-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FYpHm+Ck10mM+3webDpBjL+DH339m3lswwVip9Tpf/b81X1j62DJ0vBc1lJNdbh/ 4nfXQnHI7pGEHvfAbK80Lg== 0000891554-99-002391.txt : 19991230 0000891554-99-002391.hdr.sgml : 19991230 ACCESSION NUMBER: 0000891554-99-002391 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOULE INC CENTRAL INDEX KEY: 0000798168 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-FACILITIES SUPPORT MANAGEMENT SERVICES [8744] IRS NUMBER: 222735672 STATE OF INCORPORATION: DE FISCAL YEAR END: 0927 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09477 FILM NUMBER: 99782272 BUSINESS ADDRESS: STREET 1: 1245 U.S. ROUTE 1 SOUTH CITY: EDISON STATE: NJ ZIP: 08837 BUSINESS PHONE: 9085485444 MAIL ADDRESS: STREET 1: 1245 U.S. ROUTE 1 SOUTH CITY: EDISON STATE: NJ ZIP: 08837 10-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF (X) THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended September 30, 1999 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission File Number - 1-9477 JOULE INC. (Exact name of registrant as specified in its charter) Delaware 22-2735672 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1245 U.S. Route 1 South, Edison, New Jersey 08837 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 732-548-5444 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.01 per share Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes _X_ No ___. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the Common Stock held by non-affiliates of the registrant, based upon the closing price of the Common Stock on the American Stock Exchange on December 21, 1999, was approximately $ 2,034,000. As of December 21, 1999, there were 3,674,000 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Certain portions of the Company's Annual Report to Stockholders for the fiscal year ended September 30, 1999 filed with the Securities and Exchange Commission (The "Commission") pursuant to Rule 14a-3 under the Securities Exchange Act of 1934 (the "1999 Annual Report"), are incorporated by reference in Part II, Items 5-8, and Part IV of this Annual Report on Form 10-K. Certain portions of the Company's Proxy Statement to be filed with the Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 in connection with the Company's 2000 Annual Meeting of Stockholders (the "Proxy Statement") are incorporated by reference in Part III, Items 10-13, of this Annual Report on Form 10-K. PART I ITEM 1. BUSINESS General Joule Inc. and its subsidiaries are engaged in the business of personnel outsourcing, as a supplier to industry of staffing service personnel. These services focus on supplying commercial (skilled office and light industrial) workers, technical professionals, and skilled craft industrial plant and facility maintenance personnel to business and industry on a temporary basis. All employees on assignment to the Company's clients are on the Company's payroll only during the periods of their assignments. By prior understanding, their employment is continued after completion of an assignment only if another suitable assignment is available. Historically, approximately 95% of revenue is billed based on direct cost plus a mark-up to cover the Company's overhead and profit. At September 30, 1999, approximately 2400 employees were on assignment to approximately 450 clients for periods ranging in duration from one day to several years. In May 1999, the Company completed the acquisition of the principal operating assets (excluding cash and receivables) of Ideal Technical Services ("Ideal"), a staffing company specializing in engineering and other technical services, for $1.3 million. Ideal, which has offices in Mobile, Alabama and Houston, Texas, had been a subsidiary of SkillMaster, Inc. of Houston, Texas. This acquisition substantially increased the size and geographic coverage of the Company's technical staffing operations. The Company was incorporated in New Jersey in 1967 as the successor to a business organized in 1965 and was reincorporated in Delaware on July 28, 1986. Description of Services The Company supplies commercial (skilled office and light industrial workers) to business and industry. The office workers are comprised of word processing, data entry, consumer service and other office service personnel. Light industrial workers may work in warehouse, packaging or light assembly environments. Recruitment and assignment of such personnel is conducted through fourteen offices in New Jersey, Delaware, Maryland and Florida. The assignments last from one day to several months or longer. