ASSET PURCHASE AGREEMENT

Exhibit 10.1

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (“Agreement”) is made as of October 11, 2007 (the “Effective Date”), by and among Eagle Broadband, Inc., a Texas corporation (“Seller”), and Nighthawk Systems, Inc., a Nevada corporation (“Buyer”).

BACKGROUND

WHEREAS, subject to the terms and conditions set forth herein, Buyer desires to acquire from Seller, and Seller desires to sell to Buyer, all of Seller’s set-top box business (the “Business”), together with all historical records and documents of the Business, including the right to use any assumed names, logos, or other identifiers associated with the Business (except for names, logos or other identifiers which are primarily associated with the Seller’s corporate image or non-set-top box businesses, including, but not limited to, the name “Eagle Broadband” and the Eagle Broadband logo.)

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound, the parties agree as follows:

1.

PURCHASE AND SALE OF THE BUSINESS.

1.1

Purchase of Business .  On the terms contained in this Agreement, Seller shall sell, transfer and deliver to Buyer, by appropriate instruments satisfactory to Buyer and its counsel, all right, title and interest of Seller and its Affiliates in and to the Business, including without limitation, all lists, records and other information pertaining to drawings, blueprints, work orders, product data, equipment, equipment maintenance, utilization, and all books, ledgers, files and business records pertaining to the Business, whether evidenced in writing, electronically (including, without limitation, by computer) or otherwise (“Purchased Assets”).  All such Purchased Assets are listed on Schedule 1.2.

1.2

Inventory and Equipment Consideration .  At the Closing (defined below), Buyer will purchase from Seller all assets of the Seller pertaining to the set-top box business, including all of the technical parts, supplies, inventory and equipment directly associated with the Business (the “Inventory”), including but not limited to the detailed inventory and fixed asset list which is attached as Schedule 1.2.

1.3

Limited Assumed Liabilities .  At the Closing (defined below), Buyer will assume and pay the obligations of Seller listed on Schedule 1.3 (the “Assumed Liabilities”).

1.4

Excluded Liabilities .  Except for the Assumed Liabilities described in Section 1.3 above, Buyer shall not assume or become liable for, and shall not be deemed to have assumed or have become liable for, any other debts, liabilities or obligations of Seller of any nature whatsoever, whether accrued, absolute or contingent, whether known or unknown, whether disclosed or undisclosed, whether due or to become due and regardless of when or by whom asserted (collectively, “Excluded Liabilities”).

1.5

Employees .  Starting on October 15, 2007, Buyer agrees to hire, on the same at-will employment terms as existed in recent times at Seller, the following individuals: Jon Hayden, Giang Dao, Dominic Kok and Marilyn Maddox.  All vacation time owed by Seller will be paid by Seller to these employees as they terminate their employment with the Seller at the Closing and they will start new accruals for vacation time with the Buyer.  Transferred employees will retain their years of service seniority entitlements with the Seller in their transfer to the Buyer, as if they had been employed by the Buyer from their individual employment start dates with the Seller.  Transferred employees will cease their benefit programs with the Seller at Closing and will enroll in Buyer benefit programs immediately following Closing.  If there are to be delays in the start of medical coverage, Buyer will reimburse transferred employee COBRA payments to Seller for the medical transition period.

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2.

PURCHASE PRICE AND CLOSING

2.1

Purchase Price .  Subject to the conditions contained in this Agreement, in consideration for the transfer of the Business and Inventory, Buyer shall pay to Seller $4.75 million dollars ($4,750,000) (the “Purchase Price”).  

2.2

Closing .  The closing of the purchase and sale of the Business (the “Closing”) will take place on October 11, 2007 (the “Closing Date”), at the offices of Seller.  At the Closing, Buyer shall deliver to Seller the Purchase Price less the $250,000 deposit paid by Buyer on September 5, 2007, by wire transfer of immediately available funds to a bank account designated in writing by Seller.

2.3

Post-Closing Assistance .  Seller will make available to Buyer the services of Brian Morrow on up to a half-time basis for a period of ninety (90) days following the Closing.  Buyer will pay any expenses incurred by Mr. Morrow or Seller in connection with such assistance and will reimburse Seller for Mr. Morrow’s time at the rate of $110 per hour.

2.4

Definit ions.  For purposes of this Agreement, the following terms have the meanings set forth below:

“Affiliate” means when used with respect to any Person, (a) if such Person is a corporation, any officer or director thereof and any Person which is, directly or indirectly, the beneficial owner (by itself or as part of any group) of more than twenty percent (20%) of any class of any equity security (as defined in Section 3(a)(ii) of the Securities Exchange Act of 1934, as amended) thereof, and, if such beneficial owner is a partnership, any general or limited partner thereof, or if such beneficial owner is a corporation, any Person controlling, controlled by or under common control with such beneficial owner, or any officer or director of such beneficial owner or of any corporation occupying any such control relationship, (b) if such Person is a partnership, any general or limited partner thereof and (c) any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person.  For purposes of this definition, (i) “control” (including the correlative terms “controlling,” “controlled by” and “under common control with”), with respect to any Person, shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise; and (ii) all officers, directors, and stockholders of such party shall be considered an Affiliate of such party.

