**Execution Copy****EXHIBIT 10.71****Asset Purchase Agreement**betweenRockford Corporation, Audio Innovations, Inc.andAdvanced Integration, LLCDated as of March 31, 2006
 

 
**Asset Purchase Agreement**This Asset Purchase Agreement (“Agreement”) is between: (a) Rockford Corporation (“Rockford”) and its wholly owned subsidiary AudioInnovations, Inc. (“AI” and, with Rockford, “Seller”); and  (b) Advanced Integration, LLC (“Purchaser”).Seller and Purchaser agree as follows:1. **Background and Definitions**. 1.1 Company Business. AI is in the business of designing,manufacturing, marketing and distributing branded aftermarket car-audio enclosuresunder the names of Q-Logic, Q-Forms, and Q-Customs (the “Business”).  1.2 Asset Sale. Seller desires to sell, and Purchaser has agreed toacquire all or substantially all of Seller’s tangible and intangible assets usedexclusively in the Business and specifically listed in *Schedule 1.2*(the “Assets”),including:  (a) the Business’ inventory as it exists on the Effective Date and asupdated and acquired through the Closing Date, except for inventory sold in theordinary course of business (the “Inventory”);  (b) all accounts receivable related to the Business as of the EffectiveDate as updated and created through the Closing Date, except for accountsreceivable sold in the ordinary course of business (the “Accounts Receivable”)  (c) the Intellectual Property used exclusively in connection with theBusiness, including those trademarks and trade names identified on *Schedule 1.2*and any federal, state, or foreign registrations relating to these names (the“Names”), and the goodwill associated with such Names. Purchaser will not acquireany interest in any of Seller’s trademarks, names or other Intellectual Propertyother than the Names and Intellectual Property identified on *Schedule 1.2*;  (d) the additional assets of the Business, including owned or leasedproperty and equipment, supplies, trade show fixtures specific to the Business,and other assets listed in *Schedule 1.2*.     The Assets specifically exclude the Excluded Assets. 1.3 Definitions. In this Agreement: (1) *Affiliate*means any individual or Business Entity which, directlyor indirectly, alone or together with others, controls, is controlled by, or isunder common
- 2 -

 
   control with, another individual or Business Entity;  (b) *Agreement*means this Agreement and each of the Schedules andcertificates delivered with this Agreement. The Schedules and certificates are apart of this Agreement;  (c) *Assets*has the meaning given in *Section 1.2*;  (d) *Assumed Liabilities*means those debts, obligations and otherliabilities assumed by Purchaser, as specifically listed in *Schedule 2.4*.  (e) *Business*has the meaning given in *Section 1.1*;  (f) *Business Entity*means any person, corporation, partnership, jointventure, limited liability company, or other entity;  (g) *Closing*means the consummation of the transactions contemplated bythis Agreement;  (h) *Closing Date*means the day on which the Closing takes place;  (i) *Contract*means any contract, indenture, mortgage or deed of trust,lease, purchase order, guaranty, insurance policy, bond, license, instrument,understanding, obligation, or other agreement, written or oral;  (j) *Employment Contracts*means all employment agreements, consultingagreements, and collective bargaining agreements;  (k) *Employment Plans*means all executive compensation plans, bonus plans,holiday and other bonus practices, deferred compensation agreements, pension orretirement plans, employee stock option or stock purchase plans, employee life,health, and accident insurance, and other employee benefit plans, agreements,arrangements or commitments;  (l) *Encumbrance*means any mortgage, pledge, lien, claim, charge, securityinterest, restriction, easement, right of way, or other encumbrance;  (m) *Environmental Laws*means all Laws relating to the environmental orHazardous Materials, including the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended by the Superfund Amendments andReauthorization Act of 1986 (“CERCLA”), 42 U.S.C. §9601 *et seq*.; the ToxicSubstance Control Act (“TSCA”), 15 U.S.C. §2601 *et seq;*the Hazardous MaterialsTransaction Act, 49 U.S.C. §1802 *et seq;*the Resource Conservation and RecoveryAct (“RCRA”), 42 U.S.C. §9601 *et seq;*the CleanWater Act (“CWA”), 33 U.S.C. §1251 *et seq;*the Safe Drinking Water Act, 42 U.S. C.§300(f) *et seq;*the Clean Air Act (“CAA”), 42 U.S.C. §7401 *et seq;*
- 3 -

 
   FederalInsecticide, Fungicide and Rodentcide Act (“FIFRA), 7 U.S.C. §136 *et seq;*andSolid Waste Disposal Act (“SVVDA”) §6901 *et seq;*  (n) *Excluded Assets*means the assets used in the Business that are notbeing sold to or acquired by Purchaser, including any assets used in the Businessthat are not listed as Assets on *Schedule 1.2*or that are listed as *ExcludedAssets*on *Schedule 1.2*;  (o) *Financial Statements*and *Financial Statement Date*have the meaninggiven in *Section 5.5;*  (p) *Government*means any legislature, executive, department,administrative agency, municipality, subdivision, instrumentality, or otherauthority of the United States, any state, any locality, or any foreign country orpolitical subdivision of a foreign country;  (q) *Hazardous Materials*means hazardous wastes, hazardous substances,hazardous constituents, toxic substances, pollutants, contaminants, radioactivematerials, related materials, and any other substances, constituents or wastes,whether solids, liquids or gases, subject to regulation under any EnvironmentalLaws;  (r) *Information*means information Seller has supplied to Purchaser under*Section 7.7*of this Agreement;  (s) *Intellectual Property*means patents, trademarks, trade names, servicemarks, other trade rights, copyrights, licenses, and similar intangibles;  (t) *Knowledge*means and an individual will be deemed to have “knowledge”of a particular fact or other matter if such individual is actually aware of suchfact or other matter after due inquiry that is reasonable under the circumstances.  (u) *Laws*means any law, statute, ordinance, rule, regulation, or Order;  (v) *Liabilities*shall mean, without limitation, any direct or indirectliability, indebtedness, guaranty, endorsement, claim, loss, damage, eitheraccrued, absolute, contingent, mature, unmature or otherwise and whether known orunknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, securedor unsecured.  (w) *Loss*means all expenses (including reasonable attorneys’ andaccountants’ fees), losses, taxes, claims, damages, awards, fines, interest,penalties, and liabilities;  (x) *Material Adverse Change*or *Material Adverse Effect*means any changeor effect that is or would be materially adverse to a party and its Affiliates,
- 4 -

