit Buyer to support and maintain the business of
Seller as currently conducted. Seller has taken reasonably prudent actions
(determined by reference to the actions of companies of a similar size in
similar business lines) necessary to maintain the Proprietary Software as
protectable trade secrets. Seller has taken reasonably prudent actions
(determined by reference to the actions of companies of a similar size in
similar business lines) to protect the data contained in its Information
Technology Systems related to its business and protect against the existence of
(i) any protective, encryption, security or lock-out devices that might in any
way interrupt, discontinue, or otherwise adversely affect the use of such
Information Technology Systems; and (ii) any so-called computer viruses, worms,
trap or back doors, Trojan horses or any other instructions, codes, programs,
data or materials (collectively, “Malicious Instructions”) that could improperly
interfere with the operation or use of such Information Technology Systems. None
of the Information Technology Systems related to the business of Seller has
experienced bugs, failures, breakdowns, continued substandard performance,
Malicious Instructions, data losses, data-integrity problems, hacking attempts
or security breaches since January 1, 2005, that have caused any substantial
disruption or interruption in, or to the use of, any such Information Technology
Systems. Seller has not provided the source code for any Proprietary Software to
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by license, transfer, sale, escrow, or otherwise, or granted permission to any
other Person to reverse engineer, disassemble, or decompile the Proprietary
Software.
     4.13 Intellectual Property Assets.
     (a) Schedule 4.13(a) contains a complete and accurate list and summary
description of all registered Trademarks, Patents, Copyrights and Net Names and
all of Seller’s Contracts relating to the Intellectual Property Assets,
including any royalties paid or received by Seller, and all material
unregistered Intellectual Property Assets. Seller has delivered to Buyer
accurate and complete copies of any registrations for Intellectual Property
Assets and any such Contracts, except for any license implied by the sale of a
product and licenses for commonly available Software programs under which Seller
is the licensee. All of Seller’s rights related to the Intellectual Property
Assets are valid and enforceable. There are no outstanding and, to Seller’s
Knowledge, no threatened disputes or disagreements with respect to any such
registration or Contract. No allegations have been asserted or, to Seller’s
Knowledge, threatened that the Intellectual Property Assets violate or infringe
upon any intellectual property or other rights of any other person. Seller has
not received a notice that it is required to license any Person’s intellectual
property for which it does not currently have a license. No customer Contract
transfers ownership of any Intellectual Property Assets to the customer, and
Seller has not transferred ownership rights in any Intellectual Property Assets
to (i) Hilton Hotels Corporation under the Preferred Vendor Services Agreement,
dated January 12, 2004 or (ii) SITA Information Networking Computing USA Inc.
(“SITA”), the City of Atlanta Department of Aviation or the Hartsfield-Jackson
Atlanta International Airport under the Agreement with SITA described on
Schedule 4.19.
     (b) Except as set forth in Schedule 4.13(b):
     (i) the Intellectual Property Assets are all those necessary for the
operation of the Business as it is currently conducted. Seller is the owner or
licensee of all right, title and interest in and to each of the Intellectual
Property Assets, free and clear of all Encumbrances, and has the right to use
without payment to a third party all of the Intellectual Property Assets, other
than in respect of licenses listed in Schedule 4.13(a).
     (ii) all current employees of Seller have executed, or will execute prior
to the Closing Date, written Contracts with Seller substantially in the form of
Exhibit 4.13(b)(ii) that assign to Seller all rights to any inventions,
improvements, discoveries or information relating to the Business.
     (iii) All of the Intellectual Property Assets (other than commonly
available Software licensed by Seller as licensee) are assignable to Buyer
without the requirement of any consent or the payment of any fees.
     (c) Trademarks.
     (i) The name “StayOnline” has been registered as a service mark with the
United States Patent and Trademark Office (the “PTO”), and such registration is
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timely post-registration filing of affidavits of use and incontestability and
renewal applications), is valid and enforceable and is not subject to any
maintenance fees or taxes or actions falling due within ninety (90) days after
the Closing Date.
     (ii) Seller’s registered Trademark has not been and is not now involved in
any opposition, invalidation or cancellation Proceeding and, to Seller’s
Knowledge, no such action is threatened.
     (iii) To Seller’s Knowledge, there is no trademark registered with, or
trademark application pending with, the PTO of any other Person potentially
interfering with or infringing on Seller’s registered Trademark.
     (iv) All products and materials containing Seller’s registered Trademark
bear the proper federal registration notice where permitted by law.
     (d) Trade Secrets. Seller has taken reasonably prudent actions (determined
by reference to the actions of companies of a similar size in similar business
lines) to protect the secrecy, confidentiality and value of all Trade Secrets.
     (e) Net Names. All Net Names have been registered in the name of Seller and
are in compliance with all formal requirements of law. No Net Name has been or
is now involved in any dispute, opposition, invalidation or cancellation
Proceeding and, to Seller’s Knowledge, no such action is threatened with respect
to any Net Name.
     4.14 Significant Contracts.
     (a) For the purposes of this Agreement, “Significant Contracts” means
(a) all of the Contracts to which Seller is a party or by which Seller is bound
under which Seller’s payment obligations, or Seller’s rights to receive payment,
exceed $25,000 in any 12-month period or $100,000 over the term of the Contract,
or on which Seller is otherwise substantially dependent in connection with the
conduct of the Business, (b) any agreement with a customer (including any master
agreement pursuant to which Seller has entered into multiple service agreements
covering individual hotels) under which Seller’s right to receive payment
exceeds $25,000 in any 12-month period or $50,000 over the term of the Contract,
(c) any outstanding purchase order or group of purchase orders, or
understandings or commitments payable to the same payee pursuant to which the
amount payable to Seller exceeds $25,000, (d) any agreement governing a general
or limited partnership, limited liability company or other form of joint venture
to which Seller is a party or by which Seller is bound, (e) any agreement under
which Seller has created, incurred, assumed or guaranteed or may be obligated to
create, incur, assume or guarantee any Indebtedness or any capitalized lease
obligation in an amount in excess of $25,000 or under which Seller has imposed
an Encumbrance on any of Seller’s assets having a book value in excess of
$5,000, (f) any agreement, arrangement or commitment under which Seller has
agreed or committed to advance or loan or has advanced or loaned any amount to
any of its directors, officers or employees or any family member thereof, other
than advances with respect to reasonable and customary business expenses
incurred in the ordinary course of business, (g) any agreement, arrangement or
commitment entered into outside the ordinary course of business and pursuant to
which any obligations or liabilities (whether absolute, contingent or otherwise)
remain outstanding,

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(h) any employment, bonus or consulting agreement, arrangement or commitment
involving potential payments in excess of $100,000, (i) any agreement that
contains any preferential or “most favored nations” provisions, (j) any
agreements that guarantee any person a particular amount of payment irrespective
of such person’s performance of any of its obligations under such agreement,
(k) any agreement that contains a restriction on assignment or that requires
payment or results in a modification of the terms or termination of the
agreement on a change of control, (l) any agreement that prohibits the
incurrence of a lien on Seller’s assets, (m) any agreement involving
indemnification for obligations of or losses or damages incurred by third
parties that are not otherwise included in an Assumed Contract, or (n) any
agreement pursuant to which Seller has acquired or is obligated to acquire any
material portion of the assets or business of any other person since Seller’s
date of incorporation, or any amendments, modifications or supplements to any of
the foregoing.
     (b) Each of the Significant Contracts constitutes a valid and binding
obligation of Seller, is in full force and effect and is enforceable against
Seller in accordance with its terms, subject to general equitable principles
(regardless of whether such enforceability is considered in a proceeding at
equity or at law), and except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws of general application relating to creditors’ rights. Set forth on Schedule
4.14 is an accurate and complete list of all Significant Contracts. Seller has
provided Buyer a true and complete copy of each Significant Contract. Except as
set forth on Schedule 4.14, with respect to each of the Significant Contracts,
Seller is not in default thereunder in any material respect nor would be in
default thereunder in any material respect with the passage of time, the giving
of notice or both. Except as set forth on Schedule 4.14, to Seller’s Knowledge,
none of the other parties to any Significant Contract is in default thereunder
in any material respect or would be in default thereunder with the passage of
time, the giving of notice or both. Except as set forth on Schedule 4.14, Seller
has not given or received any notice of default or notice of termination with
respect to any Significant Contract. The Significant Contracts are all the
material Contracts necessary and sufficient to operate the Business as currently
operated. Except as set forth on Schedule 4.14, there are no currently
outstanding proposals or offers submitted by Seller to any customer, prospect,
supplier or other Person which, if accepted, would result in a legally binding
Significant Contract of Seller.
     4.15 Employees and Independent Contractors. Except as limited by any
employment Contracts listed on Schedule 4.14 and except for any limitations of
general application which may be imposed under applicable employment Laws,
Seller has the right to terminate the employment of each of its employees at
will and to terminate the engagement of any of its at will independent
contractors without payment to such employee or independent contractor other
than for services rendered through termination and without incurring any penalty
or liability other than liability for severance pay in accordance with the
employment Contracts listed on Schedule 4.14. Seller is in material compliance
with all Laws respecting employment practices. Seller has not been a party to or
bound by any union or collective bargaining Contract, nor is any such Contract
currently in effect or being negotiated by or on behalf of Seller and, to
Seller’s Knowledge, there are no union organizing activities involving Seller’s
employees. Seller has not experienced any labor problem that was or is material
to the Business. Seller’s relations with its

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employees are currently on a satisfactory and normal basis. Except as indicated
on Schedule 4.15, no officer of Seller has indicated to Seller an intention to
terminate his employment with Seller. To the Knowledge of Seller, no officer,
employee or independent contractor of Seller is in violation of any term of any
contract, proprietary information agreement, noncompetition agreement or any
other agreement or any restrictive covenant or any other common law obligation
to a former employer relating to the right of any such person to be engaged by
Seller or to the use of trade secrets or proprietary information of any such
former employer. Seller is not delinquent in payments to any of its employees
for any wages, salaries, commissions, bonuses, perquisites or any other form of
compensation for any services performed by them or amounts required to be
reimbursed to such employees. Schedule 4.15 sets forth a complete and accurate
list of the following information for each employee of Seller: name, job title,
location in which employed, current compensation paid or payable, and service
credited for purposes of vesting and eligibility to participate under any
Employee Benefit Plan listed on Schedule 4.16.
     4.16 Employee Benefit Plans. Except as set forth on Schedule 4.16, Seller
does not sponsor, maintain or contribute to, or have any ongoing Obligations
with respect to, any Employee Benefit Plan, including, but not limited to, any
employee benefit plan as defined in ERISA, with respect to employees of Seller.
Copies of all Employee Benefit Plans described on Schedule 4.16 have been
delivered to Buyer along with copies of all summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the two
most recent years’ Form 5500s and financial reports, and any notices to or from
the Internal Revenue Service or any office or representative of the Department
of Labor or any similar Governmental Authority. With respect to each Employee
Benefit Plan described on Schedule 4.16, Seller has operated and currently
operates such plan in compliance with the plan documents and all applicable
Laws, including without limitation ERISA and the Internal Revenue Code of 1986,
as amended (the “Code”). No liability or contingent liability under Title IV or
Section 302 of ERISA has been incurred by Seller or any ERISA Affiliate that has
not been satisfied in full, and neither Seller nor any ERISA Affiliate made, or
was required to make, contributions to any Employee Benefit Plan subject to
Title IV of ERISA during the last six years ended prior to the Closing Date.
Neither Seller nor any ERISA Affiliate sponsors or ever has sponsored,
maintained, contributed to or incurred an obligation to contribute to any
Multiemployer Plan or to a Multiple Employer Plan. There are no actions, suits
or claims pending or, to the Knowledge of Seller, threatened (other than routine
claims for benefits) in writing with respect to or relating to any Employee
Benefit Plan. To the Knowledge of Seller, no event has occurred and there
currently exists no condition or set of circumstances in connection with which
Seller or any of its ERISA Affiliates could be subject to any liability (other
than routine claims for benefits) under the terms of any Employee Benefit Plan,
ERISA, the Code, or any other law applicable to Seller’s Employee Benefit Plans.
“ERISA Affiliate” means any entity which is part of a “controlled group” with
Seller or is under “common control” with Seller, or is treated as employed by a
single employer with Seller (within the meaning of Sections 414(b), (c), (m) or
(o) of the Code).
     4.17 Customers, Prospects and Suppliers. Each of the fifteen (15) largest
customers of Seller (measured by the total amount paid during the nine
(9) months ended September 30, 2006 by such customers to Seller for its services
and grouping as one customer multiple franchisees of a single franchisor with
which Seller has contracted) (the “Fifteen Largest Customers”) has signed a
Contract and is listed on Schedule 4.17. Seller has previously delivered to
Buyer a list

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of Seller’s prospects and proposals with respect to its Business. Schedule 4.17
lists such prospects to which Seller has made a proposal that, if accepted,
would reasonably be expected to cause such prospect to become one of Seller’s
fifteen (15) largest customers during the first twelve (12) months of the
resulting agreement. All of the proposals made to the prospects listed on
Schedule 4.17 are still pending and have not been rejected. Except as set forth
on Schedule 4.17, none of the Fifteen Largest Customers has given notice or
otherwise indicated to Seller that it will or intends to terminate or not renew
any Significant Contract before the scheduled expiration date or otherwise
terminate its relationship with Seller and since December 31, 2005, there has
not been any material adverse change in the business relationship of Seller with
any of the Fifteen Largest Customers. To Seller’s Knowledge, the transactions
contemplated by this Agreement will not have a Material Adverse Effect on
Buyer’s relations with any of the Fifteen Largest Customers. There has not been
any Material Adverse Effect since December 31, 2005 in the business relationship
of Seller with any supplier from whom Seller purchased more that five percent
(5%) of the goods and services which it purchased during the same period.
     4.18 Taxes. Except as disclosed on Schedule 4.18, Seller has timely filed
all Tax Returns and reports required to be filed by it, all of which to Seller’s
Knowledge were accurately prepared, and, except as set forth in Schedule 4.18,
Seller has timely paid all Taxes or withholdings required to be paid by it with
respect to such Tax Returns. Seller has properly withheld from payments to its
employees, contractors, salesmen, agents, representatives, vendors and other
Persons all amounts required by Law to be withheld, and Seller has timely filed
all Tax Returns to be filed by it with respect to such withholdings. Except as
indicated on Schedule 4.18, (a) no audit or other Proceeding relating to Taxes
is pending or threatened against Seller; (b) no notice of deficiency or
adjustment has been received by Seller, by or from any governmental taxing
authority, with respect to sales, use, excise, real property, payroll,
withholding or similar Taxes; (c) there are no agreements or waivers in effect
that provide for an extension of time for the assessment of any such Tax against
Seller; (d) Seller has established on its books and records reserves in
accordance with GAAP that are adequate for the payment of all Taxes of Seller
not yet due and payable; and (e) there are no liens for Taxes upon the Acquired
Assets other than any liens for Taxes not yet due and payable.
     4.19 Proceedings and Judgments. Except as described on Schedule 4.19,
(i) no Proceeding involving or related to the Acquired Assets or the Business is
currently pending or threatened, nor during the two (2) years preceding the date
of this Agreement has any material Proceeding occurred to which Seller is or was
a party or by which the Acquired Assets are or were affected in any material
respect; (ii) no Judgment involving or related to Seller, the Acquired Assets or
the Business is currently outstanding, nor during the two (2) years preceding
the date of this Agreement has any material Judgment been outstanding against
Seller, the Acquired Assets or the Business or by which Seller, the Acquired
Assets or the Business is or was affected, which remains unsatisfied; and
(iii) no breach of contract, material breach of warranty, tort, negligence,
infringement, product liability, discrimination, charge or complaint filed by an
employee or a union with a court of law, the National Labor Relations Board, the
Department of Labor, the Equal Employment Opportunity Commission, or any
comparable Governmental Authority, or any other labor or employment dispute
against or affecting Seller or its premises, and including but not limited to
any claim or charge for wrongful termination, harassment, defamation, unfair
labor practices, wage and hour violations, or violation of any federal, state or
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involving or related to Seller, the Acquired Assets or the Business is currently
being asserted or threatened by or against Seller, and to Seller’s Knowledge
there is no basis for any such claim. As to each matter described on
Schedule 4.19, accurate and complete copies of all pertinent pleadings,
judgments, orders, correspondence and other legal documents have been delivered
to Buyer.
     4.20 Insurance. Schedule 4.20 is an accurate and complete list of all
Insurance Policies currently owned or maintained by Seller. Seller has not
received notice of cancellation with respect to any such current Insurance
Policy, and to Seller’s Knowledge there is no basis for the insurer thereunder
to terminate any such current Insurance Policy. Each such Insurance Policy is or
was in full force and effect during the period(s) of coverage indicated on
Schedule 4.20. All premiums payable by Seller under all such Insurance Policies
have been timely paid, and Seller otherwise has complied in all material
respects with the terms and conditions of all such Insurance Policies. Seller
has not received notice of any threatened termination of, material premium
increase with respect to, or material alteration of coverage under, any of such
Insurance Policies. Except as described on Schedule 4.20 and except for claims
by covered employees under medial, dental and health insurance policies, there
are no claims that are pending under any of the Insurance Policies described on
Schedule 4.20.
     4.21 Questionable Payments. To Seller’s Knowledge, neither Seller nor any
of the current or former directors, executives, officers, representatives,
agents or employees of Seller (when acting in such capacity or otherwise on
behalf of Seller): (a) has used or is using any corporate funds for any illegal
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (b) has used or is using any corporate funds for any direct
or indirect unlawful payments to any foreign or domestic government officials or
employees; (c) has violated or is violating any provision of the Foreign Corrupt
Practices Act of 1977; (d) has established or maintained, or is maintaining, any
unlawful or unrecorded fund of corporate monies or other properties; (e) has
made any false or fictitious entries on the books and records of Seller; (f) has
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment of any nature using corporate funds or otherwise on behalf of Seller; or
(g) made any material favor or gift that is not deductible for federal income
tax purposes using corporate funds or otherwise on behalf of Seller.
     4.22 Related Party Transactions. Except as described on Schedule 4.22 and
except for any employment Contracts listed on Schedule 4.14, (a) no director,
officer, record or beneficial owner of five percent (5%) or more of the equity
securities of Seller, affiliate or controlling Persons of Seller, (b) no
immediate family member of any such director, officer, record or beneficial
owner of five percent (5%) or more of the equity securities of Seller, affiliate
or controlling Person, and (c) no entity controlled by any one or more of the
foregoing (excluding Seller) (collectively, the “Related Parties”): (i) owns,
directly or indirectly, any interest in (excepting not more than three percent
(3%) stock holdings for investment purposes in securities of publicly held and
traded companies), or is an officer, director, employee or consultant of, any
Person that is engaged in business as a competitor of Seller, or as a lessor,
lessee, customer, distributor, sales agent, or supplier of any material amount
of goods or services to Seller; (ii) owns, directly or indirectly, in whole or
in part, any material tangible or intangible property that Seller uses or the
use of which is necessary for the conduct of its Business; (iii) has any cause
of action or other claim whatsoever against Seller or its Business; (iv) on
behalf of Seller, has made any payment or commitment to pay any commission, fee
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purchase or obtain or otherwise contract to purchase or obtain any goods or
services from, any corporation or other Person of which any officer or director
of Seller, or an immediate family member of the foregoing, is a partner or
stockholder (excepting stock holdings solely for investment purposes in
securities of publicly held and traded companies). Schedule 4.22 contains a
complete list of all material Contracts between Seller and any Related Party
relating to the Business, entered into on or prior to the date of this Agreement
or contemplated to be entered into before Closing.
     4.23 Brokerage Fees. Except for the fees payable to Daniels & Associates,
L.P. as set forth on Schedule 4.23, which fees and all other costs and expenses
relating thereto shall be paid by Seller, no Person acting on behalf of Seller
is or shall be entitled to any brokerage, finder’s or investment banking fee in
connection with the transactions contemplated by this Agreement.
     4.24 Full Disclosure. To Seller’s Knowledge, no representation or warranty
made by Seller in this Agreement: (a) contains any untrue statement of any
material fact; or (b) omits to state any fact that is necessary to make the
statements made, in the context in which made, not false or misleading in any
material respect.
     4.25 Litigation. There is no litigation or other Proceeding pending or, to
the Knowledge of Seller, threatened against Seller that questions or challenges
the validity of this Agreement or any of the Related Agreements, the
consummation of the transactions contemplated hereby or any action taken or to
be taken by Seller pursuant to this Agreement or any Related Agreement.
     4.26 Environmental Matters. Seller has obtained, or has timely applied for,
all permits, licenses, approvals, identification numbers and any other
authorizations (collectively, “Environmental Permits”) required under applicable
Environmental Laws to conduct its business and operations as currently
conducted. Seller is in material compliance with all applicable Environmental
Laws and Environmental Permits, and Seller has not received any written
communication from any Person or Governmental Authority that alleges that Seller
is not in such compliance. There are no Environmental Claims pending or, to the
Knowledge of Seller, threatened in writing, against Seller. Seller (i) has not
entered into or agreed to any consent decree or order and is not subject to any
judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Substances, or (ii) is
not an indemnitor in connection with any claim asserted in writing or, to the
Knowledge of Seller, threatened in writing against Seller by any third-party
indemnitee for any liability under any Environmental Law or relating to any
Hazardous Substances. Seller has not treated, stored, disposed of, arranged for
or permitted the disposal of, transported, handled, or released any substance,
including any Hazardous Substance, or owned or operated any property or facility
in a manner, that has given, or to the Knowledge of Seller reasonably could
give, rise to any material liabilities pursuant to any Environmental Laws.

