EXHIBIT 99.(b)
(TO BE PLACED ON FLEET CAPITAL CORPORATION LETTERHEAD)
November ___, 2003
JAC Acquisition Company, Inc.
c/o Symphony Suites
00 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Dear Xx. Xxxxxxxxxx:
Fleet Capital Corporation ("Lender") is pleased to conditionally commit
the following facilities based upon the submissions and due diligence to date.
LOAN I
Borrower
The Borrower will be JAC Acquisition Company, Inc., a Delaware
corporation, (herein "JAC").
The Loan
A loan is to be made to JAC in the principal amount of Two Million One
Hundred Thousand Dollars ($2,100,000) solely for the purpose of facilitating the
privatization of Joule, Inc. in accordance with a tender offer being made by JAC
(the "Tender Offer"). The terms and conditions of this loan will be in
accordance with Lender's normal and customary procedures for loans of this
nature. The loan will be made upon acceptance for payment of shares of common
stock of Joule Inc. tendered pursuant to the Tender Offer, which will only occur
if the Minimum Tender Condition (as defined in the Offer to Purchase transmitted
to stockholder of Joule Inc. in connection with the Tender Offer) has been
satisfied. The loan will be due and payable upon the earlier of (i) two (2) days
from closing or (ii) upon the closing of the merger of JAC into Joule Inc. (
with Joule Inc. as the survivor), but will be due, if earlier, upon an Event of
Default as set forth in the Loan Agreement (as hereinafter defined). Interest
only will be paid on a daily basis until the full amount of the loan is due.
LOAN II
Borrower
The Borrower will be Joule Staffing Services, Inc., Joule Technical
Staffing, Inc., Joule Technical Services, Inc., Joule Transportation, Inc.,
Joule Corporate Services, Inc., 0000 Xxxxx 0 Xxxx. and 000 X. Xxxxx Xxxxxx Corp.
(the "Borrowers").
The Loan
Upon closing of the merger of JAC into Joule Inc. (with Joule Inc. as
the survivor), a term loan is to be made to the Borrowers under the existing
credit facility provided by the Lender to the Borrowers as set forth in the Loan
and Security Agreement among the Lender and Borrowers dated August 22, 2003 (the
"Loan Agreement") in the maximum amount of One Million Four Hundred Ninety-Two
Thousand Dollars ($1,492,000). The terms and conditions of this loan will be in
accordance with Lender's normal and customary procedures for loans of this
nature. The loan will be due and payable on August 22, 2006 and monthly payments
to be calculated on a seven (7) year amortization schedule with fixed principal
payments plus interest. The Loan Agreement will be appropriately amended to
reflect the terms of Loan II to include, without limitation, prepayment fees and
to add 1245 Route 1 Corp. and 000 X. Xxxxx Xxxxxx Corp. as co-borrowers.
GENERAL CONDITIONS APPLICABLE TO LOAN I AND LOAN II
Interest Rate on Loan I
Interest on Loan I is to be calculated based upon Xxxxxx's fluctuating
base rate, plus 1.0 percent, which rate of interest is to be changed in
accordance with each change in Lender's fluctuating base rate effective as of
the date of each such change. The fluctuating base rate is defined as the rate
of interest established by Lender from time to time whether or not such rate is
otherwise published. The fluctuating base rate is established for the
convenience of Lender. It is not necessarily Lender's lowest rate. In the event
that there should be a change in the fluctuating base rate of Lender, such
change shall be effective on the date of such change without notice to JAC or
any guarantor, endorser or surety.
Interest Rate on Loan II
Interest on Loan II is to be calculated based upon Xxxxxx's fluctuating
base rate, plus 1.0 percent, which rate of interest is to be changed in
accordance with each change in Lender's fluctuating base rate effective as of
the date of each such change. The fluctuating base rate is defined as the rate
of interest established by Lender from time to time whether or not such rate is
otherwise published. The fluctuating base rate is established for the
convenience of Lender. It is not necessarily Lender's lowest rate. In the event
that there should be a change in the fluctuating base rate of Lender, such
change shall be effective on the date of such change without notice to Borrowers
or any Guarantor, endorser or surety. The Borrowers will also have the option to
purchase an interest rate swap from Lender to fix the interest rate of Loan II
at the current market rate.
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Collateral For Loan I
To secure payment and performance of all obligations evidenced by Loan
I, Xxxxxx is to be granted the unlimited personal guarantees of Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxxx and Xxxx X.