 
 **•** taking into account the business, properties, assets, employees, financialcondition and results of operations of the party and its Affiliates; but  **•** excluding those changes, effects, and developments that directly result from(1) the announcement of this Agreement, or (2) any act or omission of Purchaser(if the event has an effect on Seller) or Seller (if the event has an effect onPurchaser)  (y) *Order*means any order, decree, decision, injunction, finding, orjudgment;  (z) *Permits*means all approvals, permits, licenses, filings,registrations, certificates, orders, authorizations, qualifications, or otherconsents from any Government, self-regulatory authority, or any other third party;  (aa) *Proceeding*means any claim, action, suit, mediation, arbitration,labor grievance, Government investigation, or other legal or administrativeproceeding;  (bb) *Purchase Price*means the purchase price for the Assets, in a totalamount of $1,750,000, including $750,000 payable in cash at the Closing (the“Cash Purchase Price”) and $1,000,000 payable in 30 monthly installments after theclosing (the “Deferred Purchase Price”);  (cc) *Purchaser*means Advanced Integration, LLC, an Oklahoma corporation;  (dd) *Seller*means Rockford Corporation, an Arizona corporation, andRockford’s wholly owned subsidiary Audio Innovations, Inc., an Oklahomacorporation; and  (ee) *Tax*means any tax, assessment, duty, or governmental charge ordeposit (including income, property, ad valorem, gross receipts, sales, use, valueadded, occupation, franchise, transfer, excise, goods and services, payroll,employment, profits, capital, severance, production, premium, payroll, stamp,unemployment insurance, disability, workers’ compensation, withholding, and socialsecurity tax), and all interest and penalties, whether disputed or not, imposed byany Government.     Other terms used as defined terms have the meanings used in this Agreement.2. **Purchase and Sale of Assets**. At the Closing, and subject to the terms and conditions of thisAgreement: 2.1 Purchase of Assets. Seller will sell to Purchaser, andPurchaser will purchase from Sellers, the Assets free and clear of allEncumbrances, except the Assumed Liabilities.
- 5 -

 
 2.2 No Purchase of Other Assets. Other than the Assets, Purchaserwill not acquire any other asset of Seller.  2.3 No General Assumption of Certain Liabilities. Except for theAssumed Liabilities, Purchaser will not assume any liabilities of Seller. Sellerwill be solely responsible for paying all liabilities (except for the AssumedLiabilities) related to the Business and the Assets, including executory contracts,purchase orders, judgments, obligations and debts.  2.4 Assumption of Assumed Liabilities. Purchaser will assumeliability only for the leases, accounts payable, contract obligations, warrantyobligations, and other liabilities specifically described in *Schedule 2.4*(the“Assumed Liabilities”).3. **Closing**. The Closing will take place at 10:00 A.M., local time, on or before March 31, 2006,at the offices of Steptoe & Johnson, 201 E. Washington St., Suite 1600, Phoenix, Arizona85004, or at another agreed upon time and place. 4. **Purchase Price**. 4.1 Purchase Price; Closing Adjustments. At the Closing, Purchaserwill pay to Seller the Purchase Price for the Assets in the following manner:  (a) *Cash Purchase Price*. The Cash Purchase Price by wire transfer ofimmediately available funds to the account Seller designates; and  (b) *Deferred Purchase Price*. The Deferred Purchase Price by delivery toSeller of the Loan and Security Agreement providing for payment of $1,000,000 in30 equal monthly installments beginning on the first day of the month followingthe closing and continuing for 30 months. The Deferred Purchase Price will besecured by (a) a first priority security interest in the receivables owed to AI orto Purchaser by Best Buy or any Affiliate of Best Buy and (b) a second prioritysecurity interest in all other assets of Purchaser including the Assets.  4.2 Allocation of Purchase Price. The Parties will allocate thePurchase Price among the Assets for tax purposes in accordance with Section 1060 ofthe Internal Revenue Code. Purchaser and Seller will each prepare and file on atimely basis with the Internal Revenue Service substantially identical initial andsupplemental Internal Revenue Service Forms 8594 “Asset Acquisition StatementsUnder Section 1060” consistent with such allocation.5. **Representations and Warranties by Seller**. To the extent information on which the followingrepresentations are made depend upon information supplied by AI management located at AI’sfacility in Oklahoma, Buyer’s representations and warranties are made in reliance upon suchmanagement and are made to Seller’s Knowledge. Because such members of management are alsoprincipals of Buyer, Buyer acknowledges that this reliance is reasonable and that Seller isnot responsible for errors, inaccuracies or misrepresentations 
- 6 -