“Government Entity” means any public body or authority, including courts of competent jurisdiction, domestic or foreign.

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

2.5

Allocation Reporting .  Buyer and Seller agree to allocate the payments set forth in Section 1 among the Purchased Assets in accordance with Section 1060 of the Code, which allocation shall be prepared by Buyer within ninety (90) days after the Closing Date.  If Seller disputes the allocation, Buyer and Seller shall cooperate in good faith to resolve any dispute.  Should the parties fail to reach an agreement within thirty (30) days after Buyer’s delivery of such allocation to Seller, the determination of the allocation shall be made by T.R. Moore whose decision shall be final.  Buyer and Seller , in connection with their respective U.S. federal, state , and local tax returns and other filings (including without limitation Internal Revenue Service Form 8594), shall not take any position inconsistent with such treatment and allocation.

3.

REPRESENTATIONS AND WARRANTIES CONCERNING SELLER.

As an inducement to Buyer to enter into this Agreement and to consummate these transactions, Seller represents and warrants to Buyer as follows:

3.1

Organization of Seller .  Seller is a corporation, formed and duly organized, validly existing and in good standing under the laws of the State of Texas.  Seller is duly qualified or licensed, as applicable, and authorized to conduct its Business in each state in which the nature of the Business of the Seller makes such qualification or license necessary.

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3.2

Authority of Seller .

Seller has full power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to comply with the terms, conditions and provisions hereof.  This Agreement and each other agreement or instrument of Seller contemplated by it will be, the legal, valid and binding agreement of Seller, enforceable against Seller in accordance with its terms, except where such enforceability is limited by any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar laws or equitable principles affecting the enforcement of creditor’s rights.  The execution, delivery and performance of this Agreement and the other agreements of Seller contemplated by it do not require any further authorization, the consent of or notice to any third party.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein will conflict with or result in any violation of or constitute a default under any term of any agreement, mortgage, debt instrument, indenture, or other instrument, judgment, decree, order, award, law or regulation by which Seller is bound, or result in the creation of any lien upon the Business .

3.3

Broker or Finder .  Neither Seller, nor any party acting on Seller’s behalf, has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated herein.

3.4

Options, Warrants and Rights of First Refusal .  No Person other than the Buyer has any option, warrant or right of first refusal to purchase the Business.

3.5

Litigation .  With respect to the Business and with the exception of information detailed on publicly disclosed SEC filings prior to the Effective Date, (i) there are no material orders, investigations or claims pending or, to the best knowledge of Seller, threatened against Seller, or pending or threatened by either Seller against any third party, at law or in equity, or before or by any Government Entity, (ii) neither Seller nor the Business are subject to any arbitration proceedings under collective bargaining agreements or otherwise or any governmental investigations or inquiries, and (iii) to the best knowledge of Seller, there is no basis for any of the foregoing.

3.6

Consents .  The execution and delivery of this Agreement by Seller does not, and the performance of this Agreement by Seller will not:  (i) require any authorization, approval, consent, waiver, amendment or other action by, or registration, declaration or filing with or notice to, any foreign, domestic, federal, territorial, state or local governmental authority (including the United States Federal Communications Committee relating to that certain high density copy protection license), quasi-governmental authority, instrumentality, court, arbitral panel, 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 (each, a “ Governmental Authority ”); (ii) result in a violation of any statute, law, rule, regulation or ordinance (the foregoing, collectively, “ Laws ”), or of any order, writ, injunction, judgment decree or other requirement of any Governmental Authority (the foregoing, each an “ Order ”) applicable to Seller, the Business or the assets purchased hereunder; (iii) result in the creation of any Lien on any of the assets; or (iv) violate the articles (or certificate) of incorporation, bylaws or other organizational documents or instruments of Seller.

3.7

Intellectual Property .  Schedule 3.7 lists all items of Intellectual Property, as defined by inclusion in Schedule 3.7, of Seller necessary to the operation of the Business as now conducted, in each case free of any claims of infringement or any actual infringement.  No consent will be required for the use of any Intellectual Property by Buyer and no governmental registration of any of the Intellectual Property has lapsed or expired or been canceled, abandoned, opposed, or the subject of any reexamination request.  No current licenses for the use of any of the Intellectual Property have been granted by Seller to any third parties, and none of the Intellectual Property is being used by any other individual or entity.

3.8

Material Contracts .  True and correct copies of all Material Agreements (as defined below) as currently in effect have previously been delivered to Buyer.  The term “ Material Agreement ” means each contract, lease, undertaking, commitment, mortgage, indenture, note, security agreement, pledge agreement, guaranty, bond, letter of credit, lease or instrument creating any lien or claim on any of the assets used in the Business (other than unsecured trade accounts payable and incurred in the ordinary course of business), license and other agreement of Seller in effect on the date hereof which relates to the Business.

