Document:

exv10w33

 

EXECUTION COPY

Exhibit 10.33

ASSET PURCHASE AGREEMENT

By and Between

StayOnline, Inc.,

a Delaware corporation

as Seller

and

LodgeNet Entertainment Corporation,

a Delaware corporation

as Buyer

 

 

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	 

i

 

	 	 	 	 	 
	 	 	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	 

iii

 

	 	 	 	 	 
	 	 	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 ThirdParty Beneficiaries
	 	 	44	 
	14.12 Neutral Construction
	 	 	44	 
	14.13 Dispute Resolution
	 	 	44	 
	14.14 Schedules
	 	 	45	 

iv

 

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

v

 

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

vi

 

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.

 

 

     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.

2

 

     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

3

 

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.

4

 

     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 filed with or submitted to, any Governmental

5

 

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.

6

 

     (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

7

 

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

8

 

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

9

 

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

10

 

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-half by Seller and one-

11

 

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.

13

 

     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

14

 

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 any other Person,
directly or indirectly,

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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
currently in compliance with all formal requirements of Law (including the

16

 

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 local laws
governing employment, or other material claim of any nature

20

 

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 or other
amount to, or

21

 

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 may
reasonably request; and (d) otherwise cooperate and assist, to the

23

 

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

24

 

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

25

 

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

31

 

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

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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 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
proposing to disclose such information

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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.

37

 

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 persons (the “Seller

38

 

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 upon the Indemnitor (the
“Permitted Indemnification Claims”).

39

 

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 made of a release from all

40

 

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 behalf of any Party, or the

41

 

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 Related Agreements and other

42

 

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 partial exercise of any right, power or remedy by any party, and

43

 

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 delivers a Dispute
Notice pursuant to this Section 14.13, or if

44

 

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]

45

 

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

	 	 	 	 	 
	 	SELLER:

StayOnline, Inc.

 	 
	 	By:  	 	 
	 	 	Antonio DiMilia, President and 	 
	 	 	Chief Executive Officer 	 
	 
	 	BUYER:

LodgeNet Entertainment Corporation

 	 
	 	By:  	 	 
	 	 	James G. Naro, Senior Vice President, 	 
	 	 	General Counsel, Secretary and Chief Compliance Officer 	 
	 

46exv10w34

 

Exhibit 10.34

EXECUTION COPY

STOCK PURCHASE AGREEMENT

by and among

LODGENET ENTERTAINMENT CORPORATION

and

LIBERTY SATELLITE & TECHNOLOGY, INC.

and

LIBERTY MEDIA CORPORATION

December 13, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I DEFINITIONS

	 	 	1	 
	Section 1.1.

	 	Definitions.
	 	 	1	 
	Section 1.2.

	 	Tax Terms.
	 	 	8	 
	Section 1.3.

	 	Terms Generally.
	 	 	8	 
	ARTICLE II PURCHASE AND
SALE OF SHARES; CLOSING

	 	 	9	 
	Section 2.1.

	 	Purchase and Sale of Shares.
	 	 	9	 
	Section 2.2.

	 	Purchase Price.
	 	 	9	 
	Section 2.3.

	 	Adjustment.
	 	 	9	 
	Section 2.4.

	 	Closing.
	 	 	11	 
	Section 2.5.

	 	Closing Deliveries.
	 	 	11	 
	Section 2.6.

	 	Stock Adjustment.
	 	 	12	 
	ARTICLE III REPRESENTATIONS
AND WARRANTIES OF SELLER
AND LIBERTY
REGARDING THE COMPANY AND
ITS SUBSIDIARIES

	 	 	12	 
	Section 3.1.

	 	Organization, Qualification and Corporate Power.
	 	 	12	 
	Section 3.2.

	 	Capitalization.
	 	 	12	 
	Section 3.3.

	 	Subsidiaries and Equity Affiliates.
	 	 	13	 
	Section 3.4.

	 	Financial Statements.
	 	 	13	 
	Section 3.5.

	 	Assets and Liabilities of the Company.
	 	 	14	 
	Section 3.6.

	 	No Undisclosed Liabilities.
	 	 	15	 
	Section 3.7.

	 	Noncontravention; Consents.
	 	 	15	 
	Section 3.8.

	 	Compliance with Legal Requirements.
	 	 	15	 
	Section 3.9.

	 	Title to Assets.
	 	 	15	 
	Section 3.10.

	 	Intellectual Property.
	 	 	16	 
	Section 3.11.

	 	Real Property; Real Property Leases.
	 	 	16	 
	Section 3.12.

	 	Contracts.
	 	 	17	 
	Section 3.13.

	 	Litigation.
	 	 	19	 
	Section 3.14.

	 	Environmental, Health, and Safety Matters.
	 	 	19	 
	Section 3.15.

	 	Employees.
	 	 	20	 
	Section 3.16.

	 	Labor Relations.
	 	 	20	 
	Section 3.17.

	 	Employee Benefits.
	 	 	20	 
	Section 3.18.

	 	Insurance.
	 	 	21	 
	Section 3.19.

	 	Related Party Transactions.
	 	 	22	 
	Section 3.20.

	 	Brokers’ Fees.
	 	 	22	 
	Section 3.21.

	 	Absence of Certain Changes or Events.
	 	 	22	 
	ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES

	 	 	22	 
	Section 4.1.

	 	Organization of Seller.
	 	 	22	 
	Section 4.2.

	 	Authorization; Binding Effect.
	 	 	23	 
	Section 4.3.

	 	Noncontravention; Consents.
	 	 	23	 
	Section 4.4.

	 	Shares.
	 	 	23	 
	Section 4.5.

	 	Brokers’ Fees.
	 	 	23	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 4.6.

	 	Investment Intent.
	 	 	23	 
	Section 4.7.

	 	Disclosure of Information.
	 	 	24	 
	Section 4.8.

	 	Accredited Investor.
	 	 	24	 
	Section 4.9.

	 	Restricted Securities.
	 	 	24	 
	ARTICLE V REPRESENTATIONS
AND WARRANTIES OF BUYER

	 	 	24	 
	Section 5.1.

	 	Organization of Buyer.
	 	 	24	 
	Section 5.2.

	 	Authorization; Binding Effect; Financial Capability.
	 	 	24	 
	Section 5.3.

	 	Noncontravention; Consents.
	 	 	24	 
	Section 5.4.

	 	Investment Intent.
	 	 	25	 
	Section 5.5.

	 	Disclosure of Information.
	 	 	25	 
	Section 5.6.

	 	Accredited Investor.
	 	 	25	 
	Section 5.7.

	 	Restricted Securities.
	 	 	25	 
	Section 5.8.

	 	Certain Proceedings.
	 	 	25	 
	Section 5.9.

	 	Brokers’ Fees.
	 	 	25	 
	Section 5.10.

	 	Delivery of Share Consideration.
	 	 	25	 
	Section 5.11.

	 	SEC Filings; Financial Information.
	 	 	26	 
	ARTICLE VI PRE-CLOSING
COVENANTS

	 	 	26	 
	Section 6.1.

	 	Commercially Reasonable Efforts.
	 	 	26	 
	Section 6.2.

	 	Notices and Consents.
	 	 	27	 
	Section 6.3.

	 	Operation of Business.
	 	 	27	 
	Section 6.4.

	 	Access and Investigation.
	 	 	28	 
	Section 6.5.

	 	Notification.
	 	 	29	 
	Section 6.6.

	 	Subsequent Financial Statements.
	 	 	29	 
	Section 6.7.

	 	Subsequent Filings.
	 	 	29	 
	Section 6.8.

	 	Non-Solicitation.
	 	 	29	 
	Section 6.9.

	 	Assistance with Financing.
	 	 	30	 
	Section 6.10.

	 	Assistance with Acquisition of Minority Ownership of THN.
	 	 	 30	 
	ARTICLE VII OTHER MATTERS

	 	 	31	 
	Section 7.1.

	 	Understanding Regarding Disclaimer
of Warranties of Buyer.
	 	 	31	 
	Section 7.2.

	 	Understanding Regarding Disclaimer
of Warranties of Seller.
	 	 	31	 
	Section 7.3.

	 	HSR Act Filings.
	 	 	32	 
	Section 7.4.

	 	Special Actions.
	 	 	32	 
	Section 7.5.

	 	Confidentiality.
	 	 	32	 
	Section 7.6.

	 	Employee Matters.
	 	 	33	 
	Section 7.7.

	 	Further Cooperation.
	 	 	36	 
	Section 7.8.

	 	Non-Disparagement.
	 	 	36	 
	Section 7.9.

	 	Company Audited Financial Statements.
	 	 	37	 
	ARTICLE VIII CONDITIONS TO CLOSING

	 	 	37	 
	Section 8.1.

	 	Conditions to Obligation of Buyer.
	 	 	37	 
	Section 8.2.

	 	Conditions to Obligation of Seller.
	 	 	39	 
	ARTICLE IX TAX MATTERS

	 	 	40	 
	Section 9.1.

	 	Tax Definitions.
	 	 	40	 
	Section 9.2.

	 	Tax Representations.
	 	 	41	 
	Section 9.3.

	 	Tax Covenants.
	 	 	43	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 9.4.

	 	Tax Sharing Agreements.
	 	 	43	 
	Section 9.5.

	 	Tax Refunds and Credits.
	 	 	43	 
	Section 9.6.

	 	Cooperation on Tax Matters.
	 	 	43	 
	Section 9.7.

	 	Certain Taxes and Fees.
	 	 	44	 
	ARTICLE X TERMINATION

	 	 	44	 
	Section 10.1.

	 	Termination of Agreement.
	 	 	44	 
	Section 10.2.

	 	Termination Date.
	 	 	45	 
	Section 10.3.

	 	Effect of Termination.
	 	 	45	 
	ARTICLE XI INDEMNIFICATION

	 	 	46	 
	Section 11.1.

	 	Survival.
	 	 	46	 
	Section 11.2.

	 	General Indemnification.
	 	 	47	 
	ARTICLE XII MISCELLANEOUS

	 	 	52	 
	Section 12.1.

	 	Public Announcements.
	 	 	52	 
	Section 12.2.

	 	No Third-Party Beneficiaries.
	 	 	52	 
	Section 12.3.

	 	Successors and Assigns.
	 	 	52	 
	Section 12.4.

	 	Entire Agreement.
	 	 	53	 
	Section 12.5.

	 	Notices.
	 	 	53	 
	Section 12.6.

	 	Governing Law; Jurisdiction.
	 	 	54	 
	Section 12.7.

	 	Amendments and Waivers.
	 	 	54	 
	Section 12.8.

	 	Severability.
	 	 	54	 
	Section 12.9.

	 	Expenses.
	 	 	54	 
	Section 12.10.

	 	Construction.
	 	 	54	 
	Section 12.11.

	 	Incorporation of Exhibits and Schedules.
	 	 	55	 
	Section 12.12.

	 	Headings.
	 	 	55	 
	Section 12.13.

	 	Facsimile; Counterparts Signatures.
	 	 	55	 

iii

 

LIST OF SCHEDULES

	 
	Schedules
	3.3 Subsidiaries and Equity Affiliates

	3.7 Notices and Consents

	3.9 Permitted Encumbrances

	3.10 Intellectual Property

	3.11 Real Property Leases

	3.12 Contracts

	3.17(a) Employee Benefit Plans

	3.17(c) Multiemployer Plans

	3.17(g) Non-US Plans

	3.18 Insurance

	3.19(a) Contracts and Arrangements Involving Related Parties

	3.19(b) Master Purchasing Arrangements

	5.11 Current Filings

	6.3 Permitted Actions by Seller, the Company and its Subsidiaries

	7.6 Employee Matters

	8.1(j) Required Content Agreements

	9.2(c) Tax Consolidated Groups

	9.4 Tax Sharing Agreements

	Disclosure Schedule

iv

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of December 13,
2006 (the “Agreement Date”), by and among LodgeNet Entertainment Corporation, a Delaware
corporation (“Buyer”), Liberty Satellite & Technology, Inc., a Delaware corporation
(“Seller”), and Liberty Media Corporation, a Delaware corporation (“Liberty”).
Buyer, Liberty and Seller are referred to individually as a “Party” and collectively as the
“Parties.”

RECITALS

     A. Liberty owns 100% of the issued and outstanding shares of capital stock of Seller. Seller
owns 100% of the issued and outstanding shares of capital stock of Ascent Entertainment Group,
Inc., a Delaware corporation (the “Company”). The Company owns 100% of the issued and
outstanding shares of capital stock of On Command Corporation, a Delaware corporation
(“ONCO”).

     B. Seller desires to sell, and Buyer desires to purchase, 100% of the issued and outstanding
shares (the “Shares”) of capital stock of the Company, for the consideration and on the
terms and conditions set forth in this Agreement.

     C. Seller, Buyer and Liberty are concurrently executing the Stockholders Agreement between
Seller, Buyer and Liberty, dated as of the date hereof.

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound, the parties agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1.      Definitions. The following terms have the following meanings for purposes of this
Agreement:

     “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, Controls or is Controlled by or is under common Control with such Person.

     “Agreement” has the meaning set forth in the preamble.

     “Agreement Date” has the meaning set forth in the preamble.

     “Antitrust Division” has the meaning set forth in Section 7.3.

     “Antitrust Law” means the Sherman Act, the Clayton Act, the HSR Act, the Federal Trade
Commission Act, and all other federal, state and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint
of trade or lessening of competition.

1

 

     “Ascent Intercompany Indebtedness” means accounts or other Liabilities between the
Company and any Subsidiary of the Company or between any Subsidiaries of the Company.

     “Authorized Representatives” has the meaning set forth in Section 7.5.

     “Balance Sheet” has the meaning set forth in Section 3.4.

     “Balance Sheet Date” has the meaning set forth in Section 2.3(d).

     “Bank Commitment Letter” means the amended and restated bank facilities commitment
letter, dated as of December 6, 2006, among Bear Stearns, Credit Suisse and Credit Suisse
Securities (USA) LLC and Buyer, pursuant to which Bear Stearns, Credit Suisse and Credit Suisse
Securities (USA) LLC have agreed, subject to the terms and conditions set forth therein, to provide
or cause to be provided an aggregate of up to $475 million in financing under senior secured credit
facilities of Buyer comprised of a revolving credit facility in a maximum principal amount of $50
million and $425 million in term loans, as it may be amended from time to time.

     “Bank Financing” has the meaning set forth in Section 6.9.

     “Bear Stearns” means, collectively, Bear, Stearns & Co. Inc and Bear Stearns Corporate
Lending Inc.

     “Benefit Plans” has the meaning set forth in Section 3.17(a).

     “Business Day” means any day other than Saturday, Sunday or a day on which banking
institutions in Denver, Colorado or Sioux Falls, South Dakota are required or authorized to be
closed.

     “Buyer” has the meaning set forth in the preamble.

     “Buyer 401(k) Plan” has the meaning set forth in Section 7.6(f).

     “Buyer’s Fundamental Representations” has the meaning set forth in Section 11.1(a).

     “Buyer Indemnified Parties” has the meaning set forth in Section 11.2(a).

     “Buyer Tax Loss” has the meaning set forth in Section 11.2(a).

     “Cafeteria Plan” has the meaning set forth in Section 7.6(d).

     “Cash Consideration” has the meaning set forth in Section 2.2.

     “Closing” has the meaning set forth in Section 2.4.

     “Closing Date” has the meaning set forth in Section 2.4.

     “Closing Date Calculations” has the meaning set forth in Section 2.3(e).

     “Closing Purchase Price Adjustment” has the meaning set forth in Section 2.3(a).

2

 

     “Closing Working Capital” means the consolidated current assets of the Company and its
Subsidiaries on the Closing Date (including cash) minus consolidated current liabilities of the
Company and its Subsidiaries on the Closing Date, determined as set forth on Exhibit A attached
hereto and in accordance with GAAP and consistent with the Financial Statements (except as set
forth on Exhibit A).

     “COBRA” has the meaning set forth in Section 7.6(b).

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” has the meaning set forth in Recital A.

     “Company Group” has the meaning set forth in Section 3.19.

     “Company Audited Financial Statements” has the meaning set forth in Section 6.6(b).

     “Company Unaudited Financial Statements” has the meaning set forth in Section 3.4.

     “Contracts” has the meaning set forth in Section 3.12.

     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ownership of
voting securities or partnership, membership or other ownership interests, by contract or
otherwise.

     “Current Filings” has the meaning set forth in Section 5.11(b).

     “Disclosing Party” has the meaning set forth in Section 7.5.

     “Disclosure Schedule” has the meaning set forth in the introductory paragraph of
Article III.

     “Encumbrance” means any charge, claim, community property interest, condition,
equitable interest, mortgage, lien, option, pledge, security interest, right of first refusal, or
other charge or restriction of any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of ownership.

     “Environmental, Health, and Safety Requirements” means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force or effect of law,
all judicial and administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.

3

 

     “Equity Affiliates” means all Persons in which the Company or any Subsidiaries of the
Company hold an equity interest that are not Subsidiaries of the Company that are accounted for
under the equity method of accounting in accordance with GAAP.

     “ERISA” has the meaning set forth in Section 3.17(a).

     “ERISA Affiliate” has the meaning set forth in Section 3.17(a).

     “ERISA Plans” has the meaning set forth in Section 3.17(a).

     “Estimated Closing Working Capital” has the meaning set forth in Section 2.3(a).

     “Existing NDA” has the meaning set forth in Section 6.4.

     “Final Purchase Price Adjustment” has the meaning set forth in Section 2.3(b).

     “Financial Information” has the meaning set forth in Section 6.9.

     “Financial Statements” has the meaning set forth in Section 3.4.

     “FTC” has the meaning set forth in Section 7.3.

     “GAAP” means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board (and its predecessors), the
American Institute of Certified Public Accountants and the Financial Accounting Standards Board
that are applicable to the circumstances as of the date of determination, consistently applied.

     “Governmental Authority” means any court, arbitrator, administrative or other
governmental department, agency, political subdivision, commission, authority or instrumentality in
the United States or elsewhere.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “Income Tax” has the meaning set forth in Section 9.1.

     “Indebtedness” means, with respect to any Person, without duplication (a) every
Liability of such Person (excluding any Ascent Intercompany Indebtedness) (i) for borrowed money,
(ii) evidenced by notes, bonds, debentures or similar instruments (whether or not negotiable),
(iii) any amounts owing as deferred purchase price for property acquired, other than accounts
payable on commercial terms, or (iv) any reimbursement of amounts actually drawn under 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
(other than any guarantee by the Company of any Liability of any Subsidiary of the Company and any
guarantee by any Subsidiary of the Company of any Liability of any other Subsidiary of the
Company), in each case only to the extent required pursuant to GAAP to be set forth as a liability
on a balance sheet of such Person.

