Exhibit
10.14


 


ASSET PURCHASE AGREEMENT


 


THIS ASSET PURCHASE AGREEMENT (the “Agreement”), dated effective
March 19, 2004, is by and between Waters Network Systems, LLC (“Buyer”), a
Minnesota limited liability company, and Waters Instruments, Inc. (“Seller”), a
Minnesota corporation.


 


WHEREAS, Seller desires to sell and Buyer desires to purchase certain
assets of Seller relating solely to the operation of Seller’s Waters Network
division (the “Network Division”) upon the terms and conditions hereinafter set
forth.


 


NOW, THEREFORE, in consideration of the agreements herein, the parties
hereby agree as follows:


 


ARTICLE I


Purchase and Sale of Assets


 


1.1                                 Purchased
Assets.  Seller hereby sells,
assigns, transfers, conveys and delivers to Buyer free and clear of all
Encumbrances (as defined in Section 5.5 hereof), and Buyer purchases from
Seller, all of the following assets, properties, rights and interests of the
Network Division (all of such assets being collectively referred to herein as
the “Purchased Assets”);


 


(a)                                  Such inventory of the
Network Division on hand or on order as is agreed upon by the parties and as
set forth on Schedule 1.1(a) (the “Inventory”) attached hereto;


 


(b)                                 Such fixed assets and
prepaid expenses of the Network Division are as set forth on
Schedule 1.1(b) attached hereto;


 


(c)                                  Seller’s existing
inventory of product literature, product specifications and other documents
related to solely the Purchased Assets; and,


 


(d)                                 The content of
Seller’s web site respecting solely the Network Division.


 


1.2                                 Excluded
Assets.  Except for the Purchased
Assets, Buyer shall not purchase any other assets of Seller under this
Agreement.  Without in any way limiting
the generality of the immediately previous sentence, the term “Purchased
Assets” shall not include (a) any of the Seller’s assets not exclusively used
in the Network Division’s business, (b) accounts receivable, (c) any cash, cash
equivalents, bank deposits and the like, and (d) accounting records.


 


ARTICLE II


Liabilities of Seller


 


2.1                                 Assumed
Liabilities.  Other than Warranty
Obligations (defined in the next paragraph) and Inventory on order, Buyer shall
assume an aggregate of Ten Thousand Dollars ($10,000) of the liabilities and
obligations of the Network Division as they may exist on the Closing Date of
any nature whatsoever, whether now existing or hereafter arising, and whether
known or unknown (the “Assumed Liabilities”).


 


In addition, the Assumed Liabilities assumed by Buyer specifically
include and not be subject to the Ten Thousand Dollar ($10,000) limitation all
liabilities or obligations arising under or with respect to any Inventory on
order or warranties respecting the products of the Network Division.


 


Buyer shall discharge in the ordinary course the Assumed Liabilities.


 


2.2                                 Not
Assumed Liabilities.  Seller will
remain liable for and shall discharge in the ordinary course all liabilities
and obligations of the Network Division that are not Assumed Liabilities.


 


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ARTICLE III


Purchase Price


 


3.1                                 Purchase
Price; Payment of Purchase Price.


 


(a)                                  The purchase price
for the Purchased Assets (the “Purchase Price”) shall be as follows:


 


(i)                                     Such amount as
equal Seller’s book value of the Inventory pursuant to of a physical inventory
which shall be completed prior to or at time of Closing (as defined in
Section 4.1 herein).


 


(ii)                                  Five Thousand Eight
Hundred Dollars ($5,800) for the fixed assets and prepaid expenses described in
Schedule 1.1(b).


 


(iii)                               Twenty-five thousand
dollars ($25,000) respecting goodwill of the Network Division’s business.


 


(b)                                 The Purchase Price
shall be paid in cash or via wire transfer at Closing.