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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
     As of the date hereof, Buyer represents and warrants to and for the benefit
of Seller as follows:
     5.1 Organization. Buyer is a corporation that is duly organized, validly
existing and in good standing under the Laws of the State of Delaware. Buyer has
full corporate power and authority to own its assets, conduct its business as
and where such business is presently conducted, and enter into this Agreement.
     5.2 Effect of Agreement. The execution, delivery and performance by Buyer
of this Agreement and the Related Agreements to which it is a party, and its
consummation of the transactions contemplated hereby and thereby, (a) have been
duly authorized by all necessary corporate actions by its Board of Directors;
(b) do not constitute a violation of or default under its charter or bylaws;
(c) do not constitute a default or breach (after the giving of notice, passage
of time or both) under any Contract to which it is a party or by which it is
bound; (d) do not constitute a violation of any Law or Judgment that is
applicable to it or to the transactions contemplated by this Agreement; and
(e) do not require the consent of any Person. This Agreement and the Related
Agreements to which Buyer is a party constitute the valid and legally binding
agreements of Buyer, enforceable against Buyer in accordance with their
respective terms.
     5.3 Brokerage Fees. No Person acting on behalf of Buyer is entitled to any
brokerage, finder’s or investment banking fee in connection with the
transactions contemplated by this Agreement.
     5.4 Litigation. There is no litigation or other Proceeding pending or, to
the Knowledge of Buyer, threatened against Buyer that questions or challenges
the validity of this Agreement or any of the Related Agreements, the
consummation of the transactions contemplated hereby or any action taken or to
be taken by Buyer pursuant to this Agreement or any Related Agreement.
     5.5 Availability of Funds. Buyer will have cash on hand sufficient to fund
Buyer’s payment of the entire Purchase Price at the Closing.
ARTICLE 6
COVENANTS OF SELLER PRIOR TO CLOSING
     6.1 Access And Investigation. Between the date of this Agreement and the
Closing Date, and upon reasonable advance notice received from Buyer, Seller
shall (a) afford Buyer and its representatives (collectively, “Buyer Group”)
full and free access, during regular business hours, to Seller’s personnel,
properties, Contracts, Permits, books and records and other documents and data,
such rights of access to be exercised in a manner that does not unreasonably
interfere with the operations of Seller; (b) furnish Buyer Group with copies of
all such Contracts, Permits, books and records and other existing documents and
data as Buyer may reasonably request; (c) furnish Buyer Group with such
additional financial, operating and other relevant data and information as Buyer
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extent reasonably requested by Buyer, with Buyer’s investigation of the
properties, assets and financial condition of Seller.
     6.2 Operation of the Business of Seller. Between the date of this Agreement
and the Closing, Seller shall:
     (a) conduct its business only in the ordinary course consistent with past
practice;
     (b) except as otherwise directed by Buyer in writing, and without making
any commitment on Buyer’s behalf, use its best efforts to preserve intact its
current business organization, keep available the services of its officers,
employees and agents and maintain its relations and goodwill with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with it;
     (c) confer with Buyer prior to implementing operational decisions of a
material nature;
     (d) otherwise report periodically to Buyer concerning the status of its
business, operations and finances;
     (e) make no material changes in management personnel without prior
consultation with Buyer;
     (f) maintain the Acquired Assets in a state of repair and condition that
complies with legal requirements and is consistent with the requirements for the
normal conduct of the Business;
     (g) use its best efforts to keep in full force and effect, without
amendment, all material rights relating to the Business;
     (h) comply with all material requirements of Law and Contracts applicable
to the operations of Business;
     (i) continue in full force and effect the insurance coverage under the
policies set forth in Schedule 4.20 or substantially equivalent policies;
     (j) cooperate with Buyer and assist Buyer in identifying the Permits
required by Buyer to operate the Business from and after the Closing Date and
either transferring existing Permits of Seller to Buyer, where permissible, or
obtaining new Permits for Buyer; and
     (k) maintain all financial books and records of Seller relating to the
Business in accordance with GAAP.
     6.3 Negative Covenant. Except as otherwise expressly permitted herein,
between the date of this Agreement and the Closing Date, Seller shall not,
without the prior written consent of Buyer, (a) take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
Material Adverse Effect or any of the changes or events listed in

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Section 4.8(a) would be likely to occur; (b) make any modification to any
Significant Contract or terminate or cancel any Significant Contract; (c) enter
into any compromise or settlement of any Proceeding relating to the Acquired
Assets, the Business or the Assumed Liabilities, (d) amend its Certificate of
Incorporation or Bylaws, except as contemplated by Section 6.6, (e) acquire or
agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, any
Person, (f) enter into any agreement, contract or lease that would constitute a
Significant Contract, except in the ordinary course of business, (g) incur or
commit to any capital expenditure other than capital expenditures incurred or
committed to in the ordinary course of business, (h) adopt, commit to adopt,
enter into, terminate or amend any Employee Benefit Plan, (i) make or change any
accounting method or tax election or file an amended Tax Return, (j) enter into
any agreement with any directors, employees, or officers, or (k) grant any
license or sublicense to any rights under the Intellectual Property Assets.
     6.4 Notification. Between the date of this Agreement and the Closing,
Seller shall promptly notify Buyer in writing if it becomes aware of (a) any
fact or condition that causes or constitutes a breach of any of Seller’s
representations and warranties made as of the date of this Agreement or (b) the
occurrence after the date of this Agreement of any fact or condition that would
be reasonably likely to (except as expressly contemplated by this Agreement)
cause or constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Seller’s discovery of, such fact or condition. Should any such fact or condition
require any change to any Schedule hereto, Seller shall promptly deliver to
Buyer a supplement to the Schedule specifying such change. Such delivery shall
not affect any rights of Buyer under Section 10.2 and Article 12.
     6.5 Monthly Financial Statements. Until the Closing Date, Seller shall
deliver to Buyer within thirty (30) days after the end of each month a copy of
the balance sheet, statement of operations, change in stockholders’ equity and
cash flow statement for such month prepared in a manner and containing
information in accordance with GAAP and certified by Seller’s Chief Financial
Officer as to compliance with Section 4.5.
     6.6 Change of Name. On or before the Closing Date, Seller shall (a) take
all corporate action necessary to approve and authorize the amendment of its
certificate of incorporation to change its name to one sufficiently dissimilar
to Seller’s present name, in Buyer’s judgment, to avoid confusion and (b) take
all actions requested by Buyer or a subsidiary of Buyer to enable Buyer or a
subsidiary of Buyer to change its name to Seller’s present name after the
Closing.
     6.7 Payment of Liabilities. Seller shall pay or otherwise satisfy in the
ordinary course all of its Obligations.
     6.8 Shareholder Meeting. Seller shall cause a meeting of its shareholders
(the “Shareholder Meeting”) to be duly called and held as soon as reasonably
practicable after the date hereof for the purpose of obtaining the approval
contemplated by Section 9.4 of this Agreement. In connection with the
Shareholder Meeting, Seller shall (i) subject to the provisions of
Section 11.14(b) the Board shall recommend to the shareholders that the
shareholders approve this agreement and use all reasonable efforts to obtain the
approval of its shareholders of the transaction contemplated by this Agreement,
and (ii) otherwise comply with all legal

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requirements applicable to such meeting. In lieu of holding the Shareholder
Meeting, the Seller, at its election, may cause the actions required hereunder
to be approved by written consent of its shareholders.
ARTICLE 7
COVENANT OF BUYER PRIOR TO CLOSING
     Buyer shall use its best efforts to cause the conditions in Article 9 to be
satisfied at or prior to the Closing.
ARTICLE 8
CONDITIONS TO BUYER’S OBLIGATION TO CLOSE
     Buyer’s obligation to purchase the Acquired Assets and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
     8.1 Accuracy of Representations.
     (a) The representations and warranties in Section 4.2 and each other
representation and warranty in this Agreement that contains an express
materiality qualification, shall have been accurate in all respects as of the
date of this Agreement, and shall be accurate in all respects as of the time of
the Closing as if then made, without giving effect to any supplement to any
schedules hereto.
     (b) Each of Seller’s representations and warranties in this Agreement other
than those referred to in paragraph (a) of this Section 8.1 shall have been
accurate in all material respects as of the date of this Agreement, and shall be
accurate in all material respects as of the time of the Closing as if then made,
without giving effect to any supplement to any schedules hereto.
     8.2 Seller’s Performance. Each of the covenants and obligations that Seller
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing shall have been duly performed and complied with in all material
respects.
     8.3 Consents. Each of the Consents identified in Schedule 8.3 shall have
been obtained and shall be in full force and effect.
     8.4 Additional Documents. Seller shall have caused the following documents
to be delivered to Buyer:
     (a) a bill of sale for all of the Acquired Assets that are Tangible
Property in the form of Exhibit 8.4(a) (the “Bill of Sale”), executed by Seller;
     (b) an assignment of all of the Acquired Assets that are Intellectual
Property Assets in the form of Exhibit 8.4(b), which assignment shall also
contain Buyer’s undertaking and assumption of the Assumed Liabilities (the
“Assignment and Assumption Agreement”), executed by Seller;