4

 

     “Indemnified Party” has the meaning set forth in Section 11.2(g).

     “Independent Accounting Firm” has the meaning set forth in Section 2.3(g).

     “Information Memorandum” has the meaning set forth in Section 9.1.

     “Intellectual Property” means (a) all patents and patent applications (including all
provisional, divisionals, continuations, continuations in part, and reissues), inventions
(patentable or unpatentable and whether or not reduced to practice), and business methods; (b) all
registered and unregistered fictional business names, trade names, trademarks, service marks, trade
dress, brands, slogans, logos, and registered domain names and all applications with respect to any
of the foregoing; (c) all registered and unregistered copyrights in both published works and
unpublished works and copyrightable subject matter, including software; and (d) all know-how, trade
secrets, customer and vendor lists, software, technical information, data, process technology,
plans, drawings, blueprints, processes, methods and techniques, research and development
information, industry analyses, drawings, algorithms, source code and object code, etherware,
specifications, designs, proposals, models, financial and accounting data, business and marketing
plans, and all other confidential or proprietary information.

     “Interim Financial Statements” has the meaning set forth in Section 3.4.

     “Legal Requirement” means any federal, state, provincial, local, international, or
other administrative order, law, ordinance, principle of common law, rule, regulation, statute or
code.

     “Liability” means any liability (whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, and whether liquidated or
unliquidated), including any liability for Taxes.

     “Liberty” has the meaning set forth in the preamble.

     “Liberty 401(k) Plan” has the meaning set forth in Section 7.6(f).

     “Liberty Benefit Plans” has the meaning set forth in Section 7.6(a).

     “Liberty Group” has the meaning set forth in Section 3.19.

     “Liberty Intercompany Debt” has the meaning set forth in Section 8.1(f).

     “Losses” means any loss, Liability, action, cause of action, cost, damage or expense,
Tax, penalty, or fine, in each case whether or not arising out of third party claims and including
any interest, penalties, attorneys’, consultants’ and experts’ fees and expenses (including such
attorneys’, consultants’ and experts’ fees and expenses incurred in connection with the enforcement
of a party’s rights under this Agreement) and all amounts paid in investigation, defense or
settlement of any of the foregoing after taking into account any monies actually received in
respect thereof under a policy of insurance, under a contractual right of set-off or indemnity or
otherwise.

5

 

     “Material Adverse Effect” means a material adverse effect on the financial condition,
assets, business or results of operations of the Company and its Subsidiaries, taken as a whole,
other than any such effect attributable to or resulting from (a) any matter contemplated by or
disclosed in this Agreement, (b) the public announcement or consummation of the transactions
contemplated by this Agreement, including loss of vendors, customers or employees resulting
therefrom, or the compliance by any Party with its obligations under this Agreement, (c) any change
in general economic conditions, financial market conditions or in conditions affecting the on
premises telecommunications industry or hotel industry generally, whether locally, regionally or
nationally, or (d) any act or omission taken with the prior written consent or at the specific
written request of Buyer.

     “MFN Clause” has the meaning set forth in Section 3.12(b).

     “Non-US Plans” has the meaning set forth in Section 3.17(g).

     “Notifying Party” has the meaning set forth in Section 6.5.

     “Objection Notice” has the meaning set forth in Section 2.3(f).

     “ONCO” has the meaning set forth in Recital A.

     “ONCO Stock Plan” has the meaning set forth in Section 7.6(i).

     “Ordinary Course of Business” means the ordinary course of business of the Company or
any Subsidiary, as applicable, consistent with past custom and practice and assuming rational
decision-making based on the continued operations and capital investment decisions of the Company
and its Subsidiaries as if ownership of the Company and its Subsidiaries were not being sold.

     “Party” or “Parties” has the meaning set forth in the preamble.

     “Permits” means all permits, licenses, authorizations, registrations, franchises,
approvals, consents, certificates, variance and similar rights obtained or required to be obtained
from any Governmental Authority.

     “Permitted Encumbrances” means (a) any restrictions under the Securities Act or any
applicable state or foreign securities laws; (b) any Encumbrance for Taxes, fees, assessments or
other governmental charges or levies, either not delinquent or being contested in good faith and
for which the Company or any Subsidiary maintains adequate reserves on its books and records; (c)
licenses or sublicenses granted or entered into in the Ordinary Course of Business and any interest
or title of a licensor or licensee under any such license or sublicense; (d) leases or subleases
entered into in the Ordinary Course of Business, including in connection with the leased personal
property of the Company or any Subsidiary or Real Property Leases; (e) Encumbrances of carriers,
warehousemen, mechanics, materialmen and landlords incurred in the Ordinary Course of Business for
sums not overdue or being contested in good faith and for which the Company or any applicable
Subsidiary maintains adequate reserves on its books and records; (f) Encumbrances incurred in the
Ordinary Course of Business in connection with worker’s compensation, unemployment insurance or
other forms of governmental insurance or

6

 

benefits, or to secure performance of tenders, statutory obligations, leases and contracts
(other than for borrowed money) entered into in the Ordinary Course of Business or to secure
obligations on surety or appeal bonds; (g) to the extent described on Schedule 3.9,
purchase money security interests or Encumbrances on property acquired or held by the Company or
any Subsidiary in the Ordinary Course of Business to secure the purchase price of such property or
to secure indebtedness incurred solely for the purpose of financing the acquisition of such
property; and (h) easements, restrictions and other exceptions to or defects of title that are not,
in the aggregate, material and that do not, individually or in the aggregate, materially and
adversely affect the use or occupancy of the property affected thereby.

     “Person” means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization, any other entity, or a Governmental Authority.

     “Proceeding” means any action, arbitration, mediation, audit, charge, claim,
complaint, demand, notice, hearing, investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted, or heard by or before,
or otherwise involving, any Governmental Authority or any third-party arbitrator or mediator.

     “Purchase Price” has the meaning set forth in Section 2.2.

     “Real Property Leases” has the meaning set forth in Section 3.11.

     “Receiving Party” has the meaning set forth in Sections 6.5 and 7.5.

     “Representatives” has the meaning set forth in Section 11.1(c).

     “Responsible Party” has the meaning set forth in Section 11.2(g).

     “Retention Plan” has the meaning set forth in Section 7.6(h).

     “SEC” means the United States Securities and Exchange Commission.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Seller” has the meaning set forth in the preamble.

     “Seller’s Financial Advisors” has the meaning set forth in Section 4.5.

     “Seller’s Fundamental Representations” has the meaning set forth in Section 11.1(a).

     “Seller Indemnified Parties” has the meaning set forth in Section 11.2(b).

     “Seller Tax Loss” has the meaning set forth in Section 11.2(b).

     “Share Consideration” means 2,050,000 shares of LodgeNet Entertainment Corporation
common stock, $0.01 par value, as such number is adjusted pursuant to the provisions of Section
2.6.

7

 

     “Share Consideration Value” means $47,867,500.

     “Shares” has the meaning set forth in Recital B.

     “Stockholders Agreement” means the Stockholders Agreement between Seller, Buyer and
Liberty, dated as of the date hereof.

     “Subsidiaries” means all Persons that the Company directly or indirectly Controls.

     “Survival Period” has the meaning set forth in Section 11.1(a).

     “Target Working Capital” means an anticipated working capital amount set forth on
Exhibit B.

     “Terminated ONCO 401(k) Plans” has the meaning set forth in Section 7.6(g).

     “Termination Date” has the meaning set forth in Section 10.2.

     “THN” means The Hotel Networks, Inc. f/k/a Hotelevision, Inc.

     “THN Balance Sheet” has the meaning set forth in Section 3.4.

     “THN Contracts” has the meaning set forth in Section 3.12(m).

     “THN Financial Statements” has the meaning set forth in Section 3.4.

     “THN Interim Financial Statements” has the meaning set forth in Section 3.4.

     “Threshold” has the meaning set forth in Section 11.2(c).

     “WARN Act” has the meaning set forth in Section 7.6(j).

     Section 1.2.     Tax Terms. Certain terms related to tax matters used in Article IX are defined in Section
9.1.

     Section 1.3.     Terms Generally. The definitions set forth or referenced in Section 1.1 apply equally to
both the singular and plural forms of the terms defined. Any pronoun includes the corresponding
masculine, feminine and neuter forms, as the context requires. The words “include,” “includes” and
“including” will be deemed to be followed by the phrase “without limitation.” The word “or” is not
exclusive. The words “shall” and “will” are used interchangeably and are intended to have, and
will be deemed to have, the same meaning. The “knowledge” of a Party will mean the actual
knowledge of any senior officer of such Party after due investigation and inquiry; provided,
however, that the “knowledge” of Seller or Liberty also will be deemed to include the actual
knowledge of any of the following officers of ONCO: The President and Chief Executive Officer; the
Senior Vice President and Chief Financial Officer; the Senior Vice President, General Counsel and
Secretary; the Senior Vice President, Operations; the Senior Vice President, Marketing and
Programming; and Group Vice President of Sales, and (b) the President and Chief Executive Officer
and Chief Financial Officer (or persons holding equivalent positions) of THN. The words “herein,”
“hereof” and “hereunder” and words of

8

 

similar import refer to this Agreement (including the Exhibits and Schedules) in its entirety and
not to any part of this Agreement unless the context otherwise requires. All references to
Articles, Sections, Exhibits and Schedules will be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context otherwise requires. Any
references to any agreement or other document or instrument or to any statute or regulation are to
it as amended and supplemented from time to time (and, in the case of a statute or regulation, to
any successor provisions, and to any rules and regulations promulgated thereunder), unless the
context otherwise requires. Any reference to a “day” or number of “days” (without the explicit
qualifications of “business”) will be interpreted as a reference to a calendar day or number of
calendar days. If any action or notice is to be taken or given on or by a particular calendar day,
and such calendar day is not a Business Day, then such action or notice will be deferred until, or
may be taken or given on, the next Business Day. All references to dollar amounts will be
references to United States Dollars.

ARTICLE II

PURCHASE AND SALE OF SHARES; CLOSING

     Section 2.1.     Purchase and Sale of Shares. Subject to the terms and conditions set forth in this
Agreement, at the Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller, free and clear of any Encumbrances, as set forth in this Article
II.

     Section 2.2.     Purchase Price. The purchase price for the Shares will be $380,000,000.00, subject to
adjustment as set forth in Section 2.3 (the “Purchase Price”), consisting of:

     Section      

     (a) cash in the amount of the difference between the Purchase Price and the Share
Consideration Value (the “Cash Consideration”); and

     (b) the Share Consideration.

     Collectively the sum of the Cash Consideration (as such amount may be adjusted pursuant to Section
2.3) plus the Share Consideration are referred to as the Purchase Price. The Cash Consideration
will be paid at the Closing by wire transfer of immediately available funds pursuant to wire
instructions delivered by Seller to Buyer no later than two Business Days prior to the Closing
Date. The Share Consideration will be paid at the Closing by delivery of a stock certificate or
certificates registered in Seller’s name, the denominations of which Seller will request at least
three (3) Business Days prior to Closing and which will evidence an aggregate number of shares of
common stock of Buyer equal to the full Share Consideration.

     Section 2.3.     Adjustment. The Cash Consideration portion of the Purchase Price shall be subject to
adjustment as follows:

     (a) If, as of the Closing Date, the Estimated Closing Working Capital is (i) less than the
Target Working Capital, the Cash Consideration payable at the Closing will be reduced by the
difference between the Estimated Closing Working Capital and the Target Working Capital or (ii)
more than the Target Working Capital, the Cash Consideration payable at the Closing will be
increased by the difference between the Estimated Closing Working Capital

9

 

and the Target Working Capital such increase or decrease, (the “Closing Purchase Price
Adjustment”). The Seller shall not less than three (3) Business Days prior to the Closing
estimate the Closing Working Capital, based on the balance sheet of the Company and its
Subsidiaries as of the prior month-end, but brought forward to include any known changes in the
components of Closing Working Capital since such prior month-end, supporting documentation for all
of which shall be provided to Buyer for its review concurrently with or prior to the delivery of
the estimated Closing Working Capital calculation (the “Estimated Closing Working
Capital”).

     (b) If the Closing Working Capital is (i) less than the Estimated Closing Working Capital, the
Cash Consideration will be reduced by the difference between the Estimated Closing Working Capital
and the Closing Working Capital or (ii) more than the Estimated Closing Working Capital, the Cash
Consideration will be increased by the difference between the Estimated Closing Working Capital and
the Closing Working Capital, provided that if no Closing Purchase Price Adjustment was made at
Closing as a result of clause (c) below, then the foregoing calculation shall be made by comparing
the Closing Working Capital to the Target Working Capital rather than the Estimated Closing Working
Capital (the “Final Purchase Price Adjustment”). Any Final Purchase Price Adjustment shall
be paid in accordance with Section 2.3(d) below.

     (c) Notwithstanding clauses (a) and (b) above, no adjustment to the Purchase Price shall be
made if the aggregate adjustment would be in an amount less than $1,000,000.

     (d) In the event of a reduction to the Purchase Price pursuant to Section 2.3(b)(i), Seller
and Liberty will be jointly and severally liable for the amount of the reduction and will pay to
Buyer, within five (5) Business Days of the Closing Date Calculations being declared final pursuant
to Section 2.3(f) and (g) (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. In the event of an increase to the
Purchase Price pursuant to Section 2.3(b)(ii), the 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 (6)% per annum from the Closing Date until such amount is paid, in
immediately available funds. Any amount paid pursuant to this Section 2.3 will be treated as an
adjustment to the Purchase Price for all purposes.

     (e) The Buyer shall prepare and distribute to Seller, within sixty (60) days after the Closing
Date, a written calculation of the proposed Final Purchase Price Adjustment and the Closing Working
Capital (the “Closing Date Calculations”), as determined by reference to the relevant
provisions of this Agreement.

     (f) On or prior to the thirtieth (30th) day after Buyer gives Seller notice of the
Closing Date Calculations, Seller may give Buyer a written notice that it objects (an
“Objection Notice”) to the Closing Date Calculations. 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 the Closing
Date Calculations pursuant to an Objection Notice delivered to Buyer within such thirty (30) day
period, the Closing Date Calculations will be conclusive and binding upon the Parties.

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     (g) If Seller delivers a timely Objection Notice as described in Section 2.3(f), 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 all disputes regarding the Closing
Date Calculations on or prior to the thirtieth (30th) day after the date the Objection
Notice was delivered, then Buyer shall retain a “big four” accounting firm (after eliminating any
such firm which is conflicted or otherwise unable to participate) (the “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 Independent Accounting Firm shall only decide the specific
items under dispute by the parties, and shall make its determinations solely in accordance with
this Section 2.3. The Independent Accounting Firm’s determination regarding the matters in dispute
will be conclusive and binding upon the Parties hereto and will constitute (or, if applicable, will
be used in the calculation of) the Final Purchase Price Adjustment and the Closing Working Capital
for all purposes of this Section 2.3. The fees and expenses of the Independent Accounting Firm in
connection with its review of the Closing Date Calculations shall be paid one-half (1/2) by the
Company and one-half (1/2) by Seller.

     Section 2.4.     Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) will take place at the offices of Sherman & Howard L.L.C. in Denver, Colorado at
10:00 a.m. Mountain Time on the date that is five Business Days after the satisfaction or waiver of
the closing conditions contained in Article VIII, or at such other time and place as the Parties
may agree in writing (the “Closing Date”), provided that if the conditions to Closing set
forth in Article 8 are satisfied prior to January 1, 2007, then Buyer shall have the option to
extend the Closing Date for up to sixty (60) days assuming that Buyer is diligently proceeding to
obtain its financing for the transactions contemplated by this Agreement.

     Section 2.5.     Closing Deliveries. At the Closing:

     (a) Seller and Liberty will deliver to Buyer:

     (i) one or more stock certificates representing the Shares, duly endorsed (or accompanied by
duly executed stock powers) for transfer to Buyer, which Shares shall be free and clear of any
Encumbrances except Encumbrances arising out of any action taken by Buyer or any of its Affiliates
or under the Securities Act; and

     (ii) one or more officer’s certificates, dated the Closing Date, executed by duly authorized
executive officers of Seller and Liberty, attesting to matters in Sections 8.1(a) and (b); and

     (iii) possession of all documents, books, records agreements and financial data relating to
the Company and its Subsidiaries held by Liberty, the Company and its Subsidiaries.

     (b) Buyer will deliver to Seller:

     (i) the Cash Consideration (as adjusted pursuant to Section 2.3(a), if applicable) by wire
transfer of immediately available funds to an account designated by Seller; and

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     (ii) a stock certificate or certificates representing the Share Consideration; and

     (iii) a certificate, dated the Closing Date, executed by a duly authorized executive officer
of Buyer, attesting to matters in Sections 8.2(a) and 8.2(b).

     Section 2.6.     Stock Adjustment. If, after the Agreement Date and prior to the Closing Date, the Buyer is
recapitalized or reclassified or Buyer effects any stock dividend, stock split, or reverse stock
split or otherwise effects any transaction that changes its common stock into any other securities
(including securities of another corporation), then the Share Consideration to be delivered to
Seller under this Agreement will be appropriately and equitably adjusted to the kind and amount of
shares of stock and other securities and property which the Seller would have been entitled to
receive had the shares comprising the Share Consideration been issued and outstanding as of the
record date for determining stockholders entitled to participate in such corporate event.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER AND LIBERTY

REGARDING THE COMPANY AND ITS SUBSIDIARIES

     The disclosures in any section or paragraph of the disclosure schedule accompanying this
Agreement (the “Disclosure Schedule”) shall qualify as disclosures by the Seller and
Liberty with respect to any other portion of the numbered and lettered paragraphs of such
Disclosure Schedule and the related representations and warranties to the extent that the relevance
of such disclosure is readily apparent to the disclosure called for in such other section or
paragraph of the Disclosure Schedule or the related representations and warranties.
Notwithstanding the foregoing or anything to the contrary in this Agreement, the information
contained in any specific document referenced in the Disclosure Schedule shall qualify the
representations and warranties only to the extent the reason such document is relevant to the
applicable section or paragraph of the Disclosure Schedule or the related representations and
warranties is specifically described in the Disclosure Schedule. Except as set forth in the
Disclosure Schedule, Seller and Liberty hereby jointly and severally represent and warrant to Buyer
as follows:

     Section 3.1.     Organization, Qualification and Corporate Power. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to own its assets and to conduct its
business as it is currently being conducted. The Company is duly qualified and authorized to
transact business and is in good standing in each jurisdiction where such qualification is
required, except where the failure to be so qualified would not have, individually or in the
aggregate, a Material Adverse Effect.

