Exhibit 10.10
 
ASSET PURCHASE AGREEMENT
 
This Asset Purchase Agreement (this “Agreement”) is dated as of September 29,
2011 between FUNCTION(X) INC., a Delaware corporation (“Function(x)”), MOBILE
MESSAGING SOLUTIONS (MMS), INC., a California corporation (“MMS”), and
WATCHPOINTS, INC., a Nevada corporation (“Watchpoints Subsidiary” and
collectively with MMS, “Sellers”).
 
WHEREAS, Mr. Otto Legerer and Mr. Kai Buehler are the only shareholders of
Watchpoints Subsidiary;
 
WHEREAS, MMS and Watchpoints Subsidiary are engaged in a business (amongst
others) of developing, selling, maintaining and improving an interactive
broadcast television loyalty application utilizing audio recognition technology
(the “Watchpoints Business”); and
 
WHEREAS, (i) Sellers desire to sell to Function(x) or its assignee (“Buyer”) all
of the assets constituting the Watchpoints Business (as defined above),
including without limitation, substantially all of the assets of Watchpoints
Subsidiary, at the price and on the terms and conditions set forth herein, and
(ii) Buyer desires to purchase all of the assets constituting the Watchpoints
Business all from Sellers at the price and on the terms and conditions set forth
herein.
 
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties agree as
follows:
 
ARTICLE 1
DEFINITIONS
 
The following terms, as used herein, have the following meanings:
 
“Affiliate” means, with respect to any Person, any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
other Person, through the ownership of all or part of any Person.
 
“Agreement” has the meaning ascribed to it in the introduction to this
Agreement.
 
“Applicable Law” means any domestic or foreign, federal, state or local statute,
law, common law, ordinance, binding policy, binding guidance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree, permit or other requirement of any Governmental Authority.
 
“Assignment and Assumption Agreement” means that certain Assignment and
Assumption Agreement attached hereto as Exhibit A.
 
“Assumed Liabilities” has the meaning ascribed to it in Section 2.2.
 
“Buehler” means Kai Buehler.
 
 
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“Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close.
 
“Buyer” has the meaning ascribed to it in the introduction to this Agreement.
 
“Buyer Indemnitees” has the meaning ascribed in Section 9.1.
 
“Closing” has the meaning ascribed in Section 8.1.
 
“Closing Date” has the meaning ascribed in Section 8.1.
 
“Code” means the Internal Revenue Code of 1986, as amended, or any successor
law, and regulation issued by the IRS pursuant to the Internal Revenue Code or
any successor law.
 
“Confidential Information” has the meaning ascribed in Section 5.3(b).
 
“Contract(s)” means contracts, instruments, loans, permits, leases, licenses,
commitments and other agreements in each case, whether written or oral,
proposed, contingent or otherwise.
 
“Compensation Programs” has the meaning ascribed to it in Section 3.20.
 
“Damages” means any loss, liability, claim, damage or expense (including
reasonable costs of investigation and defense and reasonable attorneys’ fees),
net of (a) insurance proceeds actually received, and proceeds from related third
party indemnification, contribution or similar claims actually received, and (b)
an amount equal to any reduction in cash Taxes actually payable which is solely
attributable to such Damages.
 
“Designated Employees” has the meaning ascribed to it in Section 3.18.
 
“Employee Assets” means all of Sellers’ assets, including without limitation,
computers, work stations, third party software licensed for such computers or
work stations, electronic files, multi-function printers and copiers, office
furniture and other tangible assets presently used principally by Buehler or the
Designated Employees which Buyer elects to employ, which are necessary or useful
for Buehler or each Designated Employee to continue to perform his or their
respective duties for Buyer after the Closing without interruption.
 
“Employment Agreement” means an employment agreement between Buehler and
Function(x) in form acceptable to each of them.
 
 “Equipment” means all servers, hardware, other equipment and Equipment
Embodiments and Documentation used in connection with Watchpoints audio
detection applications or any other aspect of the Watchpoints Business.
 
“Equipment Embodiments and Documentation” means all object code, source code,
technical documentation (including without limitation, technical and descriptive
materials relating to the acquisition, design, development, testing, fixing,
use, or maintenance of, and the program documentation and materials for, the
Equipment), engineering notes, information sheets, specifications, compilers,
tools, data schema, databases, data warehouses, software, marketing and
promotional materials, software libraries, know-how, invention disclosures and
technology relating to, comprising, embodied in or by or used, developed or
created in connection with the Equipment.
 
 
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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“Excluded Assets” has the meaning ascribed in Section 2.3.
 
“GAAP” means generally accepted accounting principles in the United States as in
effect on the date hereof and applied on a consistent basis.
 
“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.
 
“Indemnifying Party” means:  (a) with respect to any Buyer Indemnitee asserting
a claim under Section 9.1, MMS; and (b) with respect to any MMS Indemnitee
asserting a claim under Section 9.2, Buyer and Function(x), jointly and
severally.
 
“Indemnitee” means:  (a) the Buyer Indemnitees with respect to any claim for
which either Seller is an Indemnifying Party under Sections 9.1; and (b) MMS
Indemnitees with respect to claims for which Buyer or Function(x) is an
Indemnifying Party under Section 9.2.
 
“Intellectual Property” means United States and foreign patents, copyrights,
Trade Secrets, Marks, any registrations or applications with respect to any of
the foregoing, any similar or other intellectual property rights, and any rights
under or with respect to any of the foregoing, including, without limitation,
the right to file patent applications with respect to inventions that have been
conceived or reduced to practice in whole or part as of the date hereof, any
such applications that are in fact filed, the right to file applications to
register copyrights in copyrightable works that have been created in whole or
part as of the date hereof, and any such applications that are in fact filed.
 
“Intellectual Property Embodiments and Documentation” means all object code,
source code, technical documentation (including without limitation, technical
and descriptive materials relating to the acquisition, design, development,
testing, fixing, use, or maintenance of, and the program documentation and
materials for, the Watchpoints Software), engineering notes, information sheets,
specifications, compilers, tools, data schema, databases, data warehouses,
software, marketing and promotional materials, software libraries, know-how,
invention disclosures and technology relating to, comprising, embodied in or by
or used, developed or created in connection with the Watchpoints Software or the
Watchpoints IP, to the extent that it has been fixed in tangible media prior to
the Closing.
 
“IRS” means the U.S. Internal Revenue Service.
 
 
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“Knowledge of Buyer” or “Buyer’s Knowledge” means the actual knowledge of any
officer of Buyer.
 
“Knowledge of MMS” or “MMS’ Knowledge” means the actual knowledge of Kai
Buehler, Otto Legerer, Gary Chen, Krisna Subbarj, Marty Glover, David Benaim and
any officer or director of Sellers, after a reasonable investigation of the
surrounding circumstances.
 
“Liability” means, with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated,
secured or unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and whether or not
the same is required to be accrued on the financial statements of such Person or
is disclosed on any schedule to this Agreement.
 
“Lien” means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction,
encumbrance or charge of any kind in respect of such asset and any agreement to
grant any of the foregoing, excluding liens for Taxes that are not due and
payable or that are being contested in good faith by appropriate legal
proceedings in a manner that will prevent foreclosure of the applicable lien
during the pendency of such proceedings.
 
“Marks” means trademarks, service marks, trade dress and others indicators of
source, origin, sponsorship, certification or endorsement, and all goodwill in
and to any such trademarks, service marks, trade dress and others indicators of
source, origin, sponsorship, certification or endorsement.
 
“Material Adverse Effect” means a change in, or effect on the operations on (any
such item an “Effect”), affairs, condition (financial or otherwise), results of
operations, assets, Liabilities, and reserves of the Watchpoints Business, taken
as a whole, that results in a material adverse change to the  Transferred Assets
taken as a whole, provided, that such change effect shall exclude any change,
effect, event, occurrence, state of facts or development (individually or in the
aggregate) generally affecting the industry in which the Watchpoints Business
operates or attributable to conditions affecting the U.S. economy as a whole or
the capital markets in general and which does not disproportionately affect the
Watchpoints Business, taken as a whole.
 
“MMS” has the meaning ascribed to it in the introduction to the Agreement.
 
“MMS Indemnitees” has the meaning ascribed to it in Section 9.2.
 
“Non-Competition Agreements” has the meaning ascribed to it in Section 6.7.
 
“Open Source License” means a software license that includes terms that require
source code to be provided or made available to subsequent licensees or
sublicensees, or that require any redistribution and use of software in source
and binary forms to meet certain specified conditions, or any “free software”
license, “public” license or open-source software license, including the GNU
General Public License, the GNU Lesser General Public License, the Mozilla
Public License, the Apache license, the MIT license, the BSD license and any
BSD-like license.
 
“Open Source Software” means any Software that is licensed under, covered by or
subject to an Open Source License.
 
 
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“Ordinary Course of Business” means (a) consistent with the past practices of
such Person or (b) in the ordinary course of the normal day-to-day operations of
such Person.
 
“Pension Plans” has the meaning ascribed to it in Section 3.20.
 
“Person” means an individual, corporation, partnership, limited liability
company, joint venture, association, trust, estate or other entity or
organization, including a Governmental Authority.
 
“Proceedings” has the meaning ascribed to it in Section 3.7.
 
“Purchase Price” has the meaning ascribed to it in Section 2.5.
 
“Registration Rights Agreement” has the meaning ascribed to it in Section 6.8.
 
“Related Person” means: (a) with respect to a particular individual: (i) each
other member of such individual’s Family; (ii) any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual’s Family; and (iii) any Person with respect to which such individual
or one or more members of such individual’s Family serves as a director,
officer, partner, manager, executor, or trustee (or in a similar capacity); and
(b) with respect to a specified Person other than an individual: (i) any Person
that directly or indirectly controls, is directly or indirectly controlled by,
or is directly or indirectly under common control with such specified Person;
(ii) each Person that serves as a director, officer, partner, manager, executor,
or trustee of such specified Person (or in a similar capacity); and (iii) any
Person with respect to which such specified Person serves as a general partner
or a trustee (or in a similar capacity); and (c) any Related Person of any
individual described in clause (b) or (c).  For purposes of this definition,
“Family” of an individual means (A) the individual, (B) the individual’s spouse
(or any former spouse), (C) any other natural person who is related to the
individual or the individual’s spouse(s), and (D) any individual who resides
with such individual, and “control” of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise and, in any event and without
limitation of the previous sentence, any Person owning fifty percent (50%) or
more of the voting securities of a second Person shall be deemed to control that
second Person.
 
“Restricted Activity” means any aspect of the Watchpoints Business (other than
aspects incidental to the Watchpoints Business): (i) as operated prior to the
date of this Agreement, and (ii) as contemplated by Sellers to be operated in
the future as of the date of this Agreement; in each case, anywhere in the world
where the Watchpoints Business may be conducted from time to time.
 
 
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“Required Consents” means the consent of the other party or parties to each
Transferred Contract that is required by the terms of such Transferred Contract
to be obtained by either Seller by virtue of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby to avoid
the invalidity of such Transferred Contract, the termination thereof, the
incurrence of any penalty or fee or adverse change in amounts payable to or by
Buyer or obligations of Buyer as compared to Seller or a breach or default
thereunder (whether with or without the passage of time, the giving of notice or
both), and any other consents required to be obtained prior to the Closing Date
for the consummation of the transactions contemplated by the Transaction
Documents..
 
“Securities Act” means the Securities Act of 1933 as amended.
 
“Sellers” has the meaning ascribed to it in the introduction to this Agreement.
 
“Sellers’ Disclosure Schedule” has the meaning ascribed to it in Article 3.
 
“Shareholders” has the meaning ascribed to it in Section 3.2.
 
“Shares” means shares of common stock, par value $0.001 per share, of
Function(x).
 
“Software” means all (a) computer programs, applications, systems and code, in
both object code and Source Code, including software implementations of
algorithms, models and methodologies and program interfaces and (b) Internet and
intranet websites, databases and compilations, including data and collections of
data, whether machine-readable or otherwise.
 
“Software Licenses” has the meaning ascribed to it in Section 3.8.
 
“Source Code” means the human-readable version of a computer program that can be
compiled into executable or object code.
 
“Tax” means (a) all taxes imposed of any nature including federal, state, local
or foreign net income tax, alternative or add-on minimum tax, profits or excess
profits tax, franchise tax, gross income, adjusted gross income or gross
receipts tax, employment related tax (including employee withholding or employer
payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax,
sales or use tax, excise tax, stamp tax or duty, any withholding or back up
withholding tax, value added tax, severance tax, prohibited transaction tax,
premiums tax, environmental tax, intangibles tax, business license tax, transfer
tax, occupation tax, customs tax, duties or other taxes, fees, assessments or
charges, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Authority (domestic or foreign)
responsible for the imposition of any such tax, (b) any liability for payment of
amounts described in clause (a) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law and (c) any obligations under any
tax sharing, tax allocation, or tax indemnity agreements or arrangements with
respect to any amounts described in clause (a) or (b) above, or otherwise.
 