Xxxxxxx (the "JAC Guarantors") as well as a first priority security interest in
all of the shares of common stock of Joule Inc. that are to be contributed to
JAC by the JAC Guarantors prior to consummation of the Tender Offer and the
shares to be acquired by JAC under the Tender Offer.
Collateral For Loan II
To secure payment and performance of all obligations evidenced by Loan
II, Xxxxxx is to be granted the following security interests by the Borrowers
with respect to the following assets as well as all assets previously granted to
Lender under the Loan Agreement, also collectively identified as "Collateral":
A recordable mortgage lien and assignment of leases on the real property
located at 0000 Xxxxx 0, Xxxxxx, Xxx Xxxxxx, 0000 Xxxxx 0, Xxxxxx, Xxx
Xxxxxx and 000 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx (collectively, the
"Property") as well a the unlimited corporate guaranty of Joule Inc.
(the "Guaranty").
Structure of the Borrowers
Prior to closing, Lender will require assurance that there has been no
material adverse change in the information previously submitted to Lender as to
the present and projected organizational structure, operations and financial
condition of the Borrowers, the JAC Guarantors and the Guarantor, including, but
not limited to, financial statements, tax returns, environmental audit report,
Property inspection, appraisal report on the Property, inventory appraisal,
plans and budget reports. In addition, the Offer to Purchase in connection with
the Tender Offer, the Exchange Agreement and all other documents related to the
Tender Offer and information satisfactory to the Lender with respect to the
financial condition of the JAC Guarantors shall be submitted to the Lender.
Title Policy
Borrowers are to provide at closing a mortgagee title insurance policy
by a company licensed to do business in New Jersey as follows:
(a) It is to insure that title to the Property is marketable and
insurable at regular rates with no exceptions in Schedule B other than those
which are approved by Xxxxxx and Lender counsel;
(b) It is to insure, in the full amount of Loan II, the proposed
mortgage on the Property to be a second mortgage lien subject only to the prior
lien of the Lender;
(c) It is to insure that 1245 Route 1 Corp. and 429 E. Broad Street
Corp. own the
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Property in fee simple, free and clear of all liens, encumbrances, and other
adverse interests of any kind or nature whatsoever other than those created as
collateral security in accordance with this conditional commitment;
(d) It is to expressly insure the survey described below;
(e) It is to name Xxxxxx as an insured;
(f) The Borrowers will be responsible for the payment of the premium
at the time of closing.
(g) The title company is to issue an approved Closing Service Letter
in favor of the Borrowers' attorney, if requested by Xxxxxx or Xxxxxx's counsel.
Survey
The Borrowers will obtain surveys and legal descriptions of current date
for the Property, said survey to be certified to Lender, the insuring title
company and Xxxxxx's counsel. The survey must show all improvements, building
lines, lot lines, easements and rights of way, if any.
Insurance
The Borrowers are to continue to maintain and provide satisfactory
evidence of insurance coverage pursuant to the Loan Agreement.
Environmental Compliance
At the time of the issuance of this letter, the Lender has received
substantially all of the required reports, certificates and other evidence of
Borrowers' compliance with the Industrial Site Recovery Act, N.J.S.A. 13:1K-6
et. seq. ("ISRA"), Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et
seq., Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601 et seq., Hazardous and Solid Waste Amendments of 1984 (Pub.
L. No. 98-616), New Jersey Underground Storage Tank Registration Law, N.J.S.A.
58:10A-21 et seq., Uniform Fire Safety Act, N.J.S.A. 52:27D-192 et seq. and
other applicable environmental statutes and regulations governing control and
remediation of the environment, natural resources, solid waste and air and water
pollution. Lender shall have the right to require any additional evidence of
such compliance as it may deem appropriate.
Other Terms and Conditions
As a condition precedent to the closing:
1. There shall have been no material adverse change in the
financial condition, operating status and general business affairs of JAC, the
Borrowers, the JAC Guarantors and the Guarantor or
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with respect to the facts as set forth in the financial statements, disclosures
or other information submitted to Lender in connection with the transaction;
2. There shall be no litigation (whether bankruptcy or insolvency,
at law or in equity) or other proceedings pending or threatened before any
court, agency or tribunal which may adversely affect the financial condition,
operations or affairs of JAC, the Borrowers, the JAC Guarantors or the
Guarantor.