     Section 3.2.     Capitalization. The authorized capital stock of the Company consists of 50,000 shares of
common stock, par value $0.01 per share, of which 1,000 shares are issued and outstanding and
constitute the “Shares.” The Shares are the only shares of capital stock or other ownership
interests in the Company outstanding. All of the Shares have been duly and validly authorized and
issued, are fully paid and non-assessable, are free and clear of all Encumbrances and are held
beneficially and of record by Seller. The transfer and delivery of the Shares by

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Seller to Buyer as contemplated by this Agreement will transfer good and valid title to the Shares
to Buyer free and clear of all Encumbrances, except Encumbrances arising as a result of any action
taken by the Buyer or any of its subsidiaries. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange rights, pre-emptive
rights or other rights, contracts or commitments that could require the Company to issue, sell or
otherwise cause to become outstanding any of its capital stock or any other securities exercisable
or exchangeable for or convertible into such capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or understandings with respect
to the voting of the capital stock or Control of the Company.

     Section 3.3.     Subsidiaries and Equity Affiliates. The Company directly owns all of the issued and
outstanding shares of capital stock of ONCO, and the Company does not have any assets or
Liabilities other than those related to its ownership of ONCO and other than Liberty Intercompany
Debt of the Company and its Subsidiaries that will be eliminated prior to the Closing in accordance
with Section 8.1(f) or Ascent Intercompany Indebtedness. Schedule 3.3 sets forth a
complete list of all Subsidiaries and Equity Affiliates of ONCO and the direct or indirect
ownership interest of ONCO in each such Subsidiary and Equity Affiliate. Except as set forth on
Schedule 3.3, ONCO does not own, directly or indirectly, any equity interest in any other
Person including any general or limited partnership interest, limited liability company interest or
other form of joint venture. All issued and outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued, are fully paid and non-assessable, and, at
Closing, will be free and clear of all Encumbrances other than Permitted Encumbrances. There are
no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, pre-emptive rights, or other rights, contracts or commitments that could
require any Subsidiary to issue, sell or otherwise cause to become outstanding any of its capital
stock or any other securities exercisable or exchangeable for or convertible into such capital
stock. There are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to any Subsidiary. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting of the capital stock or
Control of any Subsidiary. Each Subsidiary is a Person duly organized, validly existing and in
good standing under the laws of its place of formation. Each Subsidiary has all requisite power
and authority to own its assets and to conduct its business as it is currently being conducted.
Each Subsidiary is duly qualified and authorized to transact business and is in good standing in
each jurisdiction where such qualification is required, except where the failure to be so qualified
would not have, individually or in the aggregate, a Material Adverse Effect.

     Section 3.4.     Financial Statements. Seller has delivered to Buyer the following financial statements of
the Company and ONCO and its subsidiaries on a consolidated basis (collectively, the “Financial
Statements”): (a) audited financial statements of ONCO, including the balance sheets as at
December 31, 2005, 2004 and 2003 and the statement of operations, changes in stockholders’ equity,
and cash flows for the fiscal years ended December 31, 2005, 2004 and 2003; (b) unaudited financial
statements of the Company, including the balance sheets as at December 31, 2005 and 2004 and the
statement of operations, changes in stockholders’ equity, and cash flows for the fiscal years ended
December 31, 2005 and 2004 (the “Company Unaudited Financial Statements”); and (c)
unaudited financial statements of ONCO and the Company, including the balance sheet as at September
30, 2006 (the “Balance Sheet”) and the

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statement of operations, changes in stockholders’ equity, and cash flows for the nine months ended
September 30, 2006 (collectively including the Balance Sheet, the “Interim Financial
Statements”). The Financial Statements and the Company Unaudited Financial Statements
(including any notes thereto) (i) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, (ii) present fairly in all material
respects the financial position of the Company and its Subsidiaries and ONCO and its Subsidiaries,
as applicable, on a consolidated basis as of such dates and the results of operations and cash
flows of the Company and its Subsidiaries and ONCO and its Subsidiaries, as applicable, on a
consolidated basis for such periods, and (iii) are consistent with the books and records of the
Company and its Subsidiaries and ONCO and its Subsidiaries, as applicable; provided, however, that
the Interim Financial Statements are subject to normal year-end adjustments (that are not material,
either individually or in the aggregate) and that the Interim Financial Statements and the Company
Unaudited Financial Statements do not contain footnotes required by GAAP. Seller has delivered to
Buyer the following financial statements of THN (collectively, the “THN Financial
Statements”); (a) unaudited financial statements, including the balance sheet as at December
31, 2005 and the statement of operations, changes in stockholders’ equity, and cash flows for the
fiscal year ended December 31, 2005; and (b) unaudited financial statements, including the balance
sheet as at September 30, 2006 (the “THN Balance Sheet”) and the statement of operations,
changes in stockholders’ equity, and cash flows for the nine months ended September 30, 2006
(collectively including the THN Balance Sheet, the “THN Interim Financial Statements”).
The THN Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, (ii) present fairly in all material respects the
financial position of THN as of such dates and the results of operations and cash flows of THN for
such periods and (iii) are consistent with the books and records of THN; provided, however, that
the THN Interim Financial Statements are subject to normal year-end adjustments (that are not
material, either individually or in the aggregate (except as set forth in the Disclosure Schedule))
and the THN Financial Statements do not contain footnotes required by GAAP. Except as described on
the Disclosure Schedule, neither ONCO’s nor the Company’s independent auditors have identified (i)
since the adoption of rules promulgated by the SEC pursuant to the Section 404 of the
Sarbanes-Oxley Act of 2002, 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 the Company and its
Subsidiaries or (ii) any fraud, whether or not material, that involves the Company’s management or
other employees who have a role in the preparation of financial statements or the internal control
over financial reporting utilized by the Company and its Subsidiaries. To the knowledge of Seller
or Liberty, (i) none of the principal executive officer or principal financial officer of Seller,
Liberty, ONCO or the Company has concluded that a material weakness currently exists, other than
what is described on the Disclosure Schedule and (ii) no claim or allegation has been made that a
material weakness exists or that there has been any fraud with respect to the preparation of ONCO’s
or the Company’s financial statements or the internal control over financial reporting utilized by
the Company and its Subsidiaries.

     Section 3.5.     Assets and Liabilities of the Company. Except for its interest in ONCO and its liability
for income taxes, the Company has no assets and no Liabilities of a nature required to be disclosed
on an unconsolidated balance sheet of the Company or in the footnotes to the Financial Statements
or any liabilities that would be required to be disclosed by SEC rules

14

 

and regulations if the Company were an unconsolidated public company registered with the SEC.
Except as set forth on the Disclosure Schedule, the Company and its Subsidiaries do not have any
contingent reimbursement obligations or amounts outstanding pursuant to any letters of credit or
similar facilities issued for the account of the Company and its Subsidiaries.

     Section 3.6.     No Undisclosed Liabilities. Neither the Company nor any Subsidiary has any Liability of a
type that would be required to be disclosed in the financial statements, including the footnotes,
under generally accepted accounting principles or liabilities described in Items 103, 303(a)(4), or
305 of Regulation S-K, except for (a) Liabilities set forth on the Balance Sheet or disclosed in
the Notes to the 2005 Financial Statements referred to in Section 3.4(a), (b) Liabilities that have
arisen after the date of the Balance Sheet in the Ordinary Course of Business, or (c) Liabilities
that would not be material to the Company and its Subsidiaries taken as a whole.

     Section 3.7.     Noncontravention; Consents. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated by this Agreement, will (a) violate any Legal
Requirement to which the Company or any Subsidiary is subject or any provision of the certificate
of incorporation or bylaws (or comparable constituent documents) of the Company or any Subsidiary
or (b) result in a breach of, constitute a default under, result in the acceleration of, create in
any Person the right to accelerate, terminate, modify, or cancel, any contract or obligation with
respect to Indebtedness to which the Company or any Subsidiary is a party or by which it is bound
or to which its assets are subject, except where any such violation, breach, default or other
matter would not have, individually or in the aggregate, a Material Adverse Effect. Schedule
3.7 sets forth all notices and filings required to be made and all authorizations, consents, or
approvals of any Governmental Authority or other Person required to be obtained by Seller in order
for Buyer and Seller to consummate the transactions contemplated by this Agreement.

     Section 3.8.     Compliance with Legal Requirements. To Seller’s knowledge, the Company and its
Subsidiaries are in compliance with all applicable Legal Requirements, except where the failure to
be in compliance would not have individually or in the aggregate, a Material Adverse Effect. No
Proceeding has been filed or commenced against the Company or any Subsidiary alleging any failure
to so comply with applicable Legal Requirements, and to Seller’s knowledge no such Proceeding has
been threatened. Each of the Company and its Subsidiaries holds all Permits used or necessary in
the conduct of its business or the ownership of its property and assets. Such Permits are valid
and in full force and effect, and no written notice has been received by the Company or its
Subsidiaries alleging the failure to hold any such Permit. The Company and its Subsidiaries are in
material compliance with the terms and conditions of such Permits, and all of such Permits will be
available for use on the same terms by the Company and its Subsidiaries immediately after the
Closing, except where the failure to be in compliance or the unavailability for use would not have,
individually or in the aggregate, a Material Adverse Effect.

     Section 3.9.     Title to Assets. Except as set forth on Schedule 3.9, each of the Company and each
Subsidiary has good title to, or a valid leasehold interest in, the properties and assets used by
the Company or such Subsidiary in its business as it is presently being conducted as set forth on
the Balance Sheet or acquired after the date of the Balance Sheet, free and clear of all

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Encumbrances (other than Permitted Encumbrances), except for properties and assets disposed of in
the Ordinary Course of Business since the date of the Balance Sheet. Neither the Company nor any
Subsidiary has received any notice of violation or default under any Legal Requirement or Contract
relating to its owned or leased properties and assets that remains uncured or has not been
dismissed, except where any such violation or default would not have, individually or in the
aggregate, a Material Adverse Effect. All leases and licenses pursuant to which the Company or any
Subsidiary leases or licenses tangible or intangible property from others, including without
limitation licenses for rights to music from music licensing associations, are valid and effective
in accordance with their respective terms, and there is not, with respect to the Company or any
Subsidiary under any of such leases or licenses, any existing default (or event that with notice or
lapse of time, or both, would constitute a default), except where any such default would not have,
individually or in the aggregate, a Material Adverse Effect.

     Section 3.10.     Intellectual Property. The Company and its Subsidiaries own or have the right to use,
pursuant to a valid and enforceable license, the Intellectual Property currently used in and
necessary for the operation of their respective businesses and shall continue to have the right to
use such Intellectual Property immediately following the Closing. Schedule 3.10 sets forth
a list of (i) all the Company’s and each Subsidiary’s registered Intellectual Property and all
material unregistered Intellectual Property (other than those items listed in subsection (d) of the
definition of Intellectual Property and other than “inventions” and “business methods” listed in
subsection (a) of said definition, “trade dress,” “brands,” “slogans,” and “logos” listed in
subsection (b) of such definition and “copyrightable subject matter” listed in subsection (c) of
said definition) owned by or used by the Company or its Subsidiaries in their respective
businesses, and (ii) all written licenses (other than off-the-shelf commercial computer software)
with an anticipated annual license fee of greater than $50,000 pursuant to which the Company or its
Subsidiaries have the right to use Intellectual Property. To the knowledge of Seller, the
Company’s and its Subsidiaries’ use of all such Intellectual Property as currently used in the
operation of their respective businesses does not violate or infringe upon any Intellectual
Property or other rights of any other Person and to the knowledge of Seller, no allegation of such
violations or infringement of any such Intellectual Property rights has been asserted or
threatened, except as listed on Schedule 3.10.

     Section 3.11.     Real Property; Real Property Leases. Neither the Company nor any Subsidiary owns any real
property. Schedule 3.11 sets forth all leases and subleases under which either the Company
or any Subsidiary is lessor or lessee or sublessor or sublessee of any real property (the “Real
Property Leases”). The Company has provided true, correct and complete copies of all such Real
Property Leases, including any amendments to such Real Property Leases, to the Buyer. The Real
Property Leases are in full force and effect and constitute binding and enforceable agreements of
the Company or the Subsidiary and, to Seller’s knowledge, the landlords or lessors party thereto.
The Company or the Subsidiary that is a party to any Real Property Lease is not in breach or
default thereunder and, to the knowledge of Seller no landlord is in breach or violation of any
such Real Property Lease and no event has occurred that with notice or lapse of time, or both,
would constitute a breach or default thereunder by the Company or the Subsidiary that is a party
thereto, except where any such Company or Subsidiary breach or default would not have, individually
or in the aggregate, a Material Adverse Effect.

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     Section 3.12.     Contracts. Schedule 3.12 sets forth the following contracts and other agreements
to which the Company or any Subsidiary is a party and under which the Company or any Subsidiary has
ongoing rights or obligations as of the Agreement Date (the “Contracts”):

     (a) any agreement for the lease of personal property to or from any Person (not including any
Real Property Leases) providing for calendar year lease payments in excess of $100,000;

     (b) any agreement with a customer, including any master agreement pursuant to which the
Company or any Subsidiary has entered into multiple service agreements covering individual hotels,
pursuant to which the Company or any such Subsidiary either received revenue in excess of $500,000
during 2005 or reasonably expects to receive revenue in excess of such amount during 2006 or
pursuant to which the Company or any Subsidiary (i) either paid fees in excess of $500,000 during
2005 or reasonably expects to pay fees in excess of such amount during 2006 (provided, however,
2006 revenue amounts and fees are forecasts only subject to uncertainties, and neither Seller, the
Company nor any Subsidiary guarantees such results) or (ii) has agreed to provide such customer
more favorable terms with respect to the price charged or any other financial matter, or with
respect to the technological capabilities of equipment utilized by the Company and its Subsidiaries
in providing services to such customer, in each case, to the extent such terms have been provided
by the Company or its Subsidiaries to other customers of the Company or its Subsidiaries (any such
clause being hereinafter referred to as an “MFN Clause”);

     (c) any agreement with a content provider pursuant to which the Company or any Subsidiary
either made payments (including variable royalty payments) in excess of $250,000 during 2005 or has
a firm commitment to make minimum payments in excess of such amount during 2006 or has a firm
commitment to make minimum payments in excess of such amount in any single year after 2006;

     (d) any agreement with any third party (other than those described elsewhere in this Article
III), including any affiliates of Seller or Liberty, pursuant to which the Company or any
Subsidiary either made payments in excess of $500,000 during 2005 or has a firm commitment to make
payments in excess of such amount during 2006, excluding purchase orders;

     (e) any purchase order or group of purchase orders or binding commitments payable to the same
payee outstanding as of September 30, 2006 pursuant to which the amount payable by the Company or
any Subsidiary exceeds $500,000;

     (f) any agreement governing a general or limited partnership, limited liability company or
other form of joint venture;

     (g) any agreement under which the Company or any Subsidiary has created, incurred, assumed, or
guaranteed any, Indebtedness or any capitalized lease obligation, in an amount in excess of
$100,000 or under which the Company or any Subsidiary has imposed an Encumbrance (other than a
Permitted Encumbrance) on any of the Company’s or any

17

 

Subsidiary’s assets, tangible or intangible, other than any such agreement described in
Section 3.19;

     (h) any agreement, arrangement or commitment governing Ascent Intercompany Indebtedness;

     (i) any agreement, arrangement or commitment under which the Company or any Subsidiary has
agreed or committed to advance or loan or has advanced or loaned any amount to any of its
directors, officers, or employees, other than advances with respect to expenses incurred in the
Ordinary Course of Business;

     (j) any agreement, arrangement or commitment entered into outside the Ordinary Course of
Business and pursuant to which any material obligations or liabilities (whether absolute,
contingent or otherwise) remain outstanding;

     (k) any employment, bonus, consulting or independent contractor agreement pursuant to which
the Company or any Subsidiary reasonably expects to make future payments in excess of $100,000 in
any calendar year;

     (l) any agreements that provide that the Company or any of its Subsidiaries are required to
pay for goods or services to a Person whether or not such Person provides such goods or services
under such Contract;

     (m) any of the following agreements of THN (collectively, the “THN Contracts”):

     (i) agreements for advertising revenue pursuant to which THN reasonably expects to
receive revenue in excess of $25,000 in any calendar year;

     (ii) agreements pursuant to which THN made payments in excess of $50,000 during 2005 or
has a firm commitment to make payments in excess of such amount during 2006, excluding
purchase orders;

     (iii) programming agreements or any agreement with a content provider;

     (iv) any agreement with a hotel customer, including any master agreement pursuant to
which THN has entered into multiple service agreements covering individual hotels covering
more than 5,000 rooms;

     (v) any agreement under which THN has created, incurred, assumed, or guaranteed any,
Indebtedness or any capitalized lease obligation, or under which THN has imposed an
Encumbrance (other than a Permitted Encumbrance) on any of THN’s assets, tangible or
intangible;

     (vi) any agreements for the issuance of any securities by THN; or

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     (vii) agreements between or among the stockholders of THN, including any agreement
whereby the Company or any of its Subsidiaries is obligated to provide funds to THN.

None of THN, the Company or the other stockholders of THN have any verbal or oral agreements
or understanding that would be required to be disclosed in (m)(i) through (vii) above, other
than as set forth in the THN Contracts.

     (n) any agreement that restricts the right or ability of the Company or any Subsidiary or, to
Seller’s and Liberty’s knowledge, any Equity Affiliate, to conduct their respective businesses
subsequent to the Closing in a manner that is substantially the same as such businesses are
conducted prior to Closing whether as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated by this Agreement, and

     (o) any agreements or licenses with music licensing associations.

With respect to each such Contract: (i) the Contract is in full force and effect and constitutes a
binding obligation of the Company or the Subsidiary (other than any such Contract whose term has
terminated or expired in accordance with its stated term), and (ii) the Company or the Subsidiary
that is a party to the Contract is not in breach or default thereunder and, (iii) to the knowledge
of Seller, the Contract constitutes a binding obligation on the other parties to the Contract, and
(iv) to the knowledge of Seller, no event has occurred that with notice or lapse of time, or both,
would constitute a breach or default thereunder by the Company or the Subsidiary that is a party
thereto or, to the knowledge of Seller, any other party to each such Contract, except where any
such breach or default would not have, individually or in the aggregate, a Material Adverse Effect.
The Company has provided true, correct and complete copies of all Contracts, including any
amendments to such Contracts, to the Buyer, except for those Contracts as to which the parties have
agreed to an alternative review process. As of the date hereof, the aggregate amount owed by the
Company and its Subsidiaries pursuant to any leases that are required to be capitalized under GAAP
does not exceed $2,000,000 and all such leases will remain in full force and effect immediately
following the Closing without any modification of their terms.

     Section 3.13.     Litigation. Neither the Company nor any Subsidiary is (a) subject to any outstanding
injunction, judgment, order, decree, ruling, conciliation agreement or settlement agreement, or
charge requiring the future payment of money by it or requiring it to take or preventing it from
taking any future action the effect of which would have a Material Adverse Effect on the Company or
(b) a party, or to the knowledge of Seller and Liberty, threatened in writing to be made a party,
to any Proceeding.