 


3.2                                 Allocation
of Purchase Price.  For purposes of
determining Buyer’s basis in the assets and Seller’s gain or loss with respect
to the transactions contemplated by this Agreement pursuant to
Section 1060 of the Internal Revenue Code of 1986, as amended from time to
time, and the treasury regulations promulgated thereunder, the Purchased Assets
will be valued in accordance with Section 3.1.  Buyer and Seller will use such values (subject to such changes as
may be hereafter agreed to by Buyer and Seller in writing) in preparing and
filing a respective Form 8594 with the Internal Revenue Service with respect to
this acquisition.


 


ARTICLE IV


Closing


 


4.1                                 Closing.  The consummation of the transaction herein
contemplated (the “Closing”) shall take place at 10:00 a.m., local time, at
Seller’s offices in Plymouth, Minnesota, on March 19th, 2004, or such
other date and place as may be mutually determined by the parties herein (the
“Closing Date”).  The Closing shall be
effective as of the close of business on the Closing Date.


 


ARTICLE V


Representations and Warranties of Seller


 


Seller hereby represents and warrants to Buyer as follows:


 


5.1                                 Organization.  Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Minnesota.  Seller has power, corporate
or otherwise, to own its properties and to carry on the Network Division’s
business as now being conducted, and is duly qualified and in good standing as
a foreign entity in every jurisdiction in which it is required to be qualified
as a foreign entity.


 


5.2                                 Authorization.  Seller has full power and authority to enter
into and perform this Agreement and consummate the transactions contemplated
hereby, including, without limitation, the execution, delivery and performance
of this Agreement and all other documents and instruments to be executed and
delivered by Seller pursuant to this Agreement.  The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
requisite action of Seller.  This
Agreement has been executed and delivered by a duly authorized officer of the
Seller and is a valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms.


 


5.3                                 Consents
and Approvals.  No consent,
authorization, order or approval of or fling or registration with any
governmental authority or other entity or person, including without limitation,
consents from parties to contracts, leases, licenses or other agreements, is
required for the execution and delivery of this Agreement and the consummation
by Seller of the transactions contemplated by this Agreement.


 


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5.4                                 No
Violation.  Neither the execution
and delivery of this Agreement nor the consummation by Seller of the
transactions herein contemplated, will conflict with or result in a breach of
any of the terms, conditions or provisions of the Articles of Incorporation or
Bylaws of the Seller, or the terms of any contract to which Seller is a party,
or of any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any court or any governmental authority or of
any arbitration award applicable to Seller.


 


5.5                                 Title.  Seller has good and marketable title to all
of the Purchased Assets free and clear of any lien, encumbrance, charge,
restriction, mortgage, pledge, security interest or claim of any kind other
than the Assumed Liabilities (collectively, “Encumbrances”).


 


5.6                                 Litigation
and Compliance with Certain Laws. 
To the best knowledge of Seller, there are no claims (including, without
limitation, workers’ compensation claims), action, suits, inquiries,
investigations, or proceedings pending or, to the best knowledge of Seller,
threatened or imminent, relating to the Purchased Assets, the Network Division
or the transactions contemplated by this Agreement before any court or
governmental body.  To the best
knowledge of Seller, Seller has complied in all material respects with all
statutes, laws and regulations, orders and decrees applicable to the Network
Division and the Purchased Assets.  “To
the best knowledge of Seller” means the actual knowledge possessed by Jerry
Grabowski and Gregg Anshus on the Closing Date without investigation.


 


5.7                                 Fixed
Assets and Inventory.  The
inventory, fixed assets and other assets included in the Purchased Assets are
sold “WHERE IS and AS IS”.  SELLER
DISCLAIMS ANY REPRESENTATION OR WARRANTY RESPECTING THE PURCHASED ASSETS,
INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.


 


5.8                                 Tax
Matters.  There are no unpaid
federal, state or local income, franchise, sale or use taxes owed by Seller,
which could become an Encumbrance on any Purchased Asset.  To the best knowledge of Seller, there is no
basis for the assertion of any tax claim, which if adversely determined, would
result in an Encumbrance on any of the Purchased Assets.