3. JAC and the Borrowers are to provide satisfactory evidence of
existence and good standing in the States of Delaware and New Jersey, as the
case may be, and qualification in any other state where required. JAC hereby
consents to Lender filing Uniform Commercial Code Financing Statements prior to
closing, without prejudice to Lender's rights and remedies;
4. Any and all disclosures, financial or otherwise, regarding
either JAC, the Borrowers, the JAC Guarantors or the Guarantor are to be deemed
accurate and complete as at the closing;
5. JAC, the Borrowers and Guarantor are to provide satisfactory
evidence that all necessary authorizations from applicable stockholders,
directors or officers have been obtained;
6. The consummation of this transaction will not constitute a
breach of any agreement between or among JAC, the Borrowers, the JAC Guarantors,
the Guarantor, and/or third parties, or violate any provision of an applicable
charter, by-law, or provision of law;
7. Opinions and certificates of JAC's, the Borrowers' and
Guarantor's counsel, accountants or other representatives are to be submitted as
requested by Xxxxxx or Lender counsel, to the effect that all documents executed
by JAC, the Borrowers and the Guarantor at closing are legally binding and
enforceable in accordance with their terms and that the transaction(s) evidenced
by such documents do not violate any law or principles of equity, including but
not limited to, the Uniform Fraudulent Transfer Act, and other opinions as
Lender may require;
8. There will not exist any default by either JAC, the Borrowers or
the Guarantor with respect to any obligations or compliance with any state or
federal law;
9. As an additional condition precedent with respect to Loan I, (i)
the special committee, consisting of independent directors of Joule Inc., shall
not have withdrawn or modified its recommendation of the Tender Offer to the
stockholders of Joule Inc. unaffiliated with JAC, (ii) the Minimum Tender
Condition (as defined in the Offer to Purchase relating to the Tender Offer)
shall have been satisfied, and (iii) the Exchange Agreement shall have been
executed in a form reasonably acceptable to the Lender and, as an additional
condition precedent to Loan II, JAC and Joule Inc. shall have been merged into
Joule Inc. as the survivor (which merger Lender will give consent), all as
acceptable to the Lender and its counsel;
10. It is the intention of the parties hereto that the consummation
of the transactions contemplated herein and in paragraph 9 above shall be
carried out the fullest extent of the law and
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that Lender is relying upon such representation in making this commitment.
11. Such other conditions precedent as Lender may require.
Expenses of Lender
Whether or not the transaction is closed, all out-of-pocket costs and
expenses incurred by Lender are to be promptly reimbursed by JAC, the Borrowers,
the JAC Guarantors or the Guarantor upon submission of an invoice to that
effect. The term "costs and expenses" includes, but is not limited to, appraisal
costs, attorney's fees, travel expenses, environmental inspections and recording
fees. Further, the Borrowers shall be responsible to pay Lender all fees charged
by Xxxxxx in conjunction with the transactions contemplated herein.
Assignment
Any and all rights or interests, as evidenced by this conditional
commitment, of JAC, the Borrowers, the JAC Guarantors or the Guarantor, if any,
are not assignable by operation of law or otherwise without the prior written
consent of Lender.
Actions at Closing
At closing, JAC, the Borrowers, the JAC Guarantors and the Guarantor are
to execute and deliver such documents and do such other acts and things as
Lender or Xxxxxx's counsel may reasonably request in order to fully effect the
purposes of and the completion of the loan transaction(s) described herein. All
such documents, acts, disclosures made and other related matters regarding the
loan transaction(s) are to be satisfactory to Lender and Xxxxxx's counsel.
Outline
This letter is intended to serve only as an outline of the proposed
transaction(s). It contemplates the execution and delivery of formal loan
documentation setting forth in detail the terms of the transaction(s) and
containing warranties, covenants, conditions, events of default, definitions and
other terms considered appropriate by Lender and its counsel. It is contemplated
that relative to Loan II, the Loan Agreement will be amended to reflect the
transaction and all remaining terms, covenants and conditions therein shall
remain in full force and effect. Such documentation will further contain,
without limitation, the following provisions:
1. Financial covenants as determined by Lender in its sole
discretion and pursuant to the Loan Agreement, and to be reset
periodically by Xxxxxx, including, but not limited to excess
cash flow recapture with respect to principal reductions to Loan
II.
2. Periodic reporting of financial affairs, all as set forth in the
Loan Agreement.