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3.9

Applicable Laws and Permits .  Schedule 3.9 sets forth a list of all of the licenses, permits, permit applications, qualifications, certificates, franchises, approvals, authorizations, exemptions, registrations, all applications therefor, and other documentation necessary to own and operate the Purchased Assets and to conduct the Business as it is currently being conducted, including without limitation any thereof required pursuant to any environmental law  (collectively, “ Permits ”).  Seller has heretofore delivered or caused to be delivered to Buyer true and correct copies of all such Permits as presently in effect.  Except as listed in Schedule 3.9:  (a) Seller has all such Permits, each of which is in full force and effect; (b) the Business is now being, and has at all times been, conducted and such assets and properties are being, and have at all times been, owned and operated in material compliance with all applicable Laws and Orders and all such Permits; (c) the Business is now being operated in compliance with all pending Permit applications and the Seller has no reason to believe the governing agency will not approve such pending Permit applications; and (d) Seller has not received any notice of any violation, breach or default of any such Laws, Orders or Permits.

3.10

Product Liability .  There is no currently pending claim for product liability, warranty, material back-charge, material additional work, field repair or other claims by any third party (whether based on contract or tort and whether relating to personal injury, including death, property damage or economic loss) arising from: (a) services rendered by Seller in connection with the Business during periods through and including the Closing Date, (b) the sale, distribution, erection or installation of products by Seller in connection with the Business prior to the Closing Date, or the manufacture of products by Seller in connection with the Business, or (c) the operation of the Business or the ownership of the Purchased Assets during the period through and including the Closing Date.  All services rendered and products sold by Seller in connection with the Business have been in material conformity with all applicable contractual commitments and all express and implied warranties, and Seller has no liability (and Seller has no knowledge of any basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand giving rise to any liability) for damages in connection therewith.  No services or products provided by Seller in connection with the Business are subject to any guaranty, warranty, or other indemnity beyond Seller’s standard terms and conditions of sale.

3.11

Insurance .  Seller has obtained and will maintain through the Closing Date insurance policies that provide coverage to insure the Purchased Assets and the Business against such risks and in such amounts as are prudent and customary in the industry in which Seller operates and all such policies are in full force and effect (the “ Insurance Policies ”).  None of the insurers under any of the Insurance Policies has rejected the defense or coverage of any claim purported to be covered by such insurer or has reserved the right to reject the defense or coverage of any claim purported to be covered by such insurer.

4.

REPRESENTATIONS AND WARRANTIES OF BUYER

As an inducement to Seller to enter into this Agreement and to consummate these transactions, Buyer represents, warrants and covenants to Seller as follows:

4.1

Organization of Buyer .  Buyer is a corporation, formed and duly organized under the laws of the State of Nevada, has the requisite power and authority to enter into this Agreement and to perform the terms of this Agreement.

4.2

Authority of Buyer .  Buyer has full power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to comply with the terms, conditions and provisions hereof.  This Agreement is, and each other agreement or instrument of Buyer contemplated by it will be, the legal, valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except where such enforceability is limited by any applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or similar laws or equitable principles affecting the enforcement of creditor’s rights.  Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by it will conflict with or result in any violation of or constitute a default under any term of the certificate of incorporation or bylaws of Buyer, or any agreement, mortgage, debt instrument, indenture, franchise, license, permit, authorization, lease or other instrument, judgment, decree, order, award, law or regulation by which Buyer is bound.

4.3

Broker or Finder .   Neither Buyer nor any party acting on its behalf has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of these transactions.

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4.4

Litigation .  There is no action, suit or proceeding pending or, to the knowledge of Buyer threatened to which Buyer is party that questions the legality or propriety of the transaction contemplated by this Agreement.  Buyer is not subject to any order, judgment or decree, or any other restriction, that is likely to prevent or hinder the transaction contemplated by this Agreement.

5.

COVENANTS

5.1

Consents; Failure to Obtain Consents .  After the Closing, Seller will use its reasonable best efforts to obtain or cause to be obtained any consents required in connection with the transactions contemplated hereby that are requested by Buyer and that have not been previously obtained prior to or at the Closing.  In the event any consent to the assignment of any Contract or Permit is required in connection with the transactions contemplated hereby and has not been obtained as of the Closing, then Seller shall continue to use their reasonable best efforts to obtain or cause to be obtained such consents and until all of such consents are obtained, shall cooperate in any arrangement reasonably satisfactory to Buyer designed to fulfill any Seller’s obligations thereunder and to afford Buyer the full benefits thereof.  Notwithstanding anything to the contrary set forth herein, this Agreement shall not constitute an assignment or attempt to assign or transfer any interest in any instrument, contract, lease, permit or other agreement or arrangement of the Business or any claim, right or benefit arising thereunder or resulting therefrom, if an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or adversely affect the rights of Buyer, the Purchased Assets or the Business.

5.2

Further Assistance .  Seller shall without further consideration execute and deliver or cause to be executed and delivered to Buyer, at the Closing or from time to time thereafter, any other instrument which may be reasonably requested by Buyer and which is reasonably appropriate to perfect or evidence any of the sales, assignments, transfers, conveyances, undertakings or agreements contemplated by this Agreement or to transfer any Purchased Assets identified after the Closing.