 


ARTICLE VI


Representations and Warranties of Buyer


 


Buyer hereby represents and warrants to Seller as follows:


 


6.1                                 Entity
Existence.  Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Minnesota, has corporate power to own its properties
and to carry on its business as now being conducted.


 


6.2                                 Authorization.  Buyer has full power and authority to enter
into and perform this Agreement and consummate the transactions contemplated
hereby, including, without limitation, the execution, delivery and performance
of this Agreement and all other documents and instruments to be executed and
delivered by Buyer pursuant to this Agreement. 
The execution and delivery of this Agreement by Buyer and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate action of Buyer. 
This Agreement has been executed and delivered by a duly authorized
officer of Buyer and is a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms.


 


6.3                                 Consents
and Approvals.  No consent,
authorization, order or approval of or filing or registration with, any
governmental authority or other person is required for the execution and
delivery of this Agreement and the consummation by Buyer of the transactions
contemplated by this Agreement.  Seller
consents to Buyer’s use of the name “Waters Network Systems, LLC”, provided,
however, that upon termination or expiration of the license granted in
Section 8.10 hereof, Buyer shall not thereafter use the words “Waters
Network Systems” in its name nor any name which is confusingly similar.


 


6.4                                 No
Violation.  Neither the execution
and delivery of this Agreement nor the consummation by Buyer of the
transactions herein contemplated, will conflict with or result in a breach of
any of the terms, conditions


 


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or provisions of the Articles of Formation or other organization
documents of Buyer, or the terms of any contract to which Buyer is a party, or
of any statute or administrative regulation, or of any order, writ, injunction,
judgment or decree of any court or any governmental authority or of any
arbitration award applicable to Buyer.


 


6.5                                 Special
Knowledge.  Buyer acknowledges and
represents that Gary Carlson (“Carlson”), the President of Buyer, was
throughout the existence of the Network Division, its General Manager.  Buyer acknowledges and represents that it is
fully charged with any and all knowledge Carlson may possess or be charged with
respecting any matter that is the subject of a representation or warranty of
Seller and Buyer is not relying on any representation or warranty of Seller to
the extent of any contrary or different information obtained by Buyer doing the
course of Buyer’s due diligence or any contrary or different information
possessed by or chargeable to Carlson.


 


ARTICLE VII


Closing Documents


 


7.1                                 Buyer’s
Deliveries.  At the Closing, Buyer
pay to Seller the Purchase Price as set forth in Section 3.1 of this
Agreement.


 


7.2                                 Seller’s
Deliveries.  At the Closing, Seller
shall deliver to Buyer physical possession of the Purchased Assets and shall
execute and deliver to Buyer a Bill of Sale substantially in the form attached
hereto as Exhibit A (the “Bill of Sale”).


 


ARTICLE VIII


Post-Closing Agreements


 


8.1                                 Post-Closing
Agreements.  From and after the
Closing, the parties shall have the respective rights and obligations set forth
in this Article VIII.


 


8.2                                 Third
Party Claims.  The parties shall
cooperate with each other with respect to the defense of any claims or
litigation made or commenced by third parties which are not subject to the
indemnification provisions contained in Article IX, provided that the
party requesting cooperation shall reimburse the other party for the other
party’s reasonable out-of-pocket costs and expenses of furnishing such
cooperation.


 