 
  resulting from Seller’sreliance upon information from such management, unless Seller has Knowledge of such errors,inaccuracies or misrepresentations prior to Closing. Except as stated otherwise in a *Schedule*to this Agreement, and subject to the disclaimer made above, Seller represents and warrants toPurchaser that: 5.1 Organization and Authority to Conduct Business. Rockford isduly organized, validly existing and in good standing under the laws of Arizona andAI is duly organized, validly existing and in good standing under the laws ofOklahoma. Each Seller is qualified to do business and is in good standing in eachof the jurisdictions identified on *Schedule 5.1*. Each Seller has all requisitecorporate power and authority to carry on its business as now being conducted, toown, lease, or operate its properties and to carry out the transactionscontemplated by this Agreement. Each Seller has delivered to Purchaser completecopies of Seller’s articles or certificate of incorporation and bylaws as amended.  5.2 Authorization and Approval of Agreement. Seller:  (a) has taken, or will take before the Closing, all actions; and  (b) has secured, or will secure before the Closing, all material Permitsrequired to authorize the execution, delivery, and consummation of this Agreement andthe transactions contemplated by this Agreement. 5.3 Binding Effect. This Agreement, and each document executed bySeller in connection with this Agreement:  (a) constitutes the legal, valid, binding, and enforceable obligation ofSeller;  (b) has been duly executed and delivered by Seller; and  (c) has been duly authorized by all necessary corporate action.  5.4 Execution, Delivery and Performance of Agreement. Theexecution, delivery, and performance of this Agreement by Seller and theconsummation of the transactions contemplated hereby will not (with or without thegiving ofnotice or the passage of time or both) conflict with, result in a default under,result in the creation of any Encumbrance on the Assets pursuant to, or result inthe acceleration of any obligation under or permit the termination of:  (a) Seller’s certificate of incorporation or bylaws; or  (b) any material Contract or Law to which Seller is a party or by whichit, the Business or the Assets may be bound.
- 7 -

 
 5.5 Required Filings and Consents. No waiver, consent, approval,order or authorization of, or registration, declaration or filing with, anyGovernmental Entity or any other person is required by or with respect to Seller inconnection with the execution and delivery of this Agreement or the consummation bySeller of any of the transactions contemplated by this Agreement, except for:  (a) the consents identified as required on *Schedule 5.5*, which are: (1) all consents, waivers and approvals required in connection withthe consummation of the transactions contemplated by this Agreement under anyof Seller’s Contracts or Permits; and  (2) will be secured before the Closing; (b) such other waivers, consents, approvals, orders, authorizations,registrations, declarations and filings as would not individually or in theaggregate: (1) have a material adverse effect on AI;  (2) impair Seller’s ability to perform its obligations under thisAgreement; or  (3) prevent the consummation of any of the transactionscontemplated by this Agreement. 5.6 Financial Statements.  (a) Sellers have delivered to Purchaser financial information relating tothe Business for the periods ending December 31, 2005, and February 28, 2006. Thelast such date is the Financial Statements Date. The financial informationincludes asset and liability information and income and expense informationderived from Rockford’s consolidated financial statements, but are not audited.Because Rockford prepares its financial statements on a consolidated basis, andbecause the Business is only a small part of Rockford’s total operations, thefinancial information was not prepared in accordance with GAAP. The financialinformation was derived from Rockford’s financial statements (which were preparedin accordance with GAAP) and other financial records.  (b) Except as contemplated by this Agreement, there are no liabilities orobligations of any nature (whether accrued, absolute, contingent or otherwise)related to the Business, except liabilities:  (1) provided for in the Business’ financial information delivered toBuyer as of the Financial Statements Date; or
- 8 -

 
 (2) incurred since the Financial Statement Date in the ordinary courseof business consistent with past practices.  5.7 Absence of Undisclosed Liabilities. As of the FinancialStatements Date, Seller does not have any debts or liabilities related to theBusiness except as disclosed in the financial information delivered under Section5.6 or in *Schedule 5.7*or elsewhere in this Agreement. Since the FinancialStatements Date Seller has not incurred additional debts or liabilities related tothe Business except as disclosed in *Schedule 5.7*or elsewhere in this Agreement;  5.8 Litigation.  (a) There is no Proceeding pending or, to Seller’s Knowledge, threatenedagainst; and  (b) There is no Order in effect or, to its Knowledge, threatened againstor relating to(1) the Business, (2) Seller’s officers, directors, or employees who participate in theBusiness, (3) the properties, assets, or operations related to the Business, or (4) thetransactions contemplated by this Agreement. Seller does not know, or have reason toknow, of any basis for such a Proceeding or Order; 5.9 Bankruptcy Proceedings. Seller is not involved in anyProceeding by or against it (a) under the Bankruptcy Code, 11 U.S.C. § 101 et seq.,(b) under any other insolvency or debtors’ relief act, or (c) for the appointmentof a trustee, receiver, liquidator, assignee, sequestrator or other similarofficial.  5.10 Taxes.  (a) Seller has paid, or will pay before their due date, all Taxes relatedto the Business due on or before the Closing and has reserved, or will reservebefore the Closing, amounts necessary to pay Taxes due after the Closing inrespect of periods ending on or before the Closing;  (b) Seller has timely filed, or will timely file, all tax returnsrequired in connection with any Taxes related to the Business, and has not madeany requests forextensions. All such returns are accurate and comply with applicable Law;  (c) Seller has made all deposits required by Law and (1) has not beendelinquent in the payment of any Tax or (2) has paid any penalty associated with adelinquency;  (d) Seller has no reassessment of any Tax proposed and knows of no basisfor any such reassessment; and
- 9 -

 
 (e) To the Knowledge of Seller, there is no pending property, sales, useor other tax dispute relating to or arising out of the Business or affecting theAssets.  5.11 Compliance with Laws, Permits, and Contracts.  (a) Seller has complied in all material respects with all Laws applicableto the Business, Assets, or operations of the Business as presently conducted;  (b) Seller has secured and is in compliance with all material Permitsrequired for the Assets and the Business as presently conducted;  (c) Seller is not in default concerning any Order, writ, injunction ordecree of any federal, state or municipal court, or other governmental departmentor agency affecting the Assets or the Business;  (d) Seller has not offered, paid, or agreed to pay money or anything ofvalue for the purpose of or with the intent of obtaining or maintaining businessfor Seller or otherwise benefiting Seller in violation of any Law (includingSection 30A(a) of the Securities Exchange Act of 1934, as amended); and  (e) The ownership and present use of Seller’s properties related to theBusiness and the conduct of the Business,  (1) does not materially conflict with the rights of any other person;and  (2) will not (with or without the giving of notice or the passage oftime or both) conflict with or result in a default under: **•** Seller’s certificate of incorporation or bylaws; or  **•** any material Contract or Law to which Seller is a party or by which it isaffected. 5.12 Enforceability of Contracts, No Defaults.  (a) All Contracts identified in any schedule to this Agreement, orrequired to be so identified, to which Seller is a party are effective, valid,binding, and enforceable in accordance with their terms;  (b) Seller is not in material default under any such Contracts; and  (c) Seller does not know, or have reason to know, of any material default(or event which, after notice or lapse of time, would constitute a materialdefault) of such Contracts.
- 10 -

