AMENDMENT NO. 1 TO
ASSET PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 to THE ASSET PURCHASE AGREEMENT is made by and
between OZO Diversified Automation, Inc., a Colorado corporation (the
"Seller") and JOT Automation, Inc., a Texas corporation (the "Purchaser"),
and is effective as of December 15, 1998.
RECITALS
A. The Seller and the Purchaser entered into the Asset Purchase Agreement as
of November 4, 1998 (the "Asset Purchase Agreement").
B. The Seller has filed a proxy statement with the Securities and Exchange
Commission (the "Commission") which is being reviewed by the Commission
and, therefore, the parties are unable to complete the Asset Purchase
Agreement as originally scheduled.
C. The Seller and the Purchaser have concluded that certain changes to the
Asset Purchase Agreement are necessary as a result of the delays resulting
from the Commission's review process.
D. Except as otherwise defined herein, capitalized terms shall have the same
meaning as set forth in the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants contained in this Agreement and on the terms and
subject to the conditions herein set forth and contained in the Asset
Purchase Agreement, the parties hereto agree as follows:
1. The Seller and the Purchaser agree that the Closing will take place as
described in Section 1.3 of the Asset Purchase Agreement, but that the
Closing Date will be the first business day not less than three days after
the shareholders of the Seller approve the transactions contemplated in the
Asset Purchase Agreement (the "New Closing Date").
2. The Purchaser acknowledges that since the date of the Asset Purchase
Agreement, certain holders of the debt listed on Schedule 5.2 have extended
the Seller's obligation to pay such date from December 30, 1998. The
Purchaser further acknowledges that certain of the holders of convertible
promissory notes listed on Schedule 5.2 have converted their notes into
shares of the Seller's common stock in accordance with their contractual
rights. As a result of the foregoing, the information set forth in
Schedule 5.2 is not accurate as of the date hereof, and attached hereto is
a new Schedule 5.2 effective as of the date hereof.
3. Certain of the amounts set forth on Schedule 5.2 are due on or before the
New Closing Date, and the Purchaser hereby grants its consent to the Seller
to make necessary and appropriate payments of such amounts to avoid
defaulting on such indebtedness. After making any payment in respect of
the principal amount of such indebtedness, the Seller will notify Purchaser
as to the total amount of such payments (the "Recoupment Amount").
4. Because of the increased amount of time between the date of the Asset
Purchase Agreement and the Closing, the Seller will have to incur certain
expenditures to maintain the "Excluded Assets" which may not be considered
to be in the ordinary course of business contemplated in Section 5.2.
Purchaser hereby grants the Seller the authority to make expenditures
necessary or appropriate to maintain and improve the Excluded Assets
provided that the Seller notifies Purchaser as to the purpose for and the
amount of such expenditures and the amount of such expenditures becomes
included within the Recoupment Amount.
5. In addition to (and without any limitation on) the access and reporting
requirements contained in Section 5.3 of the Asset Purchase Agreement:
(a) not less frequently than weekly between the date hereof and the New
Closing Date, the Seller will provide the Purchaser with reports
detailing the expenditures made by the Seller and a statement as to
whether such expenditures are to be included in the Recoupment Amount
or are considered to be in the ordinary course of business.
(b) within the weekly report described in Subsection 5(a), above, the
Seller will also identify all expenditures made (whether or not
considered to be "material expenditures" for the purposes of
Subsection 5(a)) which will be included within the Recoupment Amount,
and will provide a total of the Recoupment Amount through the date of
that report.
(c) the Purchaser shall have the final determination as to what
expenditures reported in the weekly report described in Subsection
5(a) above are to be included in the Recoupment Amount, provided such
determination is made by the Purchaser in good faith, with the goal of
providing that expenditures related to the Excluded Assets are
intended to be included in the Recoupment Amount, and all other
expenditures made in the ordinary course of business are intended to
be outside the Recoupment Amount.
6. Section 5.8 of the Asset Purchase Agreement is hereby amended to provide
that the Seller may pay bonuses to its employees provided such bonuses are
not paid with cash, but rather shares of the Seller's restricted common
stock and provided further that the payment of such bonuses complies with
applicable federal and state securities and tax laws.
7. As a result of the establishment of the Recoupment Amount in this
Amendment, the parties amend the Asset Purchase Agreement to add a new
Section 1.11 which reads as follows:
SECTION 1.11 PAYMENT OF RECOUPMENT AMOUNT. At the Closing, the
Seller will pay to the Purchaser in full,by cashier's or certified
check, funds in an amount equal to the "Recoupment Amount".
8. The provisions of Article X of the Asset Purchase Agreement apply to this
Amendment as though fully set forth herein.
9. Except as expressly modified hereby, the terms of the Asset Purchase
Agreement remain in full force and effect.
IN WITNESS WHEREOF, the undersigned parties have hereunto duly executed
this Amendment as of the date first written above.
PURCHASER SELLER
JOT Automation, Inc. OZO Diversified Automation, Inc.
By: By:
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President David J. Wolenski, President
SCHEDULE 5.2
DEBTS OF SELLER
(AS OF DECEMBER 15, 1998)
1. $100,000 principal amount of promissory notes which are due
January 31, 1999
2. $30,000 principal amount of convertible promissory notes which are due
January 31, 1999
3. $20,000 principal amount of promissory notes which are due
December 30, 1998
4. $20,000 principal amount of convertible promissory notes which are due
December 30, 1998
5. $75,000 principal amount of loan from Alvin Katz to Seller which has been
extended to February 28, 1999
6. $11,715 principal amount of loan from David J. Wolenski to Seller which is
payable on demand
7. $18,147 payable on demand to David Orthman
8. Additional amounts that may be borrowed from related parties for the
purpose of repaying the foregoing debts when they become due.
This schedule will be updated from time-to-time as may be necessary to reflect
any additional borrowings or debt conversions.