8.3                                 Employee
Matters.  Buyer shall have no
obligation to offer employment to any employees of Seller or the Network
Division and, in the event Buyer offers employment to any such employees,
nothing in this Agreement shall require Buyer to continue such employment for
any period of time after the Closing. 
All such offers of employment shall be made in accordance with all
applicable laws and regulations and only with Seller’s prior consent.  Each of Seller’s employees who accept such
an offer shall become an employee of Buyer as of the Closing (each such person
referred to hereinafter as a “Hired Employee”).  Effective as of the Closing, each Hired Employee shall cease to
be employed by Seller.  From and after
the Closing Date, Buyer shall pay, discharge and be responsible for all salary,
wages, and benefits relating solely and exclusively to the Hired Employees’ and
Carlson’s employment with Buyer from and after the Closing, and shall indemnify
and hold Seller harmless against any expenses, costs, claims or other
liabilities associated with such matters, provided that nothing in this Section shall
limit the indemnification obligations set forth in Section 9.2.  Seller shall be responsible for providing
any continuation coverage, if any, required by federal or state law, to any
employee of Seller who does not accept employment with Buyer and any qualified
beneficiary of such employee.  Seller
shall retain all such obligations, including obligations for continuation
coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) for all employees of Seller who are receiving continuation coverage
as of the Closing and their qualified beneficiaries and employees who do not
accept employment with Buyer as of the Closing and their qualified
beneficiaries.


 


8.4                                 Further
Assurances.  The parties shall
execute such further documents, and perform such further acts, as may be
necessary to transfer and convey the Purchased Assets to Buyer, on the terms
herein contained, and to otherwise comply with the terms of this Agreement and
consummate the transactions herein provided.


 


8.5                                 Termination
of Employment Agreement Obligations. 
Seller, Buyer and Carlson agree all of


 


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Seller’s unpaid or unsatisfied obligations to Carlson respecting
Seller’s employment of Carlson will terminate upon the Closing, including,
without limitations, any and all unpaid or unsatisfied severance and other
obligations to Carlson under that certain Employment Agreement between Seller
and Carlson.


 


8.6                                 Additional
Covenants of Seller.


 


(a)                                  Covenant Not to
Compete.  Seller agrees that it will
not, until such date as is three (3) years after the Closing Date, directly or
indirectly, whether on its own account or as a shareholder, partner, joint
venturer, and/or agent, of any person, firm, corporation or other entity or
otherwise, directly or indirectly:  (i)
own, manage, operate, join, control or participate in the ownership,
management, operation, or control of any business or enter into or engage in
any business which competes with the business as conducted by the Network
Division prior to the Closing Date; or (ii) induce or encourage any customer of
the Network Division to terminate its relationship with Buyer or solicit
customers or business patronage which results in competition with the Network
Division’s business to the extent it was conducted by Seller prior to the
Closing Date and is continued by Buyer; or (iii) promote or assist, financially
or otherwise, any person, firm, association, corporation or other entity
engaged in any business which competes with the Network Division’s business to
the extent it was conducted by Seller prior to the Closing Date and is
continued by Buyer (except investments in three percent (3%) or less of the
capital stock of any corporation subject to the Securities Exchange Act of
1934, as amended).


 


(b)                                 Covenant Against
Disclosure.  Seller agrees that it
will not until such date as is three (3) years after the Closing Date, (i)
disclose to any person, association, firm, corporation or other entity (other
than Buyer or those designated in writing by Buyer) in any manner, directly or
indirectly, any confidential information of the Network Division, whether of a
technical or commercial nature; or (ii) use, or permit or assist, by
acquiescence or otherwise, any person, association, firm, corporation or other
entity (other than Buyer or those designated in writing by Buyer) to use, in
any manner, directly or indirectly, any such confidential information or data
directly related to the Network Division’s business.


 


Notwithstanding anything to the contrary,
“confidential information” will not mean information that (1) is in the public
domain at the time of its disclosure, (2) goes into the public domain through
no breach of any obligation of confidentiality to Buyer or any third person by
Seller, (3) is disclosed to Seller by a third party who is under no obligation
of confidentiality to Buyer, or (4) is required to be disclosed by Seller by
law, regulation, court order or other process.


 


(c)                                  Injunctive Relief.  Each party acknowledges and agrees that
remedies at law for any breach of any of the other party’s obligations under
this Section 8.6 would be inadequate, and agrees and consents that
temporary and permanent injunctive relief may be granted in a proceeding which
may be brought to enforce any provision of this Section 8.6 without the
necessity of proof of actual damage.


