Ex. 10.67**Asset Purchase Agreement**betweenRockford CorporationandNHT, Inc.Dated as of October 7, 2005
 

 
**Asset Purchase Agreement**This Asset Purchase Agreement (“Agreement”) is between: (a) Rockford Corporation (“Seller”); and  (b) NHT, Inc. (“Purchaser”).Seller and Purchaser agree as follows:1. **Background and Definitions**. 1.1 Company Business. Seller is in the business of designing, manufacturing,marketing and distributing high quality professional and home audio speakers, home theaterspeakers, and related products through its division known as NHT (“NHT” or the “Business”).The Business includes only the Rockford Home Group division that sells products under theNHT and NHT Pro brands. The Business does not include, and no assets are sold relating to,any other Rockford Home Group brands (including the Fosgate Audionics and Hafler brands) orany other Rockford Corporation brands.  1.2 Asset Sale. Seller desires to sell, and Purchaser has agreed to acquire all orsubstantially all of Seller’s tangible and intangible assets used exclusively in theBusiness and specifically listed in *Schedule 1.2*(the “Assets”), including: (a) the Business’ inventory as it exists on the Effective Date and as updatedand acquired through the Closing Date, except for inventory sold in the ordinarycourse of business (the “Inventory”);  (b) all accounts receivable related to the Business as of the Effective Date asupdated and created through the Closing Date, except for accounts receivable sold inthe ordinary course of business (the “Accounts Receivable”)  (c) the Intellectual Property used exclusively in connection with the Business,including those trademarks and trade names identified on *Schedule 1.2*and anyfederal, state, or foreign registrations relating to these names (the “Names”), andthe goodwill associated with such Names. Purchaser will not acquire any interest inany of Seller’s trademarks, names or other Intellectual Property other than the Namesand Intellectual Property identified on *Schedule 1.2*;  (d) all other assets used exclusively in the Business, including owned orleased property and equipment, supplies, trade show fixtures specific to theBusiness, and other assets listed in *Schedule 1.2*.   The Assets specifically exclude the Excluded Assets.
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1.3 Definitions. In this Agreement: *(a)* *Affiliate*means any Business Entity which, directly or indirectly, alone ortogether with others, controls, is controlled by, or is under common control with,another Business Entity;  *(b)* *Agreement*means this Agreement and each of the Schedules and certificatesdelivered with this Agreement. The Schedules and certificates are a part of thisAgreement;  *(c)* *Assets*has the meaning given in *Section 1.2*;  *(d)* *Assumed Liabilities*means those debts, obligations and other liabilitiesassumed 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, joint venture,limited liability company, or other entity;  *(g)* *Closing*means the consummation of the transactions contemplated by thisAgreement;  *(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, Compensationand Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986 (“CERCLA”), 42 U.S.C. §9601 *et seq*.; the Toxic SubstanceControl Act (“TSCA”), 15 U.S.C. §2601 *et seq;*the Hazardous Materials
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   Transaction Act,49 U.S.C. §1802 *et seq;*the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C.§9601 *et seq;*the Clean Water Act (“CWA”), 33 U.S.C. §1251 *et seq;*the Safe DrinkingWater Act, 42 U.S. C. §300(f) *et seq;*the Clean Air Act (“CAA”), 42 U.S.C. §7401 *etseq;*Federal Insecticide, Fungicide and Rodentcide Act (“FIFRA), 7 U.S.C. §136 *et seq;*and Solid Waste Disposal Act (“SVVDA”) §6901 *et seq;*  *(n)* *Escrow Agent*means the person appointed to serve as Escrow Agent under theEscrow Agreement, attached as *Exhibit 4.1*;  *(o)* *Excluded Assets*means the assets used in the Business that are not beingsold to or acquired by Purchaser, including any assets that are listed as *ExcludedAssets*on *Schedule 1.2*;  *(p)* *Financial Statements*and *Financial Statement Date*have the meaning given in*Section 5.5;*  *(q)* *Government*means any legislature, executive, department, administrativeagency, municipality, subdivision, instrumentality, or other authority of the UnitedStates, any state, any locality, or any foreign country or political subdivision of aforeign country;  *(r)* *Hazardous Materials*means hazardous wastes, hazardous substances, hazardousconstituents, toxic substances, pollutants, contaminants, radioactive materials,related materials, and any other substances, constituents or wastes, whether solids,liquids or gases, subject to regulation under any Environmental Laws;  *(s)* *Information*means information supplied to Purchaser by Seller under *Section7.8*of this Agreement;  *(t)* *Intellectual Property*means patents, trademarks, trade names, servicemarks, other trade rights, copyrights, licenses, and similar intangibles;  *(u)* *Know, Knows, Knowledge, Knowingly*or *Known*mean, when referring todisclosure by Seller, matters known, or that should have been known by Seller’sexecutive officers and other senior managers responsible for the Business (excludingthe NHT Managers, the “Seller Managers”) other than the managers of the Business whoare expected to accept employment with Purchaser (the “NHT Managers”), and mattersreflected in Seller’s reasonably available records relating to the Business, butexcluding matters (1) that were known to (or should have been known by) the NHTManagers but not the Seller Managers or (2) reflected in records generally availableto the NHT Managers but not to the Seller Managers. The Seller Managers are entitledto rely on statements and representations that the NHT Managers have made about theBusiness and its prospects and their knowledge may be based on suchstatements and representations, even if investigation would have revealed suchstatements and representations were not correct, unless they had actual knowledge