 “Threshold Amount” has the meaning ascribed to it in Section 9.3(a).
 
“Trade Secrets” means all “Trade Secrets” as defined in the Uniform Trade
Secrets Act.
 
 
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“Transaction Documents” means this Agreement, the Assignment and Assumption
Agreement, the Registration Rights Agreement, a bill of sale, patent
assignments, trademark assignments and all other agreements and documents
entered into by one or more of the parties as contemplated by or in connection
with this Agreement and the transactions.
 
“Transferred Assets” has the meaning ascribed to it in Section 2.1.
 
“Transferred Contracts” has the meaning ascribed to it in Section 2.1(c).
 
“Transfer and Sales Taxes” means all sales tax, use taxes, stamp taxes,
conveyance taxes, transfer taxes, filing fees and other similar duties, taxes
and fees, if any, imposed upon, or resulting from, the transfer of the
Transferred Assets.
 
“Watchpoints Business” has the meaning ascribed in the preamble.
 
“Watchpoints IP” means all of the Sellers’ Intellectual Property in or relating
to the Watchpoints Business, the Watchpoints Software, the Watchpoints Marks or
the Intellectual Property Embodiments and Documentation, including, without
limitation, all of the Intellectual Property set forth on Schedule 2.1(a).  For
avoidance of doubt, Watchpoints IP includes, without limitation, (a) all of the
patents and patent applications referenced in the foregoing sentence that are or
have been issued or filed as of the Closing Date (the “Existing Patents and
Applications”), (b) all other patent applications that are filed after the
Closing Date that disclose or claim any inventions first conceived or reduced to
practice in whole or part on or before the Closing Date that relate to the
Watchpoints Software, or the Intellectual Property Embodiments and
Documentation, including, without limitation, all continuations,
continuations-in-part, divisional, reexamined and reissued patent applications
and patents that relate to the Existing Patents and Applications, (c) all
foreign counterparts with respect to any of the foregoing, (d) all patents that
issue with respect to any of the foregoing patent applications, and (e) all
Intellectual Property in or relating to any bug fixes to Watchpoints Software
created by or for Sellers at any time.
 
“Watchpoints Marks” means all Marks used or intended for use in connection with,
or otherwise relating to, the Watchpoints Software or the Watchpoints Business,
including Watchpoints, without limitation, all of the Marks set forth on
Schedule 2.1(a).
 
“Watchpoints Software” means Software used in or relating to the Watchpoints
Business, including without limitation the Software used in social viewing
applications and audio thumbprinting applications, all versions of Watchpoints
and audio thumbprinting applications and other Software created or acquired by
the Sellers for these purposes that exists as of the Closing Date, and all
versions thereof, enhancements thereto or derivative works based thereon created
by or for Sellers at any time.
 
“Watchpoints Subsidiaries” has the meaning ascribed to it in the introduction to
this Agreement.
 
“Welfare Plans” has the meaning ascribed to it in Section 3.19.
 
 
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ARTICLE 2
PURCHASE AND SALE
 
2.1    Purchase and Sale of Transferred Assets.  Subject to the terms and
conditions of this Agreement, at the Closing (as defined below) Sellers shall
sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase,
accept and acquire from Sellers, free and clear of any Liens, all assets
constituting the Watchpoints Business, including without limitation, the
following properties, assets, rights and claims, whether tangible or intangible,
but excluding the Excluded Assets (the “Transferred Assets”):
 
(a) all of the Watchpoints IP, including without limitation the Watchpoints IP
identified on Schedule 2.1(a);
 
(b) the Equipment and Equipment Embodiments and Documentation, including without
limitation the assets identified on Schedule 2.1(b);
 
(c) the Contracts identified on Schedule 2.1(c) (the “Transferred Contracts”)
except that Transferred Contracts shall not include any Contract if Buyer elects
on or after the Closing not to accept a Contract for which a Required Consent is
necessary or which Buyer is still reviewing as identified on Schedule 2.1(c);
 
(d) the Employee Assets which are listed as Schedule 2.1(d) (as it may be
adjusted at Closing to reflect the Designated Employees who have accepted
employment offers, if any, from Buyer as of the Closing);
 
(e) all websites, internet domain names, URLs and webpages used or held for use
in connection with the Watchpoints Business, including without limitation,
www.watchpoints.com, “www.watchpoints.tv” and the other domain names identified
on Schedule 2.1(e), together with all Intellectual Property associated therewith
other than trademarks set forth therein which are not otherwise part of the
Transferred Assets;
 
(f) all advertising, marketing and sales materials developed for, or used in
connection with, the Watchpoints Business together with all Intellectual
Property embodied therein other than trademarks set forth therein which are not
otherwise part of the Transferred Assets;
 
(g) all files, invoices, customer lists, records pertaining to customers and
end-users (present, past and potential), all supplier lists and records
pertaining to suppliers, books of account, files and ledgers, and other records
to the extent solely and specifically for the Transferred Assets or the Assumed
Liabilities and copies of the Tax books and records (redacted to exclude
information not relating to the Transferred Assets or the Assumed Liabilities)
relating to the Transferred Assets of the  Assumed Liabilities and not otherwise
provided pursuant to this clause (g);
 
(h) without limiting the foregoing, electronic media including complete and
accurate copies of all Intellectual Property Embodiments and Documentation; and
 
(i) all goodwill of the Watchpoints Business.
 
 
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2.2    Assumption of Liabilities.  Upon the terms and subject to the conditions
of this Agreement and in reliance upon the representations, warranties and
agreements set forth herein, Buyer agrees, effective at the Closing Date, as
defined below, to assume, perform and timely pay and discharge only those
executory obligations (the “Assumed Liabilities”) arising after the Closing Date
under the Transferred Contracts which do not relate to (a) warranties,
maintenance, support or service obligations, or (b) indemnification claims
relating to (i) any matter that occurred on or prior to the Closing Date, or
(ii) any Watchpoints Software or any other Intellectual Property provided,
licensed or sold by Sellers.
 
2.3    Excluded Assets.  Notwithstanding anything to the contrary herein, the
following assets (the “Excluded Assets”) shall be excluded from the Transferred
Assets and retained by Sellers:
 
(a) all cash, cash equivalents and marketable securities on hand or on deposit
with any financial institution;
 
(b) all prepaid Taxes and other expenses not included on Schedule 2.1(i);
 
(c) all assets of Sellers of the kinds described in Section 2.1 which are not
used in the Watchpoints Business, including, without limitation, those assets
listed on Schedule 2.3(c);
 
(d) all legal and equitable privileges, rights and claims against any third
parties, and all choses in action relating to the Excluded Assets or Retained
Liabilities; and
 
(e) all accounts receivable.
 
2.4   Excluded Liabilities. Buyer does not hereby assume, and shall not at any
time hereafter (including on or after the Closing Date) become liable for, any
liabilities of Sellers other than the Assumed Liabilities.
 
2.5   Purchase Price. The aggregate purchase price for the Transferred Assets
(the “Purchase Price”) in an amount equal to $3,000,000:  The Purchase Price
shall be payable as follows: (a) Buyer shall pay at Closing the sum of
$2,500,000 in cash by wire transfer to an account designated by MMS at least one
(1) Business Day prior to Closing and (b) Buyer shall cause to be delivered to
MMS certificates evidencing the issuance to MMS of a total of 200,000 Shares,
within three (3) Business Days of the Closing Date (which for purposes of this
Agreement shall be valued at $500,000 in the aggregate or approximately $2.50
per Share).
 
2.5    Tax Treatment / Allocation of Purchase Price.
 
 ax Treatment. The parties agree that all amounts paid pursuant to Section 2.5
shall be treated as amounts paid for the Transferred Assets and not
characterized in any other manner (except as otherwise required pursuant to a
final determination within the meaning of Section 1313(a) of the Code as if such
provision applies in the relevant jurisdiction).
 
(b) Purchase Price Allocation.  Buyer and Sellers agree that the Purchase Price
(plus any Assumed Liabilities that are treated as consideration for the
Transferred Assets for federal income tax purposes) shall be allocated among the
Transferred Assets (the “Purchase Price Allocation”).  The Purchase Price
Allocation shall be made in accordance with the methodology set forth in
Schedule 2.6(b).  The parties shall make appropriate adjustments to the
allocations in the Purchase Price Allocation schedule to reflect any adjustments
to the Purchase Price.  The parties agree that the Purchase Price Allocation
complies with Section 1060 and the Treasury Regulations promulgated
thereunder.  Each party shall use such Purchase Price Allocation for all
purposes.
 
 
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(c) Tax Filings.  Each of Buyer and MMS shall timely file IRS Form 8594 and all
other federal, state, local and foreign Tax Returns in accordance with such
Purchase Price Allocation.  Neither Buyer nor MMS nor any of their respective
Affiliate or representatives shall take any position on any Tax Return or with
any taxing authority that is inconsistent with the Purchase Price Allocation as
determined pursuant to Section 2.6(b) or the tax treatment as set forth in
Section 2.6.  Buyer and MMS each agree to promptly provide the other party with
any additional information required to complete Form 8594.  Buyer and MMS each
agree to timely notify the other party, and to timely provide the other party
with updates, in the event of an examination, audit or other proceeding
regarding the tax treatment of the transactions or the Purchase Price
Allocation.
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
 
As an inducement to Function(x) to enter into this Agreement and for Buyer to
consummate the transactions contemplated herein and except as set forth on the
Sellers’ disclosure schedule attached hereto and incorporated herein, comprising
schedules numbered according to the sections of this Article 3 and as
specifically set forth herein (the “Sellers’ Disclosure Schedule”), Sellers
jointly and severally represent and warrant to Buyer, as of the date of this
Agreement (except if another date is specified in the representation or
warranty) as follows:
 
3.1   Corporate Existence.  MMS is a corporation duly organized and validly
existing under the laws of the state of California.  Watchpoints Subsidiary is a
corporation duly organized and validly existing under the laws of the State of
Nevada.  Each Seller is duly qualified to do business as a corporation and is in
good standing in the jurisdictions where the conduct or nature of the business
or the ownership, leasing, holding or use of any property or asset related to or
used in connection with the business makes such qualification necessary, except
for those jurisdictions where the failure to be so qualified would not have a
Material Adverse Effect.
 
3.2   Authorization. The execution, delivery and performance by each Seller of
this Agreement and the consummation by each Seller of the transactions
contemplated by this Agreement and the Transactions Documents to which a Seller
is party are within the corporate powers of each Seller and have been duly
authorized by each Shareholder and all other necessary corporate or shareholder
action on the part of each Seller.  The capitalization of each Seller is set
forth on Schedule 3.2 together with the name of each shareholder of each Seller
and the number of shares owned by such shareholder (the shareholders of MMS and
Watchpoints Subsidiary are referred to as the “Shareholders”).  This Agreement
has been duly and validly executed by each of the Sellers, and each of the
Transaction Documents to which a Seller is party will as of the Closing be duly
and validly executed by each Seller, and constitute the legal, valid and binding
agreement of each Seller, enforceable against each Seller in accordance with its
terms, subject to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at law).
 
 
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3.3    Governmental Authorization.  The execution, delivery and performance by
Sellers of this Agreement and the Transaction Documents requires no action by,
consent or approval of, or filing with any Governmental Authority or other
Person other than (a) any actions, consents or approvals otherwise expressly
referred to in this Agreement or any schedule hereto; (b) any filings required
to be made by Buyer in accordance with Applicable Law; (c) notice filings that
are not material to the Watchpoints Business; and (d) approvals or filings
required by Governmental Authorities outside of the U.S. to effectuate or record
the transfer of any Transferred Assets.
 
3.4   Non-Contravention.  The execution, delivery and performance by Sellers of
this Agreement and the Transaction Documents does not and will not (a)
contravene or conflict with the organizational documents of either Seller, true
and correct copies of which have been delivered to Buyer by MMS; (b) contravene
or conflict with or constitute a violation of any provision of any Applicable
Law binding upon a Seller, its business or any of the Transferred Assets; (c)
result in the creation or imposition of any Lien on any of the Transferred
Assets; or (d) contravene, conflict with or constitute a violation or breach of
any agreement to which a Seller is a party or by which either Seller has any
obligation to third parties pursuant to any Transferred Contracts.
 
3.5   Ownership and Absence of Liens.  MMS is the sole owner of all of the
Transferred Assets, free and clear of any Liens.  To MMS’ Knowledge, no third
party has made any claim or assertion challenging MMS’ sole and exclusive
ownership of all right, title and interest in and to the Transferred Assets,
free and clear of all Liens.  The tangible Transferred Assets are in normal
operating condition and free from any significant defects, ordinary wear and
tear excepted, and have been properly serviced and maintained by MMS.
 