 


8.7                                 Accounts
Receivable.  Buyer agrees at Buyer’s
expense, to assist and cooperate with Seller in reasonable collection efforts
involving the Network Division’s accounts receivable outstanding as of the
Closing Date.  Any payments delivered or
received on said accounts receivable to Buyer will immediately be turned over
to Seller.


 


8.8                                 Manufacturing
Rental.  Seller leases to Buyer the
manufacturing space currently used by the Network Division in Seller’s,
Ellendale, MN facility (the “Operating Area”) for such period as Seller and
Buyer agree but no longer than six (6) months after the Closing Date at a total
rental cost to Buyer of $1.00. 
Incremental services and/or support beyond the Operating Area will be
billed at a mutually agreed upon billing rate which shall be due and payable
ten (10) days after the invoice date therefor. 
If Seller and Buyer are not able to agree on such billing rate, Seller
shall have no obligation to provide any incremental services and/or support.


 


Buyer and Buyer’s employees and visitors shall, at all times, conform
their conducts and businesses to comply with applicable laws, rules,
regulations, and restrictions including reasonable rules and directives issued by
Seller, including without limitation building access guidelines, security and
employee policies, visitor policies, insurance and legal requirements.  Buyer shall maintain the Operating Area at
least in accordance with Seller’s housekeeping standards and instructions
(e.g., cleanliness, orderly appearance, utility use).  Seller will promptly give


 


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to Buyer a copy of any rules or directives issued by Seller so that
Buyer may satisfy its obligations under this Section.


 


Buyer shall provide Seller with evidence that it carries insurance
coverage reasonably satisfactory to Seller concerning the Operating Area and
Buyer’s operations in it, including without limitation, workers’ compensation
insurance and liability insurance.


 


8.9                                 No
Representations Concerning Products and Services.  Buyer expressly acknowledges that Seller has made no and makes no
representation in this Agreement concerning the manner in which the products
and services produced, manufactured, distributed, sold or provided by the
Network Division were sold or whether or not such products or services conform
to applicable laws, ordinances, regulations, trade and industry standards and
customer specifications in effect at the tune of such production, manufacture,
distribution, sale or provision.


 


8.10                           Trademark
License.  Seller grants Buyer a
royalty free, terminable, at will license to use the tradename “Waters Network
Systems” (the “Trademark”) through December 31, 2004.  Seller shall have the right to exercise such
rights of quality control as are required by the trademark laws to maintain its
intellectual property rights in the Trademark. 
Buyer shall at all times comply with all applicable laws requiring it to
conduct business in its true name and shall not engage in any actions or use of
the Trademark which could reasonably be expected to cause any third party to
believe they are dealing with Seller instead of Buyer as to the products or
business of the Network Division as it may be continued by Buyer
hereafter.  From and after the
termination or expiration of the license granted in this Section, Buyer shall
immediately cease all use of the Trademark.


 


ARTICLE IX


Survival and Indemnification


 


9.1                                 Buyer’s
Indemnification Covenants.  Buyer
shall indemnify Seller from and against all liability, demands, claims, actions
or causes of action, assessments, losses, fines, penalties, costs, damages and
expenses, including reasonable legal, accounting and consultant fees sustained
or incurred and other expenses sustained or incurred in the investigation and
defense of any claims or actions by the indemnified party (collectively,
“Losses” or, individually, a “Loss”), sustained or incurred by Seller as a
result of or arising out of or by virtue of: (i) any inaccuracy in a
representation or warranty made by Buyer to Seller in this Agreement; or (ii)
the failure of Buyer or Carlson to comply with, or the breach by Buyer or
Carlson of, any of the covenants or other agreements in this Agreement to be
performed by Buyer or Carlson; (iii) Buyer’s failure to honor, discharge, pay
or fulfill when due any of the Assumed Liabilities, or any claim against Seller
with respect to any such Assumed Liability; (iv) the violation by Buyer, its
employees, agents or independent contractors or business invitees (hereafter
“Buyer Responsible Party”) of any Federal, state or local law, rule, ordinance
of any kind or nature, whether statutory or common law, or from any other
source which governs or applies in any way to the use of the Operating Area;
(v) the negligence or willful act of a Buyer Responsible Party; or (vi) Buyer’s
conduct of its business after the Closing Date.