 
 5.13 Product Recalls. Seller has not within the past 5 years:  (a) been party to any Proceeding brought by a Government; or  (b) been subject to any Order;that related to the Business and required, or sought to require, that Seller recall anyproducts designed, manufactured, assembled, shipped, sold, distributed, installed,repaired or maintained by Seller in connection with the Business. Seller does not know, orhave reason to know, of any voluntary recall undertaken to avoid a Proceeding or Order orof any pending or threatened Proceeding or Order that would require such a recall. 5.14 Environmental Matters.  (a) The Business is in material compliance with Environmental Laws;  (b) Seller has secured all material Permits required under EnvironmentalLaws for the operation of the Business (and such Permits are listed on *Schedule5.14*);  (c) Seller does not know, or have reason to know, of any pending orthreatened Proceedings against Seller related to the Business with respect toEnvironmental Laws;  (d) Seller does not know, or have reason to know, of any act related tothe Business and attributable to Seller that could give rise to material liabilityunder CERCLA or any other Environmental Law. Seller has not submitted noticepursuant to Section 103 of CERCLA with respect to any of the Assets;  (e) To Seller’s Knowledge, Seller does not own or operate in connectionwith the Business an underground storage tank except for tanks in materialcompliance with Environmental Laws; and  (f) Seller does not know, or have reason to know, of any HazardousMaterials that have been released, discharged, deposited, emitted, leaked,spilled, poured,emptied, injected, dumped or disposed of in a manner that materially violates anyapplicable Environmental Law on, in, or under real property owned or occupied bySeller and related to the Business.  5.15 Ownership of Assets; No Encumbrances. Seller has good andmarketable title to the Assets free and clear of any Encumbrance. There are noundisclosed interests in the Assets, nor does Seller know, or have reason to know,of any assertion of such an interest, or of any facts or circumstances that wouldgive rise to such an interest. *Schedule 5.15*lists:
- 11 -

 
 (a) *Real Property*.  (1) all real property that Seller uses in the Business and owns orleases;  (2) a summary of the terms on which Seller owns, leases, or uses suchreal property; and  (3) a summary of the terms of any Encumbrances affecting such realproperty.  (b) *Personal Property*.  (1) all tangible personal property (other than inventory and supplies)that Seller uses in the Business and owns or leases, except for owned itemshaving a value of less than $10,000 and leased items requiring lease payments ofless than $10,000 annually;  (2) a summary of the terms on which Seller owns, leases, or uses suchpersonal property; and  (3) a summary of the terms of any Encumbrances affecting such personalproperty.  (c) *Title*. Seller has title to all the Assets reflected in the FinancialStatements or in *Schedule 5.15*, free of any Encumbrance, except:  (1) items sold or otherwise disposed of in the ordinary course ofbusiness consistent with past practice after the date hereof; or  (2) as set forth in the Financial Statements or in *Schedule 5.15*.  (d) The Assets are in good operating condition and repair (ordinary wearand tear excepted), are suitable for the purposes used, and are adequate for thecurrent operations of the Business. The Assets constitute all of the propertiesand assets used or held for use in connection with, necessary for the conduct of,or otherwise material to, the Business. Seller does not know, or have reason toknow, of any pending or threatened condemnation affecting the Assets.  5.16 Insurance. *Schedule 5.16*lists all material insurance policiesinsuring, and all material performance bonds related to, the Business issued infavor of Seller specifying:  (a) the name of the insurer or bonding company;  (b) the risk insured or bonded;  (c) the limits of coverage;
- 12 -

 
 (d) the deductible (if any);  (e) the premium (including any proposed premium increases known toSeller);  (f) any notice of cancellation or nonrenewal received by Seller; and  (g) the date through which coverage will continue by virtue of premiumsalready paid.  5.17 Distribution Agreements. *Schedule 5.17*lists all materialsales agency agreements, distributorship agreements, and agreements providing forthe services of an independent sales representative relating to the Business towhich Seller is a party.  5.18 Other Contracts. *Schedule 5.18*lists:  (a) Each loan, conditional sales, or security agreement of Sellerrelating to the Business with an unpaid balance more than $10,000;  (b) Each material license agreement relating to intellectual property ofSeller relating to the Business (other than licenses incident to leases ofcomputers, software, or office or photographic equipment used in the ordinarycourse of business); and  (c) All material Contracts of Seller relating to the Business, butexcluding:  (1) Contracts listed or excluded elsewhere in this Agreement; and  (2) any Contract entered into in the ordinary course of businessterminable by Seller in less than 30 days or involving payment or receipt of lessthan $10,000.  5.19 Employment Matters.  (a) *Employment Contracts and Plans. Schedule 5.19*lists all materialEmployment Contracts and Employment Plans to which Seller is a party or by whichit isbound and which relate to the operation of the Business.  (b) *Compliance with Employment Laws.*Seller, in connection with theBusiness:  (1) is in material compliance with all Laws regulating employmentpractices, terms and conditions of employment and wages and hours;  (2) is not subject to any unfair labor practice complaint or otherpetition before the National Labor Relations Board;  (3) is not subject to any material labor strike, dispute, slow-down orstoppage;
- 13 -