3.6   Sufficiency of the Transferred Assets.  The Transferred Assets include
substantially all of the assets of Watchpoints Subsidiary.  Upon consummation of
the transactions contemplated by this Agreement (including, without limitation,
payment of the Purchase Price), Sellers will have sold, assigned, transferred
and conveyed to Buyer the Transferred Assets, free and clear of all
Liens.  Except as noted on Schedule 3.6(i), the Transferred Assets comprise all
of the assets: (a) necessary for Buyer to conduct the Watchpoints Business and
(b) utilized by Sellers in the Watchpoints Business and when used in conjunction
with the hardware systems and standard third-party desktop software applications
used generally in its operations, all of which are identified on Schedule
3.6(ii), and Open Source Software, all of which is identified on Schedule
3.6(iii) will enable Buyer to conduct the Watchpoints Business in the manner
that Sellers have conducted the Watchpoints Business during 2011.  Without
limiting the foregoing, the Transferred Assets are all assets (other than
personnel) necessary for Buyer to fulfill the obligations under the Transferred
Contracts, and are all operating assets of Sellers used in their “Watchpoints”
division.
 
 
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3.7   Litigation. There are no actions, suits, claims, hearings, arbitrations,
proceedings (public or private) or, to the Knowledge of MMS, governmental
investigations (“Proceedings”) that have been brought by or against or before
any Governmental Authority or any other Person pending or, to the Knowledge of
MMS, threatened with respect to any Seller that seek to enjoin or rescind the
transactions contemplated by this Agreement or the Transaction Documents, and
there are no existing Proceedings, orders, judgments or decrees against or
binding upon any Seller or any of the Transferred Assets, or that would prevent
the performance by any Seller of the transactions contemplated by this
Agreement.
 
3.8   Contracts.
 
(a) MMS have provided Buyer with true, correct and complete copies of all
Transferred Contracts.  Except as set forth in Schedule 3.8(a)(i), Sellers do
not have any contractual relations with any third party in order to use the
Watchpoints IP to the extent necessary to conduct the Watchpoints
Business.  Without limiting the generality of the foregoing, Schedule 3.8(a)(ii)
lists all licenses and other agreements pursuant to which any third party grants
Sellers any rights in or relating to any software, other technology or any
Intellectual Property therein or relating thereto that is incorporated into or
used in connection with the development, creation, marketing, copying, sale and
distribution of any Watchpoints Software or otherwise used or commercialized by
Sellers in connection with the Watchpoints Business, other than licenses for
commercially available off-the shelf Software (“Software Licenses”), the term of
each Software License, whether the Software License is terminable at-will and
whether the licensor can materially modify the terms without the consent of
Sellers.  Except as set forth on Schedule 3.8(a)(iii), are not obligated to pay
any on-going license fees, royalties or any other amount to any other Person in
connection with the Software Licenses, the operation of the Watchpoints
Business, any license of the Watchpoints IP or any of the transactions
contemplated hereunder, and have no liabilities thereunder.  Consummation of the
transactions contemplated by this Agreement will not result in any increase of
any license fees with respect to any of the Software Licenses. Except as set
forth on Schedule 3.8(a)(iv), none of the parties to the Transferred Contracts
have received, or have a right to receive, any discounts, special pricing or
other benefits in connection with the Watchpoints Business other than those
expressly set forth in the Transferred Contract entered into by such
party.  Neither Seller nor, to the Knowledge of MMS, any other party to any
Software License is in breach or default thereof, and each Software License is
fully valid and enforceable in accordance with its terms.
 
(b) Schedule 3.8(b) sets forth as of the date of this Agreement those leases
pertaining to each portion of real property that is leased or used by MMS or its
Affiliates in connection with the Watchpoints Business.  MMS owns all right,
title and interest in and have good and valid title in all leasehold estates as
set forth in Schedule 3.8(b), in each case free and clear of all Liens.
 
(c) The Transferred Contracts are valid and effective in accordance with their
terms, and there is not under any of such Transferred Contracts (i) any existing
or claimed default by either Seller or event which, with the notice or lapse in
time, or both, would constitute a default by either Seller or (ii) to the
Knowledge of MMS, any existing or claimed default by any other party or event
which with notice or lapse of time, or both, would constitute a material default
by any such party.  There is no actual or, to the Knowledge of MMS, threatened
termination, cancellation or limitation of any of the Transferred Contracts.  To
the Knowledge of MMS, there is no pending or threatened bankruptcy, insolvency
or similar proceeding with respect to any other party to the Transferred
Contracts.
 
 
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(d) Schedule 3.8(d)(i) sets forth all of the outstanding training, warranty,
maintenance, service or support obligations of Sellers under the Transferred
Contracts.  Schedule 3.8(d)(ii) sets forth the marketing support, marketing
initiatives and development funds provided to each of parties to the Transferred
Contracts during  2010 and 2011. 
 
(e) The Transferred Contracts constitute all Contracts relating to the
Watchpoints Business.
 
(f) The Transferred Contracts, respectively, do not contain provisions relating
to any of the following matters:
 
(i)  any covenant not to compete or confidentiality agreement of either Seller
or for the benefit of another Person;
 
(ii)  any arrangement limiting the freedom of either Seller to conduct the
Watchpoints Business in any manner or use the Watchpoints IP in any manner;
 
(iii)  any agreement restricting transfer or sale by either Seller of
Watchpoints IP or the other Transferred Assets; and
 
(iv)  any rights granted to, or retained by, any Affiliate of a Seller or any
shareholder, director, officer or employee of a Seller.
 
3.9   Permits; No Required Consents.  Schedule 3.9(i) sets forth all approvals,
authorizations, certificates, consents, licenses, orders and permits of all
Governmental Authorities, necessary for the operation of the Transferred Assets
or the Watchpoints Business in substantially the same manner as currently
operated by Sellers.  No approvals, authorizations, certificates, consents,
licenses, orders, permits or other authorizations of any Governmental
Authorities are required to manufacture, use, sell or otherwise exploit the
Transferred Assets consistent with the manner in which the Transferred Assets
are or have been manufactured, used, sold or otherwise exploited by
Sellers.  Schedule 3.9(ii) sets forth the Required Consents that must be
obtained prior to the Closing Date.  Except as set forth in Schedules 3.9(i) and
3.9(ii), no consents are required for the sale of the Transferred Assets by
Sellers to Buyer.
 
3.10   Compliance with Applicable Laws.  Sellers are not in violation of any
Applicable Law or any order, writ, injunction or decree of any Governmental
Authority applicable to the Watchpoints IP or the Watchpoints Business.  All
documentation, correspondence, reports, data, analysis and certifications
relating to or regarding the Transferred Assets filed or delivered (or, if
amended, as of the date for which such amendment speaks) by or on its behalf to
any Governmental Authority were true and accurate when so filed or delivered and
remain, to the extent required by any Applicable Laws.
 
3.11   Intellectual Property.
 
(a) Schedule 3.11(a) sets forth an accurate and complete list, as of the date
hereof, of (i) all patents, registered copyrights, Marks and applications for
any of the foregoing owned, licensed or used in the Watchpoints Business by
Sellers; and (ii) all Watchpoints Software.  No other intellectual property
rights, privileges, Software Licenses, contracts or other instruments, or
evidences of interest are necessary to or used in the conduct of the Watchpoints
Business.  The consummation of the transactions contemplated under the
Transaction Documents will not alter, impair, or extinguish any Watchpoints IP.
 
 
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(b) To the Knowledge of MMS, the Sellers have taken all commercially reasonable
actions to maintain and protect their rights, in the Watchpoints IP including,
without limitation, by maintaining the confidentiality of their related Trade
Secrets.  Without limiting the generality of the foregoing, and except as noted
on Schedule 3.11(b) or from whom MMS has purchased Watchpoints Software, Sellers
have not disclosed to any Person other than Buyer and to MMS’ Knowledge no
Person other than Buyer and MMS’ Affiliates have had access to any Source Code
with respect to any Watchpoints Software.  Neither Sellers nor any Affiliate
thereof nor any other Person other than Buyer shall have any right under any
circumstances or conditions to receive access to any such Source Code at any
time after the Closing Date.  All Persons (including, without limitation present
and former employees of Sellers) who have developed any Watchpoints IP have
executed and delivered to a Seller a valid and enforceable agreement providing
for an assignment to a Seller with respect to such Person’s rights in any
Watchpoints IP.  All Persons who have worked for Sellers, whether as employees
or independent contractors, in developing the Watchpoints Business or who had
access to Watchpoints IP, also have executed and delivered to a Seller a valid
and enforceable agreement providing for the nondisclosure by such Person of any
confidential information of Sellers. All of such agreements are listed in
Schedule 3.11(b) and copies thereof have been delivered to Buyer.  All such
agreements are and will continue to be in effect after the Closing and, to the
Knowledge of MMS, there have been no breaches of such agreements or of any of
any Sellers’ security measures or unauthorized access to the Watchpoints IP.  At
no time during the conception or reduction to practice of any Watchpoints IP was
any developer, inventor or other contributor to such Watchpoints IP operating
directly or indirectly under any grants from any Governmental Authority or
subject to any employment agreement, invention assignment, nondisclosure
agreement or other Contract with any third Person that could adversely affect
the rights of Sellers, and upon the Closing, Buyer to such Watchpoints IP.
 
(c) To the Knowledge of MMS, all of the Watchpoints IP is valid, enforceable and
subsisting.  Neither Seller has received any notice or claim challenging or
questioning the ownership, validity or enforceability of any Watchpoints IP.
 
(d) Except for nonexclusive licenses granted by Sellers in the Ordinary Course
of Business to its customers in substance identical to one of the forms of
customer license set forth on Schedule 3.11(d), neither MMS nor any Affiliate
thereof has granted or purported to grant to any Person (other than Buyer) any
license or other right or interest under or with respect to the Watchpoints
Software or any Watchpoints IP.
 
(e) To the Knowledge of MMS, neither the Watchpoints IP nor the conduct by
Sellers of the Watchpoints Business infringes, misappropriates or dilutes any
Intellectual Property of any third Person.  Sellers have not received any notice
or claim asserting or suggesting that any such infringement, misappropriation or
dilution may be occurring or has occurred (including, without limitation, offers
to license), nor, to MMS’ Knowledge, is there any basis therefor.  To MMS’
Knowledge, no third party is misappropriating, infringing or diluting any
Watchpoints IP.
 
 
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(f) Except as set forth on Schedule 3.11(f), no Open Source Software has been
incorporated into or used or distributed with any of the Watchpoints Software or
otherwise used by Sellers in any respect in or in connection with the
Watchpoints Software, in a manner that requires any publishing of Watchpoints
Software source code.  None of the Watchpoints Software is covered by or subject
to any Open Source License that requires that source code to be published or
made freely available.  Sellers have not created any derivative work based upon
any Open Source Software that is used by Sellers in connection with the
Watchpoints Business in a manner that requires that those derivative works be
published or made feely available.  None of the Watchpoints IP itself is Open
Source Software.
 
(g) The Watchpoints Software substantially conforms to the specifications set
forth on Schedule 3.11(g)(i).  The Watchpoints Software includes no bugs, errors
or specification nonconformities that would, or could be reasonably expected to,
give rise to a Material Adverse Effect.  A list of all bugs, errors or
specification nonconformities related to Watchpoints Software known to Sellers
is set forth on Schedule 3.11(g)(ii).  Schedule 3.11(g)(iii) sets forth all
reported problems, bug reports, technical support incidents and warranty claims
made with respect to the Watchpoints Business during 2010 and 2011.  Schedule
3.11(g)(iv) set forth all of Sellers’ patches, bug fixes, updates and software
releases (including new product releases) with respect to the Watchpoints
Business during 2010 and 2011.
 
(h) MMS has provided the Buyer complete and accurate copies of all Intellectual
Property Embodiments and Documentation, except for Source Code, which has been
available for inspection before Closing, but will be delivered only at Closing.
 
(i) Except for the items of third-party software specifically identified in
Schedule 3.11(i), (i) MMS owns all right, title and interest in and to the
Watchpoints Software and all Intellectual Property therein or relating thereto
and (ii) the Watchpoints Software was written in its entirety by either
employees or third party contractors acting within the course and scope of their
employment or contracts.  Accordingly, MMS is deemed to be the author,  for
purposes of the United States Copyright Act, 17 U.S.C. § 101, et. seq. of those
portions of the Watchpoints Software that was written by its employees, and
assignees of the copyrights to works of which contractors were the author.
 
(j) Schedule 3.11(j) contains a complete list and description of all products
(other than the Watchpoints Software) used by or on behalf of Sellers to develop
the Watchpoints Software (“MMS’ Tools”) specifying to each item, as applicable:
(i) the nature and purpose of the item, including the title, (ii) the owner of
the item, and (iii) if Sellers are not the owner thereof, the title of the
licenses or other Contracts or arrangements pursuant to which Sellers have or
had the right to use MMS’ Tools.
 