 


9.2                                 Seller’s
Indemnification Covenants.  Seller
shall indemnify Buyer and its successors and assigns from and against all
Losses as a result of or arising out of or by virtue of: (i) any inaccuracy in
a representation or warranty made by Seller to Buyer in this Agreement; (ii)
the failure of Seller to comply with, or the breach by Seller of, any of the
covenants or other agreements in this Agreement or to be performed by Seller;
and (iii) Seller’s failure to honor, discharge, pay or fulfill when due any
responsibility, liability or obligation of Seller that is not an Assumed
Liability, or any claim against Buyer with respect to any such obligation or
alleged obligation that is not an Assumed Liability.


 


9.3                                 Subrogation.  Any party obligated to provide
indemnification (the “Indemnifying Party”) shall not be entitled to require
that any action be brought against anyone else before action is brought against
it hereunder by the party being indemnified hereunder (“Indemnified Party”) and
shall not be subrogated to any right of action until it has paid in full or
successfully defended against the claim for which indemnification is sought or
has acknowledged without qualification its indemnification obligations under
this Article IX in writing to the Indemnified Party.


 


9.4                                 Notice
and Opportunity to Defend.  Promptly
after the receipt by any party hereto of notice of any 


 


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claims or the commencement of any action or proceeding by a third party
(i.e. a party who is not a party to this Agreement), such party hereto will, if
a claim with respect thereto is to be made against an Indemnifying Party,
pursuant to Section 9.1 or 9.2 hereof, give such Indemnifying Party
written notice of such claim or the commencement of such action or
proceeding.  In the case of a claim
asserted by a third party, such Indemnifying Party shall have the right, at its
option to compromise or defend, at its own expense and by its own counsel, any
such matter involving the asserted liability of the party seeking such
indemnification.  If any Indemnifying
Party shall undertake to compromise or defend any such asserted liability, it
shall promptly notify the party seeking indemnification of its intention to do
so, and the party seeking indemnification agrees to cooperate with the
Indemnifying Party and its counsel in the compromise of, or defense against, any
such asserted liability.  In this event,
the Indemnified and Indemnifying Parties shall have the right to participate in
the defense of such asserted liability and to approve any compromise or
settlement, which approval shall not be unreasonably withheld.


 


9.5                                 Limitation
on Indemnification.  Any claim for
indemnification made pursuant to this Article IX must be made on or prior
to such date that is eighteen (18) months after the Closing Date, provided,
however, that such requirement shall not apply to the parties’ respective
obligations concerning the liabilities or obligations of their respective
businesses arising after the Closing Date, Assumed Liabilities, liabilities and
obligations of Seller arising before the Closing Date that are not Assumed
Liabilities and all tax liabilities related to any returns filed prior to the
Closing Date.


 


ARTICLE X


Miscellaneous


 


10.1                           Expenses.  All fees and expenses incurred by Seller in
connection with this Agreement shall be borne by Seller, and all fees and
expenses incurred by Buyer in connection with this Agreement shall be borne by
Buyer, subject to Article IX and except as is otherwise expressly provided
in this Agreement.


 


10.2                           Notices.  All notices required or permitted to be
given hereunder shall be in writing and shall be deemed given when delivered in
person, or three business days after being deposited in the United States mail,
postage prepaid, registered or certified mail, addressed as hereinafter set
forth or on the next business day after being deposited with a nationally
recognized overnight courier service addressed as hereinafter set forth or upon
dispatch if sent by facsimile with telephonic confirmation of receipt from the
intended recipient to the telecopy number hereinafter set forth:


 


If to Seller addressed to:


 


Waters Instruments, Inc.