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     (c) a separate assignment of Seller’s registration for the service mark
“StayOnline” (Registration No. 2665968) in the form of Exhibit 8.4(c), executed
by Seller;
     (d) the assignments of the leases of the Facilities in a form reasonably
acceptable to Buyer and Seller (the “Assignments of Facilities”), executed by
Seller;
     (e) such other bills of sale, assignments, certificates, documents and
other instruments of transfer and conveyance as may reasonably be requested by
Buyer, each in form and substance satisfactory to Buyer and executed by Seller;
     (f) an employment agreement in a form reasonably acceptable to Buyer
executed by each of Antonio DiMilia, Steven Berrey, Chris Medders and Ron
Peterson (the “Employment Agreements”);
     (g) a non-competition agreement in the form of Exhibit 8.4(g), executed by
each of Seller and William C. Newton (the “Non-Competition Agreements”);
     (h) a certificate executed by Chief Executive Officer of Seller as to the
accuracy of its representations and warranties as of the date of this Agreement
and as of the Closing in accordance with Section 8.1 and as to its compliance
with and performance of its covenants and obligations to be performed or
complied with at or before the Closing in accordance with Section 8.2;
     (i) a certificate of the Secretary of Seller certifying, as complete and
accurate as of the Closing, and attaching all requisite resolutions or actions
of Seller’s Board of Directors and shareholders approving the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and the change of name contemplated by Section 6.6 and certifying to the
incumbency and signatures of the officers of Seller executing this Agreement,
any Related Agreement to which Seller is a party and any other document relating
to such contemplated transactions, and accompanied by the requisite documents
for amending Seller’s certificate of incorporation required to effect such
change of name in form sufficient for filing with the Secretary of State of
Delaware;
     (j) the certificate of incorporation and all amendments thereto of Seller,
duly certified as of a recent date by the Secretary of State of Delaware;
     (k) recently dated lien search reports describing all security interests
reflected in the Uniform Commercial Code or similar records of such
jurisdictions and the United States Patent and Trademark Office as Buyer may
reasonably request, indicating that any Encumbrances on any of the Acquired
Assets (including, without limitation, the security interests previously granted
by Seller to Technology Investment Capital Corp.), other than those to which
Buyer does not object and Permitted Encumbrances, have been discharged or
released before or simultaneously with the Closing;
     (l) if requested by Buyer, any Consents or other instruments that may be
required to permit Buyer’s qualification in each jurisdiction in which Seller is
licensed or

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qualified to do business as a foreign corporation under the name “StayOnline” or
any derivative thereof;
     (m) opinion of counsel to Seller in a form reasonably acceptable to Buyer
and Seller;
     (n) payoff letters for repayment in full of all Indebtedness secured by any
of the Acquired Assets, which set forth the terms and conditions for payment and
satisfaction in full of all such Indebtedness and release of all Encumbrances
granted by Seller relating thereto on and as of the Closing Date and release and
termination of all Deposit Account Control Agreements relating thereto;
     (o) evidence of payoff of all Obligations of Seller under the Employee
Benefit Plans, including, but not limited to, any salaries, bonuses,
commissions, accrued vacation pay, benefits or severance; and
     (p) the Escrow Agreement in the form of Exhibit 3.4, executed by each of
Seller and Escrow Agent.
     8.5 No Proceedings. There shall not have been commenced or threatened
against Seller or Buyer any litigation or other Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement or (b) that may have the effect of
preventing, delaying, making illegal, imposing limitations or conditions on or
otherwise interfering with any of such contemplated transactions.
     8.6 Permits. Buyer shall have received such Permits as are necessary to
allow Buyer to operate the Acquired Assets from and after the Closing.
     8.7 No Material Adverse Effect. Since the date of this Agreement there
shall not have occurred a Material Adverse Effect nor shall there exist any
facts or circumstances that could reasonably be expected to cause such a
Material Adverse Effect.
     8.8 Financial Statements. Not less than twenty days prior to Closing, Buyer
shall have received audited (including an audit report with no qualifications)
and unaudited consolidated financial statements of Seller and, to the extent
necessary, its predecessor entities necessary for Buyer to comply with any
applicable requirements for filings under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC, promulgated thereunder,
which shall be certified by the Chief Financial Officer of Seller as fairly
presenting in all material respects the matters presented therein and otherwise
as materially consistent with the Financial Statements previously provided to
Buyer.
     8.9 Deliveries.Buyer shall have received from Seller each item required to
be delivered by Seller pursuant to this Agreement.

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ARTICLE 9
CONDITIONS TO SELLER’S OBLIGATION TO CLOSE
     Seller’s obligation to sell the Acquired Assets and to take the other
actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller in whole or in part):
     9.1 Accuracy of Representations. Each of Buyer’s representations and
warranties in this Agreement shall have been accurate in all material respects
as of the date of this Agreement and shall be accurate in all material respects
as of the time of the Closing as if then made.
     9.2 Buyer’s Performance. Each of the covenants and obligations that Buyer
is required to perform or to comply with pursuant to this Agreement at or prior
to the Closing shall have been performed and complied with in all material
respects.
     9.3 Consents. Each of the Consents identified in Schedule 9.3 shall have
been obtained and shall be in full force and effect.
     9.4 Shareholder Approval. Seller’s shareholders shall have approved and
authorized the execution and delivery of this Agreement and the Related
Agreements by Seller and the consummation of the transactions contemplated
hereby and thereby in accordance with Delaware law and Seller’s Organizational
Documents.
     9.5 Additional Documents. Buyer shall have caused the following documents
to be delivered at Closing to Seller:
     (a) the Assignment and Assumption Agreement executed by Buyer;
     (b) the Assignments of Facilities executed by Buyer;
     (c) the Employment Agreements executed by Buyer;
     (d) a certificate executed by the Chief Executive Officer of Buyer as to
the accuracy of Buyer’s representations and warranties as of the date of this
Agreement and as of the Closing Date in accordance with Section 9.1 and as to
Buyer’s compliance with and performance of its covenants and obligations to be
performed or complied with at or before the Closing in accordance with
Section 9.2;
     (e) a certificate of the Secretary of Buyer certifying, as complete and
accurate as of the Closing, and attaching all requisite resolutions or actions
of Buyer’s Board of Directors approving the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
certifying to the incumbency and signatures of the officers of Buyer executing
this Agreement, and the Related Agreements to which Buyer is a party and any
other document relating to such contemplated transactions;
     (f) Opinion of counsel to Buyer in a form reasonably acceptable to Buyer
and Seller; and

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     (g) the Escrow Agreement in the form of Exhibit 3.4, executed by each of
Buyer and Escrow Agent.
     9.6 No Proceedings. There shall not have been commenced or threatened
against Buyer or Seller any litigation or other Proceeding (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement or (b) that may have the effect of
preventing, delaying, making illegal, imposing limitations or conditions on or
otherwise interfering with any of such contemplated transactions.
     9.7 Purchase Price. Buyer shall have paid the Purchase Price as provided in
Section 3.1.
     9.8 Deliveries. Seller shall have received from Buyer each item required to
be delivered by Buyer pursuant to this Agreement.
ARTICLE 10
TERMINATION
     10.1 Termination Events. By notice given prior to or at the Closing,
subject to Section 10.2, this Agreement may be terminated as follows:
     (a) by Buyer if a material breach of any provision of this Agreement has
been committed by Seller and such breach has not been waived by Buyer;
     (b) by Seller (i) if a material breach of any provision of this Agreement
has been committed by Buyer and such breach has not been waived by Seller, or
(ii) at any time when Seller is entitled to retain the Deposit as a result of a
default by Buyer as provided in Section 3.2(d);
     (c) by mutual consent of Buyer and Seller;
     (d) by Buyer if the Closing has not occurred on or before June 30, 2007, or
such later date as the parties may agree upon, unless Buyer is in material
breach of this Agreement or the reason for the delay is a failure by Buyer to
comply with its obligations under this Agreement;
     (e) by Seller if the Closing has not occurred on or before June 30, 2007,
or such later date as the parties may agree upon, unless Seller is in material
breach of this Agreement or the reason for the delay is a failure by Seller to
comply with its obligations under this Agreement; or
     (f) by Seller or Buyer if Seller’s Board of Directors determines in good
faith, pursuant to Section 11.14, that an unsolicited Acquisition Proposal
constitutes a Superior Proposal and authorizes a Change in Recommendation in
response thereto.
     10.2 Effect of Termination. Each party’s right of termination under
Section 10.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of such right of termination will not be an
election of remedies. If this Agreement is terminated pursuant to Section 10.1,
all obligations of the parties under this Agreement will terminate,

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except that the obligations of the parties in this Section 10.2 and Article 14
and the terms of the Confidentiality Agreement will survive, provided, however,
that, nothing in this Agreement shall relieve any party from liability for fraud
or any intentional breach of this Agreement.
     10.3 Termination in Response to Superior Proposal. If this Agreement is
terminated pursuant to Section 10.1(f), then on the earlier of (i) the date on
which Seller enters into a definitive written agreement providing for the
consummation of a transaction contemplated by the Superior Proposal or (ii) two
(2) business days after the date of termination, Seller shall pay to Buyer, by
wire transfer of immediately available funds to an account specified by Buyer, a
termination fee of One Million Dollars ($1,000,000).
ARTICLE 11
ADDITIONAL COVENANTS
     11.1 Employees and Employee Benefits.
     (a) Information on Active Employees. For the purpose of this Agreement, the
term “Active Employees” shall mean all employees employed on the Closing Date by
Seller who are employed exclusively in the Business as currently conducted.
     (b) Employment of Active Employees by Buyer.
     (i) Buyer is not obligated to hire any Active Employee but may interview
all Active Employees. Buyer will provide Seller with a list of Active Employees
to whom Buyer has made an offer of employment that has been accepted to be
effective on the Closing Date (the “Hired Active Employees”). Subject to
applicable legal requirements, Buyer will have reasonable access to Seller’s
Facilities and personnel records (including performance appraisals, disciplinary
actions, grievances and medical records) for the purpose of preparing for and
conducting employment interviews with all Active Employees and will conduct the
interviews as expeditiously as possible prior to the Closing Date. Access will
be provided by Seller upon reasonable prior notice during normal business hours.
Effective immediately before the Closing, Seller will terminate the employment
of all of the Hired Active Employees.
     (ii) Seller shall not solicit the continued employment of any Active
Employee (unless and until Buyer has informed Seller in writing that the
particular Active Employee will not receive any employment offer from Buyer) or
the employment of any Hired Active Employee after the Closing. Buyer shall
inform Seller promptly of the identities of those Active Employees to whom it
will not make employment offers, and Seller shall comply with the Worker
Adjustment and Retraining Notification Act (the “WARN Act”) or similar state or
local law, if applicable, as to those Active Employees.
     (iii) It is understood and agreed that (A) Buyer’s expressed intention to
extend offers of employment as set forth in this section shall not constitute
any commitment, contract or understanding (expressed or implied) of any
obligation on the part of Buyer to a post-Closing employment relationship of any
fixed term or duration or upon any terms or conditions other than those that
Buyer may