(k) In connection with the Watchpoints Business to MMS’ Knowledge, the
activities of Sellers’ current and past employees, officers, directors and
contractors in connection with their employment or contractual or other
relationship with Sellers did not and do not violate any agreements or
arrangements that any such employees or consultants had or have with any former
employer or any other Person.  No litigation (or other proceeding in or before
any Governmental Authority or arbitral body) charging either Seller with
infringement or unauthorized or unlawful use of any Watchpoints IP is pending,
or to MMS’ Knowledge, threatened; nor, to MMS’ Knowledge, is there any
reasonable basis for any such litigation or proceeding.
 
 
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(l) Each present or past employee, officer, director, consultant or any other
Person who authored, conceived, created, developed or reduced to practice any
part of any Watchpoints IP, either: (i) is a party to a Contract that conveys or
obligates such Person to convey to either Seller any and all right, title and
interest in and to all such Watchpoints IP authored, conceived, created,
developed or reduced to practice by such Person, (ii) as to copyrighted or
copyrightable material created in the course of such Person’s employment with or
engagement on behalf of either Seller is a party to a “work made for hire”
Contract pursuant to which such Seller is deemed as a matter of Law to be the
original owner/author of all proprietary rights in such material, or (iii)
otherwise has by operation of Law vested in such Seller any and all right, title
and interest in and to all such Watchpoints IP authored, conceived, created,
developed or reduced to practice by such Person.  To Sellers’ Knowledge, at no
time during the conception or reduction to practice of any Watchpoints IP was
any developer, inventor or other contributor to such Watchpoints IP operating
directly or indirectly under any grants from any governmental authority or
subject to any employment agreement, invention assignment, nondisclosure
agreement or other Contract with any Person that could adversely affect the
rights of Sellers, and upon the Closing, Buyer to such Watchpoints IP.
 
(m) Sellers have not given any party an indemnity in connection with the
Transferred Assets.
 
3.12   Advisory Fees.  There is no broker, finder, agent or other intermediary
who has been retained by or is authorized to act on behalf of any Seller or its
Affiliates and is entitled to any fee, commission or reimbursement of expenses
upon consummation of the transactions contemplated by the Transaction Documents.
For the avoidance of doubt, no employee, officer or director of MMS is
considered to be a broker, finder, agent or other intermediary of MMS, even if
they are acting as a finder for, or are planning to become employees of,
Function(x).  Sellers consent to Buehler acting as a finder for Function(x) and
receiving a finder’s fee from Function(x) as described in Section 4.7.
 
3.13   Foreign Corrupt Practices Act.  Neither Seller nor any person acting on
their behalf has used corporate or other funds for unlawful contributions,
payments, or gifts in violation of the U.S. Foreign Corrupt Practices Act.
 
3.14   Taxes. Sellers have timely paid all Taxes with respect to the Watchpoints
Business when the same have become due.  Sellers have complied with all
Applicable Laws relating to the withholding and collection of Tax with respect
to the Watchpoints Business, and have timely reported such amounts and paid them
over to the applicable taxing authority.  There is no outstanding claim, audit
or other examination or proceeding with respect to Taxes with respect to the
Watchpoints Business and, to the Knowledge of MMS, no such claim, audit,
examination or proceeding is threatened.  Sellers have timely filed all Tax
Returns with respect to the Watchpoints Business required to be filed and all
such Tax Returns have been true, correct, and complete in all material
respects.  Sellers have complied  in all material respects with all Applicable
Laws with respect to the Watchpoints Business with respect to record
retention.  There are no liens for Taxes (other than liens for current Taxes not
yet due and payable ) on the Transferred Assets.  There is no action in respect
of Taxes pending, or, to MMS’ Knowledge, threatened, that would result in such a
lien.
 
 
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3.15   Financial Statements.  Attached hereto as Schedule 3.15 are copies of the
Financial Statements.  The Financial Statements are complete and correct in all
material respects, have been prepared in accordance with MMS’ books and records
and in conformity with the practices consistently applied by MMS without
modification of the accounting principles used in the preparation thereof, and
present fairly the financial position, expenses and cash flows of Sellers with
respect to the Watchpoints Business as at the dates and for the periods
indicated, and that neither Seller has received any revenue from the operation
of the Watchpoints Business. Each Seller (i) will be able to pay its obligations
as they become due in the Ordinary Course of Business and (ii) is not now
insolvent, nor will it be rendered insolvent.  No bankruptcy, reorganization,
debt arrangement or other case or proceeding under any bankruptcy or insolvency
law has been commenced with respect to either Seller.
 
3.16   Absence of Liabilities, Changes and Events.  Since July 1, 2011, neither
Seller has (a) incurred any debts, liabilities, claims against or obligations,
and to MMS’ Knowledge, there is no reasonable legal basis therefor, that may
adversely affect Sellers’ ability to perform its obligations hereunder or under
the other Transaction Documents or may adversely affect the ownership of the
Transferred Assets or the use thereof by Buyer in the manner currently used by
Sellers, whether accrued, absolute, contingent or otherwise, and whether due or
to become due, including but not limited to liabilities on account of taxes,
other governmental charges, duties, penalties, interest or fines; (b) sold,
assigned, transferred or licensed any tangible or intangible asset of Sellers
used in the operation of the Watchpoints Business other than in the Ordinary
Course of Business; (c) modified or terminated any Software
License; (d) increased any salaries, wages or employee benefits or made any
arrangement for payment of any bonus or special compensation for any employee of
Sellers who primarily perform services with respect to the Watchpoints Business;
(e) agreed to take any action described in (a) through (d) above, or (f) had a
Material Adverse Effect or to MMS’ Knowledge, has there been any occurrence or
event that could reasonably be expected to have a Material Adverse Effect.
 
3.17   Operation of the Watchpoints Business.  Sellers and their Affiliates have
conducted the Watchpoints Business, including ownership and use of the
Transferred Assets, only through MMS and not through any other divisions or any
direct or indirect subsidiary or Affiliate of MMS.  Since June 1, 2010, MMS has
operated the Watchpoints Business in the Ordinary Course of
Business.  Schedule 3.17 contains a list of all prospective customers, including
contact information, contacted by Sellers with respect to the Watchpoints
Business together with all maintenance, support or service agreements entered
into or renewed by Sellers with respect to the Watchpoints Business.
 
3.18   Employment and Labor Matters.  Schedule 3.18 lists all employees of
Sellers who primarily perform services with respect to the Watchpoints Business
(the “Designated Employees”).  Sellers have complied in all material respects
with all Applicable Laws respecting employment and employment practices, terms
and conditions of employment, wages and hours, and occupational safety and
health.  With respect to the Designated Employees:
 
 
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(i)  except for routine government inquiries, examinations and inspections which
Sellers have no reason to believe are material, there are no charges,
governmental audits, investigations, administrative proceedings or complaints,
grievances or actions concerning the employment practices of Sellers pending,
nor have Sellers been expressly notified of any such matter being threatened,
before any federal, state or local agency or court and, to the Knowledge of MMS,
no basis for any such matter exists;
 
(ii)  no Seller is a party to any union or collective bargaining agreement, no
union attempts to organize its employees have been made, nor are any such
attempts now threatened;
 
(iii)  no Seller has experienced any organized slowdown, work interruption,
strike, or work stoppage by any of its employees;
 
(iv)  none of such employees have filed any complaints against any Seller or any
officers or employees of any Seller, initiated any Proceedings against any
Seller or been the subject to any disciplinary actions by any Seller;
 
(v)  Seller will not incur any Liability to any such employee or violate any
Applicable Laws respecting employment and employment practices as a result of
the transactions contemplated by this Agreement; and
 
(vi)  Sellers have valid written documentation that each such employee is a U.S.
resident or is authorized to work in the U.S. and has delivered such
documentation to Buyer.
 
3.19   Employee Benefit Matters.
 
  (a) A true, correct and complete list of the names, titles, base salaries,
bonus information, date of hiring, sick and vacation leave that is accrued and
unused and all other benefits of the Designated Employees as of the date hereof
is included on Schedule 3.19.  To MMS’ Knowledge, except as contemplated by this
Agreement (i) it is not expected that any of the Designated Employees will be
terminating employment with Sellers prior to the Closing Date or will not
commence employment with Buyer as of the Closing Date, (ii) none of the
Designated Employees or former employees of Sellers have violated any
confidentiality agreement or covenant not to compete and (iii) none of the
Designated Employees have violated (A) any material Applicable Laws in the
course of their employment with the Sellers, or (B) any material Sellers’
policies, in each case excepting such violations as would not be expected to
have a Material Adverse Effect.  All former or current employees (whether or not
Designated Employees) which have or had information or access to information
regarding the Transferred Assets have entered into a customary confidentiality
and covenant not to compete agreement with Sellers which are and will continue
to be in effect after the Closing.
 
  (b) The Designated Employees receive benefits or are eligible under only the
employee pension benefit plans, as defined in Section 3(2) of ERISA, as are
listed in Schedule 3.19 (the “Pension Plans”).  MMS has not maintained or
contributed within the last six (6) years to any other employee pension benefit
plan, as defined in Section 3(2) of ERISA, which was subject to Title IV of
ERISA.
 
 
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  (c) The Designated Employees receive benefits or are eligible under only the
employee welfare benefit plans, as defined in Section 3(1) of ERISA (including
but not limited to, life insurance, medical, hospitalization, holiday, vacation,
disability dental and vision plans) as are listed on Schedule 3.19 (the “Welfare
Plans”).
 
  (d) The Designated Employees receive benefits or are eligible under only
unwritten incentive compensation, material fringe benefit, material payroll or
employment practice, bonus, option, stock purchase, severance, sick pay, salary
continuation, deferred compensation, supplemental executive compensation plans,
employment agreements (other than those terminable at will without severance)
and consulting agreements for the benefit of their officers, directors,
employees, former employees, or independent contractors as are listed in
Schedule 3.19 (the “Compensation Programs”).
 
  (e) Each Pension Plan and Welfare Plan has been operated and administered in
substantial compliance with ERISA and the Code; each Pension Plan which is
intended to be qualified under Section 401(a) of the Code has been determined by
the IRS to be so qualified or a request for such determination has been timely
filed with the IRS or the Pension Plan is a prototype plan for which the
prototype sponsor has obtained a favorable IRS opinion letter (and to MMS’
Knowledge no event has occurred between the date of the last such determination
and the Closing Date that would reasonably be expected to cause the Internal
Revenue Service to revoke such determination).
 
  (f) All amounts required to be paid by MMS with respect to any Designated
Employee under each Pension Plan, Welfare Plan and Compensation Program on or
before the Closing Date have or will be paid.
 
  (g) Neither the execution and delivery of this Agreement nor the consummation
of any of the transactions contemplated hereby or by the Transaction Documents
will (i) result in any payment (including, without limitation, severance,
unemployment compensation, golden parachute or otherwise) becoming due to any
Designated Employee, (ii) increase any benefits otherwise payable under any
Pension Plan, Welfare Plan or Compensation Program to any Designated Employee,
or (iii) result in any acceleration of the time of payment or vesting of any
such benefits.
 
3.20   Insurance.  With respect to the Watchpoints Business, Sellers maintain
insurance policies that are customary and adequate, including, without
limitation, general liability employer’s liability, business liability and
errors and omissions policies.  All such insurance policies are listed on
Schedule 3.20 and are in full force and effect and enforceable in accordance
with their terms.  All of the Transferred Assets and the use of the Transferred
Assets of an insurable nature are insured by Sellers in such amounts and against
such losses or risks as is customary and usual, as required by Applicable Law
and as required by Contract.
 
3.21   Securities Law Matters. The offer and sale of the Shares to MMS is being
made as a private placement pursuant to Section 4(2) of the Securities Act and
Regulation D thereunder, and is not being registered under the Securities
Act.  Sellers hereby acknowledge that the Shares have not been registered under
the Securities Act, or registered or qualified for sale under any state
securities laws, and cannot be resold without registration thereunder or
exemption therefrom. MMS is an “accredited investor,” as such term is defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act, and will
acquire the Shares for its own account and not with a view to a sale or
distribution thereof in violation of the Securities Act, and the rules and
regulations thereunder, any applicable state “blue sky” laws or any other
applicable securities laws. MMS has sufficient knowledge and experience in
financial and business matters to enable it to evaluate the risks of investment
in the Shares, is purchasing the Shares with a full understanding of all of the
terms, conditions and risks thereof, and at the Closing will bear and have the
ability to bear the economic risk of this investment for an indefinite period of
time. MMS understands and agrees to the terms and conditions under which the
Shares are being offered.
 
 
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3.22   Legends. MMS acknowledges that, to the extent applicable, each
certificate evidencing the Shares shall be endorsed with a legend substantially
in the form set forth below, as well as any additional legend imposed or
required by applicable securities laws:
 
“THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE
SECURITIES LAWS OF ANY U.S. STATE, NOR IS ANY SUCH REGISTRATION CONTEMPLATED.
THIS SECURITY AND ANY SECURITY ISSUABLE UPON CONVERSION HEREOF MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM.
 