13705 26th Avenue North, Suite 102


Minneapolis, Minnesota 55441


Attn:  Jerry Grabowski


 


Fax No.:  (763) 509.7450


 


If to Buyer addressed to:


 


Waters Network Systems, LLC


8225 Oxborough Ave. South


Bloomington, Minnesota 55431


Attn:  Gary E. Carlson


 


and/or to such other respective addresses as may be designated by
notice given in accordance with the provisions of this Section 10.2 except
that any notice of change of address shall not be deemed given until actually
received by the party to whom directed.


 


10.3                           Third
Parties.  Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies
under or by reason of this Agreement on any other person other than the parties
and their respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation


 


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or liability of any third person to either party hereto, nor shall any
provision give any third party any right of subrogation or actions over or
against either party hereto.  This
Agreement is not intended to and does not create any third party beneficiary
rights whatsoever.


 


10.4                           Entire
Agreement.  This Agreement and the
Schedules and Exhibits hereto constitute the entire agreement between the
parties and shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, successors and assigns.


 


10.5                           Non-Waiver.  The failure in any one or more instances of
a party to insist upon performance of any of the terms, covenants or conditions
of this Agreement, to exercise any right or privilege in this Agreement
conferred, or the waiver by said party of any breach of any of the terms,
covenants or conditions of this Agreement, shall not be construed as a
subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the same shall continue and remain in full force and effect as
if no such forbearance or waiver had occurred. 
No waiver shall be effective unless it is in writing and signed by an
authorized representative of the waiving party.


 


10.6                           Modification.  This Agreement may only be amended or
modified in writing signed by the parties hereto.


 


10.7                           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.


 


10.8                           Severability.  The invalidity of any provision of this
Agreement or portion of a provision shall not affect the validity of any other
provision of this Agreement or the remaining portion of the applicable
provision.


 


10.9                           Applicable
Law.  All questions concerning the
validity, operation, enforceability, interpretation, construction, and effect
of this Agreement shall be governed by, and determined in accordance with the
internal laws of the State of Minnesota without regard to the conflicts of law
provisions.


 


10.10                     Assignment.  This Agreement is not assignable by any
party without the other party’s prior written consent.


 


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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the day and year first above written.


 


	
   

  	
  WATERS INSTRUMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jerry Grabowski

  	
   

  
	
   

  	
  By:  Jerry Grabowski,
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATERS NETWORK SYSTEMS, LLC

  
	
   

  	
   

  
	
   

  	
  /s/ Gary E. Carlson

  	
   

  
	
   

  	
  By:  Gary E. Carlson,
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald H. Langlie

  	
   

  
	
   

  	
  By:  Ronald H. Langlie,
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gary E. Carlson

  	
   

  
	
   

  	
  Gary E. Carlson, individually with respect to Section 6.5 hereof

  



 


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EXHIBIT A


 


Bill of Sale


 


By this Bill of Sale given effective as of March 19, 2004, by
Waters Instruments, Inc. (“Seller”), a Minnesota corporation, for and in
consideration of the purchase price provided in that certain Asset Purchase
Agreement by and between Seller and Waters Network Systems, LLC (“Buyer”), a
Minnesota limited liability company, dated the date hereof (the “Agreement”),
Seller hereby sells, bargains, assigns, transfers and conveys to Buyer only the
Purchased Assets (as defined in Section 1.1 of the Agreement) on the terms
and conditions set forth in the Agreement and excluding all of the Excluded
Assets (as defined in Section 1.2 of the Agreement).


 


To have and to hold the same unto Buyer and its legal representatives,
successors and assigns forever, free and clear of any and all liens, security
interests, claims, encumbrances and demands of any kind or nature whatsoever or
by or of any other person or entity, except as provided in the Agreement.


 


The Purchased Assets are sold on a WHERE IS and AS IS basis.


 


IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of the
date first above written.


 


	
   

  	
  WATERS INSTRUMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jerry Grabowski

  	
   

  
	
   

  	
  By:  Jerry Grabowski,
  President

  



 


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