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establish pursuant to individual offers of employment, and (B) employment
offered by Buyer is “at will” and may be terminated by Buyer or by an employee
at any time for any reason (subject to any written commitments to the contrary
made by Buyer or an employee and applicable Law). Nothing in this Agreement
shall be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Active Employees after
the Closing or to change adversely or favorably the title, powers, duties,
responsibilities, functions, locations, salaries, other compensation or terms or
conditions of employment of such employees.
     (c) Salaries and Benefits.
     (i) Seller shall be responsible for (A) the payment of all wages and other
remuneration due to Active Employees with respect to their services as employees
of Seller through the close of business on the Closing Date, including pro rata
commissions, bonus payments and all vacation pay earned prior to the Closing
Date, (B) the payment of any termination or severance payments and the provision
of health plan continuation coverage in accordance with the requirements of
COBRA and sections 601 through 608 of ERISA; and (C) any and all payments to
employees required under the WARN Act or similar state or local law.
     (ii) Seller shall be liable for any claims made or incurred by Active
Employees and their beneficiaries through the Closing Date under the Employee
Benefit Plans. For purposes of the immediately preceding sentence, a charge will
be deemed incurred, in the case of hospital, medical or dental benefits, when
the services that are the subject of the charge are performed and, in the case
of other benefits (such as disability or life insurance), when an event has
occurred or when a condition has been diagnosed that entitles the employee to
the benefit.
     (d) General Employee Provisions.
     (i) Seller and Buyer shall give any notices required by applicable Law and
take whatever other actions with respect to the plans, programs and policies
described in this Section 11.1 as may be necessary to carry out the arrangements
described in this Section 11.1.
     (ii) Seller shall provide Buyer with completed I-9 forms and attachments
with respect to all Hired Active Employees, except for such employees as Seller
certifies in writing to Buyer are exempt from such requirement.
     (iii) Buyer shall not have any responsibility, liability or obligation,
whether to Active Employees, former employees, their beneficiaries or to any
other Person, with respect to any employee benefit plans, practices, programs or
arrangements (including the establishment, operation or termination thereof and
the notification and provision of COBRA coverage extension) maintained by
Seller.

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     11.2 Payment of All Taxes Resulting from Sale of Assets by Seller. Seller
shall pay in a timely manner all Taxes resulting from or payable in connection
with the sale of the Assets pursuant to this Agreement, regardless of the Person
on whom such Taxes are imposed by Law.
     11.3 Restrictions on Seller Dissolution and Distributions.
     Seller shall not dissolve, or make any distribution of the Escrow Amount
released to it pursuant to Section 3.1, until the later of (a) three
(3) business days after the completion of all adjustment procedures contemplated
by Section 3.3; or (b) Seller’s payment, or adequate provision for the payment,
of all of its obligations pursuant to Section 11.2.
     11.4 Removing Excluded Assets. On or before the Closing Date, Seller shall
remove all Excluded Assets from all Facilities to be occupied by Buyer. Such
removal shall be done in such manner as to avoid any damage to the Facilities to
be occupied by Buyer and any disruption of the business operations to be
conducted by Buyer after the Closing. Any damage to the Acquired Assets or to
the Facilities resulting from such removal shall be paid by Seller at the
Closing or thereafter.
     11.5 Reports and Returns. Seller shall promptly after the Closing prepare
and file all reports and returns required by applicable Law relating to the
Business as conducted using the Acquired Assets, to and including the Closing
Date.
     11.6 Assistance In Proceedings. Seller will cooperate with Buyer and its
counsel in the contest or defense of, and make available its personnel and
provide any testimony and access to its books and records in connection with,
any Proceeding involving or relating to (a) this Agreement or the transactions
contemplated hereby or (b) any action, activity, circumstance, condition,
conduct, event, fact, failure to act, incident, occurrence, plan, practice,
situation, status or transaction on or before the Closing Date involving Seller
or the Business.
     11.7 Customer and Other Business Relationships. After the Closing, Seller
will cooperate with Buyer in its efforts to continue and maintain for the
benefit of Buyer those business relationships of Seller existing prior to the
Closing and relating to the Business to be operated by Buyer after the Closing,
including relationships with lessors, employees, regulatory authorities,
licensors, prospects, customers, suppliers and others, and Seller will satisfy
the Excluded Liabilities in a manner that is not detrimental to any of such
relationships. Seller will refer to Buyer all inquiries relating to the Business
after the Closing.
     11.8 Retention of and Access to Records. After the Closing Date, Buyer
shall retain for a period consistent with Buyer’s record-retention policies and
practices those books and records of Seller delivered to Buyer. Buyer also shall
provide Seller and its representatives reasonable access thereto, during normal
business hours and on at least three days’ prior written notice, to enable them
to prepare financial statements or tax returns or deal with tax audits. After
the Closing Date, Seller shall provide Buyer and its representatives reasonable
access to records that are Excluded Assets, during normal business hours and on
at least three days’ prior written notice, for any reasonable business purpose
specified by Buyer in such notice.
     11.9 Further Assurances. The parties shall cooperate reasonably with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and

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(c) do such other acts and things, all as the other party may reasonably request
for the purpose of carrying out the intent of this Agreement and the
transactions contemplated hereby.
     11.10 Reconciliations and Allocations. At and after the Closing, all
payments received by Seller on account of Accounts Receivable in existence as of
the Closing Date or arising after the Closing Date under any of the Assumed
Contracts and all other payments received by Seller with respect to the
operation of the Business after the Closing Date, shall be held in trust for
Buyer and shall be promptly paid to Buyer.
     11.11 Tax Matters
     (a) Liability for Taxes
     (i) Taxable Periods Ending On or Before the Closing Date. Seller shall be
responsible for filing all Tax Returns required to be filed by or with respect
to Seller for any taxable year or taxable period ending on or before the Closing
Date and shall be liable for all Taxes for any taxable year or period ending on
or before the Closing Date which are due and payable by Seller or with respect
to the Acquired Assets or Assumed Liabilities.
     (ii) Taxable Periods Commencing On or After the Closing Date. Buyer shall
be responsible for filing all Tax Returns required to be filed by or with
respect to the Acquired Assets and the Assumed Liabilities for any taxable year
or period commencing after the Closing Date and shall be liable for and any and
all Taxes for any taxable year or period commencing on or after the Closing Date
due or payable by Buyer with respect to the Acquired Assets or Assumed
Liabilities.
     (iii) Taxable Periods Commencing Before the Closing Date and Ending After
the Closing Date. In the case of any taxable year or period which commences
before and would otherwise end after the Closing Date (the “Closing Period”),
Seller shall, to the extent required or permitted under applicable Law, end its
taxable year or period on the Closing Date. For purposes of paragraphs (i) and
(ii) of this Section 11.11(a), the Taxes related to the pre-Closing Date portion
of the Closing Period shall (1) in the case of Taxes other than Taxes based upon
or related to income, sales, gross receipts, wages, capital expenditures,
expenses or any similar Tax base, be deemed to be the amount of such Tax for the
entire Closing Period multiplied by a fraction the numerator of which is the
number of days in the Closing Period ending on the Closing Date and the
denominator of which is the number of days in the entire Closing Period, and
(2) in the case of any Tax based upon or related to income, sales, gross
receipts, wages, capital expenditures, expenses or any similar Tax base, be
deemed equal to the amount which would be payable if the relevant Tax period
ended on the Closing Date. Any credits relating to the Closing Period shall be
taken into account as though the relevant Tax period ended on the Closing Date.
     (iv) Mutual Cooperation. As soon as practicable, but in any event within
thirty (30) days after a request by either Seller or Buyer, the party to which
such request is made shall deliver to the requesting party such information and
other data relating to the Tax Returns and Taxes of Seller or Buyer and shall
make available such knowledgeable employees of Seller or Buyer, as may be
appropriate, as the requesting party may reasonably request, including providing
the information and