THE HOLDER OF THIS SECURITY AGREES THAT (A) THIS SECURITY MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO FUNCTION (X), INC., OR ITS
SUCCESSOR, (II) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, IN EACH OF CASES
(I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY SELLER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO ABOVE. IN ANY CASE, THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THE
SECURITIES EXCEPT AS PERMITTED UNDER THE SECURITIES ACT.”
 
3.23   Restricted Securities.  MMS acknowledges that the Shares are “restricted
securities” (as such term is defined in Rule 144 under the Securities Act) and
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available.
 
3.24   Access to Information. Sellers acknowledge that they have been afforded
an opportunity to request and to review all information considered by them to be
necessary to make an investment decision with respect to the Shares.  Sellers
have received and reviewed information about Function(x) and has had an
opportunity to discuss Function(x)’s business, management and financial affairs
with its management.
 
 
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3.25    Reliance Upon Representations. MMS understands and acknowledges that:
(a) the Shares have not been registered under the Securities Act; (b) the
representations and warranties contained in Sections 3.21-3.26 are being relied
upon by Function(x) as a basis for exemption of the sale of the Shares under the
Securities Act; (c) the offering of the Shares pursuant to this Agreement will
not be registered under the Securities Act on the ground that the sale provided
for in this Agreement and the issuance of securities hereunder is exempt from
the registration requirements of the Securities Act; and (d) no state or federal
agency has made any finding or determination as to the fairness of the terms of
the sale of the Shares or any recommendation or endorsement thereof.  If any of
the representations made by a Seller in connection with MMS’ purchase of Shares
are no longer accurate prior to Closing, Sellers will promptly notify
Function(x).
 
3.26   Exculpation. Sellers acknowledge that none of them is relying upon any
person, firm or corporation, including, without limitation, Function(x), in
making its investment or decision to invest in Buyer, other than the
representations and warranties of Function(x) contained in this Agreement.
 
3.27   Affiliates.  Other than the Shareholders, Sellers are not controlled by
any Person and Sellers are not in control of any other Person, other than
Watchpoints Subsidiary.  Schedule 3.27 lists each Transferred Contract to which
Sellers and any Shareholder or any of their Related Persons is a party.  None of
the Shareholders or any of their Related Persons own, directly or indirectly, or
otherwise has an interest in whole or in part, any tangible or intangible
property (including the Watchpoints IP) that any Seller uses or the use of which
is necessary for the conduct of the Watchpoints Business or the ownership or
operation of the Transferred Assets.
 
3.28   No Other Representations and Warranties.  Except as expressly set forth
in this Article 3, Sellers do not make any representation or warranty, express
or implied, at law or in equity, with respect to Sellers, their Affiliates,
their businesses or financial condition or any of their assets, liabilities or
operations or any other matter, and any such other representations or warranties
are hereby expressly disclaimed.
 
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF FUNCTION(X) and BUYER
 
As an inducement to Sellers to enter into this Agreement and for Sellers to
consummate the transactions contemplated herein, Function(x) and Buyer represent
and warrant to Sellers, as of the date of this Agreement (except if another date
is specified in the representation or warranty) as follows:
 
4.1   Corporate Existence and Power.  Function(x) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power to enter into this Agreement and
consummate the transactions contemplated this Agreement and the Transaction
Documents.
 
 
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4.2   Authorization. The execution, delivery and performance by Function(x) of
this Agreement and the consummation by Function(x) or Buyer of the transactions
contemplated by this Agreement and the Transaction Documents are within the
corporate powers of Function(x) or Buyer and have been duly authorized by all
necessary corporate or member action on the part of Function(x) or Buyer.  This
Agreement has been duly and validly executed by Function(x) and each of the
Transaction Documents will be duly and validly executed by and does or will
constitute the legal, valid and binding agreement of Function(x) or Buyer,
enforceable against such party in accordance with its terms, subject to general
principles of equity (regardless of whether such enforceability is considered in
a Proceeding in equity or at law).
 
4.3   No Registration Required. Subject to the accuracy of the representations
and warranties set forth in Article 3, it is not necessary in connection with
the offer, sale and delivery of the Shares to MMS in the manner contemplated by
this Agreement to register the Shares under the Securities Act.
 
4.4   The Shares.  Shares have been duly and validly authorized by all necessary
corporate action on the part of Function(x) and, when issued and delivered
against payment therefor in accordance with the terms of this Agreement, the
Shares will be validly issued, fully paid and non-assessable.
 
4.5   Governmental Authorization, Other Consents.  The execution, delivery and
performance by Function(x) or Buyer of this Agreement and the Transaction
Documents requires no action by, consent or approval of, or filing with any
Governmental Authority or other Person other than any actions, consents or
approvals otherwise expressly referred to in this Agreement and any filings that
Buyer shall make in accordance with Applicable Law.
 
4.6   Litigation.  There are no Proceedings that have been brought by or against
or before any Governmental Authority or any other Person pending or, to the
Knowledge of Buyer, threatened with respect to Function(x) or Buyer that seek to
enjoin or rescind the transactions contemplated by this Agreement or the
Transaction Documents, and there are no existing Proceedings, orders, judgments
or decrees against or binding upon Buyer that could reasonably be expected to
prevent the performance by Buyer of the transactions contemplated by this
Agreement.
 
4.7   Advisory Fees. Function(x) will be paying a finder’s fee to Buehler if the
transactions contemplated hereunder close.  Except for the foregoing, there is
no broker, finder, agent or other intermediary that has been retained by or is
authorized to act on behalf of Buyer who is entitled to any fee, commission or
reimbursement of expenses upon consummation of the transactions contemplated by
the Transaction Documents.
 
4.8   Non-Contravention.  The execution, delivery and performance by Function(x)
and Buyer of this Agreement and the Transaction Documents does not and will not
(a) contravene or conflict with the organizational documents of Function(x) or
Buyer, true and correct copies of which have been delivered to Sellers by
Function(x); (b) contravene or conflict with or constitute a violation of any
provision of any Applicable Law binding upon Function(x) or Buyer; or
(c) contravene, conflict with or constitute a violation or breach of any
agreement to which a Function(x) or Buyer is a party.
 
 
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4.9   Financing. The funds available to Function(x) are, as of the date hereof,
and will be as of the Closing Date, sufficient to enable Buyer to consummate the
transactions contemplated by this Agreement and the Transaction Documents and
deliver the Purchase Price at Closing.  Notwithstanding anything to the contrary
contained herein, the parties acknowledge and agree that it shall not be a
condition to the obligations of Function(x) or Buyer to consummate the
transactions contemplated hereby that they have sufficient funds for payment of
the Purchase Price.
 
4.10   No Other Representations and Warranties.  Except as expressly set forth
in this Article 4, neither Function(x) nor Buyer make any representation or
warranty, express or implied, at law or in equity, with respect to Function(x),
Buyer, their Affiliates, their businesses or financial condition or any of their
assets, liabilities or operations or any other matter, and any such other
representations or warranties are hereby expressly disclaimed.
 
ARTICLE 5
COVENANTS OF THE PARTIES
 
5.1   Further Assurances.  The parties hereto agree to execute and deliver such
other documents, certificates, agreements and other writings and to take such
other actions as may be reasonably necessary in order to consummate or implement
on a timely basis the transactions contemplated by this Agreement.  In addition,
at such times and from time to time on and after the Closing Date, upon
reasonable request by Buyer, Sellers will execute, acknowledge and deliver, or
will cause to be done, executed, acknowledged and delivered, all such further
acts, deeds, assignments, transfers, conveyances, licenses, powers of attorney,
and assurances that may reasonably be required for the better conveying,
transferring, assigning, delivering and confirming ownership to, or reducing to
the possession of, Buyer all of the Transferred Assets and to otherwise carry
out the purposes of this Agreement.
 
5.2   Certain Filings. Without limiting the generality of Section 5.1, the
parties hereto shall cooperate with one another in determining whether any
action by or in respect of, or filing with, any Governmental Authority is
reasonably necessary or appropriate, or any action, consent, approval or waiver
from any party to any of the Watchpoints IP is reasonably necessary or
appropriate, in connection with the consummation of the transactions
contemplated by this Agreement.  Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information reasonably required in connection therewith and seek
timely to obtain any such actions, consents, approvals or waivers.
 
5.3   Public Announcements; Confidentiality.
 
  (a) The parties agree that prior to issuing any other press release or public
announcement concerning any provisions of this Agreement or the transactions
contemplated hereby, each party shall so advise the other party hereto, and the
parties shall thereafter use their reasonable efforts to cause a mutually
agreeable release or announcement to be issued; provided, however, that
Function(x) may file a Form 8-K or any other securities filings under Applicable
Law.  Notwithstanding the foregoing, the parties may, on a confidential basis,
release information regarding the existence and content of this Agreement or the
transactions contemplated hereby to their respective Affiliates, agents,
accountants, attorneys, prospective lenders, advisors or investors.
 
 
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  (b) “Confidential Information” means any confidential business or technical
information relating to the operations, business plans, or intellectual property
of the Watchpoints Business and includes without limitation the Watchpoints
Software, the Watchpoints IP, the Intellectual Property Embodiments and
Documentation, the Equipment Embodiments and Documentation and all other
confidential information relating to the Watchpoints Business, but excludes (i) 
information Buyer discloses to any third party who has not agreed to
non-disclosure restrictions similar to those contained in this Section 5.3(b),
(ii) information that is or becomes known to any member of the public or are or
enter the public domain, other than by Sellers’ fault, (iii) information
rightfully disclosed to Sellers by a third party that is legally free to
disclose such matters; and (iv) information developed by Sellers, alone or with
others, that does not materially utilize the Confidential Information.  Except
as otherwise required by law, from and after the Closing Date, Sellers shall
not, without the prior written consent of Buyer, disclose to any other Person or
use (whether for the account of Sellers or any other party) any Confidential
Information or any proprietary work product of Buyer, any client of Buyer or its
Affiliates; provided, however that Sellers may disclose to their shareholders,
accountants, attorneys, lenders and potential investors Tax and financial
information relating to its ownership and operation of the Watchpoints
Business.  In the event that any Seller believes that it is required to disclose
any such Confidential Information pursuant to applicable Laws, such Seller shall
give timely written notice to Buyer so that Buyer and its Affiliates may have an
opportunity to obtain a protective order or other appropriate relief.  Seller
shall cooperate fully in any such action by Buyer and its Affiliates.
 
5.4   Specific Performance.  The parties hereto recognize and agree that money
damages would not be an adequate remedy for a breach by Buyer or any Seller of
Sections 5.1, 5.2, 5.3, 5.8 and 5.9 and, even if money damages were adequate, it
would be impossible to ascertain or measure with any degree of accuracy the
damages sustained therefrom.  Accordingly, if there should be a breach or
threatened breach by Buyer or any Seller of Sections 5.1, 5.2, 5.3, 5.8 or 5.9
of this Agreement, the non-breaching party shall be entitled to an injunction
restraining the breaching party from any breach without showing or proving
actual damages.  Nothing in the preceding sentence shall limit or otherwise
affect any remedies that Buyer or Sellers may otherwise have under Applicable
Law.
 
5.5   Offer of Employment.  Sellers shall cooperate with Buyer and seek to
obtain on behalf of Function(x) or Buyer the acceptance of an offer of
employment by Buehler and any Designated Employees that Function(x) or Buyer may
hereafter elect to employ, and Sellers consent to Function(x) or Buyer
communicating directly with Buehler and such Designated Employees about offers
of employment.  Except for obligations to MMS, to the Knowledge of MMS, Buehler
is not obligated under or bound by any agreement or instrument, or any judgment,
decree, or order of any court of administrative agency, that (a) conflicts or
may conflict with his agreements and obligations to use his best efforts to
promote the interests of Buyer, (b) conflicts or may conflict with the business
or operations of Buyer, or (c) restricts or may restrict the use or disclosure
of any information that may be useful to Buyer.  Without regard to whether Buyer
employs Buehler or the Designated Employees, Sellers shall be solely responsible
for all outstanding payments due to Buehler and the Designated Employees under
their existing terms of employment with Sellers (including but not limited to
salary, severance obligations, vacation pay or any other payment) through the
Closing Date and Sellers acknowledge and agree that Buyer shall not assume or in
any fashion be bound by any employment contract between either Seller and
Buehler or a Designated Employee.
 
 
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5.6   Required Consents.  As promptly as practicable after the execution of this
Agreement, Sellers shall use commercially reasonable efforts to obtain, at
Sellers’ cost and expense, all Required Consents.
 
5.7   Third Party Notification.  Each party agrees to inform any actual or
potential third party purchasers, licensees, or transferees of the restrictions
imposed by the Transaction Documents on the rights licensed to or retained by
Sellers, and on the rights acquired by Buyer, in this transaction.
 
