Addendum to Asset Purchase and Merger Agreement
Exhibit 2.4
Addendum to Asset Purchase and Merger Agreement
This Addendum (this “ADDENDUM”) to the ASSET PURCHASE AND MERGER AGREEMENT entered into as of February 26, 2016, by and among Willdan Group, Inc., Willdan Energy Solutions, WESGEN, INC., Genesys Engineering P.C., and Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxx effective February 14, 2017.
RECITALS
A.Willdan Energy Solutions (“XXX”), Willdan Group, Inc. (“WGI”), and Genesys Engineering, P.C. (“Genesys”), WESGEN, INC (“Wesgen”) which has subsequently merged into Genesys, Xxxxxx X. Xxxxx (“Xxxxx”) and Xxxxxx X. Xxxxx (“Xxxxx”) entered into an Asset Purchase and Merger Agreement (the “APMA”) which closed on March 4, 2016 (the “Closing Date”).
B.Section 1.5(d)(i) allocates a portion of the purchase price to Tangible Net Assets Value (“TNAV”) in the amount of $3,988,246. This amount was based upon an estimate that was to be adjusted after the closing of the transaction. The actual amount of the TNAV was subsequently determined to be in the amount of $3,444,882. The result is that Xxxxx and Xxxxx were overpaid in the amount of $543,364.
C.The Parties agreed that XXX would increase the purchase price for Genesys in order to provide sufficient funds to allow Xxxxx and Xxxxx to pay their individual taxes without reducing their after-tax net amount paid to them under the APMA. The gross-up additional amount to be paid to Xxxxx and Xxxxx collectively was estimated to be in the amount of $1,069,338, which amount was paid by to Xxxxx and Xxxxx. The adjustment of the TNAV results in a reduction in the tax liability of Xxxxx and Xxxxx, resulting in a reduction of the tax gross-up to be in the amount of $907,659. Accordingly, Xxxxx and Xxxxx were collectively overpaid on the tax gross-up in the amount of $161,679.
D.The adjusted TNAV overpayment by Willdan in the amount of $543,364 plus the Willdan overpayment in the tax gross-up in the amount of $161,679, results in a total overpayment to Xxxxx and Xxxxx in the amount of $705,043.
E.Subsequent to the Closing Date, Willdan bought cash from Xxxxx and Xxxxx in the amount of $100,705, with the understanding that said amount would be offset against the $705,043 owed by Xxxxx and Xxxxx to Willdan.
G.The Parties wish to memorialize in writing the foregoing understandings and adjustments to the APMA.
NOW, THEREFORE, the Parties agree, as follows:
1.The Parties incorporate into this Addendum the above Recitals.
2.Subsection (d) of Section 1.5 of the APMA is amended in its entirety to read, as follows:
“(i) Tangible Net Assets - $3,444,882; and
(ii) Goodwill, Intangibles, Cash and Miscellaneous - $11,605,000.
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The Goodwill, Intangibles, Cash and Miscellaneous is allocated, as follows:
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Asset Acquisition |
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Merger |
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Total |
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Customer Relationship |
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3,260,000 |
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3,260,000 |
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Backlog |
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1,050,000 |
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1,050,000 |
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Tradename |
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1,690,000 |
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1,690,00 |
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Non-compete |
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320,000 |
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320,000 |
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Goodwill |
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5,221,000 |
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5,221,000 |
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Cash & Misc. |
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64,000 |
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64,000 |
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10,555,000 |
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1,050,000 |
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11,605,000” |
3.Subsection (e) of Section 1.5 of the APMA is deleted in its entirety.
4.The calculation of the Tax Gross Up is correctly illustrated on Attachment “A” attached hereto. The Parties agree to the accuracy of said calculation.
5.The Parties affirm that the A/R of Genesys in excess of 270 days as of the Closing Date was not an asset acquired by XXX, however, XXX has agreed to collect such A/R on behalf of Xxxxx and Xxxxx and to pay over such A/R to Xxxxx and Xxxxx as collected. The parties agree that Xxxxx and Xxxxx shall collaborate with XXX, primarily through the lead of Xxxx Xxxxxx, with regard to the collection of the Genesys A/R over 270 days on the Closing Date and that the A/R shall be paid over to Xxxxx and Xxxxx as received. As of December 30, 2016 A/R of more than 270 days in the amount of $148,624 has been collected. As of December 30, 2016 AP of more than 270 days in the amount of $6,988 has been paid. These amounts collected and paid by Willdan will be offset against the $705,043 owed by Xxxxx and Xxxxx to XXX.
6.The Parties affirm that XXX collected an insurance premium partial refund for a pre-closing insurance prepayment by Genesys in the amount of $11,226. This amount is to be paid over to Xxxxx and Xxxxx and will be offset against the $705,043 owned by Xxxxx and Xxxxx to XXX.
7.The Parties affirm that prior to the Closing Date Genesys performed uncontracted work that was not invoiced by Genesys prior to the Closing Date in the amount of $84,393. Subsequent to the Closing Date, XXX has invoiced and received payment of said amount on behalf of Xxxxx and Xxxxx. This amount shall be offset against the $705,043 owed by Xxxxx and Xxxxx to Willdan.
8.Xxxxx and Xxxxx shall reimburse Willdan the sum of $367,083 ($183,542 each). The recap in the following table:
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Gross Receivable from Xxxxx and Xxxxx: |
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$ |
705,043 |
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Offsets: |
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Cash acquired at closing |
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$ |
100,705 |
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AR over 270 days collected as of 12/30/2016 |
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$ |
148,624 |
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AP over 270 days paid as of 12/30/2016 |
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$ |
(6,988) |
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Insurance Premium Refund |
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$ |
11,226 |
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Uncontracted work performed before acquisition |
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$ |
84,393 |
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Total offsets: |
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$ |
337,960 |
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Amount owed by Xxxxx and Xxxxx |
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$ |
367,083 |
[SIGNATURES ON FOLLOWING PAGE]
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In witness whereof, the parties execute this Addendum effective as of the date first above written.
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GENESYS ENGINEERING P.C. |
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By: |
/s/ Xxxxxxx Xxxxxx |
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By: |
/s/ Xxxxxx X. Xxxxx |
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Xxxxxxx Xxxxxx, President |
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Xxxxxx X. Xxxxx, President |
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WILLDAN ENERGY SOLUTIONS |
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/s/ Xxxxxx X. Xxxxx |
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Xxxxxx X. Xxxxx, an individual |
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By; |
/s/ Xxxxxx Xxxx |
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/s/ Xxxxxx X. Xxxxx |
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Xxxxxx Xxxx, President |
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Xxxxxx X. Xxxxx, an individual |
3 of 3
Attachment A
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Final Calculation |
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Agreed TNAV - Post Closing |
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$ |
3,444,882 |
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Less Fixed Assets |
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$ |
(116,891) |
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Less Other LT Assets |
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$ |
(31,708) |
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Less: Tax Basis |
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= Net Working Capital |
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$ |
3,296,283 |
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Diff in Tax Rate - |
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19.6 |
% |
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= Numerator of Calc |
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$ |
646,071 |
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Denominator of Calc (1-28.82%) |
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0.7118 |
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Additional Tax on NWC (NWC * .196%) |
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Additional Tax on Gross Up at 28.82% |
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Tax Gross UP ($646,071/0.7118) |
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907,659 |
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