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other data customarily required by the requesting party to cause the completion
and filing of all Tax Returns for which the requesting party has responsibility
or liability under this Agreement, or to respond to audits by any taxing
authorities with respect to any Tax Returns or taxable periods for which the
requesting party has any responsibility or liability under this Agreement or to
otherwise enable the requesting party to satisfy its accounting or tax
requirements.
     (b) Resolution of Disagreements Among Seller and Buyer. If Seller and Buyer
disagree as to the amount of Taxes for which each is liable under this
Agreement, such dispute shall be resolved pursuant to Section 14.13. In no event
shall the arbitrators determine that a party’s liability for Taxes exceeds the
maximum amount for which both parties assert such party is liable or determine
that a party’s liability for Taxes is less than the minimum amount for which
both parties assert such party is liable. The parties’ Tax obligations as
finalized by the arbitrators shall be deemed final and conclusive with respect
to the parties’ Tax obligations and shall be binding on Seller and Buyer for
such purposes. The fees and expenses of the arbitrators in resolving all such
objections shall be borne by Seller and Buyer in amounts equal to the proportion
that the arbitrator finds that each of Seller and Buyer is responsible to bear
in relation to the total amount at issue.
     11.12 Confidentiality. Subject to the obligations of Buyer to provide
disclosure to comply with federal securities laws, Buyer on the one hand, and
Seller, on the other hand (the party receiving confidential information and its
Authorized Representatives, the “Receiving Party”) will maintain in strict
confidence, and will cause its respective directors, officers, employees,
subsidiaries, agents, and advisors (collectively, “Authorized Representatives”)
to maintain in strict confidence, any confidential information disclosed by any
other party or its Authorized Representatives (the party disclosing confidential
information, the “Disclosing Party”) pursuant to the letter agreement, dated as
of April 12, 2006, between Buyer and Daniels & Associates, L.P., for the benefit
of Seller (the “Confidentiality Agreement”) or this Agreement, unless (a) such
information is already known to the Receiving Party or becomes generally
available to the public other than as a result of a disclosure in violation of
the Confidentiality Agreement or this provision or a disclosure by a Person
owing a duty of confidentiality to the Disclosing Party and known to the
Receiving Party, (b) the use of such confidential information is necessary to
make a required filing or obtain any consent or approval required for the
consummation of the transactions contemplated by this Agreement, (c) such
information is disclosed to the Receiving Party’s financial and legal advisors,
lenders and investors, solely for the purpose of assisting in the consummation
of the transactions contemplated by this Agreement and such Persons are advised
prior to such disclosure of the confidential nature of the information
disclosed, or (d) the furnishing or use of such information is required by or
necessary in connection with any Proceeding, applicable requirements of any
stock exchange, or applicable Law; provided, however that if the terms of this
Agreement and the transactions contemplated hereby or any confidential
information furnished by Seller must, in the reasonable judgment of Buyer’s
counsel, be disclosed pursuant to clause (b) or (d) above, then (i) the party
proposing to disclose or cause the disclosure of such information will notify
the Disclosing Party whose confidential information may be disclosed within a
reasonable period of time prior to such disclosure being made, (ii) the party
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will take all actions necessary or reasonably requested by the Disclosing Party
to ensure that such information is maintained confidential to the maximum extent
possible, (iii) the Disclosing Party will be given a reasonable opportunity to
participate in any process or Proceeding for the purpose of ensuring that such
information is maintained confidential to the maximum extent possible, and
(iv) the party proposing to disclose such information will reasonably cooperate
with the Disclosing Party in any such process or Proceeding, and otherwise take
such actions as reasonably are requested to the end that such information is
maintained confidential to the maximum extent possible. The provisions of this
Section 11.12 are intended to supplement and not to supersede or replace the
provisions of the Confidentiality Agreement, all provisions of which remain in
full force and effect except as modified above.
     11.13 Announcement. Subject to the obligations of Buyer to provide
disclosure to comply with federal securities laws, any public announcement,
press release or similar publicity with respect to this Agreement or the
transactions contemplated by this Agreement will be issued only at such time and
in such manner as mutually determined by the parties. Buyer and Seller
understand and agree that Buyer will publicly disclose, by means of a press
release and a report on Form 8-K filed with the Securities and Exchange
Commission, the execution and delivery of this Agreement and the principal terms
of the transaction contemplated hereby, including the Purchase Price, within
four business days after such execution and delivery and that Buyer may
subsequently file a copy of the Agreement with the Securities and Exchange
Commission. Buyer and Seller will consult with each other concerning the means
by which the employees, customers, and suppliers of Seller and others having
dealings with Seller will be informed of the execution of this Agreement and the
consummation of the transactions contemplated by this Agreement. The provisions
of this Section 11.13 are intended to supplement and not to supersede or replace
the provisions of the Confidentiality Agreement.
     11.14 Exclusivity.
     (a) In recognition of the time that will be expended and the expense that
will be incurred by Buyer in connection with the transactions contemplated
hereby, until such time, if any, as this Agreement is terminated pursuant to
Article 10, Seller will not and will not cause its officers, directors,
employees, attorneys, financial advisors, agents or other representatives to,
directly or indirectly, (a) encourage, solicit, engage in negotiations or
discussions about, or provide information with respect to, any inquiry or
proposal (an “Acquisition Proposal”) relating to (i) the possible direct or
indirect acquisition of all or any portion of the Business, whether through the
acquisition of the stock, other ownership interests in Seller, or all or
substantially all of the assets of Seller or any business or division of Seller,
or (ii) any business combination with or involving Seller or (b) discuss or
disclose the existence or terms of this Agreement (except as may be required by
Law, or is necessary in connection with the transactions contemplated hereby,
and except to the extent that such information becomes public other than as
result of a violation hereof) with or to any Person other than Buyer without the
prior written consent of Buyer. Nothing contained in this Agreement shall
prohibit Seller or its Board of Directors from disclosing to its stockholders
any information which, after consultation with its outside legal and financial
advisors, is required to be disclosed in order for the Board of Directors to
comply with its fiduciary obligations in seeking approval of the stockholders of
this Agreement, or is otherwise required, under applicable Law.

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     (b) Notwithstanding anything to the contrary contained in this
Section 11.14, if, at any time prior to the shareholder approval contemplated by
Section 9.4 of this Agreement, Seller receives an unsolicited Acquisition
Proposal that the Board of Directors of Seller determines in good faith, after
receiving the advice of its financial advisers and legal counsel, constitutes a
Superior Proposal, then Seller shall be permitted to (i) engage in negotiations
regarding such Acquisition Proposal with the Person that has submitted it (the
“Bidder”), (ii) furnish to the Bidder confidential information relating to
Seller and the Business, subject to the execution and delivery of an appropriate
nondisclosure agreement with the Bidder at least as restrictive as Section 11.12
of this Agreement, and (iii) if required by fiduciary duties, make a change in
or withdraw the recommendation of the Board of Directors to the shareholders of
Seller (or decline to make such a recommendation, if not previously made) with
respect to the approval of the transaction contemplated by this Agreement (a
“Change in Recommendation”); provided, however, that within five (5) business
days after receipt of such Acquisition Proposal, Seller shall provide to Buyer a
summary of the material terms and conditions of such Acquisition Proposal,
including the identity of the Bidder, and the same confidential information
disclosed to the Bidder if such confidential information has not previously been
disclosed to Buyer. Seller shall give written notice to Buyer promptly after any
decision by Seller’s Board of Directors to make any Change in Recommendation,
and Seller shall not submit such Change in Recommendation to its shareholders
for at least ten (10) business days after the date of such notice, during which
period Buyer shall have the opportunity to propose revisions to the terms of
this Agreement (or to make an alternative proposal) that it believes would cause
the Bidder’s Acquisition Proposal not to constitute a Superior Proposal and, if
Buyer makes such a proposal, Seller’s Board of Directors shall consider such
proposal in good faith. Seller shall be permitted to disclose to the Bidder a
summary of the material terms and conditions of any revised or alternative
proposal submitted by Buyer pursuant to this Section 11.14(b), subject to the
terms of the nondisclosure agreement contemplated by clause (ii) of the first
sentence of this Section 11.14(b).
     11.15 Audit Fees. Buyer acknowledges that the requirement that Seller
obtain an audit of the Financial Statements is a result of Buyer’s reporting
obligations under federal securities laws. Accordingly, Buyer agrees to pay the
fees and expenses of Seller’s independent public accounting firm related to such
audit and any additional audits that may be required in order to satisfy the
condition set forth in Section 8.8 of this Agreement, other than the audit of
the Annual Financial Statements, up to a maximum amount of Thirty-Five Thousand
Dollars ($35,000) (the “Audit Fees”). Such amounts shall be payable by Buyer to
Seller in the form of an adjustment to the Purchase Price payable at the Closing
pursuant to Section 3.1(b). Seller shall bear the costs of the audit of the
Annual Financial Statements.
     11.16 Auditor’s Consent and Audit Preparation. Seller shall cooperate with
Buyer and shall use its commercially reasonable efforts to cause its independent
public accounting firm, at Buyer’s expense, to deliver all necessary consents
for inclusion of such firm’s audit report on Seller’s consolidated financial
statements to be included, to the extent required, in Buyer’s SEC filings from
time to time. Seller shall conduct an inventory observation at year-end that is
observed and recorded by its independent public accounting firm and shall take
all such other steps necessary in order for a subsequent audit of Seller’s
financial statements as of and for the year ended December 31, 2006 to be
conducted by an independent public accounting firm.