5.8   Non-Solicitation of Buehler.  Provided that Closing occurs, neither
Seller, their Affiliates nor any of their successors or assigns shall, during a
period of three (3) years after the Closing Date, directly or indirectly,
solicit to hire (other than a solicitation by general advertisement), hire,
divert, entice away (or in any manner persuade or attempt to do any of the
foregoing whether as an employee, consultant, or in any other capacity),
Buehler.
 
5.9    Non-Competition.  (a) For a period of three (3) years from and after the
Closing Date, neither Sellers, their Affiliates nor their successors or assigns
shall, directly or indirectly, (i) solicit, induce or cause any Person with whom
any of Sellers had a business relationship with respect to the Watchpoints
Business to reduce or terminate such Person’s business relationship with
Function(x), Buyer or their successors or assigns; and no Seller shall, directly
or indirectly, approach any such Person for any such purpose, or authorize or
assist in the taking of any of such actions for any such purpose or authorize or
assist in the taking of any such actions by any Person, (ii) engage in any
Restricted Activity, (iii) acquire, or own in any manner, any interest in any
Person that engages in any Restricted Activity, or that engages in any business,
activity or enterprise that competes with any aspect of any of Restricted
Activity, or (iv) be interested in (whether as an owner, director, officer,
partner, member, manager, joint venturer, lender, shareholder, vendor,
consultant, employee, advisor, agent, independent contractor or otherwise), or
otherwise participate in the management or operation of, any Person that engages
in any Restricted Activity or in any business, activity or enterprise that
competes with any Restricted Activity; provided, however, that this Section 5.9
shall not apply to the ownership of not more than five percent (5%) of the
outstanding stock of any Person who has a class of securities that is publicly
traded.
 
  (b) Sellers and Buyer acknowledge that as a result of the transactions
provided herein, Buyer will acquire 100% of the Watchpoints Business division,
substantially all of the assets of Watchpoints Subsidiary and the goodwill of
the Watchpoints Business and Watchpoints Subsidiary, and therefore, for all
purposes of this Section 5.9, each Seller will constitute an “owner of a
business entity selling or otherwise disposing of all of his or her ownership
interest” in a business entity, as contemplated under Section 16601 of the
California Business and Professions Code.  Sellers and Buyer further acknowledge
that such acquisition of the goodwill of the Watchpoints Business is an
essential component of the transactions contemplated hereby, and believe that
the goodwill of Sellers and of the Watchpoints Business is a valuable asset and
an essential inducement to Buyer to enter into this Agreement and to consummate
the transactions to be consummated pursuant to this Agreement.  Each Seller
acknowledges that it could substantially dilute the value of such goodwill by
violating any of the provisions of Section 5.9.  In order to induce Function(x)
to enter into this Agreement and as a condition precedent to the consummation of
the transactions contemplated by this Agreement, each Seller agrees, insofar as
it acts in its capacity as a selling equity holder, or a controlling person
thereof, and not as an employee, a manager, a member of a management board or a
consultant, to accept and be bound by the restrictions as set forth in Section
5.9(a).  In addition, each Seller acknowledges and agrees that the provisions of
Section 5.9(a) and the period of time, geographic area and scope and type of
restrictions on its activities set forth in such Section, are reasonable and
necessary for the protection of the Buyer, which is paying substantial
consideration and other benefits to the Sellers in consideration for the
covenants of Sellers hereunder.  Each Seller also acknowledges and agrees that
the reference to the California Business and Professions Code contained herein
does not limit or modify the agreement of the parties set forth in Section 11.5
that this Agreement (including the provisions of this Section 5.9) is governed
by New York law and not the law of any other State.
 
 
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  (c) If any provision contained in any of Section 5.9(a) shall be determined by
any court or other tribunal of competent jurisdiction to be invalid or
unenforceable by reason of its extending for too great a period of time or over
too great a geographical area or by reason of its being too extensive in any
other respect, (i) such provision shall be interpreted to extend over the
maximum period of time for which it may be enforceable and/or over the maximum
geographical area as to which it may be enforceable and/or to the maximum extent
in all other respects as to which it may be enforceable, all as determined by
such court or other tribunal making such determination, and (ii) in its reduced
form, such provision shall then be enforceable, but such reduced form of
provision shall only apply with respect to the operation of such provision in
the particular jurisdiction in or for which such adjudication is made.  It is
the intention of the parties that the provisions of Section 5.9(a) shall be
enforceable to the maximum extent permitted by Applicable Law.
 
  (d) Each Seller acknowledges and agrees that any breach or threatened breach
of the covenants or other provisions contained in Section 5.9(a) may cause Buyer
material and irreparable damage, the exact amount of which will be difficult to
ascertain, and that the remedies at law for any such breach will be
inadequate.  Accordingly, Buyer shall, in addition to all other available rights
and remedies (including, but not limited to, seeking such damages as it can show
it has sustained by reason of such breach and recovery of costs and expenses
including, but not limited to, attorneys’ fees and expenses), be entitled to
seek specific performance and injunctive relief (including, without limitation,
a temporary and/or permanent restraining order and/or a permanent injunction) in
respect of any breach or threatened breach of any of such covenants or
provisions.
 
5.10   Preparation of and Assistance with Financial Statements.  From and after
the date hereof, Sellers shall use commercially reasonable efforts to (i)
provide Function(x) with such information concerning Sellers and the Watchpoints
Business, (ii) provide Function(x) with reasonable access, during normal
business hours and in a manner as not to interfere with the normal business
operations of Sellers, to Seller’s accounting personnel and independent auditors
(and cause such persons to reasonably assist Function(x) with Seller’s
preparation of pro forma financial statements as required by Article 11 of
Regulation S-X or other financial statements) and (iii) as may be required by
the independent auditors, deliver representation letters, or cause their legal
counsel to deliver audit response letters, to such independent auditors, in each
case, as Function(x) may reasonably require in connection with Function(x)’s
preparation and filing with the Securities and Exchange Commission (“SEC”) of
its periodic reports on Forms 10-K and 10-Q, any Current Report on form 8-K
(including the financial statements required by Rule 3-05 and Article 11 of
Regulation S-X in respect of the Watchpoints Business) and any registration
statement, in each case as may be amended.  In the event that the SEC makes any
review or inquiry to Function(x) with respect to financial information of the
Watchpoints Business, including any such inquiry regarding such financial
statements, as promptly as practicable after being notified by Function(x) of
such review or inquiry, Sellers will provide such reasonable cooperation and
assistance as may be required by Function(x) in responding to such review or
inquiry.  Buyer will reimburse the reasonable out-of-pocket expenses to third
parties incurred by Sellers from and after the Closing to the extent Buyer
requests further compliance with this Section 5.10.
 
 
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5.11   Business Examinations and Physical Investigations of Transferred
Assets.  Prior to the Closing Buyer shall be entitled, through its employees and
representatives, including, without limitation, its auditors, and consultants
and advisors, to make such investigations and examinations of the Watchpoints
Business, the Transferred Assets, the books and records of Sellers and the
affairs and financial condition of Sellers as Buyer may request for the purpose
of familiarizing Buyer with the Watchpoints Business.  In order that Buyer may
have the full opportunity to do so, Sellers shall furnish Buyer and its
representatives during such period with all information concerning the
Watchpoints Business, the Transferred Assets and the affairs and financial
condition of Seller as Buyer or such representatives may request and cause
Sellers’ officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with Buyer and such representatives and to make full disclosure
of all information and documents requested by Buyer and/or such
representatives.  Buyer acknowledges and agrees that any information disclosed
by Sellers pursuant to this Section 5.11 will be deemed Confidential Information
of Sellers under the Bilateral Non-Disclosure Agreement dated as of July 26,
2011 between Function(x) and MMS.
 
5.12   Watchpoints Name.  MMS and Watchpoints Subsidiary shall cause Watchpoints
Subsidiary to change its corporate name as soon as practicable following the
Closing, but in any event within seven (7) days of the Closing Date, to a name
which does not include “Watchpoints” or any derivative thereof.  Except as
provided in the preceding sentence, from and after the Closing, neither Seller
nor any of their Affiliates shall use the name “Watchpoints” for any purposes,
including without limitation, in conducting business operations, as part of a
corporate name, as a Mark, as part of a website, internet domain name, URL or
webpage, or otherwise.
 
5.13   Required Consents.  Sellers shall use commercially reasonable efforts to
obtain all Required Consents for all Transferred Contracts as promptly as
practicable after the date hereof and shall cooperate with Buyer in connection
with the foregoing.  If Schedule 2.1(c) reflects that a Contract is still under
review, or if a Required Consent is not obtained prior to the Closing and Buyer
elects to waive the condition that such Required Consent be obtained prior to
Closing, (a) Sellers shall continue to use commercially reasonable efforts to
obtain such Required Consent as promptly as practicable after the Closing Date,
(b) MMS shall continue to maintain in effect the lease for its Santa Monica
office, and shall permit Buehler to continue to use his existing office in Santa
Monica, California on behalf of Buyer at no charge, until the Required Consent
relating thereto is obtained or Buyer notifies Seller that it has elected not to
accept such Transferred Contract, (c) until such time as Required Consents are
obtained for any other Transferred Contract for which a Required Consent is
necessary, Sellers shall, without any cost to Buyer, provide Buyer with all
benefits of Sellers under such Transferred Contracts, (d) Buyer may at any time
elect not to accept an assignment of a Transferred Contract for which a Required
Consent has not been obtained or if Schedule 2.1(c) reflects that a Contract is
still under review, in which event Buyer shall have no obligations thereunder
and such Transferred Contract shall instead be part of the Excluded Assets, and
(e) at such time as such Required Consents are obtained after the Closing or
Buyer elects to accept a Transferred Contract which was still under review,
Sellers shall, within three days of request by Buyer, deliver to Buyer an
executed assignment and assumption agreement with respect to such Transferred
Contract.
 
 
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ARTICLE 6
CONDITIONS TO BUYER’S OBLIGATIONS
 
The obligations of Buyer under this Agreement shall, at its option, be subject
to the satisfaction, on or prior to the Closing Date, of all of the following
conditions:
 
6.1   Representations, Warranties and Covenants.  Sellers’ representations and
warranties not qualified by materiality contained in this Agreement will be
accurate and true in all material respects and Sellers’ representations and
warranties qualified by materiality contained in this Agreement will be accurate
and true in all respects, and such representations and warranties will be
accurate in all material respects, if unqualified by materiality, or in all
respects, if qualified by materiality, on and as of the Closing as though such
representations and warranties were made as of the Closing.  Sellers shall have
performed all of their obligations and complied with all of their covenants that
they are required to perform or to comply with pursuant to this Agreement at or
prior to the Closing in all material respects prior to or as of the Closing
Date.  Sellers shall have delivered to Buyer a certificate in form and substance
satisfactory to Buyer dated as of the Closing Date and executed by each of their
chief executive officers to all such effect.
 
6.2   Required Consents.  All Required Consents shall have been obtained other
than those Required Consents which are to be obtained after Closing.
 
6.3   No Injunction, etc.  Consummation of the transactions contemplated by this
Agreement or any of the Transaction Documents shall not have been restrained,
enjoined or otherwise prohibited by any order, injunction, decree or judgment of
any court or other Governmental Authority.  No court or other Governmental
Authority shall have determined that any Applicable Law makes illegal the
consummation of the transactions contemplated by this Agreement or the
Transaction Documents.
 
6.4   Transaction Documents.  Sellers shall have executed and delivered to Buyer
the Assignment and Assumption Agreement and all other Transaction Documents to
which a Seller is a party.
 
 
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6.5   Secretary’s Certificate.  Buyer shall have received from Sellers a
certificate, dated as of the Closing Date, executed by the Secretary of each
Seller, certifying the incumbency of the respective Sellers’ officers who are
executing the Transaction Documents and any certificates, and the authenticity
of the resolutions authorizing the transactions contemplated by this Agreement
and the other Transaction Documents.
 
6.6   Employment Agreement.  Function(x) shall have reached agreement with
Buehler to accept employment pursuant to the Employment Agreement, and Buehler
shall have executed and delivered to Function(x) the Employment
Agreement.  Employment would only commence after Closing.
 
6.7   Shareholder Documents.  Each Shareholder shall have executed and delivered
to Buyer a Non-Competition, Non-Solicitation and Non-Disclosure Agreement in the
form attached as Exhibit B (collectively, the “Non-Competition Agreements”) and
each of Otto Legerer and Buehler shall have executed and delivered to Buyer a
Guaranty Agreement in the form attached as Exhibit C.
 
6.8   Registration Rights Agreement.  MMS shall have executed  and delivered to
Buyer a Registration Rights Agreement in the form attached as Exhibit D (the
“Registration Rights Agreement”).
 