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   (without reference to matters they should have known but did not know) of informationthat directly contradicted the statements made by the NHT Managers;  *(v)* *Laws*means any law, statute, ordinance, rule, regulation, or Order;  *(w)* *Liability Limit*means the amount actually held in the Escrow Fund at thetime a claim for indemnification under the provisions of *Section 13.2*is made byPurchaser against Seller;  *(x)* *Loss*means all expenses (including reasonable attorneys’ and accountants’fees), losses, taxes, claims, damages, awards, fines, interest, penalties, andliabilities;  *(y)* *Material*means any expense, expenditure, purchase, encumbrance, debt orAsset value that exceeds USD $24,000.00;  *(z)* *Material Adverse Change*or *Material Adverse Effect*means any change oreffect that is or would be materially adverse to a party and its Affiliates, **•** 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 fromthe announcement of this Agreement. *(aa)* *Order*means any order, decree, decision, injunction, finding, or judgment;  *(bb)* *Permits*means all approvals, permits, licenses, filings, registrations,certificates, orders, authorizations, qualifications, or other consents from anyGovernment, self-regulatory authority, or any other third party;  *(cc)* *Proceeding*means any claim, action, suit, mediation, arbitration, laborgrievance, Government investigation, or other legal or administrative proceeding;  *(dd)* *Purchase Price*means the purchase price for the Assets, in a total amountof $2,400,000, subject to adjustment and deductions as provided elsewhere in thisAgreement;  *(ee)* *Purchaser*means NHT, Inc., a Colorado corporation;  *(ff)* *Seller*means Rockford Corporation, an Arizona corporation; and  *(gg)* *Tax*means any tax, assessment, duty, or governmental charge or deposit(including income, property, ad valorem, gross receipts, sales, use, value added,occupation, franchise, transfer, excise, goods and services, payroll, employment,profits, capital, severance, production, premium, payroll, stamp, unemploymentinsurance, disability, workers’ compensation, withholding, and social security tax),
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   and all interest and penalties, whether disputed or not, imposed by any 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, and Purchaser will purchasefrom Sellers, the Assets.  2.2 No Purchase of Other Assets. Other than the Assets, Purchaser will not acquireany other asset of Seller.  2.3 No General Assumption of Certain Liabilities. Except for the AssumedLiabilities, Purchaser will not assume any liabilities of Seller. Seller will be solelyresponsible for paying all liabilities (except for the Assumed Liabilities) related to theBusiness and the Assets and arising before the Closing, including executory contracts,purchase orders, judgments, obligations, debts and tax liabilities.  2.4 Assumption of Assumed Liabilities. Purchaser will assume liability only forthe accounts payable, contract obligations, warranty obligations, and other liabilitiesspecifically 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 October 11,2005, 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, Purchaser will pay toSeller the Purchase Price for the Assets by wire transfer of immediately available funds,less the deposit into the Indemnity Escrow. The Indemnity Escrow will be deposited asfollows: *(a)* *Escrow Fund*. $240,000 will be deposited into an escrow account (the“Escrow Fund”) with the escrow agent listed on *Schedule 4.1*(the “Escrow Agent”) forthe purpose of securing Seller’s indemnity obligations under *Section 13.2*. TheEscrow Fund will be held and disbursed in accordance with the terms of the EscrowAgreement attached as *Exhibit 4.1*. In the absence of claims, the Escrow Fund will bereleased from escrow and paid to Seller one year after the Closing Date.  *(b)* *Earnings on Escrowed Funds*. The Escrow Fund will be invested and earningswill be paid in accordance with the terms of the Escrow Agreement. 4.2 Allocation of Purchase Price. The Parties will allocate the Purchase Priceamong the Assets for tax purposes in accordance with Section 1060 of the Internal RevenueCode. Purchaser and Seller will each prepare and file on a timely basis with the Internal
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   Revenue Service substantially identical initial and supplemental Internal Revenue ServiceForms 8594 “Asset Acquisition Statements Under Section 1060” consistent with suchallocation.5. **Representations and Warranties by Seller**. Except as stated otherwise in a *Schedule*to thisAgreement, Seller represents and warrants to Purchaser that: 5.1 Organization and Authority to Conduct Business. Seller is duly organized,validly existing and in good standing under the laws of Arizona and is qualified to dobusiness and is in good standing in each of the jurisdictions identified on *Schedule 5.1*.Seller has all requisite corporate power and authority to carry on its business as nowbeing conducted, to own, lease, or operate its properties and to carry out the transactionscontemplated by this Agreement. Seller has delivered to Purchaser complete copies ofSeller’s 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 Permits   required to authorize the execution, delivery, and consummation of this Agreement and thetransactions contemplated by this Agreement. 5.3 Binding Effect. This Agreement, and each document executed by Seller inconnection with this Agreement: (a) constitutes the valid, binding, and enforceable obligation of Seller;  (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. The execution, delivery, andperformance of this Agreement by Seller will not (with or without the giving of notice orthe passage of time or both) conflict with, result in a default under, result in thecreation of any Encumbrance pursuant to, or result in the acceleration of any obligationunder 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 which it maybe bound. 5.5 Financial Statements.