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ARTICLE 12
CLOSING
     12.1 Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall be held at the offices of Leonard, Street and
Deinard, Professional Association, at 10:00 a.m. (Eastern time) on the first
business day after all conditions set forth in Article 8 and Article 9 to be
satisfied before Closing have been satisfied, or such other time or location as
is mutually agreeable to the parties (the “Closing Date”). The Closing shall be
considered to have been effective at 5:00 p.m. (Eastern time) on the Closing
Date.
ARTICLE 13
INDEMNIFICATION
     13.1 Seller’s Indemnification. From and after the Closing Date, Seller
shall indemnify and hold harmless Buyer and its directors, officers, and
controlling persons (the “Buyer Indemnified Parties”), from and against any and
all actions, suits, claims, demands, debts, liabilities, obligations, losses,
damages, costs and expenses, including without limitation reasonable attorney’s
fees, expenses and court costs, arising out of or caused by, directly or
indirectly, any of all of the following (collectively, the “Losses”):
     (a) Misrepresentation. Any misrepresentation, breach, inaccuracy or failure
of any warranty or representation made by Seller in or pursuant to this
Agreement or any schedule, exhibit or other agreement or document contemplated
by this Agreement.
     (b) Nonperformance. Any failure or refusal by Seller to satisfy or perform
any covenant, term or condition of this Agreement or any schedule, exhibit or
other agreement or document contemplated by this Agreement that is required to
be satisfied or performed by it.
     (c) Non-Assumed Obligations. Any: (a) Excluded Liability; and (b) any
Obligation that may be imposed upon any of the Buyer Indemnified Parties as a
result of any Law under which any of the Buyer Indemnified Parties may have
successor liability for any Tax or other Obligations of Seller (collectively,
the “Non-Assumed Obligations”).
     (d) Unasserted Claims. Any Proceeding arising out of, caused by or based
upon any act or omission of Seller at any time before the Closing other than the
Assumed Liabilities.
     (e) Intentional Misrepresentation, Fraud or Criminal Matter. Any
intentional misstatement, fraud or crime committed by Seller.
     (f) Proceedings by Employees. Any Proceeding against any of the Buyer
Indemnified Parties by or on behalf of any employee of Seller who is not hired
by Buyer or by or on behalf of any Hired Active Employee that relates to matters
or events that occurred prior to the Closing.
     13.2 Buyer’s Indemnification. From and after the Closing Date, Buyer shall
indemnify and hold harmless Seller and its directors, officers and controlling
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     Indemnified Parties”), from and against any and all Losses arising out of
or caused by, directly or indirectly, any of the following:
     (a) Misrepresentation. Any misrepresentation, breach, inaccuracy or failure
of any warranty or representation made by Buyer in or pursuant to this Agreement
or any schedule, exhibit or other agreement or document contemplated by this
Agreement.
     (b) Nonperformance. Any failure or refusal by Buyer to satisfy or perform
any covenant, term or condition of this Agreement or any schedule, exhibit or
other agreement or document contemplated by this Agreement that is required to
be satisfied or performed by Buyer.
     (c) Assumed Liabilities. Any failure or refusal of Buyer to satisfy or
perform any of the Assumed Liabilities.
     (d) Unasserted Claim. Any Proceeding arising out of, caused by or based
upon any act or omission of Buyer at any time after the Closing Date.
     13.3 Indemnification Procedures. The following procedures shall be followed
with respect to each event, occurrence or matter (each, an “Indemnification
Matter”) as to which any Buyer Indemnified Party or Seller Indemnified Party (in
either case, an “Indemnitee”) is entitled to indemnification from Seller or
Buyer, as the case may be (referred to, as the case may be, as “Indemnitor”)
under this Article 13.
     (a) Notice of Claims. If: (a) a claim is made by a third party against any
party that is subject to a right of indemnification hereunder, (b) any party
hereto becomes aware of facts or circumstances establishing that such party has
experienced or incurred Losses or will experience or incur Losses subject to
indemnification under this Article 13, or (c) any party becomes aware of any
facts or events that could give rise to indemnification by an Indemnitor
hereunder, then such Indemnitee shall give to Indemnitor written notice of such
claim (“Indemnification Notice”) as soon as reasonably practicable but in no
event more than thirty (30) days after the Indemnitee has received notice of or
obtains actual knowledge of such claim (provided that failure to give such
notice shall not limit the Indemnitor’s indemnification obligation hereunder
except to the extent that the delay in giving, or failure to give, the notice
adversely affects the Indemnitor’s ability to defend against the claim). To the
extent practicable, the Indemnification Notice will describe with reasonable
specificity (1) the nature of and the basis for the indemnification claim,
including any relevant supporting documentation, and (2) an estimate of all
Losses associated therewith.
     (b) Procedure in Event of Indemnification Claim. If an Indemnitee desires
to assert an indemnification claim pursuant to Section 13.1 or Section 13.2, the
Indemnitee promptly shall provide an Indemnification Notice to the Indemnitor in
accordance with the procedures set forth in Section 13.3(a) hereof. If the
Indemnitor does not object within twenty (20) days after receipt of the
Indemnification Notice to the propriety of the indemnification claims described
as being subject to indemnification pursuant to Section 13.1 or Section 13.2 or
the amount of Losses asserted in the Indemnification Notice, the indemnification
claims described in the Indemnification Notice shall be deemed final and binding
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If the Indemnitor contests the propriety of an indemnification claim described
on the Indemnification Notice and/or the amount of Losses associated with such
claim, then the Indemnitor shall deliver to the Indemnitee a written notice
detailing with reasonable specificity all specific objections the Indemnitor has
with respect to the indemnification claims contained in the Indemnification
Notice (“Indemnification Objection Notice”). If the Indemnitor and the
Indemnitee are unable to resolve the disputed matters described in the
Indemnification Objection Notice within fifteen (15) business days after the
date the Indemnitee received the Indemnification Objection Notice, the disputed
matters will be subject to the dispute resolution procedures set forth in
Section 14.13 hereof. Any undisputed indemnification claims contained in the
Indemnification Notice shall be deemed to be final and binding upon the
Indemnitor and shall constitute a Permitted Indemnification Claim. If the
procedures in Section 14.13 result in all or any portion of an indemnification
claim properly being subject to indemnification pursuant to Section 13.1 or
Section 13.2 such claim or portion thereof shall be final and binding upon
Indemnitor and shall constitute a Permitted Indemnification Claim.
     (c) Defense of Third Party Claims. An Indemnitee against whom a third party
claim is made shall give the Indemnitor prompt notice of such claim so that the
Indemnitor shall have an opportunity to defend such claim, at the Indemnitor’s
sole expense and with counsel selected by the Indemnitor and reasonably
satisfactory to the Indemnitee; provided, however, that Indemnitee may
participate in such defense through counsel selected by the Indemnitee and
reasonably satisfactory to Indemnitor and paid at Indemnitee’s sole expense.
Failure of an Indemnitor to give an Indemnitee written notice of its election to
defend such claim within twenty (20) days after receipt of notice thereof shall
be deemed a waiver by such Indemnitor of its right to defend such claim. If an
Indemnitor shall elect not to assume the defense of such claim (or if such
Indemnitor shall be deemed to have waived its right to defend such claim), the
Indemnitee against whom such claim is made shall have the right, but not the
obligation, to undertake the defense of the claim through counsel chosen by the
Indemnitee, but shall not thereby waive any right to indemnity therefor pursuant
to this Agreement; provided, however, that if the Indemnitee undertakes the
defense of such claim, it shall defend such claim in good faith and shall
apprise the Indemnitor from time to time as the Indemnitee deems appropriate of
the progress of such defense. The Indemnitee shall not dispose of such claim or
enter into any settlement without first obtaining the written consent of the
Indemnitor (which consent shall not be unreasonably withheld), which settlement
or other disposition shall include as an unconditional term thereof the giving
by the claimant to the Indemnitor against whom such claim is made of a release
from all liability in respect of such claim (which release shall exclude only
any obligations incurred in connection with any such settlement). The Indemnitor
shall be obligated to pay the reasonable attorney’s fees and expenses of the
Indemnitee to the extent such fees and expenses relate to claims as to which
indemnification is payable under Section 13.1 or Section 13.2. If one or more of
the Indemnitors assumes the defense of such claim, the obligation of such
Indemnitor hereunder as to such claim shall include taking all steps necessary
in the defense or settlement of such claim. The Indemnitor, in the defense of
such claim, shall not consent to the entry of any judgment or enter into any
settlement (except with the written consent of the Indemnitee, which shall not
be unreasonably withheld) which does not include as an unconditional term
thereof the giving by the claimant to the Indemnitee against whom such claim is
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liability in respect of such claim (which release shall exclude only any
obligations incurred in connection with any such settlement). The Indemnitor,
then the Indemnitee shall make available, at the Indemnitor’s expense, all
information and assistance that the Indemnitor reasonably may request.
     (d) Payments. All amounts owed by the Indemnitor to the Indemnitee (if any)
shall be paid in full within fifteen (15) business days following such time as a
claim or portion thereof becomes final and binding upon the Indemnitor and
constitutes a Permitted Indemnification Claim.
     13.4 Survival Periods. For purposes of this Agreement, a “Survival Period”
shall be the period during which a claim for indemnification may be asserted
under this Agreement by an Indemnitee. The Survival Periods under this Agreement
shall commence on the date of this Agreement and shall terminate as follows:
     (a) The Survival Period for the representations, warranties, covenants and
obligations of Buyer and Seller set forth in this Agreement shall terminate
eighteen (18) months following the Closing Date; provided, however, that the
Survival Period for (a) representations, warranties, covenants and obligations
arising under Section 4.1 (Organization), Section 4.2 (Effect of Agreement),
Section 4.6 (Acquired Assets; Sufficiency, other than the first and last
sentences), Section 4.22 (Related Party Transactions), Section 4.23 (Brokerage
Fees), Section 5.1 (Organization), Section 5.2 (Effect of Agreement), and
Section 5.3 (Brokerage Fees) (collectively, the “Fundamental Representations”)
shall continue indefinitely except as limited by Law (including any applicable
statutes of limitation, extensions and tollings thereof); (b) representations,
warranties, covenants and obligations arising under Section 4.16 (Employee
Benefit Plans), Section 4.18 (Taxes), Section 4.26 (Environmental Matters) shall
continue for a period specified in the applicable statute of limitations; and
(c) covenants and obligations that require performance after Closing shall
continue until performed. Notwithstanding the foregoing provisions or anything
to the contrary in this Agreement, a party’s rights to bring legal and equitable
claims for fraud or intentional misrepresentation shall survive for thirty
(30) days after the expiration of the statute of limitations applicable to
(A) such fraud or intentional misrepresentation itself or (B) the underlying
matters with respect to which fraud or intentional misrepresentation was
committed, whichever is later.
     (b) No Indemnitor shall have any liability with respect to any
Indemnification Matter unless an Indemnitee gives an Indemnification Notice with
respect thereto within the Survival Period. Notwithstanding the foregoing, if
prior to the close of business on the last day of the applicable Survival
Period, an Indemnitor shall have been properly notified as provided hereunder of
a claim for indemnity hereunder and such claim shall not have been finally
resolved or disposed of at such date, such claim shall continue to survive and
shall remain a basis for indemnity hereunder until such claim is finally
resolved or disposed of in accordance with the terms hereof.
     (c) The representations and warranties contained in this Agreement or in
any certificate or other writing delivered in connection with this Agreement
shall survive for the periods set forth in this Section 13.4 and shall in no
event be affected by any investigation, inquiry or examination made for or on
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Knowledge of any party’s Authorized Representatives or the acceptance by any
