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Exhibit 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (“Agreement”) is made as
of October 19, 2007 (the “Effective Date”), by and
among Eagle Broadband, Inc., a Texas corporation
(“Seller”), and Security Financing Services, 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 business known as SatMAX (the
“Business”), which provides Iridium-based satellite
communications systems to Iridium service subscribers and other end
user customers, 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-SatMAX
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 patents,
trademarks, licenses, lists, records and other information
pertaining to drawings, blueprints, work orders, product data,
customer lists, computer code, accounts receivable, inventory,
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.
1.2
Excluded Liabilities . Buyer shall not assume or become liable for,
and shall not be deemed to have assumed or have become liable for,
any debts, liabilities, liens, assessments, 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”).
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, Buyer shall (i) pay to Seller one hundred thousand
dollars ($100,000) (the “Cash Payment”) and
(ii) the earn-out payments described in Section 2.2 below (the
“Earn-Out Payments). The Cash Payment and Earn-Out
Payments are collectively referred to herein as the “Purchase
Price”.
2.2
Earn-Out Payments .
(a)
The first Earn-Out Payment shall be equal to ten percent (10%) of
the gross profit attributable to the Business during the first
twelve-month period following the Closing Date. Buyer shall
make the first Earn-Out Payment to Seller on the first business day
of the sixteenth month after the Closing Date.
(b)
The second Earn-Out Payment shall be equal to ten percent (10%) of
the gross profit attributable to the Business during the second
twelve-month period following the Closing Date. Buyer shall
make the second Earn-Out Payment to Seller on the first business
day of the twenty-eighth month after the Closing Date.
(c)
The third Earn-Out Payment shall be equal to five percent (5%) of
the gross profit attributable to the Business during the third
twelve-month period following the Closing Date. Buyer shall
make the third Earn-Out Payment to Seller on the first business day
of the fortieth month after the Closing Date.
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(d)
For purposes of calculating the Earn-Out Payments, gross profit
shall be defined as the difference between Business sales revenue
and associated cost of goods sold. Sales revenue means all
monies, instruments, assets and other things of value received or
receivable by Buyer or any of its Affiliates in connection with
Buyer’s operation of the Business. Cost of goods sold
means direct material cost, direct labor cost and factory burden
incurred by Buyer or its Affiliates directly associated with the
manufacture of goods sold in connection with Buyer’s
operation of the Business.
(e)
Upon Seller’s request, Seller may, at its own expense and
during regular business hours, examine or cause to be examined by a
certified public accountant the books of account of Buyer insofar
as they relate to the calculation of any Earn-Out Payment.
If, as a result of such an audit, it is determined that there
has been an underpayment of amounts due to Seller hereunder, Buyer
shall immediately pay to Seller an amount equal to the resulting
underpayment. If the resulting underpayment is greater than
five percent (5%) of the correct Earn-Out Payment amount, Buyer
shall immediately reimburse Seller for the cost of the audit.
2.3
Allocation of Purchase Price . The Purchase Price
shall be allocated as provided in Schedule 2.3, attached
hereto.
2.4
Closing . The closing of the purchase and sale of the
Business (the “Closing”) will take place at such place
and date as mutually agreed upon by Buyer and Seller to close (such
date is herein called the “Closing Date”). At the
closing, the following shall occur:
(i)
Seller shall first deliver to Buyer:
(A)
A bill
of sale and other good and sufficient instruments of transfer and
conveyance as shall be effective to vest in Buyer marketable title
to the assets to be sold and assigned to Buyer as provided in this
Agreement;
(B)
A copy
of the UCC-3 termination statement filed on October 15, 2007;
(C)
An
assignment of all trademarks, patents, and licenses;
(D)
Seller’s certificate of good standing;
(ii)
Buyer shall deliver to Seller $100,000.00 by certified or cashier's
check or wire transfer. Following the
Closing, Seller will provide Buyer any assistance reasonably
requested by Buyer in transitioning the operation of the Business
to Buyer.
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.
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“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.
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 under the
laws of the State of Texas, has the requisite power and authority
to own and operate the Business, to enter into this Agreement and
to perform the terms of this Agreement.
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, 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 has any option, warrant or right of
first refusal to purchase the Business.
3.5
Litigation . With respect to the Business, (i) there
are no 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
Licenses, Permits, and
Certifications . Seller possesses all necessary licenses,
permits, and certifications required to operate the Business and,
by its execution hereof, hereby conveys and assigns all such
licenses, permits, and certifications to the extent permitted by
law.
3.7
Material Facts . Seller represents and warrants that
it has presented to Buyer true, complete, and correct documents
relating to the Business and that all such information does not
misstate a material fact or omit to state a material fact.
3.8
Reliance on Representations and Warranties . Seller
acknowledges that Buyer is relying on the representations and
warranties of Seller herein made.
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3.9
Insurance .
(A)
Seller maintains a Comprehensive General Liability
(“CGL”) policy which satisfies these conditions:
(1)
It covers all of Seller’s Business and
other contracts with its customers;
(2)
it includes errors and omissions coverage;
(3)
it was in effect at the time Seller sold each
product manufactured or sold by the Business;
(4)
the minimum amount of per incident coverage is
at least One Million Dollars ($1,000,000);
(5)
Seller has not been advised of any default under
Seller’s insurance policy, and Seller has no intention to
terminate such policy; and
(6)
Seller has complied with all material conditions
in its policy.
(B)
Seller has provided Buyer a cop
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