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 (a) Sellers has delivered to Purchaser financial statements relating to theBusiness for the periods ending [**dates of financial statements**]. The last such dateis the Financial Statements Date. The financial statements were derived fromSeller’s consolidated financial statements, but are not audited. Because Sellerprepares its financial statements on a consolidated basis, and because the Businessis only a small part of Seller’s total operations, the financial statements were notprepared in accordance with GAAP. The financial statements were derived fromSeller’s financial statements (which were prepared in accordance with GAAP) and otherfinancial records. Seller represents and warrants that (1) the financial statementsdelivered to Purchaser in connection with this Agreement were derived from Seller’sfinancial records, (2) Seller has used its best efforts to have the financialstatements of the Business fairly and accurately present the unconsolidated financialposition of the Business as of the dates indicated and the unconsolidated results ofoperations and cash flows of the Business for the periods then ended, and (3) Sellerhas not Knowingly caused the financial statements to present information that doesnot fairly and accurately present the unconsolidated financial position of theBusiness as of the dates indicated and the unconsolidated results of operations andcash flows of the Business for the periods then ended. Purchaser acknowledges that(i) Seller has explained that Seller’s financial systems require the application ofsignificant judgment about the allocation of certain items to different Selleroperations including the Business, (ii) the allocations made to the Business may notbe consistent with GAAP and may not reflect the results to be expected if theBusiness had operated on a stand-alone basis and, as a result, (iii) Seller does notwarrant that the financial statements actually fairly and accurately present theunconsolidated financial position of the Business as of the dates indicated and theunconsolidated results of operations and cash flows of the Business for the periodsthen ended.  (b) Except as contemplated by this Agreement, to Seller’s Knowledge, there areno liabilities or obligations of any nature (whether accrued, absolute, contingent orotherwise) related to the Business, except liabilities: (1) provided for in the Business’ balance sheet as of the FinancialStatements Date; or  (2) incurred since the date of such balance sheet in the ordinarycourse of business consistent with past practices; 5.6 Absence of Undisclosed Liabilities. As of the Financial Statements Date thereare not any Material debts or liabilities related to the Business except as disclosed inthe Financial Statements or in *Schedule 5.6*or elsewhere in this Agreement. Since theFinancial Statements Date Seller has not incurred additional Material debts or liabilitiesrelated to the Business except as disclosed in *Schedule 5.6*or elsewhere in this Agreement;
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 5.7 Litigation. (a) There is no Proceeding pending or, to Seller’s Knowledge, threatened; and  (b) There is no Order in effect or, to Seller’s 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; 5.8 Bankruptcy Proceedings. Seller is not involved in any Proceeding by oragainst it (a) under the Bankruptcy Code, 11 U.S.C. § 101 et seq., (b) under any otherinsolvency or debtors’ relief act, or (c) for the appointment of a trustee, receiver,liquidator, assignee, sequestrator or other similar official;  5.9 Taxes. (a) Seller has paid, or will pay before their due date, all Taxes related tothe Business due on or before the Closing and has reserved, or will reserve beforethe Closing, amounts necessary to pay Taxes due after the Closing in respect ofperiods ending on or before the Closing;  (b) Seller has timely filed, or will timely file, all tax returns required inconnection with any Taxes related to the Business, and has not made any 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; and  (d) Seller is not currently the subject of any Tax audit related to theBusiness, has no reassessment of any Tax proposed, and Knows of no basis for any suchreassessment; 5.10 Compliance with Laws, Permits, and Contracts. (a) Seller has complied in all respects with all Laws applicable to theBusiness, Assets, or operations of the Business as presently conducted;  (b) Seller has secured and is in compliance with all Permits required for theAssets and the Business as presently conducted;  (c) Seller has not offered, paid, or agreed to pay money or anything of valuefor the purpose of or with the intent of obtaining or maintaining business for Selleror 
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   otherwise benefiting Seller in violation of any Law (including Section 30A(a) ofthe Securities Exchange Act of 1934, as amended); and (d) The ownership and present use of Seller’s properties related to theBusiness and the conduct of the Business, (1) does not 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 Contract or Law to which Seller is a party or by which it is affected; 5.11 Enforceability of Contracts, No Defaults. (a) all Contracts identified in this Agreement to which Seller is a party areeffective, valid, binding, and enforceable in accordance with their terms; and  (b) Seller does not Know, or have reason to Know, of any default (or eventwhich, after notice or lapse of time, would constitute a default) of such Contracts; 5.12 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; 5.13 Environmental Matters. (a) The Business is in compliance with Environmental Laws;  (b) Seller has secured all Permits required under Environmental Laws for theoperation of the Business (and such Permits are listed on *Schedule 5.13*);  (c) Seller does not Know, or have reason to Know, of any pending or threatenedProceedings against Seller related to the Business with respect to EnvironmentalLaws;
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 (d) Seller does not Know, or have reason to Know, of any act related to theBusiness and attributable to Seller that could give rise to liability under CERCLA orany other Environmental Law. Seller has not submitted notice pursuant to Section 103of CERCLA with respect to any of the Assets;  (e) Seller does not own or operate in connection with the Business anunderground storage tank except for tanks in compliance with Environmental Laws; and  (f) No Hazardous Materials have been released, discharged, deposited, emitted,leaked, spilled, poured, emptied, injected, dumped or disposed of in a manner thatviolates any applicable Environmental Law on, in, or under real property owned oroccupied by Seller and related to the Business. 5.14 Ownership of Assets; No Encumbrances. Seller has good and marketable title tothe Assets free and clear of any Encumbrance. There are no undisclosed interests in theAssets, nor does Seller Know, or have reason to Know, of any assertion of such an interest,or of any facts or circumstances that would give rise to such an interest. *Schedule 5.14*lists: *(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; and *(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 5.14*, free of any Encumbrance, except:
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 (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 5.14*. (d) The Assets are in good operating condition and repair, are suitable for thepurposes used, and are adequate for the current operations of the Business. TheAssets constitute all of the properties and assets used or held for use in connectionwith, necessary for the conduct of, or otherwise material to, the Business. Sellerdoes not Know, or have reason to Know, of any pending or threatened condemnationaffecting the Assets; 5.15 Insurance. *Schedule 5.15*lists all insurance policies insuring, and allperformance bonds related to, the Business issued in favor of Seller specifying (a) the name of the insurer or bonding company;  (b) the risk insured or bonded;  (c) the limits of coverage;  (d) the deductible (if any);  (e) the premium (including any proposed premium increases Known to Seller);  (f) any notice of cancellation or nonrenewal received by Seller; and  (g) the date through which coverage will continue by virtue of premiums alreadypaid; 5.16 Distribution Agreements. *Schedule 5.16*lists all sales agency agreements,distributorship agreements, and agreements providing for the services of an independentsales representative relating to the Business to which Seller is a party;  5.17 Other Contracts. *Schedule 5.17*lists: (a) Each loan, conditional sales, or security agreement of Seller relating tothe Business with an unpaid balance more than $10,000;  (b) Each license agreement relating to intellectual property of Seller relatingto the Business (other than licenses incident to leases of computers, software, oroffice or photographic equipment used in the ordinary course of business); and  (c) All material Contracts of Seller relating to the Business, but excluding: (1) Contracts listed or excluded elsewhere in this Agreement; and
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 (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; 5.18 Employment Matters. *(a)* *Employment Contracts and Plans. Schedule 5.18*lists (1) all Employment Contracts and Employment Plans to which Seller is aparty or by which it is bound and which relate to the operation of the Business;and  (2) the names and current annual rates of compensation of all personnelwho work exclusively for the Business (including employees and independentcontractors) whose 2004 compensation was $100,000 or more; *(b)* *Compliance with Employment Laws.*Seller, in connection with the Business: (1) is in compliance with all Laws regulating employment practices,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 labor strike, dispute, slow-down or stoppage;  (4) is not subject to any 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 the EmploymentPlans in compliance with all applicable Laws with respect to employees working inconnection with the Business. Seller does not Know, or have reason to Know, of anyprohibited transaction (as defined in ERISA, 29 U.S.C. § 1001) relating to any Employment Plan; 5.19 No Guaranties. Other than as stated herein, Seller has not guaranteed theobligations or liabilities of any person or business entity in connection with theBusiness;  5.20 Intellectual Property. *Schedule 5.20*lists all patents, trademarks, tradenames, service marks, other trade rights, copyrights, licenses, and similar intangibles(the “Intellectual Property”) that Seller owns, uses, or has registered in connection withthe Business. (a) Seller is not obligated to pay any royalty with respect to IntellectualProperty;
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 (b) Seller does not Know, or have reason to Know, of any pending or threatenedProceedings alleging that Seller has infringed any third party’s IntellectualProperty rights (or of any basis for such a Proceeding);  (c) Seller owns and has all right and title to the Intellectual Property freeand clear of any debts, security interests, or encumbrances. 5.21 Inventory. Seller’s inventory and related supplies are merchantable orsuitable for sale in the ordinary course of business;  5.22 Receivables. All receivables reflected in the Financial Statements, and allreceivables which have arisen since the Financial Statement Date, arose from transactionsin the ordinary course of business. The Seller expects such receivables that are notcurrently overdue to be (or to have been) collected when due, except to the extent of thenormal allowance for doubtful accounts;  5.23 Records. The books of account (“Books”) of Seller related to the Business arecomplete and correct in all respects. Seller Knows of no transactions involving theBusiness of Seller, which properly should have been, but are not, set forth in the Books,except that this representation is qualified by reference to the representations relatingto allocation of items between Seller’s operations (including the Business) described inthe representation relating to the financial statements;  5.24 Official Filings Complete. Seller has made all required Government filingsrelated to the Business;  5.25 Absence of Changes or Events. Since the Financial Statements Date, Seller hasconducted the Business only in the ordinary course and has not taken, or entered into anyagreement or made any commitment to take, any of the following actions in connection withthe Business: (a) Incurred any obligation or liability related to the Business, exceptliabilities (1) for trade or business obligations incurred in the ordinary course ofbusiness 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 than currentliabilities (1) shown on the Financial Statements or (2) incurred since the FinancialStatements Date in the ordinary course of business;  (c) Subjected any Assets to any Material Encumbrance, other than as listed inSchedule 5.25(c) to this Agreement;  (d) Sold or otherwise disposed of any Material Assets, except as listed inSchedule 5.25(d) to this Agreement;
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 (e) Cancelled, compromised, waived, or released any debt, claim, or rightrelated to the Business, except in the ordinary course of business;  (f) Received or given notice of termination of any Contract whose terminationhas had, or may have, a Material Adverse Effect on the Business or its financialcondition;  (g) To its Knowledge, experienced any labor union organizing activity, had anyactual or threatened employee strikes, work stoppages, slow-downs, or lock-outs, orhad any material change in the terms of agreements with employees, agents, customersor suppliers;  (h) Made or agreed to make any change in the compensation payable to anymanager or employee working exclusively for the Business, except for normal periodicbonus accruals and normal periodic increases in regular compensation;  (i) Acquired any Material capital assets related to the Business, except aslisted in Schedule 5.25(i) to this Agreement;  (j) Instituted, settled or agreed to settle any Proceeding related to theBusiness; or  (k) Suffered any change, event, condition, damage, destruction, or loss havinga Material Adverse Effect on the Business; 5.26 Disclosure. To Seller’s knowledge, no representation or warranty by Seller inthis Agreement (a) contains or will contain any untrue statement of a material fact; or  (b) omits or will omit to state any material fact required to make thestatements made in this Agreement not misleading;   provided, that Seller in making the representations set forth in this *Section 5.26*isrelying in part upon, and is entitled to rely upon, the statements and representationsmade to the Seller Managers by the NHT Managers about the material facts represented or warranted and about whether any of the representations or warranties omit a materialfact  The representations and warranties contained in this Agreement will not be affected or deemedwaived by reason of any investigation by Purchaser or its representatives. 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 corporation duly organized,validly existing and in good standing under the laws of Colorado, and has all requisitepower and authority to carry on its business as now being conducted to enter into thisAgreement 