     Section 3.14.     Environmental, Health, and Safety Matters.

     (a) To the knowledge of Seller, the Company and its Subsidiaries have complied in all material
respects and are in compliance in all material respects with all Environmental, Health, and Safety
Requirements.

     (b) Without limiting the generality of the foregoing, the Company and its Subsidiaries have
obtained, and have complied in all material respects and are in compliance in

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all material respects with, all Permits that are required pursuant to Environmental, Health,
and Safety Requirements for the occupation of their respective facilities and the operation of
their respective businesses.

     (c) Neither the Company nor any Subsidiary has received any written notice, report or other
information regarding any actual or alleged material violation of Environmental, Health, and Safety
Requirements or any outstanding material Liabilities arising therefrom or, to its knowledge, any
threat of material Liabilities under any Environmental, Health and Safety Requirements.

     (d) Neither the Company nor any Subsidiary has 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 would give, rise to any material Liabilities pursuant to any Environmental,
Health, and Safety Requirements.

     (e) The Company has provided to the Buyer true and complete copies of all environmental
audits, reports, permits and other material environmental documents relating to the past or current
properties, facilities or operations of the Company or its Subsidiaries or their respective
predecessors or Affiliates which are in its possession or under its reasonable control and dated
within the past seven (7) years.

     Section 3.15.     Employees. The Company has provided to the Buyer a true and complete list, setting forth
each employee of the Company or any Subsidiary, together with such employee’s job title; location
in which employed; current compensation rate; and service credited for purposes of vesting and
eligibility to participate under any pension, retirement, profit-sharing, thrift-savings, deferred
compensation, stock bonus, stock option, restricted stock, stock appreciation right, cash bonus,
employee stock ownership (including investment credit or payroll stock ownership), retention,
severance pay, insurance, medical, welfare, or other Benefit Plan. The Company and each Subsidiary
has complied with all provisions of applicable law pertaining to the employment of employees,
including, without limitation, all such laws relating to labor relations, equal employment, fair
employment practices, entitlements, prohibited discrimination or other similar employment practices
or acts, except where any failure so to comply would not have, individually or in the aggregate, a
Material Adverse Effect.

     Section 3.16.     Labor Relations. Neither the Company nor any Subsidiary is a party to any collective
bargaining or other labor contract. There is not presently pending or existing and, to the
knowledge of Seller, there is not threatened (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, or (b) any effort to organize any employees into a collective
bargaining unit.

     Section 3.17.     Employee Benefits.

     (a) Schedule 3.17(a) sets forth each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, retention, severance or termination pay,
hospitalization or other medical, life, or other insurance, supplemental unemployment benefits,
profit-sharing, 401(k), pension or retirement plan, program, agreement, or arrangement, and each

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other employee benefit plan, program, agreement, or arrangement, written or verbal, that
currently is sponsored, maintained, or contributed to or required to be contributed to by the
Company or any Subsidiary or by any trade or business, whether or not incorporated (an “ERISA
Affiliate”), that together with the Company or any Subsidiary would be deemed a “single
employer” within the meaning of Section 4001(b) (l) of the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder (“ERISA”), for
the benefit of any U.S.-based employee or former employee of the Company or any Subsidiary (the
“Benefit Plans”). Schedule 3.17(a) identifies each of the Benefit Plans that is an
“employee welfare benefit plan” or “employee pension benefit plan” as such terms are defined in
Sections 3(1) and 3(2) of ERISA (such plans being referred to collectively as the “ERISA
Plans”).

     (b) Each of the Benefit Plans has been and is operated and administered in accordance with its
terms in all material respects and in material compliance with applicable requirements of the Code,
ERISA, and other applicable Legal Requirements and may in accordance with its terms be amended or
terminated at any time.

     (c) Except as set forth on Schedule 3.17(c), none of the Company, any Subsidiary or
any ERISA Affiliate contributes, is obligated to contribute, or has been obligated to contribute to
a “multiemployer plan” within the meaning of Section 3(37) of ERISA during the five years preceding
the Closing Date.

     (d) Neither the Company nor any Subsidiary maintains, contributes to, or has any liability or
obligation with respect to an employee welfare benefit plan that provides health or life insurance
or other benefits for current or future retired or terminated employees or directors (or any spouse
or dependents thereof) of the Company or any ERISA Affiliate, except as may be required under
Section 4980 of the Code.

     (e) No Benefit Plan is (i) a “defined benefit plan” (within the meaning of Section 3(35) of
ERISA), (ii) subject to the minimum funding requirements of Section 412 of the Code or Part 3 of
Title I of ERISA, or (iii) subject to Title IV of ERISA.

     (f) Other than claims in the ordinary course for benefits with respect to the Benefit Plans,
there are no Proceedings pending or, to the knowledge of Seller, threatened in writing with respect
to any Benefit Plan.

     (g) Schedule 3.17(g) sets forth each employee benefit plan, program or arrangement for
retirement or welfare benefits currently covering employees or former employees of the Company or
any Subsidiary who are not employed in the United States (the “Non-US Plans”). Each Non-US
Plan has been operated and administered in material compliance with all applicable Legal
Requirements.

     Section 3.18.     Insurance. Schedule 3.18 sets forth all policies of insurance to which the Company
or any Subsidiary is a party or under which the Company or any Subsidiary is covered as of the
Agreement Date. With respect to each such insurance policy: (i) the policy is valid, binding, and
in full force and effect; and (ii) neither the Company nor any Subsidiary is in breach or default,
and to the knowledge of Seller, no event has occurred that with notice or the lapse of

21

 

time, or both, would constitute a breach or default under the policy, except where any such breach
or default would not have, individually or in the aggregate, a Material Adverse Effect.

     Section 3.19.     Related Party Transactions. Schedule 3.19(a) sets forth all contracts or
arrangements involving the Company or any of its Subsidiaries and Equity Affiliates, on the one
hand (the “Company Group”), and Seller, Liberty or any Affiliate of Liberty, including
Ascent Media Group, LLC (other than members of the Company Group), on the other hand (the
“Liberty Group”), including a description of all goods and services provided by the Liberty
Group to the Company Group (all of which will be terminated as of the Closing Date unless otherwise
noted on Schedule 3.19(a)). Schedule 3.19(b) sets forth all contracts or
arrangements for obtaining products or services by the Company Group that have been entered into by
the Company Group, based in whole or in part on the relationship of the Company Group with the
Liberty Group, indicating in each case whether such contract or arrangement will be terminated or
modified as a result of the transactions contemplated by this Agreement. There is no contract or
arrangement in effect entered into by the Company or any Subsidiary with any officer or director of
the Company or any Subsidiary, other than compensation, benefits and expense reimbursements paid or
made in the Ordinary Course of Business.

     Section 3.20.     Customers. The MFN Clauses in the Company’s and its Subsidiaries’ hotel customer contracts
were granted based on total packages, and Seller has reasonable grounds to believe no such MFN
Clauses have been triggered. No hotel customer of the Company and its Subsidiaries has given any
notice to the Company and its Subsidiaries that it believes the MFN Clauses in its agreement has
been triggered.

     Section 3.21.     Brokers’ Fees. Except as provided in Section 4.5, neither the Company nor any Subsidiary
has any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.

     Section 3.22.     Absence of Certain Changes or Events. Since December 31, 2005, (a) there has occurred no
fact, event or circumstance which has had or could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (b) none of Seller or its Subsidiaries has taken, and
have not caused or permitted the Company or any Subsidiary to take, any action that would have been
prohibited without the consent or approval of Buyer if Section 6.3 of this Agreement had been in
effect since December 31, 2005 and (c) none of Seller, Liberty, the Company nor any Subsidiary has
entered into any contract or agreement to take any action that would have been prohibited without
the consent or approval of Buyer if Section 6.3 of this Agreement had then been in effect since
such date.

ARTICLE IV

ADDITIONAL REPRESENTATIONS AND WARRANTIES

     Except as set forth in the Disclosure Schedule or in any of the documents referred to in the
Disclosure Schedule, Seller and Liberty hereby jointly and severally represent and warrant to Buyer
as follows:

     Section 4.1.     Organization of Seller. Each of Seller and Liberty is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.

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     Section 4.2.     Authorization; Binding Effect. Each of Seller and Liberty has all requisite corporate
power and authority to execute and deliver this Agreement and the Stockholders Agreement and to
perform its obligations under this Agreement and the Stockholders Agreement, and this Agreement and
the Stockholders Agreement has been duly executed and delivered by Seller and Liberty. All
consents or approvals of any stockholder of Seller or Liberty required for Seller’s or Liberty’s
execution, delivery and performance of this Agreement have been obtained and are in full force and
effect, without any conditions or qualifications thereto. No further or other corporate or
stockholder consents or approvals are or will be required to be obtained by Seller or Liberty in
order for Seller to consummate the transactions contemplated in accordance with the terms hereof.
This Agreement and the Stockholders Agreement constitute the legal, valid, and binding obligation
of each of Seller and Liberty, enforceable against Seller and Liberty in accordance with its terms,
except insofar as enforcement may be limited by bankruptcy, insolvency, or other laws affecting
generally the enforceability of creditors’ rights and by limitations on the availability of
equitable remedies.

     Section 4.3.     Noncontravention; Consents. Neither the execution and delivery of this Agreement and the
Stockholders Agreement, nor the consummation of the transactions contemplated by this Agreement and
the Stockholders Agreement, will (a) violate any material Legal Requirement to which Seller or
Liberty is subject or any provision of the certificate of incorporation or bylaws of Seller or
Liberty or (b) result in a material breach of, constitute a material default under, result in the
acceleration of, create in any Person the right to accelerate, terminate, modify or cancel, any
contract, agreement, lease, license or other arrangement to which Seller or Liberty is a party or
by which it is bound or to which its assets are subject. Except as set forth on Schedule
3.7, neither Seller nor Liberty is required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Governmental Authority or other Person in
order for Buyer, Seller and Liberty to consummate the transactions contemplated by this Agreement.

     Section 4.4.     Shares. Seller holds beneficially and of record all of the Shares free and clear of any
Encumbrances other than Permitted Encumbrances, all of which will be released or removed prior to
the transfer of the Shares at the Closing, other than Encumbrances under the Securities Act.
Neither Seller nor Liberty is a party to any contract or commitment that could require either
Seller or Liberty to sell, transfer, or otherwise dispose of any capital stock of the Company
(other than this Agreement). Neither Seller nor Liberty is a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any capital stock or Control of the
Company or any Subsidiary or Equity Affiliate.

     Section 4.5.     Brokers’ Fees. Seller has no Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this Agreement, except
that Seller’s parent, Liberty, has retained Lehman Brothers Inc. and Daniels & Associates, L.P. as
its financial advisors (collectively, “Seller’s Financial Advisors”). Seller or Liberty
will be responsible for all fees and commissions payable to Seller’s Financial Advisors with
respect to the transactions contemplated by this Agreement.

     Section 4.6.     Investment Intent. Seller is acquiring the shares of Buyer’s capital stock comprising the
Share Consideration for its own account, not as a nominee or agent, and not with

23

 

a view to the resale or distribution of any part thereof within the meaning of Section 2(11) of the
Securities Act.

     Section 4.7.     Disclosure of Information. Seller has been furnished all information it considers
necessary or appropriate for deciding whether to accept the shares of Buyer’s capital stock
comprising the Share Consideration. Seller has had an opportunity to ask questions and receive
answers from Buyer regarding the business, properties, financial condition and prospects of the
Buyer and its subsidiaries, and all such questions have been answered to the full satisfaction of
Seller.

     Section 4.8.     Accredited Investor. Seller is an “accredited investor” within the meaning of SEC Rule 501
of Regulation D under the Securities Act.

     Section 4.9.     Restricted Securities. Seller understands that the shares of Buyer’s capital stock
comprising the Share Consideration are characterized as “restricted securities” under the United
States federal securities laws inasmuch as such shares are being acquired in a transaction not
involving a public offering and that under such laws and applicable regulations such shares of
Buyer’s capital stock may be resold without registration under the Securities Act only in certain
limited circumstances. In the absence of an effective registration statement covering such shares
of Buyer’s capital stock or an available exemption from registration under the Securities Act, such
shares of Buyer’s capital stock must be held indefinitely.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents and warrants to Seller as follows:

     Section 5.1.     Organization of Buyer. Buyer is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its formation.

     Section 5.2.     Authorization; Binding Effect; Financial Capability.

     (a) Buyer has all requisite corporate power and authority to execute and deliver this
Agreement and the Stockholders Agreement and to perform its obligations under this Agreement and
the Stockholders Agreement, and this Agreement and the Stockholders Agreement have been duly
executed and delivered by Buyer.

     (b) This Agreement and the Stockholders Agreement constitute the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms, except insofar as
enforcement may be limited by bankruptcy, insolvency, or other laws affecting generally the
enforceability of creditors’ rights and by limitations on the availability of equitable remedies.

     (c) Buyer’s financial resources are sufficient to purchase the Shares pursuant to the terms
and conditions set forth in this Agreement.

     Section 5.3.     Noncontravention; Consents. Neither the execution and the delivery of this Agreement and
the Stockholders Agreement, nor the consummation of the transactions

24

 

contemplated by this Agreement and the Stockholders Agreement, will (a) violate any material Legal
Requirement to which Buyer is subject or any provision of the certificate of incorporation or
bylaws (or comparable constituent documents) of Buyer or (b) result in a material breach of,
constitute a material default under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, any contract, agreement, lease, license, or other
arrangement to which Buyer is a party or by which it is bound or to which its assets are subject.
Except for the filing required under the HSR Act, Buyer does not need to give any notice to, make
any filing with, or obtain any authorization, consent, or approval of any Governmental Authority or
other Person in order for Buyer and Seller to consummate the transactions contemplated by this
Agreement.

     Section 5.4.     Investment Intent. Buyer is acquiring the Shares for its own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof within the meaning of
Section 2(11) of the Securities Act.

     Section 5.5.     Disclosure of Information. Buyer has been furnished all information it considers necessary
or appropriate for deciding whether to purchase the Shares. Buyer has had an opportunity to ask
questions and receive answers from Seller regarding the business, properties, financial condition
and prospects of the Company and its Subsidiaries, and all such questions have been answered to the
full satisfaction of Buyer.

     Section 5.6.     Accredited Investor. Buyer is an “accredited investor” within the meaning of SEC Rule 501
of Regulation D under the Securities Act.

     Section 5.7.     Restricted Securities. Buyer understands that the Shares are characterized as “restricted
securities” under the United States federal securities laws inasmuch as the Shares are being
acquired in a transaction not involving a public offering and that under such laws and applicable
regulations such Shares may be resold without registration under the Securities Act only in certain
limited circumstances. In the absence of an effective registration statement covering the Shares
or an available exemption from registration under the Securities Act, the Shares must be held
indefinitely.

     Section 5.8.     Certain Proceedings. There is no Proceeding against or involving Buyer or any Affiliate of
Buyer that has been commenced or, to Buyer’s knowledge, threatened against or involving Buyer or
any Affiliate of Buyer that challenges, or may have the effect of preventing, delaying, making
illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement.

     Section 5.9.     Brokers’ Fees. Other than Bear, Stearns & Co. Inc., Buyer has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement. Buyer will be responsible for all fees and commissions payable to
any such broker, finder, or agent retained by Buyer or any of its Affiliates with respect to the
transactions contemplated by this Agreement.

     Section 5.10.     Delivery of Share Consideration. The Share Consideration being issued and delivered
hereunder, when issued and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly authorized, validly issued, fully

25

 

paid and non-assessable. The transfer and delivery of such Share Consideration by Buyer to Seller
against the transfer of the Shares as contemplated by this Agreement will transfer good and valid
title to the shares of capital stock comprising such Share Consideration, free and clear of all
Encumbrances, except Encumbrances under the Securities Act or Encumbrances arising as a result of
any action taken by Seller or Liberty or any of their Affiliates.

     Section 5.11.     SEC Filings; Financial Information.

     (a) Buyer is a publicly traded company that is listed on The NASDAQ Stock Market LLC under the
ticker symbol “LNET” and files reports, registration and proxy statements and other information
with the SEC on its EDGAR System, all of which are available to Seller over the internet at the
SEC’s web site at http://www.sec.gov.

     (b) Buyer has delivered or made available to Seller (i) Buyer’s Form 10-Q for the quarter
ended June 30, 2006, (ii) all Form 8-Ks filed subsequent to June 30, 2006, (iii) Form 10-K for the
year ended December 31, 2005, (iv) any Proxy Statements for Annual Meetings of Stockholders held in
2005 and 2006 and (v) any Registration Statements filed by Buyer including the prospecti contained
therein and all amendments and prospectus supplements thereto, specified on Schedule 5.11
(collectively, the “Current Filings”) in which information, risks and facts about Buyer are
set forth.

     (c) The Current Filings, as of the date of the filing thereof did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading and taking into account any subsequent filings made to amend, supplement
or that had the effect of superceding any information included in a prior Current Filing.

     (d) The financial information for Buyer and its subsidiaries contained in the Current Filings
fairly present in all material respects, as of the dates thereof and for the periods then ended,
the financial position and results of operations of Buyer and its consolidated subsidiaries in
conformity with GAAP (except as indicated in the notes thereto), subject to normal year-end
adjustments (that are not material, either individually or in the aggregate) with respect to
unaudited financial statements.

ARTICLE VI

PRE-CLOSING COVENANTS

     The Parties agree as follows with respect to the period between the Agreement Date and the
Closing Date (inclusive):

     Section 6.1.     Commercially Reasonable Efforts. Except where a different standard of conduct is
specifically contemplated by this Agreement (in which event such standard will apply), each of the
Parties will use its commercially reasonable efforts in good faith to take all actions and to do
all things necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement in the most expeditious manner practicable (including
using commercially reasonable efforts to cause the conditions to Closing set forth in Article VIII
for which such Party is responsible to be satisfied as soon as reasonably

26

 

practicable and to prepare, execute and deliver such documents and instruments and take or cause to
be taken such other and further action as any other Party may reasonably request).

     Section 6.2.     Notices and Consents. Seller and Liberty will or will cause the Company or a Subsidiary,
as applicable, to give any notices to third parties, and Seller and Liberty will or will cause the
Company or a Subsidiary, as applicable, to use its commercially reasonable efforts to obtain any
third-party consents, necessary to consummate the transactions contemplated by this Agreement as
promptly as reasonably practicable. Buyer will give any notices to third parties and will use its
commercially reasonable efforts to obtain any third-party consents necessary to consummate the
transactions contemplated by this Agreement as promptly as reasonably practicable. Each of the
respective Parties will give any notices to, make any filings with, and use their commercially
reasonable efforts to obtain any authorizations, consents, and approvals of any Governmental
Authority required to be given or obtained by such respective Parties in connection with the
transactions contemplated by this Agreement as promptly as reasonably practicable.

