Screams of utter pain issue from the hotel lobby, as Moira uses the Night Manager's penknife to dig the implant out of Joe's thigh. Finally she rips out a small electronic device, which looks as if it's been rooted into Joe's flesh. Janet volunteers to go next, and the others get in line to have their own implants removed. Later, McNair leads a mission to determine the extent of the perimeter. With a safety rope tied around his waist, Joe cautiously steps forward, dropping ashtrays to mark his tracks. The surveillance cameras take it all in.
As Joe safely passes the point where he collapsed last night, Janet decides to run for it. McNair and Joe scream for her to stop and give chase, but at a certain point, Janet hits an invisible wall. Her body shakes uncontrollably from pain, and her face begins to blister as if it's burning. Joe and McNair pull her away, and all three collapse on the ground.
Later, Janet splashes water on her burning face, then turns to address the camera on the ceiling of her room. Unaware Joe's watching, she begs to know if Megan's alright, and offers to do whatever "they" say. Joe makes his presence known, pointing out that the broken door jam and dresser in Janet's room have been fixed. There have to be more people around than just the Night Manager and the restaurant crew - but where are they? And are they trying to drive the hostages crazy, or what? When Joe extends his hand to Janet in a gesture of intimacy, she leaves to join the others.
Over a lunch at the Shanghai Palace, McNair theorizes about what happened to Janet. He thinks the perimeter is guarded by an A.D.S., or Active Denial System, which Moira explains is like a giant microwave. Janet quickly dubs it the "pain gun," and guesses there must be a way to disarm it. McNair agrees; it's beatable, but they need more recon. The conversation soon turns to the why of it all - why them? Charlie thinks it's all about ransom, and Bill jokes they're starring in some sicko reality show in Dubai. Only Tori's sure of the reason she's there: her father is Franklin Fairchild, ambassador to Italy, and the former head of the CIA. Apparently, they don't get along too well.
Bill wants to beat the crap out of the Night Manager in hopes of getting some answers, and Charlie agrees. Everyone else disagrees, preferring McNair's plan to do more recon. McNair instructs everyone to split up and search a different area of the town for any useful clues. Back in San Francisco, reporter Renbe is still hot on the case of Janet's disappearance. He checks with a contact in the SFPD, Detective Gomez, who has Janet up on charges of child abandonment. Figuring Janet's mother Eleanor is behind the allegation, Renbe asks Gomez to check the deep archives.
McNair uses his hands to determine the extent of the pain gun's position in his section of town. Meanwhile, Charlie rifles through the front desk at the hotel, pleased to find the Night Manager's secret stash of cognac, which he shares with Bill. Tori pulls Moira into a clothing store. They're supposed to check every building, so they might as well shop. Moira tells Tori that she's a psychologist, smiling shyly as Tori whips off her clothes to taunt the cameras, well aware she's being watched.
Joe and Janet proceed to the hotel's highest balcony to discover they're surrounded by trees for as far as the eye can see. When Janet asks Joe if he believes in God, he annoys her, answering her question with another question. All Joe knows is he's not waiting around for divine intervention; the only thing Janet knows is that every second she spends in the town puts her daughter at greater risk. From the looks of what's going on at Eleanor's house, Janet has very good cause for concern.
By the time the Night Manager starts his shift, McNair has created a crude map of the town. Every exit is covered by pain guns. When Janet and Joe join the discussion, Bill balks. Why bother to plan when the Night Manager knows everything, and can probably lead them all out of town? When the Night Manager announces dinner will be served at the Shanghai Palace in an hour, the group splits up to prepare.
Tori steps out of the shower to find a large jar on the desk next to her fortune from last night: You will soon win some high prize or award. Moira knocks on the door, having changed out of her bathrobe into new clothes from the shopping expedition. She immediately recognizes the cocoon as belonging to the Painted Lady butterfly, and it's almost ready to hatch. In a moment of paranoia, Tori accuses Moira of planting the cocoon in her room, then realizes it must all be her father's doing. When Tori moves to throw the jar in the garbage, Moira begs to save it, promising she'll take good care of it.
Down in the lobby, Charlie and Bill gang up on the Night Manager and push him into his office, closing the door behind them. Janet finds a gun in her room with a revised version of last night's fortune: Kill Joe and you will go free. Tucked in the Bible are two photos of Megan. She faces the camera to ask if this is the answer to her pleas. Suddenly, screams for help echo through the hotel. Janet rushes to the street to find Charlie and Bill, threatening the badly beaten Night Manager with the shotgun.