6.9   No Material Adverse Effect.  No Material Adverse Effect shall have
occurred.
 
ARTICLE 7
CONDITIONS TO SELLERS’ OBLIGATIONS
 
The obligations of Sellers under this Agreement shall, at MMS’ option, be
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions:
 
7.1   Representations, Warranties and Covenants.  Function(x)’s and Buyer’s
representations and warranties not qualified by materiality contained in this
Agreement will be accurate and true in all material respects and Function(x)’s
and Buyer’s representations and warranties qualified by materiality contained in
this Agreement will be accurate and true in all respects, and such
representations and warranties will be accurate in all material respects, if
unqualified by materiality, or in all respects, if qualified by materiality, on
and as of the Closing as though such representations and warranties were made as
of the Closing.  Function(x) and Buyer shall have performed all of their
obligations and complied with all of their covenants that they are required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
in all material respects prior to or as of the Closing Date.  Function(x) and
Buyer shall have delivered to Sellers a certificate in form and substance
satisfactory to Sellers dated as of the Closing Date and executed by an
authorized officer to all such effect.
 
7.2   No Injunction, etc.  Consummation of the transactions contemplated by this
Agreement or any of the Transaction Documents shall not have been restrained,
enjoined or otherwise prohibited by any order, injunction, decree or judgment of
any court or other Governmental Authority.  No court or other Governmental
Authority shall have determined that any Applicable Law makes illegal the
consummation of the transactions contemplated by this Agreement or the
Transaction Documents.
 
 
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7.3   Other Transaction Documents.  Function(x) and Buyer shall have executed
and delivered to Sellers the Assignment and Assumption Agreement and all other
Transaction Documents to which either of them is a party.
 
7.4   Secretary’s Certificate.  Sellers shall have received from Function(x) and
Buyer a certificate, dated as of the Closing Date, executed by the Secretary of
each of them, certifying the incumbency of their respective officers who are
executing the Transaction Documents and any certificates, and the authenticity
of the resolutions authorizing the transactions contemplated by this Agreement
and the other Transaction Documents.
 
7.5   Shareholder Documents.  Buyer shall have executed and delivered to the
Shareholders their respective Non-Competition Agreements.
 
7.6   Registration Rights Agreement.  Function(x) shall have executed  and
delivered to MMS the Registration Rights Agreement
 
ARTICLE 8
CLOSING
 
8.1   Closing Date.  The closing (the “Closing”) of the transactions
contemplated by this Agreement shall take place at such place or in such other
manner (e.g., by electronic delivery of signature pages with originals to follow
by overnight delivery) as the parties may agree at 10:00 a.m. on the later to
occur (the “Closing Date”) of September __, 2011 or three (3) Business Days
after all conditions to Closing have been satisfied or waived or at such other
time or date as agreed to in writing by the parties hereto.  Notwithstanding the
foregoing, the Closing shall for all purposes be deemed to occur at the close of
business on the Closing Date.
 
8.2   Closing Deliveries.
 
  (a) At the Closing, Buyer shall pay the Purchase Price in accordance with this
Agreement and shall deliver to MMS:
 
(i)  Transaction Documents duly executed by Function(x) and Buyer, as
applicable, as described in Section 7.3.
 
(ii)  A certificate, in form and substance reasonably satisfactory to MMS,
signed by an authorized officer of Buyer certifying the matters described in
Section 7.1.
 
(iii)  A certificate, in form and substance reasonably satisfactory to MMS,
signed by the Secretary of Function(x) and Buyer (A) certifying the matters
described in Section 7.4, and (B) certifying and attaching a recent good
standing certificate regarding Function(x) and Buyer from the office of the
Secretary of State of the State of Delaware (and, if the Buyer is not organized
in Delaware, its state of organization).
 
    (b) At the Closing, Sellers shall deliver to Buyer:
 
(i)  The Transferred Assets, including without limitation, copies of all books,
records, files, and documents of Sellers relating to any of the Transferred
Assets or otherwise related or necessary to the commercial exploitation of the
Transferred Assets or the Watchpoints Business, and without limiting the
foregoing, electronic media including complete and accurate copies of all
Intellectual Property Embodiments and Documentation, with all electronic media
to be delivered fully functioning; provided that delivery of all Software which
is included in the Transferred Assets shall be made solely by Buyer
electronically accessing an online site designated by Sellers, and shall not be
accomplished by delivery of any physical tangible property; and provided,
further, that if Buyer waives the closing condition that a Required Consent be
obtained for any Transferred Contract, such Transferred Contract shall not be
assigned to Buyer at the Closing, but shall instead be assigned at such time as
the Required Consent is obtained.
 
 
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(ii)  Transaction Documents duly executed by Sellers as described in Section
6.4.
 
(iii)  A certificate, in form and substance reasonably satisfactory to Buyer,
signed by the Chief Executive Officer of Sellers the matters described in
Section 6.1.
 
(iv)  A certificate, in form and substance reasonably satisfactory to Buyer,
signed by the Secretary of Sellers (A) certifying the matters described in
Section 6.5, and (B) certifying and attaching a recent good standing certificate
regarding MMS from the office of the Secretary of State of the State of
California.
 
(v)  The Required Consents.
 
    (c) At or prior to the Closing, Function(x) and Buehler shall execute and
deliver the Employment Agreement.
 
ARTICLE 9
INDEMNIFICATION
 
9.1   Sellers’ Agreement to Indemnify.  Sellers shall jointly and severally
indemnify and hold harmless Buyer and its Affiliates, directors, managers,
members, officers, employees, attorneys, agents, representatives, successors and
permitted assigns (collectively, the “Buyer Indemnitees”) in respect of any and
all Damages reasonably incurred by any Buyer Indemnitee in connection with, or
resulting from, any or all of the following:
 
  (a) Any breach of any representation or warranty made by any Seller in this
Agreement or the Transaction Documents;
 
  (b) Any breach in the performance of any covenant, agreement or obligation of
any Seller contained in this Agreement or the Transaction Documents;
 
  (c) Any Liabilities of Sellers or their Affiliates, other than the Assumed
Liabilities;
 
  (d) Any Transfer or Sales Taxes in connection with the transactions
contemplated hereunder;
 
 
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  (e) Any Tax for which either Seller  is or maybe liable; and
 
  (f) Product liability claims in connection with products or services sold or
licensed by either Seller prior to the Closing.
 
9.2   Buyer’s Agreement to Indemnify.  Buyer and Function(x) shall jointly and
severally indemnify and hold harmless Sellers and their Affiliates, directors,
managers, members, officers, employees, attorneys, agents, representatives,
successors and permitted assigns (collectively, the “MMS Indemnitees”) in
respect of any and all Damages reasonably incurred by any MMS Indemnitee to the
extent caused by any or all of the following:
 
  (a) Any breach of any representation or warranty made by Buyer or Function(x)
in this Agreement or the Transaction Documents;
 
  (b) Any breach in the performance of any covenant, agreement or obligation of
Buyer or Function(x) contained in this Agreement or the Transaction Documents;
and
 
  (c) Any Assumed Liabilities.
 
9.3   Limitations on Duties to Indemnify.  Except for their duty to indemnify
the other party for claims of fraud or intentional misrepresentation of material
facts, the parties’ respective indemnification obligations for a breach of a
representation or warranty (other than the representations and warranties set
forth in Sections 3.1, 3.2, 3.5, 3.12, 3.13, 3.14, 3.21, 4.1, 4.2, 4.4 and 4.7
and the first two sentences of Section 3.6) shall be subject to each of the
following limitations:
 
  (a) An Indemnifying Party has no obligation to indemnify any Indemnitee
(i) unless the aggregate of all Damages for which the Indemnifying Party would
be liable exceeds on a cumulative basis an amount exceeding $50,000 (the
“Threshold Amount”), whereupon the amount of all such Losses (above and below
the Threshold Amount), and all subsequent Damages, shall become due and payable;
or (ii) if and to the extent such indemnification would cause the aggregate
indemnification by such Indemnifying Party under this Article 9 to all
Indemnitees to exceed $2,500,000.
 
  (b) Seller may cure any breach of the representations and warranties set forth
in Section 3.6 Transferred Assets by delivering to Buyer those assets,
properties and rights that would make such representations and warranties true.
 
9.4   Survival of Representations, Warranties and Covenants.
 
  (a) All representations, warranties, covenants, agreements and obligations of
each Indemnifying Party contained in this Agreement and all claims of any Buyer
Indemnitee or MMS Indemnitee in respect of any breach of any representation,
warranty, covenant, agreement or obligation of any Indemnifying Party contained
in this Agreement, shall survive the execution of this Agreement, and shall
expire 18 months following the Closing Date, except that:
 
(i)   the covenants, agreements or obligations of Sellers or Buyer which by
their terms are to be performed after the execution of this Agreement shall
survive the Closing Date and shall not expire unless otherwise expressly
provided in this Agreement, including, without limitation, the covenants,
agreements or obligations of Sellers or Buyer in Sections 9.1, 9.2 and 9.4; and
 
 
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(ii)   the representations, warranties, covenants, agreements and obligations
set forth in Sections 2.6, 3.1, 3.2, 3.5, 3.12, 3.13, 3.14, 3.21, 4.1, 4.2, 4.4
and 4.7, and the first two sentences of Section 3.6, of this Agreement, and all
claims of any MMS Indemnitee or Buyer Indemnitee in respect of any breach of any
such representation, warranty, covenant, agreement or obligation, shall survive
the Closing Date and shall expire 30 days after the expiration of all applicable
statutes of limitations, including extensions thereof.
 
  (b) Notwithstanding anything herein to the contrary, indemnification for
claims for which written notice as provided in Section 9.5 has been given prior
to the expiration of the representation, warranty, covenant, agreement or
obligation upon which such claim is based shall not expire, and claims for
indemnification thereon may be pursued, until the final resolution of such
claim.
 
  (c) Notwithstanding anything herein to the contrary, indemnification for
claims which arise out of the fraud of the Indemnifying Party shall expire 30
days after the expiration of all applicable statutes of limitations, including
extensions thereof.
 
9.5   Claims for Indemnification.  If any Indemnitee shall believe that such
Indemnitee is entitled to indemnification pursuant to this Article 9 in respect
of any Damages, such Indemnitee shall give the appropriate Indemnifying Party
prompt written notice thereof.  Any such notice shall set forth in reasonable
detail and to the extent then known the basis for such claim for
indemnification.  The failure of such Indemnitee to give notice of any claim for
indemnification promptly, but within the applicable periods specified by
Sections 9.4(a) or (b), shall not adversely affect such Indemnitee’s right to
indemnity hereunder except to the extent (and only to the extent) that such
failure adversely affects the right of the Indemnifying Party to assert all
reasonable defenses to such claim.  Each such claim for indemnity shall
expressly state that the Indemnifying Party shall have only the 20 calendar-day
period referred to in the next sentence to dispute or deny such claim.  The
Indemnifying Party shall have 20 calendar days following its receipt of such
notice either (y) to acquiesce in such claim and its respective responsibilities
to indemnify the Indemnitee in respect thereof in accordance with the terms of
this Article 9 by giving such Indemnitee written notice of such acquiescence or
(z) to object to the claim by giving such Indemnitee written notice of the
objection.  If the Indemnifying Party does not object thereto within such 20
calendar-day period, such Indemnifying Party shall be deemed to have acquiesced
in such claim and its respective responsibilities to indemnify the Indemnitee in
respect thereof in accordance with the terms of this Article 9.
 
 
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9.6   Defense of Claims. Except as otherwise set forth in the last sentence of
this Section 9.6, in connection with any claim which may give rise to indemnity
under this Article 9 resulting from or arising out of any claim or Proceeding
against an Indemnitee by a Person that is not a party hereto, the Indemnifying
Party may (unless such Indemnitee elects not to seek indemnity hereunder for
such claim), upon written notice sent at any time to the relevant Indemnitee,
assume the defense of any such claim or Proceeding, to the extent that the claim
or Proceeding relates only to monetary damages and not the Transferred Assets or
the ability to exploit the Transferred Assets provides assurances, reasonably
satisfactory to such Indemnitee, that the Indemnifying Party will be financially
able to satisfy such claim in full if such claim or Proceeding is decided
adversely.  The Indemnifying Party shall select counsel reasonably acceptable to
such Indemnitee to conduct the defense of such claim or Proceeding, shall take
all steps reasonably necessary in the defense or settlement thereof and shall at
all times diligently and promptly pursue the resolution thereof.  If the
Indemnifying Party shall have assumed the defense of any claim or Proceeding in
accordance with this Section 9.6, the Indemnifying Party shall be authorized to
consent to a settlement of, or the entry of any judgment arising from, any such
claim or Proceeding, to the extent that the settlement requires only the payment
of monetary damages, includes no injunctive provisions or performance
requirements of Indemnitee and includes no admission of guilt or liability.  Or
in the alternative, the Indemnifying Party will seek consent of the Indemnitee,
(which consent shall not be unreasonably withheld).  If the Indemnifying Party
has so elected to assume the defense, each Indemnitee shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and, except as provided herein, at its own expense.  Each Indemnitee
shall, and shall cause each of its Affiliates, officers, employees, consultants
and agents to, cooperate fully with the Indemnifying Party in the defense of any
claim or Proceeding being defended by the Indemnifying Party pursuant to this
Section 9.6.  If the Indemnifying Party does not assume the defense of any claim
or Proceeding resulting therefrom in accordance with the terms of this Section
9.6, or the Indemnifying Party does not acknowledge to the Indemnitee the
Indemnitee’s right to indemnity pursuant hereto in respect of the entirety of
such claim (as such claim may have been modified through written agreement of
the parties or arbitration hereunder) or the Indemnifying Party does not
provides assurances, reasonably satisfactory to such Indemnitee, that the
Indemnifying Party will be financially able to satisfy such claim in full if
such claim or Proceeding is decided adversely, such Indemnitee may defend
against such claim or Proceeding in such manner as it may deem appropriate at
the cost of the Indemnifying Party.
 