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   and to carry out the transactions contemplated by this Agreement. Purchaser isqualified to do business and is in good standing in each of the jurisdictions where thenature of its business or the properties it owns or leases makes such qualificationnecessary or advisable. 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 Permits   required 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 by Purchaser inconnection with this Agreement, constitutes the valid, binding, and enforceable obligationof Purchaser, has been duly executed and delivered by Purchaser, and has been dulyauthorized by all necessary corporate action;  6.4 Execution, Delivery and Performance of Agreement. The execution, delivery, andperformance of this Agreement by Purchaser will not (with or without the giving of noticeor the passage of time) conflict with, result in a default under, or result in the creationof any Encumbrance pursuant to: (a) Purchaser’s certificate of incorporation or bylaws; or  (b) any Contract or Law to which Purchaser is a party or by which it may bebound; 6.5 Purchaser’s Independent Investigation. Purchaser and its representatives haveindependently investigated Seller and the Business. Purchaser acknowledges that there areno representations or warranties, express or implied, about the Seller or the Business except for therepresentations and warranties in this Agreement and each certificate and instrumentfurnished in connection with this Agreement. Purchaser is not relying on any written ororal information about the Seller or the Business (including financial or forward-lookinginformation) 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 implement any mass lay-off,plant closing, or other covered employment loss (a “Lay-off”), as those terms are definedby 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 afterthe Closing, Purchaser will comply with the Act;
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 6.7 Litigation. There is no Proceeding pending or, to its knowledge, threatened;and there is no Order in effect relating to the transactions contemplated by thisAgreement. Purchaser does not know of any basis for such a Proceeding or Order; and  6.8 Required Filings and Consents. No waiver, consent, approval, order orauthorization of, or registration, declaration or filing with, any Governmental Entity isrequired by or with respect to Purchaser in connection with the execution and delivery ofthis Agreement or the consummation by Purchaser of any of the transactions contemplated bythis 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: (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; 6.9 Disclosure. No representation or warranty by Purchaser in this Agreement (a) contains or will contain any untrue statement of a material fact; or  (b) omits or will omit to state any material fact required to make thestatements made in this Agreement not misleading.   The representations and warranties contained in this Agreement will not be affected ordeemed waived by reason of any investigation by Seller or its representatives.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. (a) Seller will :
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 (1) obtain promptly all Permits Seller is required to secure in orderto carry out the transactions contemplated by this Agreement; and  (2) comply with all Laws applicable to Seller regulating or restrictingthe transactions contemplated by this Agreement;   Purchaser will lend assistance to Seller in obtaining the Permits referenced above asSeller reasonably requests. (b) Purchaser will : (1) obtain promptly all Permits Purchaser is required to secure inorder to carry out the transactions contemplated by this Agreement; and  (2) comply with all Laws applicable to Purchaser regulating orrestricting the transactions contemplated by this Agreement;   Seller will lend assistance to Purchaser in obtaining the Permits referenced above asPurchaser reasonably requests. 7.2 Conduct of Business. Seller will conduct the Business only in the ordinarycourse consistent with past practice, will maintain and preserve the Assets, and will usecommercially reasonable efforts to: (a) preserve the Business and its internal organization;  (b) maintain the general character of the Business and conduct the Businessoperations, activities, and practices in a reasonable manner in accordance with pastpractices;  (c) keep available to Purchaser the services of the managers, employees, agentsand 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 the Business; 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, inSeller’s reasonable 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;
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 (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 Inventory Reconciliation. Seller will provide Purchaser with reasonablyavailable information to show that the Inventory has been reconciled with the financialstatements as of the Financial Statements Date and that the financial statements as of theFinancial Statements Date accurately reflect the Inventory of the Business.  7.4 Approval of Certain Transactions. Seller will not, without Purchaser’s priorwritten approval, take or agree to take the following actions in connection with theBusiness: (a) incur any additional debt related to the Business, other than trade debtand normal intercompany payables and receivables incurred in the ordinary course ofbusiness;  (b) increase the compensation of any managers or employees working exclusivelyfor the Business, except as listed in Schedule 7.4(b) to this Agreement;  (c) take any action which would breach any of its representations andwarranties in this Agreement;  (d) sell or otherwise dispose of any of the Assets except in the ordinarycourse of business;  (e) subject any Assets to an Encumbrance, other than in the ordinary course ofbusiness; or  (f) enter into or terminate any Contract related to the Business except in theordinary course of business and except for those of the type which would not have tobe listed or described in any schedule to this Agreement; 7.5 Material Changes. Seller will give Purchaser written notice of any materialchange Known to Seller in any representations and warranties made by it in this Agreement;  7.6 Asset Restrictions. Seller will take no action that would encumber or restrictthe Assets or their sale or transfer, except actions to enforce rights under thisAgreement;  7.7 Hart-Scott-Rodino Filing. Seller and Purchaser will make any filing requiredunder the Hart-Scott-Rodino Act within 5 days after this Agreement is signed. Seller andPurchaser will cooperate to respond promptly to any comments to the filing and to secureany required Permits under the Hart-Scott-Rodino Act;  7.8 Confidentiality.