 
 (4) is not subject to any material Proceeding arising out of or under acollective bargaining agreement; and  (5) has not experienced any primary work stoppage or other labordifficulty involving its employees during the past three years.  (c) *Plan Compliance.*Seller has administered and maintained theEmployment Plans in material compliance with all applicable Laws with respect toemployees working in connection with the Business. Seller does not know, or havereason to know, of any prohibited transaction (as defined in ERISA, 29 U.S.C. §1001) relating to any Employment Plan.  (d) *Severance*. Seller has not entered into any severance or similararrangement with respect of any present or former personnel who work exclusivelyin the Business that will result in any obligation (absolute or contingent) ofPurchaser or Seller to make any payment to any present or former personnel whowork exclusively in the Business following termination of employment.  5.20 No Guaranties. Seller has not guaranteed the obligations orliabilities of any person or business entity in connection with the Business.  5.21 Intellectual Property. *Schedule 5.21*lists all materialpatents, trademarks, trade names, service marks, other trade rights, copyrights,licenses, and similar intangibles (the “Intellectual Property”) that Seller owns,uses, or has registered in connection with the Business.  (a) Seller is not obligated to pay any royalty with respect toIntellectual Property that Seller owns, uses, or has registered in connection withthe Business.  (b) Seller does not know, or have reason to know, of any pending orthreatened Proceedings alleging that the Business has infringed any third party’sIntellectual Property rights (or of any basis for such a Proceeding).  (c) Seller does not know, or have reason to know of any personchallenging or infringing on or otherwise violating any right of the Seller withrespect to any Intellectual Property that Seller owns, uses, or has registered inconnection with the Business.  5.22 Inventory. Seller’s inventory and related supplies aremerchantable or suitable for sale in the ordinary course of business, except to theextent of the allowance for excess and obsolete inventory as reflected on theFinancial Statements.  5.23 Receivables. All receivables reflected in the FinancialStatements, and all receivables which have arisen since the Financial StatementDate, arose from
- 14 -

 
   transactions in the ordinary course of business. The Sellerexpects such receivables to be (or to have been) fully collected when due, exceptto the extent of the normal allowance for doubtful accounts as reflected on theFinancial Statements.  5.24 Records. The books of account (“Books”) of Seller related tothe Business are complete and correct in all material respects. Seller knows of nomaterial transactions involving the Business of Seller, which properly should havebeen, but are not, set forth in the Books.  5.25 Official Filings Complete. Seller has made all materialrequired Government filings related to the Business.  5.26 Absence of Changes or Events. Since the Financial StatementsDate, Seller has conducted the Business only in the ordinary course and has nottaken, or entered into any agreement or made any commitment to take, any of thefollowing actions in connection with the Business:  (a) Incurred any obligation or liability related to the Business, exceptliabilities (1) for trade or business obligations incurred in the ordinary courseof business or (2) which do not materially affect the Business or the Business’financial condition;  (b) Paid any obligation or liability related to the Business other thancurrent liabilities (1) shown on the Financial Statements or (2) incurred sincethe Financial Statements Date in the ordinary course of business;  (c) Subjected any Assets to any Encumbrance, except in the ordinarycourse of business;  (d) Sold or otherwise disposed of any Assets, except in the ordinarycourse of business;  (e) Cancelled, compromised, waived, or released any material debt, claim,or right related to the Business, except in the ordinary course of business;  (f) Received or given notice of termination of any Contract whosetermination has had, or may have, a material adverse effect on the Business or itsfinancial condition;  (g) To its Knowledge, experienced any labor union organizing activity orhad any actual or threatened employee strikes, work stoppages, slow-downs, orlock-outs;  (h) Had any material change in the terms of agreements with employees,agents, customers or suppliers;
- 15 -

 
 (i) Made or agreed to make any change in the compensation payable to anymanager or employee working exclusively for the Business, except for normalperiodic bonus accruals and normal periodic increases in regular compensation;  (j) Acquired any capital assets related to the Business which cost inexcess of an aggregate of $250,000;  (k) Declared any dividends or made any distributions to its shareholders,other than transactions in the ordinary course of business consistent with pastpractices;  (l) Instituted, settled or agreed to settle any material Proceedingrelated to the Business; or  (m) Suffered any change, event, condition, damage, destruction, or losshaving a material adverse affect on the Business.6. **Representations and Warranties by Purchaser**. Except as stated otherwise in a *Schedule*tothis Agreement, Purchaser represents and warrants to Seller that: 6.1 Organization and Authority. Purchaser is a limited liabilitycompany duly organized, validly existing and in good standing under the laws ofOklahoma. Purchaser has all requisite power and authority to carry on its businessas now being conducted, to enter into this Agreement, and to carry out thetransactions contemplated by this Agreement. Purchaser is qualified to do businessand is in good standing in each of the jurisdictions where the nature of itsbusiness or the properties it owns or leases makes such qualification necessary oradvisable.  6.2 Authorization and Approval of Agreement. Purchaser:  (a) has taken, or will take before the Closing, all actions; and  (b) has secured, or will secure before the Closing, all material Permitsrequired to authorize the execution, delivery, and consummation of this Agreement and thetransactions contemplated by this Agreement. 6.3 Binding Effect. This Agreement, and each document executed byPurchaser in connection with this Agreement, constitutes the valid, binding, andenforceable obligation of Purchaser, has been duly executed and delivered byPurchaser, and has been duly authorized by all necessary corporate action.  6.4 Execution, Delivery and Performance of Agreement. Theexecution, delivery, and performance of this Agreement by Purchaser will not (withor without the giving of notice or the passage of time) conflict with, result in adefault under, or result in the creation of any Encumbrance pursuant to:
- 16 -