     Section 6.3.     Operation of Business. Except as contemplated by this Agreement, Seller will cause the
Company and its Subsidiaries to conduct the business of the Company and its Subsidiaries in the
Ordinary Course of Business, including in compliance in all material respects with applicable Legal
Requirements and all Contracts. Without limiting the generality of the foregoing, except as set
forth on Schedule 6.3 or as otherwise contemplated by the terms of this Agreement and
except as may be required by applicable Legal Requirements or any binding contract in effect on the
Agreement Date, without the consent of Buyer (which consent will not be unreasonably withheld,
delayed or conditioned), Seller will not, and will not cause or permit the Company or any
Subsidiary to, take any of the following actions:

     (a) (i) change the authorized or issued capital stock of the Company or any Subsidiary; (ii)
grant any stock option or right to purchase or receive shares of capital stock of the Company or
any Subsidiary; (iii) issue any security convertible into the capital stock of the Company or any
Subsidiary; (iv) grant any registration rights with respect to the capital stock of the Company or
any Subsidiary; or (v) purchase, redeem, retire, or otherwise acquire any shares of its capital
stock;

     (b) sell, lease, transfer, or assign any material assets of the Company or any Subsidiary
other than in the Ordinary Course of Business;

     (c) enter into any agreement, contract, lease, or license by the Company or such Subsidiary
that is outside the Ordinary Course of Business;

     (d) accelerate, terminate, modify, or cancel any agreement, contract, lease, or license to
which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound
outside the Ordinary Course of Business;

     (e) enter into any agreement, contract, lease or license with terms that are materially
different than those agreed to in the Ordinary Course of Business;

     (f) issue any note, bond, or other debt security or create, incur, assume, or guarantee any
Indebtedness (other than any Indebtedness that will be repaid at Closing);

27

 

     (g) make a material change in the accounting methods used by the Company or any Subsidiary;

     (h) cancel, compromise, waive, settle or release any right or claim outside the Ordinary
Course of Business;

     (i) grant any license or sublicense of any rights under or with respect to the Intellectual
Property of the Company or any Subsidiary, or permit the lapse or termination of any such license
or sublicense, other than in the Ordinary Course of Business;

     (j) authorize or make any material change in the certificate of incorporation or bylaws (or
comparable constituent documents) of the Company or any Subsidiary;

     (k) declare, set aside, or pay any dividend or make any distribution with respect to the
capital stock of the Company;

     (l) make any loan to, or enter into any other transaction with, any of its directors,
officers, or employees, or members of the Liberty Group other than in the Ordinary Course of
Business;

     (m) enter into any employment contract, independent contractor agreement or arrangement, or
collective bargaining agreement or modify the terms of any existing such contract or agreement
other than in the Ordinary Course of Business;

     (n) adopt, amend, modify, (including, without limitation, the modification of vesting
provisions), or terminate any bonus, profit-sharing, incentive, retention, severance, or other
plan, contract, or commitment for the benefit of any of its directors, officers, employees,
independent contractors or consultants (or take any such action with respect to any other Benefit
Plan), except that this shall not prevent (i) Liberty from taking action to vest any accounts in
the Liberty Media 401(k) Savings Plan in its sole discretion or any amendment or modification to
increase or revise any benefits to the extent such increase or revision is solely the obligation of
a member of the Liberty Group; or (ii) ONCO or its Subsidiaries from modifying the annual officer
and employee incentive plans (including bonus criteria) in the Ordinary Course of Business; or

     (o) make or grant any increase in, or accelerate the vesting of any bonus, wage or salary paid
or payable to any officer, employee or group of employees (other than general employee wage
increases in the Ordinary Course of Business).

     In addition to the foregoing, beginning January 2007, the Seller shall cause the Company or
its Subsidiaries to make capital expenditures for new and conversion rooms and capital maintenance
expenditures consistent with its plan, but (x) not less than $2,500,000 in any given month and (y)
not less than $8,000,000 in any given calendar quarter. In addition, beginning January 2007, if
Seller has not entered into a new license agreement as of January 1, 2007 with Acacia Media
Technologies Corporation (“Acacia”), the Company and its Subsidiaries shall continue to pay Acacia
at the current license rate or, in the alternative, accrue a monthly amount based on the current
license rate.

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     Section 6.4.     Access and Investigation. Subject to the provisions of the Confidentiality Agreement dated
as of November 9, 2005 (the “Existing NDA”) and to applicable Legal Requirements, Seller
will, and will cause the Company and its Subsidiaries to, after receiving reasonable advance notice
from Buyer, give Buyer reasonable access (during normal business hours) to the books, records and
appropriate personnel of the Company and its Subsidiaries for the purpose of enabling Buyer to
further investigate and inspect, at Buyer’s sole expense, the business and operations of the
Company and its Subsidiaries; provided, however, that such access may be limited to the extent that
antitrust counsel reasonably determines that such limitation is required under any applicable
Antitrust Law after discussing such determination with Buyer’s antitrust counsel. In conducting
its investigation of the business and operations of the Company and its Subsidiaries, Buyer will
not interfere in any manner with the normal business or operations of the Company or its
Subsidiaries, with the performance of the employees of the Company or its Subsidiaries or with the
customer, vendor or other business relationships of the Company or its Subsidiaries.

     Section 6.5.     Notification. Each Party will give prompt written notice to the other Party of any fact or
condition known to such first Party that causes or constitutes a breach of any of the
representations, warranties, covenants or commitments made by such first Party in this Agreement.
Should any such fact or condition require any change in the Schedules to this Agreement (including
the Disclosure Schedule) if the Schedules were dated the date of the occurrence or discovery of any
such fact or condition, Buyer or Seller, as applicable, (the “Notifying Party”) will
promptly deliver to the other Party (the “Receiving Party”) a supplement to the Schedules
specifying such change. Any such notification shall set out particulars of each untrue,
incomplete, incorrect or misleading representation or warranty and the basis for any alleged breach
of covenant, agreement or obligation, and details of any actions being taken by the Notifying Party
to rectify the same. The giving or acceptance of any such notification shall not constitute a
waiver of such breach and shall not prejudice the rights of the Receiving Party under this
Agreement.

     Section 6.6.     Subsequent Financial Statements. Seller shall cause the Company and its Subsidiaries to
prepare and deliver to Buyer monthly management reports and financial statements regarding ONCO and
its Subsidiaries and THN for each month after the date of the Interim Financial Statements and the
THN Interim Financial Statements no later than twenty (20) days after the end of each month until
the Closing or until the earlier termination of this Agreement as provided herein. Such monthly
reports and financial statements shall be consistent with past practice and such financial
statements shall foot to net income. Seller shall cause the Company and its Subsidiaries to
prepare and deliver to Buyer unaudited consolidated and consolidating financial statements of the
Company and its Subsidiaries and THN for each quarter after the date of the Interim Financial
Statements and the THN Interim Financial Statements no later than forty (40) days after the end of
each quarter until the Closing or until the earlier termination of this Agreement as provided
herein. Such quarterly statements shall not include notes and shall be subject to normal year-end
adjustments (which shall not be material, individually or in the aggregate), and shall be prepared
in accordance with GAAP.

     Section 6.7.     Subsequent Filings. Buyer shall make available to Seller any subsequent Current Filings as
and when filed up to the Closing Date.

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     Section 6.8.     Non-Solicitation. Seller shall, and Seller shall cause its respective agents,
representatives and Affiliates (and any agents and representatives of such Affiliates) not to,
during the period commencing on the Agreement Date and ending with the earlier to occur of the
Closing or the termination of this Agreement in accordance with its terms, directly or indirectly;
(a) solicit, encourage or initiate the submission of proposals or offers from any Person or entity
for, or enter into any agreement for, (b) participate in any discussions pertaining to, or (c)
furnish any information to any Person, other than Buyer and its representatives, relating to (i)
any acquisition or purchase of the capital stock or other equity interests of or in the Company or
its Subsidiaries or (ii) any acquisition or purchase of any assets or the business of the Company
or any of its Subsidiaries, or (iii) any merger, consolidation or business combination involving
the Company or any of its Subsidiaries. Seller agrees to promptly notify Buyer in writing of any
offers or proposals received from any Person (other than Buyer) after the date hereof regarding any
of the matters described in clauses (i), (ii) or (iii) above, which notice will include the
identity of such Person (including the ultimate beneficial owner(s) thereof, if known) and the
terms of such offer or proposal in reasonable detail. Because of the difficulty of measuring the
economic loss that may be incurred as a result of the breach of the covenant above, and because of
the immediate and irreparable damage that would be caused for which the injured party would have no
other adequate remedy, Seller agrees that the Buyer may enforce the provisions of this Section by
specific performance, obtaining temporary or permanent restraining orders or injunctions, or other
equitable means, in addition to any other rights available at law.

     Section 6.9.     Assistance with Financing. Prior to the Closing, Seller shall (and shall cause the Company
and its and their respective officers, managers, employees, auditors and agents to) cooperate with
Buyer and take such actions as Buyer may reasonably request in connection with obtaining the
financing necessary for Buyer to consummate the transactions contemplated by the Bank Commitment
Letter (the “Bank Financing”). In connection with the Bank Financing, Buyer (or an
affiliate of Buyer) may seek to prepare an information memorandum (the “Information
Memorandum”), which Information Memorandum may include the consolidated financial statements of
Seller or ONCO and other customary financial information (the “Financial Information”).
Accordingly, Seller shall (and shall cause the Company and its and their respective officers,
managers, employees, auditors and agents to) furnish to Buyer any Financial Information or
information or documents necessary for the completion of the Information Memorandum (including any
customary representation letters) and the Bank Financing, to the extent reasonably necessary. In
addition, Seller shall (and shall cause the Company to) make available its Chief Executive Officer,
Chief Financial Officer and General Counsel in connection with the preparation of the Information
Memorandum and the Financial Information and make available the Chief Executive Officer, Chief
Financial Officer and General Counsel in connection with the raising of financing for Buyer, in
each case, to the extent reasonably requested by Buyer, including (i) making the Chief Executive
Officer, the Chief Financial Officer and the General Counsel of each of Seller and the Company
available to participate in diligence sessions and (ii) furnishing to Buyer and its financing
sources such other financial and pertinent information regarding the Company and access to the data
room (subject to agreement by such entities to be bound by customary non-disclosure agreements).

     Section 6.10.     Assistance with Acquisition of Minority Ownership of THN. Prior to the Closing, if so
requested by Buyer, Seller and Liberty shall (and shall cause the Company and its and their
respective officers, managers, employees and agents to) cooperate with Buyer and take

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such actions as Buyer may reasonably request in connection with the acquisition of the minority
stockholder’s shares of THN in conjunction with the transactions contemplated hereby, including but
not limited to, amending this Agreement and the exercise of any drag-along rights; provided,
however, that such cooperation does not require Liberty, Seller, the Company or their respective
officers, managers, employees and agents (a) to incur material expense for which Buyer does not
agree to pay or reimburse Liberty, Seller, the Company or their respective officers, mangers,
employees and agents, (b) to assume any liability, or (c) to undertake any action that in the
reasonable judgment of Seller and Liberty would cause Liberty, Seller, the Company or their
respective officers, managers, employees and agents to incur any financial risk.

ARTICLE VII

OTHER MATTERS

     Section 7.1.     Understanding Regarding Disclaimer of Warranties of Buyer. Seller understands and agrees
that neither Buyer nor any of its Affiliates (or any officers or representatives of any of them)
has made any representation or warranty, whether express or implied, of any kind or character,
except as expressly set forth herein, including any representation or warranty as to the accuracy
or completeness of any projections, estimates or budgets of future performance of Buyer or any of
its Subsidiaries (including the underlying assumptions, or any other information or documents),
delivered to or made available to Seller, and Seller hereby waives and relinquishes any right,
claim, action or remedy based on any of such projections or assumptions, other than claims arising
from fraud or intentional misrepresentations made by Buyer or any of its Subsidiaries. Seller
acknowledges that it has conducted due diligence regarding the Buyer and its subsidiaries and their
businesses and as a result of such due diligence, it is familiar with the businesses of the Buyer
and its subsidiaries. Seller has no knowledge that any of Buyer’s representations and warranties
contained in this Agreement is untrue or incomplete or of any fact or circumstance that could
reasonably be expected to render any of Buyer’s representations and warranties contained in this
Agreement untrue or incomplete.

     Section 7.2.     Understanding Regarding Disclaimer of Warranties of Seller. Buyer understands and agrees
that neither Seller nor any of its Affiliates (or any officers or representatives of any of them)
has made, or shall be deemed to have made, any representation or warranty, whether express or
implied, of any kind or character, except as expressly set forth herein or in the Disclosure
Schedule, including any representation or warranty as to the accuracy or completeness of any
projections, estimates or budgets of future performance of the Company or any of its Subsidiaries
(including the underlying assumptions, or any other information or documents) delivered to or made
available to Buyer, and Buyer hereby waives and relinquishes any right, claim, action or remedy
based on any of such projections or assumptions, other than claims arising from fraud or
intentional misrepresentations made by Seller, Liberty, the Company or any of its Subsidiaries.
Buyer acknowledges that it has conducted due diligence regarding the Company and its Subsidiaries
and their businesses and as a result of such due diligence, it is familiar with the businesses of
the Company and its Subsidiaries. Buyer has no knowledge that any of Seller’s or Liberty’s
representations and warranties contained in this Agreement is untrue or incomplete or of any fact
or circumstance that could reasonably be expected to render any of Seller’s representations and
warranties contained in this Agreement untrue or incomplete.

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     Section 7.3.     HSR Act Filings. Each of Seller and Buyer will cause to be made an appropriate filing of
all pre-merger notification and report forms pursuant to the HSR Act no later than eighteen
Business Days after the Agreement Date. Each such filing will request early termination of the
waiting period imposed by the HSR Act. Prior to making any filing pursuant to the HSR Act, each
Party will provide the other Party with all drafts of the transaction specific information
contained therein and afford the other Party a reasonable opportunity to comment on such drafts.
Seller and Buyer will use their respective commercially reasonable efforts to respond as promptly
as reasonably practicable to any inquiries received from the Federal Trade Commission (the “FTC”)
or the Antitrust Division of the Department of Justice (the “Antitrust Division”) for additional
information or documentation and to respond as promptly as reasonably practicable to all inquiries
and requests received from any other Governmental Authority in connection with antitrust matters;
provided, however, that nothing contained in this Agreement will be deemed to preclude either
Seller or Buyer from negotiating reasonably and in good faith with any Governmental Authority
regarding the scope and content of any such requested information or documentation, provided that
such negotiations are conducted promptly and diligently. Seller and Buyer will use their
respective commercially reasonable efforts to overcome any objections that may be raised by the
FTC, the Antitrust Division or any other Governmental Authority having jurisdiction over antitrust
matters. Each Party will keep the other Party promptly apprised of any communications with, and
inquiries or requests for information from, any such Governmental Authority, including promptly
providing to the other Party copies of any such written communications, and will take reasonable
steps to consult with the other Party in advance of any meeting or conference with any such
Governmental Authority (and to the extent permitted by the applicable Governmental Authority, give
the other Party the opportunity to attend and participate in any such meeting or conference).
Notwithstanding anything to the contrary in this Section 7.3 or elsewhere in this Agreement, no
Party is or will be required to agree to divest or license any material assets or agree to any
material limitations or restrictions on the conduct of its business as a condition of resolving any
such objections. Special Actions. Each of the Parties will use its commercially reasonable
efforts to resolve any objections that may be asserted by any Person with respect to the
transactions contemplated by this Agreement under any Antitrust Law, provided that no party will be
required to agree to divest or license any material assets or agree to any material limitations or
restrictions on the conduct of its business as a condition of resolving any such objections. In
connection with the foregoing, if any Proceeding is instituted or threatened to be instituted
challenging any transaction contemplated by this Agreement as violative of any Antitrust Law, each
of the Parties will cooperate in good faith in all respects with each other and use its respective
commercially reasonable efforts to contest and resist any such Proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation
of the transactions contemplated by this Agreement, including vigorously defending on the merits
any claim asserted in any forum by any Person through a final and nonappealable judgment, provided
that no party will be required to agree to divest or license any material assets or agree to any
material limitations or restrictions on the conduct of its business as a condition of resolving any
such objections.

     Section 7.5.     Confidentiality. Subject to the obligations of Buyer to provide disclosure to comply with
federal securities laws, Buyer on the one hand, and the Company, Seller and Liberty, on the other
hand, (the Party receiving confidential information and its Authorized

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Representatives, the “Receiving Party”) will maintain in strict confidence, and will cause
its 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 Existing NDA or this
Agreement unless (a) such information was already known to the Receiving Party prior to its
disclosure or becomes generally available to the public other than, in either case, as a result of
a disclosure in violation of the Existing NDA or this provision or a disclosure by a Person with a
confidentiality obligation or fiduciary duty or obligation to the Disclosing Party that the
Receiving Party knows is in violation of such duty or obligation, (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 or
any future financing 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 Legal Requirement; provided, however that if the terms of this Agreement and the
transactions contemplated by this Agreement or any confidential information furnished by Seller or
the Company or any of its Subsidiaries 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 within a reasonable period of
time prior to such disclosure being made, (ii) the Party proposing to disclose such information
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 7.5 are intended to supplement and not to supersede or
replace the provisions of the Existing NDA. All provisions of the Existing NDA remain in full
force and effect except as modified above. In addition, following Closing, Seller and Liberty
agree to maintain in strict confidence, and will cause their Authorized Representatives to maintain
in strict confidence, any confidential information of the Company and its Subsidiaries and agree
not to solicit employees of the Company and its Subsidiaries for one year following the Closing
Date.

     Section 7.6.     Employee Matters.

          (a) Except as set forth on Schedule 7.6, all Benefit Plans are maintained by Liberty
(the “Liberty Benefit Plans”), and, subject to the requirements of ERISA or any other
applicable Legal Requirements, from and after the Closing Date, employees of the Company or any of
its Subsidiaries will no longer be entitled to participate in any of the Liberty Benefit Plans and
neither Buyer nor the Company or any of its Subsidiaries will be required to maintain or will
assume any Liabilities under any of the Liberty Benefit Plans from and after the Closing Date.
From the Closing Date at least through the first anniversary of the Closing Date, Buyer will

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provide employee Benefit Plans with aggregate employee benefits and cash compensation to
employees of the Company and its Subsidiaries that are no less favorable in the aggregate than the
benefits and cash compensation provided to them under such plans immediately prior to the Closing;
provided, however, that in the alternative Buyer at its option may provide employee benefits to
employees of the Company and its Subsidiaries that, in the aggregate, are no less favorable than
those applicable to similarly situated employees of Buyer.