3. Minimum availability under the Loan Agreement.
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If such documentation is not executed and delivered for any reason
whatsoever, including the failure of either JAC, the Borrowers, the JAC
Guarantors or the Guarantor to agree to any provision thereof, Lender has no
obligation to complete the loan transaction(s).
It is specifically agreed and understood that the proceeds of Loan II
shall be exclusively used to pay, in part, Loan I, with the balance coming from
the working capital line under the Loan Agreement of up to Five Hundred Thousand
Dollars ($500,000) and the balance in cash. Upon payment in full of Loan I as
set forth in this paragraph, Xxxxxx will release the JAC Guarantors and the
stock pledged to Lender as Collateral for Loan I.
No Modification
No change or modification of this conditional commitment is valid unless
in writing and signed by Xxxxxx. This conditional commitment sets forth the
entire understanding of the parties hereto and there are no promises,
agreements, conditions, undertakings, warranties, and representations, either
written or oral, express or implied, among the parties hereto other than as
herein set forth. It is expressly understood and agreed that the parties hereto
intend this conditional commitment to be an integration of all prior and
contemporaneous promises, agreements, conditions, undertakings, warranties and
representations.
Obligors' Counsel
THE INTERESTS OF JAC, THE BORROWERS, THE JAC GUARANTORS AND GUARANTORS
(the "OBLIGORS") AND LENDER ARE OR MAY BE DIFFERENT AND MAY CONFLICT. XXXXXX'S
ATTORNEY REPRESENTS ONLY XXXXXX AND NOT THE OBLIGORS. THE OBLIGORS ARE,
THEREFORE, ADVISED TO EMPLOY AN ATTORNEY OF THE OBLIGORS' CHOICE LICENSED TO
PRACTICE LAW IN NEW JERSEY TO REPRESENT THE INTEREST OF THE OBLIGORS.
Legal Fees
All expenses incurred by Xxxxxx in connection with these loans shall be
paid by the Obligors.
Xxxxxx shall be represented in this transaction by Xxxxx X. Xxxxxxx,
Esq. of Xxxx Xxxxx LLP, Princeton, New Jersey 08540 (609-514-5948) who will
perform all legal services for Lender in connection with this transaction. These
services include, without limitation, preparing all loan documents, reviewing
UCC searches, advising Lender with respect to all matters affecting the loans
and collateral and attending the closing.
By signing and acknowledging this letter, the Obligors agree to pay the
legal fees of Xxxxxx's counsel in connection with this transaction, whether or
not this transaction closes. The estimated legal fee of Xxxxxx's counsel will be
$7,500, plus expenses incurred in connection with the transaction, including,
but not limited to search fees, recording and filing fees, courier services,
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telecopier, telephone and photocopying charges and postage. This fee is based
upon the experience of Xxxxxx's counsel with respect to the time spent
representing Lender in transactions of this type. The fee is subject to change
if the time spent or problems encountered exceed that anticipated.
Expiration
This letter and the conditional commitment evidenced thereby
automatically expires and terminates if Lender has not received a written
acceptance on the enclosed copy fifteen (15) days from the date hereof. This
conditional commitment expires, in any event, if the closing has not occurred on
or prior to January 15, 2004.
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Xxxxxx appreciates your interest and looks forward to completing these
transactions with you.
Sincerely
FLEET CAPITAL CORPORATION
By:
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AGREED AND ACCEPTED:
JAC ACQUISITION COMPANY, INC.
By:
-----------------------------
JOULE STAFFING SERVICES, INC.,
By:
-----------------------------
JOULE TECHNICAL STAFFING, INC.,
By:
-----------------------------
JOULE TECHNICAL SERVICES, INC.,
By:
-----------------------------
JOULE TRANSPORTATION, INC.
By:
-----------------------------
JOULE CORPORATE SERVICES, INC.
By:
-----------------------------
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1245 ROUTE 1 CORP.
By:
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000 X. XXXXX XXXXXX CORP.
By:
-----------------------------
JOULE INC.
By:
-----------------------------
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Xxxxxxx Xxxxxxxxxx, Guarantor
--------------------------------
Xxxxx Xxxxxxxxxx, Guarantor
--------------------------------
Xxxxxx Xxxxxxxxxx, Guarantor
--------------------------------
Xxxxx Xxxxxxxxxx, Guarantor
--------------------------------
Xxxx X. Xxxxxxx, Guarantor
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