 
 (a) Purchaser’s articles of organization or operating agreement; or  (b) any material Contract or Law to which Purchaser is a party or bywhich it may be bound.  6.5 Purchaser’s Independent Investigation. Purchaser and itsrepresentatives have independently investigated Seller and the Business. Purchaseracknowledges that there are no representations or warranties, express or implied,about the Seller or the Business except for the representations and warranties inthis Agreement and each certificate and instrument furnished in connection withthis Agreement. Purchaser is not relying on any written or oral information aboutthe Seller or the Business (including financial or forward-looking information)except for the representations and warranties in this Agreement and eachcertificate and instrument furnished in connection with this Agreement.  6.6 Plant Closing. Purchaser has no definite plans to implementany mass lay-off, plant closing, or other covered employment loss (a “Lay-off”), asthose terms are defined by the Worker Adjustment and Retraining Notification Act,229 U.S.C. § 2101-2109 (the “Act”), within sixty-one (61) days of the Closing Date.If it implements a Lay-off after the Closing, Purchaser will comply with the Act tothe extent the Act applies to its operations (including the Business as operatedafter the Closing).  6.7 Litigation. There is no material Proceeding pending or, toits Knowledge, threatened; and there is no material Order in effect relating to thetransactions contemplated by this Agreement. Purchaser does not know of any basisfor such a Proceeding or Order.  6.8 Required Filings and Consents. No waiver, consent, approval,order or authorization of, or registration, declaration or filing with, anyGovernmental Entity or any other person is required by or with respect to Purchaserin connection with the execution and delivery of this Agreement or the consummationby Purchaser of any of the transactions contemplated by this Agreement, except for: (a) the consents identified as required on *Schedule 6.8*, which are: (1) all consents, waivers and approvals required in connection with theconsummation of the transactions contemplated by this Agreement under any ofPurchaser’s Contracts or Permits; and  (2) will be secured before the Closing; (b) such other waivers, consents, approvals, orders, authorizations,registrations, declarations and filings as would not individually or in theaggregate:
- 17 -

 
 (1) have a material adverse effect on Purchaser;  (2) impair Purchaser’s ability to perform its obligations under thisAgreement; or  (3) prevent the consummation of any of the transactions contemplated bythis Agreement.7. **Pre-Closing Covenants**. After the execution of this Agreement and before the earlier of theClosing or termination of this Agreement: 7.1 Consents and Approvals. Purchaser and Seller will cooperate  (a) to obtain as expeditiously as possible all material Permits necessaryto carry out the transactions contemplated by this Agreement; and  (b) to comply with all material Laws regulating or restricting thetransactions contemplated by this Agreement.  7.2 Conduct of Business. Seller will conduct the Business only inthe ordinary course consistent with past practice, will maintain and preserve theAssets, and will use commercially reasonable effortsto:  (a) preserve the Business and its internal organization;  (b) maintain the general character of the Business and conduct theBusiness operations, activities, and practices in a reasonable manner inaccordance with past practices;  (c) keep available to Purchaser the services of the managers, employees,agents and independent contractors who work exclusively for the Business;  (d) preserve for the benefit of Purchaser the goodwill of suppliers,customers, landlords and others having business relations material to theBusiness; and  (e) consult with Purchaser about material changes in the conduct of theBusiness.   Seller is not required to take or refrain from taking any action that, in Seller’sreasonable judgment, is likely to result in: (1) a substantial penalty;  (2) a claim for damages by any third party against Seller;  (3) losses to Seller;
- 18 -

 
 (4) prejudice to or interference with the Business; or  (5) a breach by any of the Seller of any of the representations andwarranties made by it in this Agreement.  7.3 Approval of Certain Transactions. Seller will not, withoutPurchaser’s prior written approval, take or agree to take the following actions inconnection with the Business:  (a) incur any additional debt related to the Business, other than tradedebt and normal intercompany payables and receivables incurred in the ordinarycourse of business;  (b) increase the compensation of any managers or employees workingexclusively for the Business, except for normal periodic bonus accruals and normalperiodic increases in regular compensation;  (c) declare or pay any dividends to its shareholders or make anydistributions to its shareholders, other than transactions in the ordinary courseof business consistent with past practices;  (d) take any action which would breach any of its representations andwarranties in this Agreement;  (e) sell or otherwise dispose of any of the Assets except in the ordinarycourse of business;  (f) subject any Assets to an Encumbrance, other than in the ordinarycourse of business; or  (g) enter into or terminate any material Contract related to the Businessexcept in the ordinary course of business and except for those of the type whichwould not have to be listed or described in any schedule to this Agreement;  7.4 Material Changes. Seller will give Purchaser written notice ofthe occurrence or non-occurrence of any event known to Seller (excluding mattersknown only to Seller’s personnel who are expected to be employed by Buyer after theclosing), the occurrence or non-occurrence of which would be reasonably likely tocause any representations and warranties made by it in this Agreement to be untrueor inaccurate in any material respect or any Schedule hereto to be untrue orinaccurate in any material respect (in which case Seller shall provide Purchaserwith an updated Schedule). Any supplement or amendment to a schedule or schedulesmade with respect to matters occurring on or after the date of this Agreement willnot be indemnifiable as a breach of any representation or warranty made in thisAgreement; provided, in the event any supplement or amendment would constitute amaterial breach if it had occurred prior to the
- 19 -