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 *(a)* *Agreement.*Purchaser and Seller have entered into and remain bound by theConfidentiality Agreement attached as *Schedule 7.7.*Each party will comply with itsobligations under the Confidentiality Agreement; and  *(b)* *Press Releases.*A party may make a public announcement of the transactionscontemplated in this Agreement only with the prior written consent of all otherparties. A party will not unreasonably withhold consent if an announcement isrequired by applicable Law. 7.9 Investigations. Upon reasonable notice and during regular business hours,Seller will give Purchaser and Purchaser’s attorneys, accountants and otherrepresentatives: (a) reasonable access to Seller’s officers, directors, employees, independentcontractors, counsel, and independent accountants related to the Business;  (b) reasonable access to Seller’s Assets, Contracts, and Books related to theBusiness;  (c) copies of documents of Seller reasonably requested by Purchaser related tothe Business; and  (d) information Purchaser reasonably requests with respect to the affairs ofSeller related to the Business.   Information supplied by Seller to Purchaser is subject to the Confidentiality Agreement.Seller does not assume responsibility for the accuracy or completeness of theInformation except and to the extent specifically provided in this Agreement. Neither theInformation nor Purchaser’s investigation affects Purchaser’s right to rely on therepresentations and warranties made in this Agreement.**8.** **Conditions to each Party’s Obligations**. No party is obligated to close the transactionscontemplated by this Agreement unless the following conditions are satisfied on or before theClosing Date: 8.1 Consents and Approvals. All Permits, consents and approvals required pursuantto *Section 7.1*must have been obtained; and  8.2 Proceedings. No Proceeding seeking to enjoin or prohibit, and no Orderenjoining or prohibiting the consummation of the transactions contemplated by thisAgreement may be in effect.**9.** **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: 9.1 Accuracy of Representations and Warranties. The representations and warrantiesof Seller in this Agreement must be true and correct, both when made and on the ClosingDate;
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 9.2 Performance of Obligations and Delivery of Documents. Seller must haveperformed all covenants, agreements, and obligations required of it by this Agreement andmust have executed and delivered to Purchaser all documents required to be delivered at orprior to the Closing, including this Agreement, the Escrow Agreement, and other Assignmentor Transfer Agreements reasonably requested by Purchaser (such as those needed to transferleases, licenses, Intellectual Property or other ownership rights owned by Seller andrelated to the Business);  9.3 Opinion of Counsel. Purchaser must have received an opinion of Seller’scounsel, dated as of the Closing Date, substantially in the form of opinion attached as*Schedule 9.3*; and  9.4 Certificate. Seller must deliver to Purchaser a certificate, substantially inthe form attached as *Schedule 9.4,*that the conditions stated in this *Section 9*have beenfulfilled.**10.** **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: 10.1 Accuracy of Representations and Warranties. The representations and warrantiesof Purchaser in this Agreement must be true and correct, both when made and on the ClosingDate;  10.2 Performance of Obligations and Delivery of Documents. Purchaser must haveperformed all covenants, agreements, and obligations required of it by this Agreement andmust have executed and delivered to Seller all documents required to be delivered at orprior to the Closing;  10.3 Opinion of Counsel. Seller must have received an opinion of Purchaser’scounsel, dated as of the Closing Date, substantially in the form of opinion attached as*Schedule 10.3*; and  10.4 Certificate. Purchaser must deliver to Seller a certificate, substantially inthe form attached as *Schedule 10.4*, that the conditions stated in this *Section 10*have beenfulfilled.**11.** **Obligations at and after Closing**. 11.1 Seller Deliveries. At the Closing, Seller will deliver to Purchaser alldocuments required to be delivered to Purchaser under this Agreement including thisAgreement, the Escrow Agreement, and all other documents identified in *Section 9*.  11.2 Purchaser Deliveries. At the Closing, Purchaser will deliver:
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 (a) the Purchase Price to Seller; and  (b) all other documents required to be delivered to Seller under this Agreementincluding this Agreement, the Escrow Agreement, and all other documents identified in*Section 10*. 11.3 Additional Documents. After the Closing, each party will execute and deliverother documents and take further action, as any other party reasonably deems necessary tocarry out the transactions contemplated by this Agreement.  11.4 Collection of Accounts Receivable. At the closing Seller or its designee shallhave the right and authority to collect for Purchaser’s or its designee’s account, allreceivables and other items which constitute a part of the Assets, and Seller shall,promptly after receipt of any payment in respect of any of the foregoing, properly endorseand deliver to Purchaser any documents, cash or checks received on account of or otherwiserelating to any such receivables or other items. Seller shall promptly transfer or deliverto Purchaser or its designee any cash or other property that Seller may receive in respect of any deposit, prepaid expense, Claim, contract, sales order, purchase order orreceivable of any character, or any other item, constituting an Asset and to whichPurchaser is entitled by virtue of purchasing the Assets of the Business pursuant to thisAgreement. To the extent payments of any such items are delivered to a lockbox maintainedfor Seller, Seller will pay the amount of such items to Purchaser promptly after they arecollected.  11.5 Inventory and Receivable Reconciliation. Within 15 days after Closing, Sellershall provide Purchaser with revised schedules for the Business as of the Closing (the“Closing Statement”) showing (a) the amount of inventory as of the Closing and reconcilingpurchases and sales of the inventory in the ordinary course of business from the date ofthe inventory schedule attached as part of *Schedule 1.2*(expected to be the business daybefore signing of this Agreement) to the Closing Date and (b) the accounts receivable as ofthe Closing and reconciling the addition of receivables through sales of inventory afterthe date of the accounts receivable schedule attached as part of *Schedule 1.2*(expected tobe the business day before signing of this Agreement) through the Closing Date and thecollection of receivables after the same date to the Closing Date. Such statements shallbe subject to the same standards as outlined in Section 5.5(a) of this Agreement. AnyMaterial discrepancies to the detriment of Purchaser are subject to indemnification underSection 13.2, except that the adjustment of any reconciliation for Material discrepancieswill not be subject to the “basket” deductible and will be made against the Escrow Amounton a dollar for dollar basis.**12.** **Termination**. 12.1 Rights to Terminate. A party may terminate this Agreement at any time beforethe Closing:
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 (a) by mutual written consent of Seller and Purchaser;  (b) if the Closing has not occurred on or before October 11, 2005; or  (c) if (1) a representation or warranty of the another party was or has becomematerially inaccurate or untrue or (2) another party has failed materially to complywith or perform under this Agreement (except that, if the misrepresentation or breachis curable then this Agreement will not terminate until the responsible party hasfailed for 10 days after notice to cure the misrepresentation or breach).   This Agreement will terminate when a party who is authorized to terminate it gives theother parties notice of the termination. 12.2 Effect of Termination. If this Agreement is terminated, no party has anyliability or further obligation unless the termination was a result of such party’s (a) breach;  (b) violation of its duties, obligations, representations, or warranties; or  (c) fraud, bad faith, or willful misconduct.**13.** **Indemnification.** 13.1 By Purchaser. Purchaser will indemnify Seller from, and will pay on itsbehalf, all Loss (whether or not resulting from third party claims) incurred as a result of(a) any untrue representation, breach of warranty or non-fulfillment of any of Purchaser’scovenants or agreements stated in this Agreement or (b) operation of the Business after theClosing;  13.2 By Seller. Seller will indemnify and hold harmless Purchaser from, and willpay on its behalf, all Loss (whether or not resulting from third party claims) incurred asa result of (a) any untrue representation, breach of warranty, or non-fulfillment of anycovenant or agreement of the Seller in this Agreement or (b) operation of the Businessprior to the Closing (excluding the Assumed Liabilities). *(a)* *“Basket” Deductible*. Except as otherwise provided in this Agreement, theSeller will have no obligation to indemnify the Purchaser under this *Section 13.2*unless the Purchaser has suffered Losses in excess of $24,000 in the aggregate andthen only to the extent of such excess.  *(b)* *Liability Limit*. The aggregate liability of Seller under this *Section 13.2*will not exceed the Liability Limit. Seller will have no liability forindemnification under this *Section 13.2*except to the extent of the Liability Limitand any payment of a claim for indemnification may be made out of the Escrow Fund.The obligations of Seller under this section are subject to *Section 14*below.