9.7   Nature of Payments.  Except for payments pursuant to the parties’
obligations under Sections 9.1(c) and 9.2(c), any payment under Article 9 shall
be treated for tax purposes as an adjustment to the Purchase Price to the extent
such characterization is proper and permissible under relevant Tax authorities,
including court decisions, statutes, regulations and administrative
promulgations.
 
9.8   Exclusive Remedy.  After the Closing, and except for claims of fraud or
intentional misrepresentation and except for the specific performance of
covenants, where appropriate under Applicable Law, the obligations to indemnify
under this Article 9 shall provide the exclusive remedy against a party for any
breach of any representation, warranty, covenant or other claim arising out of
or relating to this Agreement or Transaction Document.
 
9.9    Property Taxes.  All property taxes and similar ad valorem taxes
(“Property Taxes”) levied with respect to the Transferred Assets for any period
commencing before and ending after the Closing Date (“Straddle Period”) shall be
apportioned between Buyer and MMS based on the number of days of such Straddle
Period included in the portion of the period ending on the closing date
(“Pre-Closing Tax Period”) and the number of days of such Straddle Period
included in the period commencing on the day after the Closing Date
(“Post-Closing Tax Period”).  MMS shall be liable for the proportionate amount
of such Property Taxes that is attributable to the Pre-Closing Tax Period, and
Purchaser shall be liable for the proportionate amount of such Property Taxes
that is attributable to the Post-Closing Tax Period.  Upon receipt of any bill
for such Property Taxes, Purchaser or MMS, as applicable, shall present a
statement to the other setting forth the amount of reimbursement to which each
is entitled under this Section 9.7 together with such supporting evidence as is
reasonably necessary to calculate the proration amount.  The proration amount
shall be paid by the party owing it to the other within ten (10) days after
delivery of such statement.
 
 
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9.10   Transfer and Sales Tax Returns.  MMS shall timely prepare and file all
Transfer and Sales Tax returns and reports relating to the transactions
contemplated by this Agreement.  MMS shall be jointly and severally liable for
any Transfer and Sales Taxes relating to such transactions.  MMS shall furnish
to Buyer a copy of each such tax return promptly after it is filed, together
with proof of payment of the Transfer and Sales Tax shown thereon to be due.
 
ARTICLE 10
TERMINATION
 
10.1  Termination Prior to Closing.  Notwithstanding any contrary provisions of
this Agreement, the respective obligations of the parties hereto to consummate
the Closing may be terminated and abandoned at any time at or before the Closing
only as follows:
 
  (a) By and at the option of Buyer if the Closing shall not have occurred by
October 31, 2011; provided that neither Function(x) nor Buyer shall have
breached in any material respect its obligations under this Agreement in any
manner that shall have been the proximate cause of, or resulted in, the failure
to consummate the Closing.
 
  (b) By and at the option of MMS if the Closing shall not have occurred by
October 31, 2011, provided that Sellers shall not have breached in any material
respect their obligations under this Agreement in any manner that shall have
been the proximate cause of, or resulted in, the failure to consummate the
Closing.
 
  (c) At any time, without liability of any party to the others, upon the mutual
written consent of Buyer and Sellers.
 
  (d) By either Buyer or MMS, if the Sellers, on the one hand, or Function(x) or
Buyer, on the other hand, has materially breached any representations, warranty,
covenant or agreement contained herein (provided that such breach is not the
result of any breach of any covenant, representation or warranty by the
terminating party), which breach has not been cured within 30 days following
written notice of such breach by the terminating party, and such breach renders
the conditions to the terminating party’s obligation to close, set forth in
Article 6 or Article 7, as the case may be, incapable of being satisfied.
 
10.2   Effect of Termination.  In the event of the termination of this Agreement
as provided in Section 10.1, written notice thereof shall forthwith be given to
the other party specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void
(except for the provisions of this Section 10.2 and Article XI which shall
survive such termination) and there shall be no liability on the part of Buyer
or MMS, except for damages resulting from any breach by Buyer or MMS of this
Agreement.
 
 
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ARTICLE 11
MISCELLANEOUS
 
11.1  Notices.  All notices, requests and other communications to either party
hereunder shall be in writing (including facsimile, PDF or e-mail) and shall be
given,
 
If to Function(x) or Buyer, to:
 
Function(x), Inc.
902 Broadway, 11th Floor
New York, New York  10010
Attention:  Mitchell J. Nelson, Esq.
Fax: (212) 750-3034
 
With a copy to:
 
Loeb & Loeb LLP
10100 Santa Monica Boulevard, Suite 2200
Los Angeles, California  90067
Attention:  Kenneth Kraus, Esq.
Fax:  (310) 282-2200
 
If to any Seller, to:
 
Mobile Messaging Solutions (MMS), Inc.
175 Portland Street
Boston, Massachusetts  02114
Attention:                                           
Fax:  (617) 973-4151
 
With a copy to:
 
Alan Sege, Esq.
6601 Center Dr W Ste 700
Los Angeles, CA 90045
Fax:  (310) 496-0848
 
11.2   Amendments; No Waivers.
 
Any provisions of this Agreement may be amended or waived prior to the Closing
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Sellers or in the case of a waiver, by the party
against whom the waiver is to be effective.
 
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
 
 
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11.3   Expenses.  Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
 
11.4   Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
 
11.5   Governing Law.  This Agreement shall be construed in accordance with and
governed by the law of the State of New York, without regard to the conflicts of
law rules of such state.
 
11.6   Arbitration, Venue and Jurisdiction.
 
  (a) Except as otherwise provided in this Agreement, the parties shall promptly
submit any disputed matter arising hereunder or any other Transaction Document,
including the construction, interpretation, or validity of any provision hereof
(including this Section 11.6) or performance thereof, or any other matter
relating hereto or thereto arising in connection herewith or therewith or any
alleged breach hereof or thereof, whether based upon tort, contract, equity,
common law, statute, or otherwise, to arbitration before one arbitrator
administered by the American Arbitration Association in New York, New York, in
accordance with its Procedures for Large, Complex Commercial Disputes.  Judgment
on the arbitration award, which shall not include punitive damages, may be
entered in any court having jurisdiction.  This Section 11.6(a) shall not
preclude parties from seeking provisional remedies in aid of arbitration from a
court of appropriate jurisdiction or as otherwise provided in Section 11.6(c).
 
  (b) Subject to this Section 11.6, the District Court of the United States, for
the Southern District of New York, located in New York, New York, shall be the
exclusive venue and have jurisdiction with respect to all matters arising from
or relating to the subject matter of this Agreement and any Transaction
Documents related thereto; provided, however, if such court determines that it
does not have competent jurisdiction, the state court of New York state, located
in the Borough of Manhattan, New York City, shall be the venue and have
jurisdiction.  Each party hereby waives any right each may have to contest
personal jurisdiction insofar as any arbitrable matter under this Agreement is
concerned, or to assert the doctrine of forum non conveniens, or to object to
venue with respect to any suit, action or other proceeding brought in accordance
with this Agreement.
 
  (c) Notwithstanding the provisions of Section 11.6(a), each party shall have
the right, without the requirement of first seeking a remedy through any dispute
resolution alternative (including arbitration) that has been agreed upon, to
seek preliminary injunctive or other equitable relief in any proper court
pursuant to Section 5.9 or in the event that such party determines that eventual
redress through the dispute resolution alternative will not provide a sufficient
remedy for any violation of this Agreement by the other party.
 
 
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  (d) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND
(iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN SECTION 11.6.
 
11.7    Counterparts; Effectiveness.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto were upon the same instrument.  This Agreement shall
become effective when each party shall have received a counterpart hereof signed
by the other parties.
 
11.8   Entire Agreement.  This Agreement, the Bilateral Non-Disclosure Agreement
dated as of July 26, 2011 between Function(x) and MMS and the ancillary
agreements related thereto constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement.
 
11.9   Titles and Headings; Construction.  The titles and headings to Sections
herein and to the Exhibits and Schedules hereto are inserted for the convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement. This Agreement shall be construed without
regard to any presumption or other rule requiring construction hereof against
the party causing this Agreement to be drafted. The words “include”, “includes”,
“included”, “including” and “such as” do not limit the preceding words or terms
and shall be deemed to be followed by the words “without limitation”. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. All terms defined in this
Agreement in their singular or plural forms, have correlative meanings when used
herein in their plural or singular forms, respectively. All references herein to
a Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or
Schedule of or to this Agreement, unless otherwise indicated.
 
11.10   Severability.  If any provision of this Agreement is held invalid,
unenforceable or void by a court of competent jurisdiction, the remaining
provisions shall not for that reason alone be unenforceable or invalid. In such
case, the parties agree to negotiate in good faith to create an enforceable
contractual provision to achieve the purpose of the invalid provision. Further,
if any provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to make the
provision enforceable according to applicable law and shall be enforced as
amended.
 
11.11    No Third Party Beneficiaries.  Neither this Agreement nor any provision
hereof will create any right in favor of or impose any obligation upon any
person or entity other than Function(x), Buyer and Sellers, including, without
limitation, any direct or indirect equity owner or any officer, director or
employee of MMS, Buyer or of any such equity owner, and no recourse will be had
against any person or entity other than Sellers, Function(x) or Buyer by virtue
of this Agreement.

 
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IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly executed
by their respective authorized officers as of the date first written above.
 
 

  FUNCTION (X) INC.     a Delaware corporation                
By: __________________________________________    
Name:_________________________________________    
Title: __________________________________________           MOBILE MESSAGING
SOLUTIONS (MMS),     a California corporation                
By: ___________________________________________    
Name:_________________________________________    
Title:__________________________________________                 WATCHPOINTS,
INC.,     a Nevada corporation                
By: ___________________________________________    
Name:_________________________________________    
Title:__________________________________________  

 
 
 
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Schedules
 
Schedule 2.1(a) – Watchpoints IP
Schedule 2.1(b) – Equipment and Equipment Embodiments and Documentation
Schedule 2.1(c) – Transferred Contracts
Schedule 2.1(d) – Employee Assets
Schedule 2.1(e) – Domain Names
Schedule 2.3(c) – Excluded Assets
Schedule 2.5(c) – Purchase Price Allocation Methodology
Schedule 3.2 - Capitalization
Schedule 3.6(i) and (ii) – Exception to Sufficiency of Assets
Schedule 3.8(a)(i) – MMS Agreements
Schedule 3.8(a)(ii) – Third Party Contracts
Schedule 3.8(a)(iii) – Software Licenses
Schedule 3.8(a)(iv) – Fees
Schedule 3.8(a)(v) – Special Pricing
Schedule 3.8(b) - Real Property Leases
Schedule 3.8(d)(i), (ii), (iii) and (iv) – Outstanding Training, Warranty,
Maintenance, Service, Support or Marketing Obligations
Schedule 3.9(i) – All required governmental approvals
Schedule 3.9(ii) – All Required Consents
Schedule 3.11(a) – Intellectual Property
Schedule 3.11(b) – Access to source code and non-disclosure agreements
Schedule 3.11(c) – Licenses
Schedule 3.11(f) – Open Source Software
Schedule 3.11(g)(i) – List of Watchpoints Software Specifications
Schedule 3.11(g)(ii) – Bugs and Nonconformities
Schedule 3.11(g)(iii) – 2008 and 2009 Reported Incidents
Schedule 3.11(g)(iv) – 2008 and 2009 Bug Fixes and Updates
Schedule 3.11(i) – Third Party Software
Schedule 3.11(j) – MMS Tools
Schedule 3.15 – Financial Statements
Schedule 3.17 – Maintenance, Support and Service Agreements
Schedule 3.18 – Designated Employees
Schedule 3.19 – Employee Benefit Matters
Schedule 3.20 – Insurance
 
Exhibits
 
Exhibit A – Assignment and Assumption Agreement
Exhibit B -- Non-Competition, Non-Solicitation and Non-Disclosure Agreement
Exhibit C – Guaranty
Exhibit D  – Registration Rights Agreement

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