 
   date hereof, the Purchaser mayterminate this Agreement pursuant to Section 12.1(c); provided, however, that thedelivery of any notice or updated Schedule pursuant to this Section 7.4 shall notlimit or otherwise affect the remedies available hereunder to the party receivingsuch notice with respect to any matter occurring prior to the date of thisAgreement or otherwise resulting from a breach of covenant in this Agreement.  7.5 Asset Restrictions. Seller will take no action that wouldencumber or restrict the Assets or their sale or transfer, except actions toenforce rights under this Agreement;  7.6 Confidentiality.  (a) *Agreement.*Purchaser and Seller have entered into and remain bound bythe Confidentiality Agreement attached as *Schedule 7.6.*Each party will complywith its obligations under the Confidentiality Agreement; and  (b) *Press Releases.*A party may make a public announcement of thetransactions contemplated in this Agreement only with the prior written consent ofall other parties. A party will not unreasonably withhold consent if anannouncement isrequired by applicable Law.  7.7 Investigations. Upon reasonable notice and during regularbusiness hours, Seller will give Purchaser and Purchaser’s attorneys, accountantsand other representatives:  (a) access to Seller’s officers, directors, employees, independentcontractors, counsel, and independent accountants related to the Business;  (b) access to Seller’s Assets, material Contracts, and Books related tothe Business;  (c) copies of documents of Seller reasonably requested by Purchaserrelated to the Business; and  (d) information Purchaser reasonably requests with respect to the affairsof Seller related to the Business.  (e) Information supplied by Seller to Purchaser is subject to theConfidentiality Agreement. Seller does not assume responsibility for the accuracyor completeness of the Information except and to the extent specifically providedin this Agreement. Neither the Information nor Purchaser’s investigation affectsPurchaser’s right to rely on the representations and warranties made in thisAgreement.
- 20 -

 
8. **Post-Closing Covenants**. 8.1 Delivery of Information. After the Closing, Seller shall usereasonable commercial efforts to transfer, forward or deliver the following toPurchaser:  (a) all sales calls pertaining to the Business;  (b) all electronic mail pertaining to the Business;  (c) all notices and communications from any customers relating to theBusiness;  (d) all invoices and bills from any suppliers or vendors relating to theBusiness;  (e) all purchase orders relating to the Business; and  (f) all payments made to Seller by customers of the Business for paymentof accounts receivable of the Business.9. **Conditions to each Party’s Obligations**. No party is obligated to close the transactionscontemplated by thisAgreement unless the following conditions are satisfied on or before the Closing Date: 9.1 Consents and Approvals. All Permits, consents and approvalsrequired pursuant to *Section 7.1*must have been obtained; and  9.2 Proceedings. No Proceeding seeking to enjoin or prohibit, andno Order enjoining or prohibiting the consummation of the transactions contemplatedby this Agreement may be in effect.10. **Conditions to Purchaser’s Obligations**. Purchaser is not obligated to close the transactionscontemplated by this Agreement unless the following conditions are satisfied or waived byPurchaser on or before the Closing Date: 10.1 Accuracy of Representations and Warranties. Therepresentations and warranties of Seller in this Agreement must be true andcorrect, both when made and on the Closing Date.  10.2 Performance of Obligations . Seller must have performed allmaterial covenants, agreements, and obligations required of it by this or prior tothe Closing.  10.3 Material Adverse Effect. There shall not have occurred afterthe date hereof any event having a Material Adverse Effect on the Business or theAsset.
- 21 -

 
 10.4 Loan and Security Agreement. Purchaser must have received aLoan and Security Agreement executed by Seller in substantially the form attachedas *Schedule 10.4*.  10.5 Bill of Sale. Purchaser must have received an executed bill ofsale from Seller in a form reasonably acceptable to the parties covering allpersonal property included in the Assets.  10.6 Assignment and Assumption Agreement. Purchaser must havereceived an executed assignment and assumption agreement from Seller in a formreasonably acceptable to the parties.11. **Conditions to Seller’s Obligations**. Seller is not obligated to close the transactionscontemplated by this Agreement unless the following conditions are satisfied or waived bySeller on or before the Closing Date: 11.1 Accuracy of Representations and Warranties. Therepresentations and warranties of Purchaser in this Agreement must be true andcorrect, both when made and on the Closing Date.  11.2 Performance of Obligations . Purchaser must have performed allcovenants, agreements, and obligations required of it by this Agreement.  11.3 Loan and Security Agreement. Seller must have received a Loanand Security Agreement executed by Purchaser in substantially the form attached as*Schedule 10.4*.  11.4 Promissory Note. Seller must have received a Promissoryexecuted by Purchaser in substantially the form attached as *Schedule 11.4*.  11.5 Assignment and Assumption Agreement. Seller must have receivedan executed assignment and assumption agreement from Purchaser in a form reasonablyacceptable to the parties.12. **Obligations at and after Closing**. 12.1 Seller Deliveries. At the Closing, Seller will deliver toPurchaser all documents required to be delivered to Purchaser under this Agreementincluding this Agreement, the Loan and Security Agreement, and all other documentsidentified in *Section 10*.  12.2 Purchaser Deliveries. At the Closing, Purchaser will deliver:  (a) the Cash Purchase Price to Seller; and
- 22 -

 
 (b) all other documents required to be delivered to Seller under thisAgreement including this Agreement, the Loan and Security Agreement, and all otherdocuments identified in *Section 11*.  12.3 Additional Documents. After the Closing, each party willexecute and deliver other documents and take further action, as any other partyreasonably deems necessary to carry out the transactions contemplated by thisAgreement.13. **Termination**. 13.1 Rights to Terminate. A party may terminate this Agreement atany time before the Closing:  (a) by mutual written consent of Seller and Purchaser;  (b) if the Closing has not occurred on or before April 30, 2006; or  (c) if (1) a material representation or warranty of the another party wasor has become materially inaccurate or untrue or (2) another party has failedmaterially to comply with or perform under this Agreement (except that, if themisrepresentation or breach is curable then this Agreement will not terminateuntil the responsible party has failed for 10 days after notice to cure themisrepresentation or breach).This Agreement will terminate when a party who is authorized to terminate it gives theother parties notice of the termination. 13.2 Effect of Termination. If this Agreement is terminated, noparty has any liability or further obligation unless the termination was a resultof such party’s  (a) breach;  (b) violation of its duties, obligations, representations, or warranties;or  (c) fraud, bad faith, or willful misconduct.14. **Indemnification.** 14.1 By Purchaser. Purchaser will indemnify Seller from, and willpay on its behalf, all Loss (whether or not resulting from third party claims)incurred as a result of (a) any untrue representation, breach of warranty ornon-fulfillment of any of Purchaser’s covenants or agreements stated in thisAgreement or (b) Purchaser’s operation of the Business after the Closing.  14.2 By Seller. Seller will indemnify and hold harmless Purchaserfrom, and will pay on its behalf, all Loss (whether or not resulting from thirdparty claims) (a)
- 23 -