       
   (b) Liberty and its Affiliates (other than the Company and Subsidiaries) will retain
responsibility for offering and providing “continuation coverage” to any “qualified beneficiary”
who is covered by a “group health plan” sponsored, maintained or contributed to by Liberty or its
Affiliates (other than the Company and Subsidiaries) and who has experienced a “qualifying event”
or is receiving such “continuation coverage” prior to or on the Closing Date, regardless of whether
such “qualified beneficiary” is offered “group health plan” coverage by Buyer from and after the
Closing Date. “Continuation coverage,” “qualified beneficiary,” “qualifying event” and “group
health plan” will have the meanings given to such terms under Section 4980B of the Code and Section
601 et seq. of ERISA (“COBRA”). Liberty and its Affiliates (other than the Company and
Subsidiaries) will defend, indemnify and hold harmless Buyer and the Company and its Subsidiaries
after the Closing Date from and against any successor liability that any of them may incur under
COBRA with respect to any “group health plan” sponsored, maintained or contributed to by Liberty or
its Affiliates.

 
         (c) With respect to any employee benefits plans maintained or sponsored by Buyer (either
directly or through the Company or any of its Subsidiaries) on the Closing Date, each employee of
the Company and its Subsidiaries will be entitled to participate in such plans to the same extent
as similarly situated employees of Buyer and will receive credit for such employee’s past service
with the Company or any of its Subsidiaries as of the Closing Date for purposes of eligibility to
participate and vesting under such plans to the same extent that such service was credited under
the Benefit Plans on the Closing Date.

    
      (d) Employees of the Company and any of its Subsidiaries shall be eligible to receive benefits
maintained for similarly situated employees of Buyer, consistent with Buyer’s applicable human
resources policies, and shall become eligible for health and welfare plan benefits upon the later
of (i) the Closing Date, or (ii) the loss of eligibility for benefits under Seller’s or Liberty’s
health and welfare plans. Buyer agrees to cause each of the welfare plans of Buyer to (i) waive
any preexisting conditions, waiting periods actively at work requirements
under such plans
(except to the extent that such conditions, waiting periods and requirements exist and apply to an
employee under the Benefit Plans), and (ii) cause such plans to honor any expenses incurred by
employees of the Company and Subsidiaries prior to the Closing Date for purposes of satisfying
applicable deductibles, co-pays and maximum out-of-pocket amounts. Buyer shall accept or cause to
be accepted transfers from the Liberty medical reimbursement plan and dependent care assistance
plan (“Cafeteria Plan”) of each employee’s unused account balance as of the closing Date
and credit such employee with such amounts under a Cafeteria Plan of Buyer, but only if Liberty
transfers to Buyer the amount so credited under the Benefit Plans.

          (e) The Company will maintain the 2001 Severance Pay Plan and 2002 Executive Severance Pay
Plan through Closing; thereafter Buyer will maintain the 2001

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Severance Pay Plan and 2002 Executive Severance Pay Plan covering any employees of the Company
or any of its Subsidiaries entitled to benefits thereunder as in effect on the Agreement Date for a
period of two years from the Closing Date, without adverse amendment, for the benefit of employees
of the Company and its Subsidiaries.

          (f) Buyer will cause to be made available from and after the Closing Date to employees of the
Company and its Subsidiaries who were eligible to participate in the Liberty Media 401(k) Savings
Plan (the “Liberty 401(k) Plan”) a 401(k) plan sponsored by Buyer (either directly or
through the Company or any of its Subsidiaries) (the “Buyer 401(k) Plan”). The Buyer
401(k) Plan will accept direct and indirect rollovers of such employees’ account balances in the
Liberty 401(k) Plan, including direct rollovers of any outstanding employee loans under the Liberty
401(k) Plan in kind.

          (g) On Command Corporation previously sponsored or maintained two 401(k) plans, one through
Fidelity and the other through Nationwide (collectively, the “Terminated ONCO 401(k)
Plans”). All account balances in the Terminated ONCO 401(k) Plans have been distributed and
only final reporting matters (IRS Form 5500 and IRS Forms 1099R) remain to be completed after the
Closing Date. Liberty will defend, indemnify and hold harmless Buyer and the Company and its
Subsidiaries after the Closing Date with respect to any claims that may be made or disputes that
may arise relating to the Terminated ONCO 401(k) Plans.

          (h) In connection with the transactions contemplated by this Agreement, certain employees of
the Company and its Subsidiaries may be entitled to receive payments under the On Command
Corporation Retention Bonus Plan (the “Retention Plan”). All payments required to be made
under the Retention Plan shall be solely Liabilities of Liberty. Liberty will defend, indemnify
and hold harmless Buyer and the Company and its Subsidiaries after the Closing Date with respect to
any payments required to be made under the Retention Plan and with respect to any loss, cost,
expense, liability, claim or cause of action (including attorneys fees and costs of preparation
suffered or incurred by the Company or any Subsidiary) that may be made or disputes that may arise
relating to the Retention Plan. Seller agrees to use commercially reasonable efforts to retain the
employees of the Company and its Subsidiaries covered by the Retention Plan through thirty (30)
days after the Closing, including by way of adopting an amendment or supplement to the Retention
Plan, but Buyer acknowledges that there is no guarantee that any employee of the Company or its
Subsidiaries will agree to continue employment with the Company or any Subsidiary. Payments under
any such amendment, supplement or plan shall be solely Liabilities of Liberty.

          (i) All options granted to employees under the Amended and Restated On Command Corporation
1996 Key Employee Stock Plan (the “ONCO Stock Plan”) have been converted into options to
acquire shares of Liberty Series A Common Stock. Prior to the Closing, Seller will cause the ONCO
Stock Plan to be terminated. Liberty will defend, indemnify and hold harmless Buyer and the
Company and its Subsidiaries after the Closing Date with respect to any claims that may be made or
disputes that may arise relating to the ONCO Stock Plan.

          (j) Buyer will not terminate the employment of any employees of the Company or any of its
Subsidiaries if or to the extent that any such terminations of employment

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would require Seller or any of its Affiliates to take any actions in order to comply with the
provisions of the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101, et seq. (the
“WARN Act”). Buyer will defend, indemnify and hold harmless Seller and its Affiliates from
and against loss, cost, expense, liability, claim or cause of action (including attorneys fees and
costs of preparation suffered or incurred by the Company or any Subsidiary) that may arise from
noncompliance with the WARN Act as it may relate to the transactions contemplated by this
Agreement.

          (k) Nothing expressed or implied in this Section 7.6 is intended to confer upon any employee
of the Company or any of its Subsidiaries any rights or remedies of any nature or kind whatsoever
under or by reason of any of the provisions of this Section 7.6, including any rights of employment
or continued employment.

     Section 7.7.     Further Cooperation. If at any time after the Closing any further action is necessary or
desirable to carry out the purposes of this Agreement, each of the Parties will take such further
action (including the execution and delivery of such further instruments and documents) as any
other Party reasonably may request, all at the sole cost and expense of the requesting Party.
Liberty and Seller acknowledges and agrees that from and after the Closing Buyer will be entitled
to possession of all documents, books, records, agreements, and financial data of any sort relating
to the Company and its Subsidiaries and Liberty and Seller shall deliver custody or constructive
possession of such items at the Closing; provided that Seller will be entitled to retain copies of
any such items (provided such items are maintained in strict confidence to the same extent that
Seller and Liberty protects their own such books, record, data and confidential or proprietary
information in the ordinary course of their respective business) and will be entitled to
subsequently obtain from Buyer copies of such financial and other information related to the
Company and its Subsidiaries for periods prior to the Closing Date as Seller may reasonably request
in connection with any Proceeding, including any audit with respect to Taxes, subject to agreeing
to reasonable confidentiality and non-disclosure protections with respect to any such information
subsequently provided. Seller shall provide to Buyer audited consolidated financial statements of
the Company and its Subsidiaries for fiscal years ended December 31, 2005 and 2004. Liberty and
Seller shall cooperate with Buyer and each shall use their commercially reasonable efforts to cause
their independent registered public accounting firm to deliver all necessary consents for inclusion
of such firm’s audit report on the Company’s historical consolidated financial statements to be
included to the extent required in Buyer’s SEC filings from time to time.

     Section 7.8.     Non-Disparagement. Neither Party will disparage or in any way portray in a negative light
the other Party or its Affiliates or any of such Person’s products, services or businesses, either
directly or indirectly, in the form of oral statements, written statements, electronic
communications or otherwise. Neither Party will take any action to intentionally and improperly
interfere with the existing contractual or economic relationships of the other Party or its
Affiliates by encouraging or inducing any Person not to perform their existing contracts with or
otherwise conduct business with the other Party or its Affiliates, provided, however, that nothing
herein shall be deemed to prohibit or change normal and customary sales and marketing activities.

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     Section 7.9.     Company Audited Financial Statements. Seller shall deliver to Buyer as soon as practicable
after December 31, 2006, but in no event later than April 16, 2007 if Closing has not occurred by
such date, audited consolidated financial statements of the Company and its Subsidiaries, including
an unqualified audit report and balance sheet as of December 31, 2006 and the statement of
operations, changes in stockholders’ equity, and cash flows for the year then ended (collectively,
the “Company Audited Financial Statements”) if such Company Audited Financial Statements
were not required to be provided pursuant to Section 8.1(k). Seller shall take all steps to have
the Company’s December 31, 2006 financial statements audited as soon as practicable. If Closing
occurs prior to such time as the Company’s audited December 31, 2006 financial statements are
needed under Section 8.1(k) and such audit is not completed, Seller and Buyer shall cooperate to
complete such audit and allocates costs based on chargeable hours completed as of Closing. Seller
shall cooperate with Buyer and shall use its commercially reasonable efforts to cause the Company’s
independent accounting firm to deliver all necessary consents for inclusion of such firm’s audit
report on the Company Audited Financial Statements and the financial statements required by Section
8.1(k) to be included, to the extent required, in Buyer’s SEC filings (including registration
statements) from time to time. Seller shall also provide unaudited interim consolidated financial
statements for periods prior to the Closing for the Company and its Subsidiaries necessary to allow
Buyer to timely complete and file required reports and filings necessary to comply with SEC
reporting obligations or necessary for the filing of registration statements that are required by
Rule 3-05 of Regulation S-X (including the corresponding period for the prior year) if such interim
financial statements were not required to be provided pursuant to Section 8.1(k).

ARTICLE VIII

CONDITIONS TO CLOSING

     Section 8.1.     Conditions to Obligation of Buyer. The obligation of Buyer to purchase the Shares 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):

     (a) the representations and warranties set forth in Articles III and IV and in Section 9.2
shall be true and correct in all material respects as of the Closing Date (except that those that
relate to an earlier specified date shall be true and correct as of such date), provided that
notwithstanding the foregoing any representation and warranty set forth in Articles III and IV and
in Section 9.2 containing a materiality qualifier (including terms such as “material” and “Material
Adverse Effect”) shall be true and correct in accordance with their express terms;

     (b) the Company, Seller and Liberty shall have performed and complied with all of their
respective covenants and obligations under this Agreement to be performed at or prior to the
Closing in all material respects as of the Closing, provided that notwithstanding the foregoing any
covenants and obligations of the Company, Seller or Liberty under this Agreement containing a
materiality qualifier (including terms such as “material” and “Material Adverse Effect”) shall have
been complied within accordance with their express terms, provided, that any breach of covenant in
Section 6.9 or failure to deliver audited financial statements for the year ended December 31, 2006
under Section 7.9, to the extent it adversely affects Buyer’s ability to finance this transaction
on terms set forth in the Bank Commitment Letter, shall be material;

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     (c) Liberty or Seller, as applicable, (or the Company or any of its Subsidiaries) shall have
given notice to the third parties and procured all of the material third-party consents (which are
designated by an asterisk (*) to indicate that such consents are material and are a condition to
Closing) set forth on Schedule 3.7;

     (d) the waiting period under the HSR Act shall have expired or been terminated and any
applicable foreign antitrust approvals required by applicable Antitrust Law shall have been
obtained without any Governmental Authority taking any action to prevent the consummation of the
transactions contemplated by this Agreement;

     (e) no Proceeding shall be pending before any Governmental Authority and the Canadian
Commissioner of Competition shall not have threatened to make an application to commence a
Proceeding before the Canadian Competition Tribunal, and no statute, judgment, order, decree,
ruling, injunction, or charge shall be in effect, which reasonably could (i) prevent or materially
delay the consummation of any of the transactions contemplated by this Agreement, or (ii) cause any
of the transactions contemplated by this Agreement to be rescinded following consummation;

     (f) no Indebtedness of any member of the Company Group (other than Equity Affiliates) to third
parties (other than capital lease obligations with respect to which the remaining principal payment
obligations do not exceed $2,000,000 in the aggregate), or Indebtedness under any convertible notes
or intercompany accounts or amounts due or owed by any member of the Company Group to Liberty or
any Affiliate of Liberty that is not a member of the Company Group (“Liberty Intercompany
Debt”) shall remain outstanding and the extinguishment, conversion or payment of the Liberty
Intercompany Debt or any such other Indebtedness shall not result in any Liability or obligations,
including Tax, to Buyer, the Company or any Subsidiary;

     (g) each item required to be delivered by Seller pursuant to Section 2.5(a) shall have been
delivered by Seller;

     (h) the officers and directors of each of the Company and its Subsidiaries, except Jay Regan,
shall have tendered their resignation as an officer or director, as applicable, of each such
entity, provided that such persons shall not be required to tender their resignation as an
employee;

     (i) any shareholder holding any shares (including director-qualifying shares) of any
Subsidiary shall deliver such shares to Buyer or Buyer’s designee (other than the sole minority
shareholder of THN or the minority shareholders of Digital Media Network, Inc. d/b/a Instant Media
Network);

     (j) None of Liberty, Seller, the Company or its Subsidiaries shall have received notice of
termination by any third party of (i) any agreement, contract or groups of related agreements or
contracts representing in excess of 25,000 rooms serviced by the Company or its Subsidiaries, other
than due to normal expiration of any such agreements or contracts or due to breach by the third
party to any such agreements or contracts, or (ii) any Contract listed on Schedule 8.1(j)
provided that, in the case of clause (ii) above, if such agreement has been

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replaced by the Company with an agreement providing comparable services with the same or
another provider or licensor, or the Company or its Subsidiaries are negotiating an extension of
such terminated agreement and such extension is reasonably likely to be obtained the condition to
closing shall be deemed met;

     (k) Buyer shall have received audited (including an audit report with no qualifications) and
unaudited consolidated financial statements of the Company and its Subsidiaries necessary for Buyer
to comply with any applicable requirements for filings under the Securities Act or the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange
Commission, promulgated thereunder, which shall be certified by the Chief Financial Officer of the
Company as fairly presenting in all material respects the matters presented therein and otherwise
as materially consistent with the Financial Statements previously provided to Buyer and which shall
disclose that the Company has no assets or Liabilities other than its interest in ONCO;

     (l) The Company and its Subsidiaries shall be qualified to do business as foreign corporation
in all states in which each of them conducts business; and

     (m) 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 a
Material Adverse Effect.

     Section 8.2.     Conditions to Obligation of Seller. The obligation of Seller to sell the Shares 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):

     (a) the representations and warranties set forth in Article V shall be true and correct in all
material respects as of the Closing Date (except that those that relate to an earlier specified
date shall be true and correct as of such date), provided that notwithstanding the foregoing any
representation and warranty set forth in Article V containing a materiality qualifier (including
terms such as “material”) shall be true and correct in accordance with their express terms;

     (b) Buyer shall have performed and complied with all of its covenants and obligations under
this Agreement to be performed at or prior to the Closing in all material respects as of the
Closing, provided that notwithstanding the foregoing any covenants and obligations of Buyer under
this Agreement containing a materiality qualifier (including terms such as “material”) shall have
complied with in accordance with their express terms;

     (c) the waiting period under the HSR Act shall have expired or been terminated and any
applicable foreign antitrust approvals shall have been obtained without any Governmental Authority
taking any action to prevent the consummation of the transactions contemplated by this Agreement;

     (d) no Proceeding shall be pending before any Governmental Authority, and no statute,
judgment, order, decree, ruling, injunction, or charge shall be in effect, which reasonably could
(i) prevent or materially delay the consummation of any of the transactions

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contemplated by this Agreement or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation; and

     (e) each item required to be delivered by Buyer pursuant to Section 2.5(b) shall have been
delivered by Buyer or shall be delivered at Closing.

ARTICLE IX

TAX MATTERS

     Section 9.1.     Tax Definitions. The following terms, as used in this Article IX and to the extent used
elsewhere in this Agreement, have the following meanings:

     “Combined Tax” means any Income Tax or franchise Tax payable to any state, local or
foreign Taxing Authority with respect to any Tax Return that includes any of the Company or any of
its Subsidiaries and is filed on, or will be filed on, an affiliated, consolidated, combined or
unitary basis.

     “Federal Tax” means any Income Tax with respect to any Tax Return that includes any of
the Company or any of its Subsidiaries with respect to United States federal income tax.

     “Final Determination” means (i) any final determination of Liability in respect of a
Tax that, under applicable Legal Requirements, is not subject to further appeal, review or
modification through any Proceeding or otherwise (including the expiration of a statute of
limitations or a period for the filing of claims for refunds, amended Tax Returns or appeals from
adverse determinations), including a “determination” as defined in Section 1313(a) of the Code or
execution of an Internal Revenue Service Form 870AD or (ii) the payment of Tax by Buyer, Seller, or
any of their respective Affiliates, whichever is responsible for payment of such Tax under
applicable Legal Requirements, with respect to any item disallowed or adjusted by a Taxing
Authority, provided that such responsible Party determines that no action should be taken to recoup
such payment and the other Party agrees.

     “Income Tax” means any Tax imposed on or measured by income or profits.

     “Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date
and, with respect to a Tax period that begins on or before the Closing Date and ends after the
Closing Date, the portion of such Tax period ending on and including the Closing Date. With
respect to any Taxes that are imposed on a periodic basis and are payable for a Tax period that
includes (but does not end on) the Closing Date, the portion of such Tax related to the portion of
such Tax period ending on and including the Closing Date will (i) in the case of any Tax other than
sales or use Tax and Income Tax, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction the numerator of which is the number of days in the Tax period ending on
and including the Closing Date and the denominator of which is the number of days in the entire Tax
period, and (ii) in the case of any Income Tax and any sales or use Tax, be deemed equal to the
amount that would be payable if the relevant Tax period ended on and included the Closing Date.
All determinations necessary to give effect to the allocation set forth in the foregoing clause
(ii) will be made in a manner consistent with prior practice of Seller and its Affiliates with
respect to the Company and its Subsidiaries.

