EXHIBIT (b)
[LETTERHEAD OF FLEET CAPITAL CORPORATION]
March 22, 2004
JAC Acquisition Company, Inc.
c/o Symphony Suites
00 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Joule Inc.
0000 Xxxxx 0 Xxxxx
Xxxxxx, 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 ACCOMMODATIONS
Borrower
The Borrowers will be Joule Staffing Services, Inc., Joule Technical
Staffing, Inc., Joule Technical Services, Inc., Joule Transportation, Inc. and
Joule Corporate Services, Inc. (the "Borrowers").
The Loan
Upon closing of the merger of JAC Acquisition Company, Inc. ("JAC") into
Joule Inc. (with Joule Inc. as the survivor under the terms of an Agreement and
Plan of Merger dated March 19, 2004) (the "Merger" or referred to as "Merger
Agreement"), 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 "Loan"). The terms and conditions of the 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 the Loan to include, without limitation,
prepayment fees. The Loan will be used as partial funding to facilitate the
privatization of Joule Inc. as more particularly set
forth in the Information Statement ("Information Statement") to be filed with
the Securities and Exchange Commission ("SEC").
GENERAL CONDITIONS APPLICABLE TO THE LOAN
Interest Rate
Interest on the Loan 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 the Loan
at the current market rate.
Collateral
To secure payment and performance of all obligations evidenced by the
Loan, 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, 1235 Route 1,
Edison, New Jersey and 000 X. Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx
(collectively, the "Property") as well as the unlimited corporate
guaranty (the "Guaranty") of Joule Inc. (sometimes referred to
hereinafter as the "Guarantor").
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 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 Information Statement, the Merger, the Exchange
Agreement substantially in the form filed as an exhibit to Schedule 13E-3 to be
filed by Joule Inc., JAC members of the Xxxxxxxxxx family and Xxxx Xxxxxxx with
the SEC and all other documents related to the privatization of Joule Inc. and
information satisfactory to the Lender with respect to the financial condition
of Joule Inc. and the Borrowers shall be submitted to the Lender.
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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 the Loan, 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 Joule Technical Services, Inc. owns the
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
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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 and the Guarantor or 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 or the Guarantor;
3. The Guarantor 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;
4. Any and all disclosures, financial or otherwise, regarding
either JAC, the Borrowers or the Guarantor are to be deemed accurate and
complete as at the closing;
5. The Borrowers and Guarantor are to provide satisfactory evidence
that all necessary authorizations from applicable stockholders, directors or
officers have been obtained, and as to JAC, satisfactory evidence of
authorizations of the Merger;
6. The consummation of this transaction will not constitute a
breach of any agreement between or among JAC, the Borrowers, 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 the Borrowers' and Guarantor's
counsel, accountants or other representatives are to be submitted as requested
by Xxxxxx or Xxxxxx's counsel, to the effect that all documents executed by 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 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 the Loan
and modification of the
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Loan Agreement as set forth herein, (i) the Merger shall occur (which Lender has
hereby consented to); and (ii) the Exchange Agreement, the Merger Agreement and
Information Statement shall have been executed in a form reasonably acceptable
to the Lender along with any agreements with Continental Stock Transfer and
Trust Company, 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 to the fullest extent of the law and that Lender is relying upon
such representations 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 Xxxxxx are to be promptly reimbursed by JAC, the Borrowers,
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, or the Guarantor, if any, are not assignable
by operation of law or otherwise without the prior written consent of Xxxxxx.
Actions at Closing
At closing, JAC, the Borrowers, 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 the Loan, 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:
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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 the
Loan.
2. Periodic reporting of financial affairs, all as set forth in the
Loan Agreement.
3. Minimum availability under the Loan Agreement.
If such documentation is not executed and delivered for any reason
whatsoever, including the failure of either JAC, the Borrowers, 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 the Loan
shall be exclusively used to pay, in part, the Merger Consideration (as defined
in the Information Statement), with the balance coming from the working capital
line under the Loan Agreement of up to Nine Hundred Thousand Dollars ($900,000),
subject to availability under the borrowing formulas, and the balance in cash.
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 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 Borrowers and Guarantor.
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
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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 Borrowers and Guarantor
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 $12,000, plus expenses incurred in connection with the
transaction, including, but not limited to search fees, recording and filing
fees, courier services, 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 May 28, 2004.
Xxxxxx appreciates your interest and looks forward to completing these
transactions with you.
Sincerely
FLEET CAPITAL CORPORATION
By: /s/Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx, Vice President
AGREED AND ACCEPTED:
JAC ACQUISITION COMPANY, INC.
By: /s/Xxxx X. Xxxxxxx, Xx.
------------------------------------
JOULE STAFFING SERVICES, INC.,
By: /s/Xxxxxxx X. Xxxxxxx
------------------------------------
JOULE TECHNICAL STAFFING, INC.,
By: /s/Xxxxxxx X. Xxxxxxx
------------------------------------
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JOULE TECHNICAL SERVICES, INC.,
By: /s/Xxxxxxx X. Xxxxxxx
------------------------------------
JOULE TRANSPORTATION, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
JOULE CORPORATE SERVICES, INC.
By: /s/Xxxxxxx X. Xxxxxxx
------------------------------------
JOULE INC.
By: /s/Xxxxxxx X. Xxxxxxx
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