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 13.3 Procedure. Procedures for making a claim for indemnity are set forth in theEscrow Agreement.  13.4 Indemnification for Direct Fraud. Seller will indemnify and hold harmlessPurchaser from, and will pay on its behalf, all Loss (whether or not resulting from thirdparty claims) incurred as a result of Seller’s direct participation in fraud related to therepresentations and obligations established in this Agreement. In determining whetherSeller’s activities may have constituted fraud, Seller will have the right to rely uponstatements and representations of the NHT Managers without investigation and any actiontaken or representation made in reliance upon any NHT Manager is not and cannot befraudulent. Purchaser will make claims for fraud using the process established in *Section14. S*uch claims will not be subject to the “basket deductible” or the Liability Limit;however, they may not exceed the Purchase Price.**14.** **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 this Agreement,will survive the Closing and any investigation at any time made by or on behalf of the parties. 14.1 Survival of Certain Representations and Warranties. The representations andwarranties set forth in *Section 5*and *Section 6*will survive until one year after theClosing Date (the “Escrow Release Date”) unless prior to such time one or more claimsspecifying a breach of any such representation or warranty is submitted in writing to theindemnified party and identified as a claim for indemnification pursuant to this Agreement;  14.2 Limit on Claims. A party may maintain a claim or action for indemnity pursuantto *Section 13*after the expiration of the representation or warranty under *Section 14.1*only if the party made the claim in writing before expiration.  14.3 Application of Claims. Claims for indemnity pursuant to *Section 13.2 orSection 13.4*will be applied against the Escrow Fund in the following order: (a) the first $24,000 aggregate amount of Losses for breaches ofrepresentations and warranties are subject to the “basket” and no claim may be madeagainst the Escrow Fund for them except that the “basket” will not apply to claimsunder *Section 13.4*or as otherwise provided in this Agreement; and  (b) the Losses up to the amount of the Liability Limit and in excess of the“basket” will be paid to Purchaser out of the Escrow Fund (if the Escrow Fund has notbeen released). Seller shall not be responsible to pay any amounts due under*Sections 13*or *14*of this Agreement in excess of the amount of the Liability Limit,except for claims for direct fraud covered by *Section 13.4*.   Except for claims for direct fraud covered by *Section 13.4*(which may be made directlyagainst Seller if the Escrow Fund is exhausted), no claim for Losses for a breach of thisAgreement may be made in excess of the Liability Limit and Purchaser will not seek 
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   paymentof a claim for Losses out of assets other than those identified in this *Section 14*.Purchaser acknowledges that it has accepted the risk that claims will exceed this amount. 14.4 Release of Escrow Fund. At the Escrow Release Date the Escrow Agent willrelease all amounts in the Escrow Fund, except for amounts held in reserve to cover pendingclaims for which Purchaser has made a written claim for indemnity under this Agreement.The released amount will be distributed to Seller. The methods for determining the amountto be held in reserve for pending claims and for releasing the reserve are set forth in theEscrow Agreement.**15.** **Notices**. Notices under this Agreement must be in writing. Notices are deemed given: 15.1 when personally delivered;  15.2 when received by facsimile or by overnight courier service; or  15.3 on the fifth business day after mailing by first class registered mail, return receiptrequested.   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).**16.** **Certain Costs**. 16.1 Costs of Proceedings. In any Proceeding arising under or related to thisAgreement the prevailing party is entitled, in addition to other amounts it recovers, tohave the other party pay all costs and expenses (including reasonable attorneys’ fees)incurred in connection with the Proceeding.  16.2 Expenses. Each party is solely responsible for its own expenses relating tothe preparation, execution, and consummation of this Agreement and the transactionscontemplated by this Agreement, including any fees payable to an investment banker orbroker.**17.** **Miscellaneous**. 17.1 Integration and Amendment. This Agreement, together with the Escrow Agreement,constitutes the entire agreement of the parties, and supersedes all prior agreements orunderstandings among the parties, with respect to their subject matter. This Agreement maybe amended only in a written agreement signed by all of the parties.  17.2 Waivers. No waiver under this Agreement is valid unless it is in writing andsigned by the party giving the waiver. A waiver of a particular matter does not waive asubsequent or similar matter.
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 17.3 Binding Effect. This Agreement is binding upon, and inures to the benefit of,each party and its successors and assigns.  17.4 No Benefit to Others. This Agreement is solely for the benefit of the parties(and their successors and assigns) and does not confer any rights on any other persons.  17.5 Severability. The invalidity or unenforceability of any provision of thisAgreement does not affect the other provisions. This Agreement is to be construed in allrespects as if it excluded any invalid or unenforceable provision.  17.6 Construction and Headings. Whenever a singular word is used in this Agreementit also includes the plural if required by the context, and vice versa. Paragraph headingsare for convenience only and do not define or limit the contents of a paragraph.  17.7 Cooperation. In order to carry out this Agreement, each party will cooperate,will take further action, and will execute and deliver further documents as reasonablyrequested by any other party.  17.8 Counterparts. This Agreement may be executed in one or more counterparts, allof which taken together are one original.  17.9 Governing Law. This Agreement is governed by the internal Laws of Arizona.Exclusive jurisdiction and venue for any litigation arising under this Agreement is in thefederal and state courts located in Maricopa County, Arizona.**18.** **Effective Date**. This Agreement is executed and effective as of October 7, 2005.          [Signatures Follow]
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               NHT, Inc., a Colorado corporation                   By:      /s/ Mark Herbst                      Mark Herbst, President                   Address:          6273 Monarch Park Place          Niwot, Colorado 80503          Attention: Mark Herbst          Telephone: (303) 544-7252          Facsimile: (303) 442-4587                   with a copy to:                       Erik Rebich, Esq.          6273 Monarch Park Place          Niwot, Colorado 80503          Telephone: (303) 468-4277          Facsimile: (303) 468-4266                 Rockford Corporation, an Arizona corporation                   By:      /s/ W. Gary Suttle                      Gary Suttle, President                   Address:          Rockford Corporation          600 S. Rockford Drive          Tempe Arizona 85281          Attention: W. Gary Suttle, President          Telephone: (480) 967-3565          Facsimile: (480) 966-3639                   with a copy to:          Kevin Olson          Steptoe & Johnson LLP          201 E. Washington St., Suite 1600          Phoenix, Arizona 85004          Telephone: (602) 257-5275          Facsimile: (602) 257-5299  
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