 
 ** ** incurred as a result of any untrue representation, breach of warranty, or non-fulfillment of any covenantor agreement of the Seller in this Agreement, (b) arising out of or resulting from any Liabilities other than the AssumedLiabilities, and (c) arising out of or resulting from the Excluded Assets.  (a) *“Basket” Deductible*. Except as otherwise provided in this Agreement,the Seller will have no obligation to indemnify the Purchaser under this *Section14.2*unless the Purchaser has suffered Losses in excess of $50,000 (the “Basket”)in the aggregate and then only to the extent of such excess. Claims by Purchaserunder Section 5.15 shall not be subject to the Basket.  (b) *Liability Limit*. Except as otherwise provided in this Agreement, theaggregate liability of Seller under this *Section 14.2*will not exceed, and Sellerwill have not liability for indemnification except to the extent of $200,000 (the“Cap”). Claims by Purchaser under Section 5.15 shall not be subject to the Cap.The obligations of Seller under this section are subject to *Section 15*below.  14.3 Procedure. Procedures for making a claim for indemnity are setforth in *Schedule 14.3*.15. **Expiration of Representations and Warranties**. All representations and warranties made by theparties in this Agreement, or in any instrument or document furnished in connection with thisAgreement, will survive the Closing and any investigation at any time made by or on behalf ofthe parties. 15.1 Survival of Certain Representations and Warranties. Therepresentations and warranties set forth in *Section 5*and *Section 6*will surviveuntil twelve months after the Closing Date except for Sections 5.1, 5.2, 5.3, 5.4,and 5.10, which shall survive until twenty four months after the Closing Date andSection 5.15, which shall survive indefinitely.  15.2 Limit on Claims. A party may maintain a claim or action forindemnity pursuant to *Section 14*after the expiration of the representation orwarranty under *Section 15.1*only if the party made the claim in writing beforeexpiration.  15.3 Application of Claims. Claims for indemnity pursuant to*Section 14.2*will be applied in the following order:  (a) the first $100,000 aggregate amount of Losses for breaches ofrepresentations and warranties are subject to the “basket” and no claim may bemade against Seller for them except as otherwise provided in this Agreement; and  (b) the Losses up to the limit specified in *Section 14.**2(b)* and in excessof the “basket” will be paid by Seller to Purchaser, either in cash or byreduction in the principal amount due under the Loan and Security Agreement.
- 24 -

 
   Except as otherwise provided in this Agreement, no claim for Losses for a breach ofthis Agreement may be made in excess of the amounts set forth in (a) and (b) above.Purchaser acknowledges that it has accepted the risk that claims will exceed thisamount.16. **Notices**. Notices under this Agreement must be in writing. Notices are deemed given: 16.1 when personally delivered;  16.2 when received by facsimile or by overnight courier service; or  16.3 on the fifth business day after mailing by first class registered mail,return receipt requested.  Notices must be sent to the parties at the addresses stated on the signature page of thisAgreement (or at any other address designated in a notice given by a party to change itsaddress). 17. **Certain Costs**. 17.1 Costs of Proceedings. In any Proceeding arising under orrelated to this Agreement the prevailing party is entitled, in addition to otheramounts it recovers, to have the other party pay all costs and expenses (includingreasonable attorneys’ fees) incurred in connection with the Proceeding.  17.2 Expenses. Each party is solely responsible for its ownexpenses relating to the preparation, execution, and consummation of this Agreementand the transactions contemplated by this Agreement, including any fees payable toan investment banker or broker.18. **Miscellaneous**. 18.1 Integration and Amendment. This Agreement, together with theLoan and Security Agreement, constitutes the entire agreement of the parties, andsupersedes all prior agreements or understandings among the parties, with respectto their subject matter. This Agreement may be amended only in a written agreementsigned by all of the parties.  18.2 Waivers. No waiver under this Agreement is valid unless it isin writing and signed by the party giving the waiver. A waiver of a particularmatter does not waive a subsequent or similar matter.  18.3 Binding Effect. This Agreement is binding upon, and inures tothe benefit of, each party and its successors and assigns.
- 25 -

 
 18.4 No Benefit to Others. This Agreement is solely for the benefitof the parties (and their successors and assigns) and does not confer any rights onany other persons.  18.5 Severability. The invalidity or unenforceability of anyprovision of this Agreement does not affect the other provisions. ThisAgreement is to be construed in all respects as if it excluded any invalid orunenforceable provision.  18.6 Construction and Headings. Whenever a singular word is used inthis Agreement it also includes the plural if required by the context, and viceversa. Paragraph headings are for convenience only and do not define or limit thecontents of a paragraph.  18.7 Cooperation. In order to carry out this Agreement, each partywill cooperate, will take further action, and will execute and deliver furtherdocuments as reasonably requested by any other party.  18.8 Counterparts. This Agreement may be executed in one or morecounterparts, all of which taken together are one original.  18.9 Governing Law. This Agreement is governed by the internal Lawsof Arizona. Exclusive jurisdiction and venue for any litigation arising under thisAgreement is in the federal and state courts located in Maricopa County, Arizona.19. **Effective Date**. This Agreement is executed and effective as of March 31, 2006.   [Signatures Follow]
- 26 -

 
Advanced Integration, LLC, an Oklahoma limited liability company            By:   /s/ Steven E. Frazier               Steven E. Frazier, Member-Manager  Address:2805 E. 6th Avenue