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     “Tax” means (i) any federal, state, provincial, local, or foreign income, duties,
levies, gross receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, paid-up capital, capital stock,
franchise, profits, withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added, goods and services,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, and any Liability for any of the
foregoing as transferee, (ii) in the case of the Company or any Subsidiary, Liability for the
payment of any amount of the type described in clause (i) as a result of having been on or before
the Closing Date a member of an affiliated, consolidated, combined or unitary group, and (iii)
Liability of any of the Company or any Subsidiary for the payment of any amount as a result of
being a party to any Tax Sharing Agreement (other than this Agreement) on or before the Closing
Date.

     “Tax Return” means any return, declaration, report, claim for refund, or information
return or statement relating to, or required to be filed in connection with, any Taxes, including
any schedule or attachment thereto.

     “Tax Sharing Agreements” means all existing agreements or arrangements (whether or not
written) binding the Company or any of its Subsidiaries that provide for the allocation,
apportionment, sharing or assignment of any Tax Liability or benefit, each of which is listed on
Schedule 9.4.

     “Taxing Authority” means any applicable Governmental Authority responsible for the
imposition of any Tax.

Section 9.2.     Tax Representations. Except as set forth in the Disclosure Schedule,

     (a) All material Tax Returns required to be filed with any Taxing Authority with respect to
the Pre-Closing Tax Period by or on behalf of the Company or any Subsidiary have been, to the
extent required to be filed on or before the Agreement Date, or will have been, to the extent
required to be filed on or before the Closing Date (in each case taking into account any extension
of time within which to file), as applicable, filed when due in accordance with all applicable
Legal Requirements, and all such Tax Returns were correct and complete in all material respects.
All material Taxes due and payable on or before the Agreement Date or the Closing Date, as
applicable, by the Company or any Subsidiary with respect to the Pre-Closing Tax Period (whether or
not shown on any filed Tax Return) have been, or will have been, as applicable, timely paid, or
withheld and remitted, to the appropriate Taxing Authority. No written claim has been made by a
Taxing Authority in a jurisdiction where either the Company or any Subsidiary does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are no Encumbrances
(other than Permitted Encumbrances) on any of the assets of the Company or any Subsidiary that
arose in connection with any failure (or alleged failure) to pay any Tax.

     (b) Neither Seller nor any Affiliate of Seller has received any written notice from any Taxing
Authority assessing any additional Taxes against the Company or any Subsidiary for any period for
which Tax Returns have been filed that has not been resolved. No dispute or claim concerning any
Tax Liability of the Company or any Subsidiary has been

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claimed or raised by any Taxing Authority in writing that has not been resolved. No audits or
administrative or judicial Tax proceedings are pending or being conducted by any Taxing Authority
with respect to the Company or any Subsidiary or any consolidated, combined or unitary group of
which the Company or any Subsidiary is or has been a member since December 31, 2001. Neither the
Company, any Subsidiary, nor any consolidated, combined or unitary group of which the Company or
any Subsidiary is or has been a member since December 31, 2001 has received from any taxing
Authority (including jurisdictions where the Company or any Subsidiary or any consolidated,
combined or unitary group of which the Company or any Subsidiary is or has been a member since
December 31, 2001 has not filed a Tax Return) any (i) written notice indicating an intent to open
an audit or other review, (ii) request for information related to Tax matters, or (iii) written
notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed
by any Taxing Authority against the Company or any Subsidiary or any consolidated, combined or
unitary group of which the Company or any Subsidiary is or has been a member since December 31,
2001.

     (c) Schedule 9.2(c) sets forth the common parent company of each affiliated,
consolidated, combined or unitary group of which the Company or any Subsidiary has been a member
for purposes of any Federal Tax Return or Combined Tax Return and the relevant time period during
which such Person was a member of such group after tax year ended December 31, 2000.

     (d) Neither the Company nor any Subsidiary has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency that has
not expired.

     (e) Neither the Company nor any Subsidiary is a party to any contract, arrangement or plan
that has resulted or could result, separately or in the aggregate, in the payment of any “excess
parachute payment” within the meaning of Section 280G of the Code (or any corresponding provision
of state, local or foreign Tax law) solely because of the transaction contemplated by this
Agreement and there are no tax gross-ups associated with any such contract arrangement or plan.

     (f) The Company and each Subsidiary has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of Federal Tax within
the meaning of Section 6662 of the Code. Any Taxes of the Company or any Subsidiary or any
consolidated, combined or unitary group of which the Company or any Subsidiary is now or has ever
been a member with respect to any Pre-Closing Tax Period that remain unpaid on the Closing Date
will not exceed the reserve for Taxes (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the Financial Statements
(rather than in any notes thereto).

     (g) Neither the Company nor any Subsidiary has engaged in any “reportable transaction” as
defined in the Treasury Regulations promulgated under Section 6011 of the Code except as described
on Schedule 9.2(g).

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     Section 9.3.     Tax Covenants.

     (a) All Tax Returns for Income Taxes required to be filed by Seller or any of its Affiliates
on or after the Closing Date with respect to the Company and each Subsidiary with respect to any
Pre-Closing Tax Period (i) will be filed when due in accordance with all applicable Legal
Requirements and (ii) will be correct and complete in all material respects.

     (b) The Company and each Subsidiary will be included in the consolidated Federal Tax Return of
which Liberty is the parent company through the close of business on the Closing Date and in any
Combined Tax Return of which either Liberty or ONCO, as applicable and consistent with past
practices, is the parent company through the close of business on the Closing Date.

     (c) Neither Buyer nor any of its Affiliates will make any actual or deemed election under Code
Section 338(h)(10) (or any similar provisions of state law or the law of any other taxing
jurisdiction) with respect to any of the Company or any of its Subsidiaries in connection with any
of the transactions contemplated by this Agreement.

     (d) The Parties will cooperate in making any determination, including any Tax election, that
is reasonably necessary in making the allocation of Taxes set forth in the definition of
“Pre-Closing Tax Period” in Section 9.1, provided that any such determination or Tax election does
not adversely affect the tax attributes of such Party or result in significant costs or expenses of
such Party.

     Section 9.4.     Tax Sharing Agreements. Any and all existing Tax Sharing Agreements (other than this
Agreement) will be terminated with respect to the Company and each Subsidiary as of the Closing
Date, and none of the Company or any of its Subsidiaries will be bound by or will have any further
rights or liabilities thereunder after the Closing Date.

     Section 9.5.     Tax Refunds and Credits. Seller and its Affiliates (not including for this purpose any of
the Company or any of its Subsidiaries) will be entitled to any refund or credit of any Income Tax
of the Company or any Subsidiary to the extent related to a Pre-Closing Tax Period and to any
refund or credit of any Tax described in clause (ii) or clause (iii) of the definition of Tax (in
each case whether such refund or credit is received or receivable before, on or after the Closing
Date). Buyer will pay to Seller the full amount of any refund or credit of any Tax to which Seller
and its Affiliates are entitled pursuant to this Section 9.5 that is received by Buyer or any of
its Affiliates or the benefit of which is made available to Buyer or any of its Affiliates within
five business days after such refund or credit is received by, or the benefit of which is realized
by, Buyer or any of its Affiliates. Any amounts not paid when due pursuant to this Section 9.5
will bear interest from the date such payment is due until the date paid at a rate equal to LIBOR
plus three percent, with LIBOR determined in accordance with the last sentence of Section 10.3(e).

     Section 9.6.     Cooperation on Tax Matters.

     (a) Buyer and Seller will cooperate fully, as and to the extent reasonably requested by the
other Party, in connection with the preparation and filing of Tax Returns pursuant to this Article
IX and any Proceeding (including any Tax audit) with respect to Taxes.

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Such cooperation will include (i) preparation by ONCO of all Tax Returns for Income Taxes with
respect to any Pre-Closing Tax Period (subject to review and comment by Liberty) consistent with
past practices (which preparation by ONCO will not be deemed to affect Seller’s responsibility for
Income Taxes of the Company or any Subsidiary to the extent related to any Pre-Closing Tax Period
as provided in this Article IX), (ii) causing any Tax Return that is prepared by or on behalf of
the other Party pursuant to the terms of this Agreement to be signed on behalf of the Person filing
such Tax Return by an authorized signatory at the time of filing or making available (upon the
other Party’s request) records and information that are reasonably relevant to any such Proceeding
with respect to Taxes (including any Tax audit). Buyer and Seller agree (i) to retain all books
and records with respect to Tax matters pertinent to the Company or any Subsidiary relating to any
Pre-Closing Tax Period until the expiration of the statute of limitations (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective Tax periods, and to abide by
all record retention agreements entered into with any Taxing Authority, and (ii) to give the other
Party reasonable written notice prior to destroying or discarding any such books and records and,
if the other Party so requests, to allow the other Party to take possession of such books and
records.

     (b) Upon the request of the other Party, Buyer and Seller will use their commercially
reasonable efforts to obtain any certificate or other document from any Governmental Authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the transactions contemplated by this Agreement).

     Section 9.7.     Certain Taxes and Fees. All transfer, documentary, sales, use, stamp, registration and
other such Taxes and fees (including any penalties and interest) incurred in connection with the
transactions contemplated by this Agreement will be paid by Buyer when due, and Buyer will, at its
own expense, file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees.

ARTICLE X

TERMINATION

     Section 10.1.     Termination of Agreement. This Agreement may be terminated at any time prior to the
Closing as follows:

     (a) Buyer and Seller may terminate this Agreement by mutual written consent;

     (b) Buyer may terminate this Agreement by giving written notice to Seller (i) if Seller or
Liberty has breached any representation, warranty, or covenant contained in this Agreement in any
material respect and such breach has not been cured by Seller or Liberty within 30 days after
written notice of such breach is delivered by Buyer to Seller, or (ii) if any of the conditions in
Section 8.1 has not been satisfied as of 5:00 p.m. Mountain Time on the Termination Date, or if
satisfaction of such a condition is or becomes impossible (other than as a result of the failure of
Buyer to comply with its obligations under this Agreement) and Buyer has not waived such condition
on or before such date; or

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     (c) Seller may terminate this Agreement by giving written notice to Buyer (i) if Buyer has
breached any representation, warranty, or covenant contained in this Agreement in any material
respect and such breach has not been cured by Buyer within 30 days after written notice of such
breach is delivered by Seller to Buyer, or (ii) if any of the conditions in Section 8.2 has not
been satisfied as of the Termination Date or if satisfaction of such a condition is or becomes
impossible (other than in whole or in part as a result of the failure of Seller to comply with its
obligations under this Agreement) and Seller has not waived such condition on or before such date.

     Section 10.2.     Termination Date. The Termination Date shall be July 11, 2007; as such date is extended as
follows:

     (a) Seller may unilaterally extend the Termination Date by up to 90 days plus the number of
days that Buyer’s response to any request for information from any Governmental Authority with
respect to the transactions contemplated by this Agreement lags behind the date of Seller’s
response to such Governmental Authority.

     (b) If Seller has not unilaterally extended the Termination Date as provided in Section
10.2(a), Buyer may unilaterally extend the Termination Date by up to 60 days plus the number of
days that Seller’s response to any request for information with respect to the transactions
contemplated by this Agreement from any Governmental Authority lags behind the date of Buyer’s
response to such Governmental Authority.

     (c) Additional extensions of the Termination Date shall require the written consent of Seller
and Buyer. Neither party will unreasonably withhold consent for up to two requests for a further
extension for a period of no longer than 30 days after the end of the extension period under
Section 10.2(a) or (b) so long as the party requesting the extension is continuing to pursue
obtaining Governmental Authority approval with respect to the transactions contemplated by this
Agreement diligently and in good faith.

     (d) Any extension of the Termination Date under Section 10.2(a) or (b) will be made by giving
written notice to the other party at least five Business Days prior to the initial Termination
Date, and a request by either party for an extension of the Termination Date under Section 10.2(c)
will be made in writing to the other party at least five Business Days prior to the end of the
extension period under Section 10.2(a) or (b), as applicable.

     Section 10.3.     Effect of Termination.

     (a) Buyer will promptly cause to be returned to Seller all documents and information obtained
in connection with this Agreement and the transactions contemplated by this Agreement and all
documents and information obtained in connection with Buyer’s investigation of the business,
operations and financial and legal affairs of the Company and its Subsidiaries, including any
copies made by Buyer or any of Buyer’s agents of any such documents or information.

     (b) Buyer’s and Seller’s right of termination under Section 10.1 is in addition to any other
rights or remedies it may have under this Agreement or otherwise, and the exercise of a right of
termination will not be deemed an election of remedies. If this Agreement is

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terminated pursuant to Section 10.1, all further obligations of the Parties under this
Agreement automatically will terminate, except that the provisions of this Section 10.3 and Section
7.5 and Articles XI and XII will survive such termination; provided, however, that if this
Agreement is terminated by a Party because of the breach of this Agreement by the other Party or
because one or more of the conditions to the terminating Party’s obligations under this Agreement
is not satisfied as a result of the other Party’s failure to comply with its obligations under this
Agreement, the terminating Party’s right to pursue all legal and equitable remedies for such breach
will survive such termination unimpaired.

     (c) If either Buyer or Seller terminates this Agreement for failure to obtain HSR Act
clearance, Buyer will pay Seller a breakup fee of $5,000,000, by wire transfer of immediately
available funds within five Business Days after termination of this Agreement, provided that Buyer
will not be obligated to pay Seller the breakup fee if (i) Seller has breached its obligations
under this Agreement in any material respect that was a cause of the failure to obtain HSR Act
clearance by the Termination Date, or (ii) the failure to obtain HSR Act clearance is due in
material part to documentation produced by Seller to a Governmental Authority in connection with
the transactions contemplated by this Agreement, with the burden of proof on Buyer to establish by
reasonable evidence that the conditions specified in either clause (i) or (ii) has occurred if
Buyer maintains that it is not obligated to pay the breakup fee.

     (d) The Parties agree that the provisions contained in Section 10.3(c) are an integral part of
the transactions contemplated by this Agreement, that the damages resulting from the termination of
this Agreement for any of the reasons set forth in Section 10.3(c) are uncertain and incapable of
accurate calculation and that the amounts payable pursuant to Section 10.3(c) are reasonable
forecasts of the actual damages that may be incurred by Seller under such circumstances. The
amounts payable pursuant to Section 10.3(c) constitute liquidated damages and not a penalty and
will be the sole and exclusive remedy of Seller and Liberty in the event of termination of this
Agreement on the basis specified in Section 10.3(c). If Buyer fails to pay to Seller any amounts
due under Section 10.3(c) in accordance with the terms thereof, Buyer will pay the costs and
expenses (including legal fees and expenses) of Seller in connection with any action, including the
filing of any Proceeding, taken to collect payment.

     (e) Any amounts not paid when due pursuant to Section 10.3(c) will bear interest from the date
such payment is due until the date paid at a rate equal to LIBOR plus three percent. For purposes
of this Agreement, LIBOR will mean the current LIBOR rate as quoted by Citibank, N.A., adjusted for
reserve requirements, if any, and subject to customary change of circumstance provisions, for
interest periods of six months.

ARTICLE XI

INDEMNIFICATION

     Section 11.1. Survival.

     (a) The representations and warranties of the Parties contained in this Agreement or in any
certificate or other writing delivered in connection with the Closing shall survive either (i)
until June 30, 2008 if Closing occurs on or before June 30, 2007 or (ii) until April 15, 2009 if
Closing occurs after June 30, 2007 (the “Survival Period”), except that (i) the

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representations and warranties set forth in Section 3.14 (Environmental, Health and Safety
Matters) shall survive until 30 days after the expiration of the statute of limitations with
respect to such matters (giving effect to any waiver, migration or extension thereof); (ii) the
representations and warranties set forth in Section 3.17 (Employee Benefits) shall survive until
the three (3) year anniversary of Closing Date; (iii) the representations and warranties made by
Seller set forth in Article IX (Tax Matters) shall survive until thirty (30) days after the
expiration of the applicable statutes of limitations (giving effect to any permissible waiver,
migration or extension thereof); (iv) the representations and warranties set forth in Section 3.1
(Organization; Qualification and Corporate Power), Section 3.2 (Capitalization), Section 3.3
(Subsidiaries and Equity Affiliates), Section 3.20 (Brokers’ Fees), Section 4.1 (Organization of
Seller), Section 4.2 (Authorization; Binding Effect); Section 4.4 (Shares), and Section 4.5
(Brokers’ Fees) shall survive forever (the representations and warranties made by Seller and
described in clauses (iii) and (iv), collectively, the “Seller’s Fundamental
Representations”); and (v) the representations and warranties set forth in Section 5.1
(Organization of Buyer), Section 5.2(a) and (b) (Authorization; Binding Effect), Section 5.9
(Brokers’ Fees) (collectively, the “Buyer’s Fundamental Representations”) shall survive
forever. Notwithstanding the foregoing provisions or anything to the contrary in this Agreement,
the Parties’ rights to bring legal and equitable claims for fraud or intentional misrepresentation
shall survive for 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) Any representation or warranty in respect of which indemnity may be sought under this
Article XI, and the indemnity rights and obligations with respect thereto, shall survive the time
at which the representation and warranty would otherwise terminate pursuant to this Section 11.1 if
written notice of the inaccuracy or breach or potential inaccuracy or breach thereof giving rise to
such right or potential right of indemnity shall have been given to the party against whom such
indemnity may be sought prior to such time, and in any such case such representation or warranty
shall survive until any claim for indemnity related to such inaccuracy or breach or potential
inaccuracy or breach is resolved.

     (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 period set forth in
this Section 11.1 and, subject to the last sentence of each Section 7.1 and Section 7.2, shall in
no event be affected by any investigation, inquiry or examination made for or on behalf of any
Party, or the knowledge of any Party’s officers, directors, employees, representatives,
consultants, agents, or advisors (collectively, “Representatives”) or the acceptance by any
Party of any certificate or opinion hereunder.

     Section 11.2.     General Indemnification.