Charlie and Bill have hatched a plan to march the Night Manager to the end of town and push him into the pain gun. Surely "they" won't kill one of their own, and will deactivate the pain gun, allowing an avenue for escape. Joe reminds Charlie and Bill that the cameras are watching their every move. If whoever is behind this cared about the Night Manager, wouldn't they have intervened already? McNair jumps on Bill, and Joe tackles Charlie, enabling Janet to grab the shotgun. The Night Manager runs off, making it past the town perimeter with no injury. Incensed, Charlie makes a run for it. Unfortunately, he's met with even greater agony than Janet experienced earlier. The pain guns have been re-activated with a vengeance.
In the morning, Moira treats a sober and silent Charlie with pain cream for the burns on his face. Bill hits the cognac bottle, but Charlie defers; despite the pain it's too early for him. Bill cracks wise - what's the plan now that McNair and Joe have thwarted their only shot at escape? McNair and Joe agree they might have acted hastily, but torture never works. McNair advises Joe to stay frosty and pray to the God of his choice for guidance.
Tori lolls in bed, flashing back to an elegant party lorded over by her father the ambassador. When he tries to wave her off, she raises her voice, threatening to expose the truth - he will pay. A group of Marines descend and escort Tori from the party. Moira interrupts her reverie. Tori admits she feels hung over, even though she's had nary a drop to drink. Moira points out that it's likely depression, and offers up the newly hatched butterfly. Why don't they set it free? It might be therapeutic and cheer them both up.
Back in San Francisco, Renbe meets Gomez at a dive bar. Gomez grumbles. He doesn't know why he's risking his life for the likes of Renbe, who's anything but his friend. He pushes a file across the bar, promising it contains ugly stuff. Most of what happened to Janet was when she was a juvenile, and there's no chance of unsealing it. Not only has Janet been through the ringer, but her scumbag husband abandoned her when she was pregnant. Gomez leaves Renbe with a final word of caution: as usual, none of this info came from him.
Renbe hits the street with Janet's folder. Within seconds, Janet's private investigator Sam Edick drags him down an alley. Edick wants the file. He's not taking no for an answer, and he sticks his pistol into Renbe's ribs to prove it. Apparently, his client will stop at nothing to prevent this info from appearing in the Register. When Renbe asks if the client is Eleanor, Edick cold cocks him, and leaves him passed out in the alley. Later that night, Renbe shows up at his editor Kat's apartment, claiming he clunked his head on the fridge. Furthermore, he's giving up on the missing mom story. Kat pulls him into her apartment with a kiss, promising to make him feel a whole lot better.
A raging thunderstorm increases the gloom hanging over the Shanghai Palace as the captives gather for dinner. When Tori tells the story of the chrysalis that just appeared in her room, Moira asks if anything unusual happened to anyone else. Janet stays mum about the gun. Suddenly, lightning strikes the pain gun at the end of the street, igniting a giant fireball. Figuring the A.D.S. must be turned off, Charlie runs for it. Janet wants to take the van that's parked nearby, so Bill gets to work hotwiring it. Moira volunteers to distract the restaurant workers, and runs back inside.
As Moira screams and begins to destroy the kitchen, Bill starts the van and tries to drive away. Tori protests, so Janet slams her foot on the brake and sends Tori to retrieve Moira. Charlie's waiting for them up the street, too scared to risk fording the pain gun perimeter on his own. Everyone's amazed and relieved when they're able to drive right on through into the deep woods that surround the town. Suddenly, they're hit with a blinding light. Bill stops the van, but Janet fears the worst and hits the gas.
The light disappears just as suddenly as it came, and the hostages are devastated to find they're right back where they started - still confined to the town. They drive back to the hotel, where the Night Manager waits for them. The next morning, everyone's engaged in their own private ablutions when Moira and Tori release the butterfly. Sadly, the butterfly soars against the pain gun and is quickly incinerated. Furious, Tori accuses Moira of being yet another in a long line of dismal psychologists and storms off. Moira apologizes and offers the truth: she's really a mental hospital patient with truth issues. Despite her apologies, Tori turns and walks away.
Janet's lost in the photos of her daughter when the phone rings. Despite a line filled with static, she can just make out her daughter's voice, and Megan can barely hear her. Within seconds, Eleanor takes the phone from Megan, scolding her never to pick it up. When the static becomes overwhelming, the connection gives out. At the end of her rope, Janet grabs the gun and runs to Joe's room.
Joe backpedals, begging Janet to put the gun down. When she explains that Megan is in danger, he promises he'll do everything he can to get them out. Janet addresses the camera - is this what they want? - and shows Joe her revised fortune. He continues to beg as Janet empties her gun. Joe's shocked to find he's still alive; Janet's shot up the camera, and is screaming at it. She's done playing sick games, and if anything happens to Megan, they'll wish they killed her the first day. As Janet storms out of Joe's room, the broken camera slides away, and a brand new one slides into place.