party of any certificate or opinion hereunder.
     13.5 Shareholder/Partner Suits. No party shall have any liability under
this Article 13 or otherwise for suits brought by the other party’s shareholders
or partners.
     13.6 Limitations on Indemnification Obligation. The indemnification
obligations of this Article 13 are subject to the following limitations:
     (a) No indemnification pursuant to Section 13.1 shall be made unless the
aggregate amount of Losses incurred by the Buyer Indemnified Parties exceeds One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00) (the “Buyer Threshold
Amount”), and, in such event, indemnification shall be made only to the extent
that the aggregate amount of Losses incurred by the Buyer Indemnified Parties
exceeds the Buyer Threshold Amount; provided that, the Buyer Threshold Amount
shall not limit indemnification with respect to Losses related to breaches of
the Fundamental Representations or any facts or circumstances which constitute
fraud or intentional misrepresentation or failure to perform or satisfy any of
the Non-Assumed Obligations.
     (b) In the absence of intentional misrepresentation, fraud or criminal
matters on the part of Seller or Losses related to breaches of the Fundamental
Representations, in no event shall Seller’s aggregate obligation to indemnify
the Buyer Indemnified Parties pursuant to Section 13.1 with respect to
Indemnification Matters other than those involving the Excluded Liabilities,
exceed Three Million and No/100 Dollars ($3,000,000.00).
     (c) If any representation, warranty or covenant which is qualified by
materiality or Material Adverse Effect is breached, the amount of any Loss
related to a breach of any such representation or warranty shall be determined
without regard to any materiality qualification (including terms such as
“material” and “Material Adverse Effect”) set forth therein.
     13.7 Insurance and Tax Benefits. The amount of any Losses incurred by an
Indemnitee shall be reduced by any amount received by the Indemnitee with
respect thereto under any insurance coverage or pursuant to any tax benefit
available to the Indemnitee relating thereto. The Indemnitees shall use
reasonable efforts to collect any amounts available under such insurance
coverage and shall take advantage of such tax benefit.
     13.8 Exclusive Remedy. The right of each party hereto to assert
indemnification claims and receive indemnification payments pursuant to this
Article 13 shall be the sole and exclusive right and remedy exercisable by such
party with respect to any matter, except (a) for the right to seek specific
performance of any of the agreements and covenants contained herein, and (b) in
the event of fraud or intentional breach.
ARTICLE 14
OTHER PROVISIONS
     14.1 Fees and Expenses. Each party shall pay all of the fees and expenses
incurred by it in negotiating and preparing this Agreement (and all of the
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documents and instruments executed in connection herewith) and in consummating
the transactions contemplated by this Agreement and the Related Agreements.
Seller shall be responsible for all fees paid or payable to Daniels &
Associates, L.P. in connection with the transactions contemplated by this
Agreement.
     14.2 Notice. All notices, consents or other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given: (a) when delivered personally or (b) upon
receipt of proof of delivery indicating the date of delivery after being sent by
a reputable overnight delivery service, postage or delivery charges prepaid, to
the parties at their respective addresses stated on the first page of this
Agreement. Notices may also be given by facsimile and shall be effective on the
date transmitted if confirmed within twenty four (24) hours thereafter by a
signed original sent in the manner provided in the preceding sentence. Notice to
Seller at the address specified in the preamble to this Agreement or to
facsimile number (404) 592-4004 to the attention of Antonio DiMilia, shall
suffice as notice to Seller, provided that a copy thereof is simultaneously sent
to Carrington, Coleman, Sloman & Blumenthal, L.L.P., 901 Main Street,
Suite 5500, Dallas, Texas 75202, facsimile number (214) 855-1333, attention Kenn
W. Webb, Esquire.
     Notice to Buyer at the address specified in the preamble to this Agreement
or to facsimile number (605) 988-2910 to the attention of James G. Naro, shall
suffice as notice to Buyer, provided that a copy thereof is simultaneously sent
to Leonard, Street and Deinard, Professional Association, 150 South Fifth
Street, Suite 2300, Minneapolis, MN 55402, facsimile number (612) 335-1657,
attention Mark S. Weitz, Esquire. Any party may change its address for notice
and the address to which copies must be sent by giving notice of the new
addresses to the other party in accordance with this Section 14.2, except that
any such change of address notice shall not be effective unless and until
received.
     14.3 Entire Understanding. This Agreement, together with the Exhibits and
Schedules hereto, states the entire understanding among the parties with respect
to the subject matter hereof, and supersedes all prior oral and written
communications and agreements, and all contemporaneous oral communications and
agreements, with respect to the subject matter hereof, including without
limitation all letters of intent previously entered into between the parties
hereto. No amendment or modification of this Agreement shall be effective unless
in writing and signed by the party against whom enforcement is sought.
     14.4 Parties in Interest. Neither of the parties may assign this Agreement
or any rights or obligations under this Agreement without the prior written
consent of the other party, provided that Buyer may assign this Agreement or any
rights or obligations under this Agreement to a subsidiary of Buyer without the
prior written consent of Seller and provided further that Buyer or its assignee
may make a collateral assignment of its rights, but not its obligations, under
this Agreement to any of its financing sources. This Agreement shall bind,
benefit, and be enforceable by and against the parties hereto, and their
respective successors and permitted assigns.
     14.5 Waivers. Except as otherwise expressly provided herein, no waiver with
respect to this Agreement shall be enforceable unless in writing and signed by
the party against whom enforcement is sought. Except as otherwise expressly
provided herein, no failure to exercise, delay in exercising, or single or
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no course of dealing between or among any of the parties, shall constitute a
waiver of, or shall preclude any other or further exercise of, any right, power
or remedy.
     14.6 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.
     14.7 Counterparts; Facsimile. This Agreement may be executed in any number
of counterparts, and delivered by facsimile or other form of electronic
communication, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
     14.8 Section Headings. The section and subsection headings in this
Agreement are used solely for convenience of reference, do not constitute a part
of this Agreement, and shall not affect its interpretation.
     14.9 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits. Unless a
particular context clearly requires otherwise, the words “hereof” and
“hereunder” and similar references refer to this Agreement in its entirety and
not to any specific section or subsection of this Agreement.
     14.10 CONTROLLING LAW. THIS AGREEMENT IS MADE UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
     14.11 No Third-Party Beneficiaries. No provision of this Agreement is
intended to or shall be construed to grant or confer any right to enforce this
Agreement, or any remedy for breach of this Agreement, to or upon any Person
other than the parties hereto, including, but not limited to, any customer,
prospect, supplier, employee, contractor, salesman, agent or representative of
Seller.
     14.12 Neutral Construction. The parties have negotiated this Agreement and
all of the terms and conditions contained in this Agreement in good faith and at
arms’ length, and each party has been represented by counsel during such
negotiations. No term, condition, or provision contained in this Agreement shall
be construed against any party or in favor of any party: (a) because such party
or such party’s counsel drafted, revised, commented upon, or did not comment
upon, such term, condition, or provision; or (b) because of any presumption as
to any inequality of bargaining power between or among the parties. Furthermore,
all terms, conditions, and provisions contained in this Agreement shall be
construed and interpreted in a manner which is consistent with all other terms,
conditions, and provisions contained in this Agreement.
     14.13 Dispute Resolution. If any dispute arises: (a) out of or relating to,
this Agreement or any alleged breach thereof; or (b) with respect to any of the
transactions or events contemplated hereby (a “Dispute”), the party desiring to
resolve such Dispute shall deliver a written notice describing such Dispute with
reasonable specificity to the other party (the “Dispute Notice”). If any party
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any Indemnifying Party delivers to any Indemnitee an Indemnification Objection
Notice pursuant to Section 13.3, the parties involved in the Dispute shall meet
at least twice within the twenty (20) day period commencing with the date of the
Dispute Notice or the Indemnification Objection Notice (as the case may be) and
in good faith shall attempt to resolve such Dispute.
     If the Dispute is not resolved pursuant to the above paragraph, the Dispute
shall be settled by arbitration conducted in Minneapolis, Minnesota, or such
other place as mutually agreed to by the parties, which shall be in accordance
with the rules and procedures of the American Arbitration Association then in
effect with respect to commercial disputes; provided that discovery shall be
limited to depositions and interrogatories, document production and other
written discovery and provided that the arbitration shall be conducted by three
arbitrators, with each of Buyer and Seller selecting one arbitrator and the two
so selected shall select a third (and if they are unable to agree, such third
arbitrator shall be appointed by AAA). The arbitration of such issues, including
the determination of any amount of damages suffered by any party hereto by
reason of the acts or omissions of any party, shall be final and binding upon
all parties. Notwithstanding the foregoing, the arbitrator shall not be
authorized to award punitive damages with respect to any such claim or
controversy, nor shall any party seek punitive damages relating to any matter
under, arising out of or relating to this Agreement in any other forum, provided
that the arbitrator may award punitive damages in the event a third party claim
for which a party is seeking indemnification includes a punitive damages claim.
Except as otherwise set forth in the Agreement, the cost of any arbitration
hereunder, including the cost of the record or transcripts thereof, if any,
administrative fees, and all other fees involved including reasonable attorneys’
fees incurred by the party determined by the arbitrator to be the prevailing
party, shall be paid by the party determined by the arbitrator not to be the
prevailing party, or otherwise allocated in an equitable manner as determined by
the arbitrator. The parties shall use reasonable efforts to enable the
arbitrator to render its decision no later than sixty (60) days after the
submission of the Dispute or Indemnification Objection Notice to the arbitrator.
     14.14 Schedules. Seller’s disclosures contained in the schedules described
in Section 2.1(b)(ii), Article 4 and Section 8.3 of this Agreement are made as
of August 31, 2006. Not later than ten (10) days prior to the Closing, Seller
shall supplement or amend all schedules as may be necessary to update the
disclosures contained therein and provide all documentary materials referred to
in such amended schedules and, as so updated, such disclosures shall be deemed
to be made as of the Closing Date. Such amended or supplemented schedules shall
not disclose the occurrence of any Material Adverse Effect or any material
breach of this Agreement on the date hereof or thereafter. For purposes of this
Agreement, including without limitation for purposes of determining whether the
conditions set forth in Section 8.1 have been fulfilled and for purposes of
Section 13.1(a), such schedules shall be deemed to include all information in
the schedules as so supplemented or amended which are accepted by Buyer based on
the standard set forth in the preceding sentence. Information contained on any
schedule to this Agreement that is also responsive to the requirements of any
other schedule shall also be deemed to have been disclosed on such other
schedule if it is reasonably apparent that such disclosure relates to such other
schedule, whether or not specifically set forth or cross-referenced therein.
[Remainder of Page Intentionally Blank]

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EXECUTION COPY
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.

                  SELLER:    
 
                StayOnline, Inc.    
 
           
 
  By:   /s/ Antonio DiMilia
 
Antonio DiMilia, President and Chief Executive Officer    
 
                BUYER:    
 
                LodgeNet Entertainment Corporation    
 
           
 
  By:   /s/ James G. Naro    
 
           
 
      James G. Naro, Senior Vice President, General Counsel, Secretary and Chief
Compliance Officer    

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