     (a) Indemnification Obligations of Seller and Liberty. Seller and Liberty agree to
jointly and severally indemnify the Buyer and its Affiliates, and their respective shareholders,
partners, representatives, successors and permitted assigns and the Company and its Subsidiaries
(collectively, the “Buyer Indemnified Parties”) and save and hold each of the Buyer
Indemnified Parties harmless against, and pay on behalf of or reimburse such Buyer Indemnified
Party as and when incurred for, any Losses which any such Buyer Indemnified

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Party may suffer, incur, sustain or become subject to, as a result of, in connection with,
relating or incidental to or by virtue of:

     (i) any facts or circumstances which constitute a breach of any representation or warranty
regarding the Company or any Subsidiary or of Seller or Liberty contained in this Agreement or in
any certificate delivered by or on behalf of Seller or Liberty in connection with the Closing; or

     (ii) any breach of any covenant, agreement or other provision by the Company or any Subsidiary
or Seller or Liberty under this Agreement or in any certificate or other writing delivered by or on
behalf of Seller or Liberty in connection with the Closing other than those covered in clause (iii)
of this Section 11.2(a); or

     (iii) any (w) Income Tax of Liberty, the Company or any Subsidiary to the extent related to a
Pre-Closing Tax Period whether such Income Tax is due before, on or after the Closing Date, and any
Income Tax with respect to income, gain or loss from the sale of the Shares pursuant to this
Agreement, (x) Tax described in clause (ii) or clause (iii) of the definition of Tax, (y) Tax of
Liberty, the Company or any Subsidiary attributable to or resulting from or constituting a breach
of the provisions of Section 9.2, Section 9.3(a) or (b) or Section 9.4 and (z) Liabilities, costs,
expenses (including reasonable expenses of investigation and attorneys’, accountants’ and other
experts’ fees and expenses), losses, damages, assessments, settlements or judgments arising out of
or incident to the imposition, assessment, assertion or claim of any Tax described in clause (w),
(x) or (y) above in this Section 11.2(a)(iii) or attributable to or resulting from a breach by
Seller of its obligations in Section 9.6 (the sum of the amounts determined pursuant to clauses
(w), (x), (y) and (z) of this Section 11.2(a)(iii) being referred to as a “Buyer Tax
Loss”); or

     (iv) any Taxes, Liabilities, costs, expenses (including reasonable expenses of investigation
and attorneys’, accountants’, and other experts’ fees and expenses), losses, damages, assessments,
settlements or judgments arising out of or incident to the items identified on Section 3.6 of the
Disclosure Schedule or Section 9.2(a) of the Disclosure Schedule.

If and to the extent any provision of this Section 11.2(a) is unenforceable for any reason, Seller
hereby agrees to make the maximum contribution to the payment and satisfaction of any Loss for
which indemnification is provided under this Section 11.2(a) which is permissible under applicable
Laws. Any claims for indemnification made under this Section 11.2(a) may only be made by the Buyer
on behalf of the Buyer Indemnified Parties.

     (b) Indemnification Obligations of the Buyer. The Buyer shall indemnify Seller and
Liberty and their Affiliates (which shall not include the Company or any of its Subsidiaries)
(collectively, the “Seller Indemnified Parties”) and save and hold each of them harmless
against and pay on behalf of or reimburse such Seller Indemnified Parties as and when incurred for
any Losses which any Seller Indemnified Party may suffer, incur, sustain or become subject to, as a
result of, in connection with, relating or incidental to or by virtue of:

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     (i) any facts or circumstances which constitute a breach of any representation or
warranty regarding the Buyer under this Agreement or in any certificates or other writing
delivered by or on behalf of Buyer in connection with the Closing;

     (ii) any breach of any covenant, agreement or other provision by the Buyer under this
Agreement or in any certificate delivered by or on behalf of Buyer in connection with the
Closing;

     (iii) any claims or causes of action asserted against any Seller Indemnified Party
after the Closing in connection with the operation of the Company’s and its Subsidiaries’
businesses following the Closing Date, but not including any claims or causes of action
disclosed by Seller pursuant to this Agreement or any Losses which arise out of, or relate
to, any matters with respect to which Seller is obligated to indemnify the Buyer Indemnified
Parties pursuant to Section 11.2(a) hereof; or

     (iv) any (v) Tax of the Company or any Subsidiary other than any Buyer Tax Loss for
which Seller is obligated to indemnify the Buyer Indemnified Parties pursuant to Section
11.2(a)(iii), (w) Tax resulting from transactions or actions taken by Buyer or any of its
Affiliates (including for this purpose the Company and each of its Subsidiaries) that occur
on the Closing Date but after the Closing and that are not in the Ordinary Course of
Business, (x) Tax resulting from an actual or deemed election by Buyer under Code Section
338 (or any similar provision of state law or the law of any other taxing jurisdiction) with
respect to the Company or any Subsidiary in connection with any of the transactions
contemplated by this Agreement, (y) Tax that is the obligation of Buyer pursuant to Section
9.7, and (z) Liabilities, costs, expenses (including reasonable expenses of investigation
and attorneys’, accountants’ and other experts’ fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the imposition,
assertion or assessment of any Tax described in clause (v), (w), (x) or (y) above in this
Section 11.2(b)(iv) or attributable to or resulting from a breach by Seller of its
obligations in Section 9.6 (the sum of the amounts determined pursuant to clauses (v), (w),
(x), (y) and (z) of this Section 11.2(b)(iv) being referred to as a “Seller Tax
Loss”).

If and to the extent any provision of this Section 11.2(b) is unenforceable for any reason, the
Buyer hereby agrees to make the maximum contribution to the payment and satisfaction of any Loss
for which indemnification is provided under this Section 11.2(b) which is permissible under
applicable Laws. Any claims for indemnification made under this Section 11.2(b) may only be made
by a Seller on behalf of Seller Indemnified Parties.

(c) Limitations on Indemnification

     (i) Notwithstanding anything to the contrary in this Article XI, neither Seller nor
Liberty shall be required to indemnify the Buyer Indemnified Parties in respect of any
Losses for which indemnity is claimed under Section 11.2(a)(i) and (iii) unless and until
the aggregate of all such Losses exceeds one percent (1%) of Purchase Price (the
“Threshold”); provided, that if the aggregate of such Losses claimed exceeds the

49

 

Threshold then Seller and Liberty shall be obligated to indemnify the Buyer Indemnified
Parties for only the amount of such Losses in excess of the Threshold; provided, further,
that the Threshold shall not limit indemnification with respect to Losses relating to
breaches of the Seller’s Fundamental Representations or any facts or circumstances which
constitute fraud, or intentional misrepresentation. Notwithstanding anything to the
contrary in this Article XI, Buyer shall not be required to indemnify the Seller Indemnified
Parties in respect of any Losses for which indemnity is claimed under Section 11.2(b)(i) and
(iv) unless and until the aggregate of all such Losses exceeds the Threshold; provided, that
if the aggregate of such Losses claimed exceeds the Threshold then Buyer shall be obligated
to indemnify the Seller Indemnified Parties for only the amount of such Losses in excess of
the Threshold; provided, further, that the Threshold shall not limit indemnification with
respect to Losses relating to breaches of the Buyer’s Fundamental Representations or any
facts or circumstances which constitute fraud, or intentional misrepresentation.

     (ii) Notwithstanding anything to the contrary in this Article XI, the maximum amount of
Losses that the Buyer Indemnified Parties will be entitled to recover pursuant to Section
11.2(a)(i) and (iii) (to the extent that such Losses under Section 11.2(a)(iii) relate
solely to a breach of a representation or warranty and do not relate in whole or in part to
a breach of a covenant) for breaches of representations and warranties is twelve and
one-half percent (12.5%) of the Purchase Price, provided that such limitation shall not
apply to breaches of the Seller’s Fundamental Representations and/or to any facts or
circumstances which constitute fraud or intentional breach or omission with respect to any
representation or warranty of the Company, its Subsidiaries, Seller and Liberty.
Notwithstanding anything to the contrary in this Article XI, the maximum amount of Losses
that the Seller Indemnified Parties will be entitled to recover pursuant to Section
11.2(b)(i) and (iv) (to the extent that such Losses under Section 11.2(b)(iv) relate solely
to a breach of a representation or warranty and do not relate in whole or in part to a
breach of a covenant) for breaches of representations and warranties is twelve and one-half
percent (12.5%) of the Purchase Price, provided that such limitation shall not apply to
breaches of the Buyer’s Fundamental Representations and/or to any facts or circumstances
which constitute fraud or intentional breach or omission with respect to any representation
or warranty of the Buyer.

     (d) Manner of Calculation. If any representation, warranty or covenant which is
qualified by materiality or Material Adverse Effect is breached in accordance with its terms (which
shall take into account any such materiality qualifiers), the amount of any Loss related to a
breach of any such representation or warranty or covenant shall be determined without regard to any
materiality qualification (including terms such as “material” and “Material Adverse Effect”) set
forth therein.

     (e) Exclusive Remedy. The remedies provided by this Article XI, subject to the
limitations set forth in this Agreement, shall be the sole and exclusive remedies of the Buyer
Indemnified Parties and Seller Indemnified Parties after Closing for the recovery of Losses
resulting from, relating to or arising out of this Agreement, except for (i) in the case of fraud,
intentional breach or omission and (ii) any other remedies expressly set forth in this Agreement
other than in this Article XI.

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     (f) Manner of Payment. Any indemnification of the Buyer Indemnified Parties or Seller
Indemnified Parties, as the case may be, pursuant to this Section 11.2 shall be effected by wire
transfer of immediately available funds from Seller or Liberty or the Buyer, as the case may be, to
an account designated in writing by the applicable Buyer Indemnified Party or Seller Indemnified
Party, as the case may be, within fifteen (15) days after the determination thereof. Any
indemnification payments shall be made together with interest accruing thereon from the date
written notice of the indemnification claim is made to the date of payment at five percent (5%) per
annum.

     (g) Third Party Claims and Notice of Tax Loss. A Buyer Indemnified Party will give
timely written notice to Seller of any Buyer Tax Loss, and a Seller Indemnified Party will give
timely written notice to Buyer of any Seller Tax Loss, or, if a Proceeding is initiated by any
third party against any Person entitled to seek indemnification under this Article XI (an
“Indemnified Party”), and if an Indemnified Party intends to seek indemnification with
respect thereto under this Article XI, such Indemnified Party shall promptly, after receipt of
written notice of such Proceeding, provide written notice of such Proceeding to the party or
parties from whom the Indemnified Party intends to seek indemnification from (the “Responsible
Party”), which notice shall describe such Proceeding in reasonable detail and the amount
thereof (if known and quantifiable); provided, that the failure to so notify a Responsible Party
shall not relieve such Responsible Party of its obligations hereunder unless and only to the extent
the Responsible Party shall be actually and materially prejudiced by such failure to so notify. A
Responsible Party shall be entitled to participate in the defense of such Proceeding giving rise to
an Indemnified Party’s claim for indemnification at such Responsible Party’s expense, and at its
option (subject to the limitations set forth below) shall be entitled to assume the defense thereof
by appointing a reputable counsel reasonably acceptable to the Indemnified Party to be the lead
counsel in connection with such defense within thirty (30) days of its receipt of notice of the
Proceeding; provided, that prior to the Responsible Party assuming control of such defense, it
shall (x) demonstrate to the Indemnified Party in writing such Responsible Party’s financial
ability to provide full indemnification to the Indemnified Party with respect to such Proceeding
(including the ability to post any bond required by the court or adjudicative body before which
such Proceeding is taking place), and (y) agree in writing to be fully responsible for all Losses
relating to such Proceeding; provided, further, that:

     (i) the Indemnified Party shall be entitled to participate in the defense of such claim
and to employ counsel of its choice for such purpose;

     (ii) the Responsible Party shall not be entitled to assume control of such defense if
(a) the claim for indemnification relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation, (b) the Indemnified Party
reasonably believes an adverse determination with respect to the Proceeding, giving rise to
such claim for indemnification would be materially detrimental to or materially injure the
Indemnified Party’s reputation or future business prospects, (c) such claim seeks an
injunction or equitable relief against the Indemnified Party, (d) a conflict of interest
exists between the Responsible Party and the Indemnified Party, or (e) the Responsible Party
failed or is failing to vigorously prosecute or defend such claim; and

51

 

     (iii) if the Responsible Party shall control the defense of any such claim, the
Responsible Party shall obtain the prior written consent of the Indemnified Party before
entering into any settlement of Proceeding or ceasing to defend such Proceeding if, pursuant
to or as a result of such settlement or cessation, injunctive or other equitable relief will
be imposed against the Indemnified Party or if such settlement does not expressly and
unconditionally release the Indemnified Party from all Liabilities and obligations with
respect to such claim and does not include any admission of liability for the underlying
claims (even if no Liabilities accrue therefrom).

     (h) Adjustment Treatment. All indemnification payments made pursuant to this Article
XI shall be treated as adjustments to the Purchase Price unless a Final Determination or change in
applicable Legal Requirements (including a revenue ruling or other similar announcement) causes any
such amount not to constitute an adjustment to the Purchase Price for any applicable Tax purposes.

     (i) Insurance, Set-Off. The Indemnified Party shall use commercially reasonable
efforts to pursue any claims for Insurance, set-off or indemnification to the extent applicable in
connection with any claim for which it seeks indemnification pursuant to this Article 11.

ARTICLE XII

MISCELLANEOUS

     Section 12.1.     Public Announcements. 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, if at
all, at such time and in such manner as mutually agreed by Buyer and Seller. Seller and Buyer will
consult with each other concerning the means by which the employees, customers, and suppliers of
the Company or any of its Subsidiaries and others having dealings with the Company or any of its
Subsidiaries will be informed of the transactions contemplated by this Agreement and any such
communication will be made only as mutually agreed by Buyer and Seller. The provisions of this
Section 12.1 are intended to supplement and not to supersede or replace the provisions of the
Existing NDA.

     Section 12.2.     No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted assigns.

     Section 12.3.     Successors and Assigns. This Agreement will be binding upon and inure to the benefit of
the Parties and their respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties, provided that the Buyer may without the prior written consent of
Seller, assign this Agreement or any of its rights, interests or obligations to an Affiliate of
Buyer and provided further that Buyer may make a collateral assignment of its rights, but not its
obligations, under this Agreement to any of its financing sources.

52

 

     Section 12.4.     Entire Agreement. This Agreement (including the Exhibits and Schedules hereto and any
other agreements and documents referred to in this Agreement) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they are related in any way to the subject
matter hereof, other than the Existing NDA.

     Section 12.5.     Notices. All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), or
(c) when received by the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile numbers set forth
below (or to such other addresses and telecopier numbers as a Party may designate by notice to the
other Parties, provided that any such change shall be effective only upon receipt by the other
Parties):

If to Seller or to

Liberty: Liberty Satellite & Technology, Inc.

c/o Liberty Media Corporation

12300 Liberty Boulevard

Englewood, CO 80112

Attention: William R. Fitzgerald and Charles Y. Tanabe

Facsimile: 720-875-5382

Copy (which shall
not constitute
notice) to:

Sherman & Howard L.L.C.

633 17th Street, Suite 3000

Denver, CO 80202

Attention: Steven D. Miller, Esq.

Facsimile: 303-298-0940

If to Buyer, or to
the Company after

Closing: LodgeNet Entertainment Corporation

3900 West Innovation Street

Sioux Falls, SD 57107

Attention: Scott C. Petersen and James G. Naro

Facsimile: 605-988-1715

53

 

Copy (which shall not constitute notice) to:

Leonard, Street and Deinard, Professional Association

150 South Fifth Street, Ste. 2300

Minneapolis, MN 55402

Attention: Mark S. Weitz, Esq.

Facsimile: 612-335-1657

     Section 12.6.     Governing Law; Jurisdiction. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to any choice or conflict
of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Delaware. Any
Proceeding seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated by this Agreement may be brought
by or against any Party in any court of competent jurisdiction located in the State of Delaware.
Each Party irrevocably and unconditionally agrees to be subject to the jurisdiction of the courts
of the State of Delaware and of the federal courts sitting in the State of Delaware and not to
object to the jurisdiction of such courts on the basis of inconvenience of forum or otherwise.
Without limiting the generality of the foregoing, each Party agrees that service of process upon
such Party at such Party’s address as set forth in Section 12.5, together with written notice of
such service to such Party, will be deemed effective service of process upon such Party.

     Section 12.7.     Amendments and Waivers. No amendment of any provision of this Agreement will be valid
unless the same is in writing and signed by Buyer, Liberty and Seller. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether
intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant under this Agreement or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.

     Section 12.8.     Severability. Any term or provision of this Agreement that is invalid or unenforceable in
any situation in any jurisdiction will not affect the validity or enforceability of the remaining
terms and provisions of this Agreement or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction.

     Section 12.9.     Expenses. Except as otherwise expressly provided in this Agreement, each of Seller,
Liberty and Buyer will bear its own costs and expenses (including legal fees and expenses) incurred
in connection with this Agreement and the transactions contemplated by this Agreement, provided
that Seller and Buyer shall each pay fifty (50%) percent of any filing fee related to the HSR Act.

     Section 12.10.     Construction. The Parties have participated jointly in the negotiation and drafting of
this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement
will be construed as if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.

54

 

     Section 12.11.     Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.

     Section 12.12.     Headings. The Article and Section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation of this Agreement.

     Section 12.13.     Facsimile; Counterparts Signatures. This Agreement may be executed by facsimile signature
and in one or more counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

55

 

     IN WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of the date
first written above.

	 	 	 	 	 
	 	BUYER:

LODGENET ENTERTAINMENT

CORPORATION

 	 
	 	By:  	 	 
	 	 	Name:  	Scott C. Petersen 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	SELLER:

LIBERTY SATELLITE & TECHNOLOGY, INC.

 	 
	 	By:  	 /s/
William R. Fitzgerald	 
	 	 	Name: William R. Fitzgerald	 
	 	 	Title: Senior Vice President	 
	 

	 	 	 	 	 
	 	LIBERTY:

LIBERTY MEDIA CORPORATION

 	 
	 	By:  	 /s/
William R. Fitzgerald	 
	 	 	Name: William R. Fitzgerald	 
	 	 	Title: Senior Vice President	 

	 

[Signature Page to Stock Purchase Agreement]

 

 

EXHIBIT A

DEFINITION OF CLOSING WORKING CAPITAL

Closing Working Capital shall be determined in accordance with GAAP, except as follows:

1. Closing Working Capital shall exclude (i) all Indebtedness (other than the current portions of
capital lease obligations related to capital leases outstanding on the Agreement Date, to the
extent that the recorded book value of such capital leases does not exceed an aggregate of
$2,000,000 on the Agreement Date and the Closing Date), (ii) current Income Tax receivables and
payables, (iii) deferred Tax amounts, and (iv) deferred revenue amounts.

2. Closing Working Capital shall be calculated as of immediately prior to the Closing and should
not include the impact of any adjustments required by purchase accounting (revaluing assets and
liabilities to fair value).

As an example, the working capital as of September 30, 2006 would be calculated as follows (all
numbers are in thousands):

	 
	Current Assets

	Cash $1,018

	Accounts Receivable, net of reserve for doubtful accounts $29,636

	Other Current Assets $3,235

	Less: Current Liabilities

	Accounts Payable $25,878

	Accrued Compensation $2,739

	Other Accrued Liabilities $3,714

	Accrued sales, use and property taxes $3,788

	Current portion of long-term debt (cap leases) $0

	 

	Net working capital $(2,230)

 

 

EXHIBIT B

TARGET WORKING CAPITAL

     The Target Working Capital (in thousands) amount shall be $3,500.

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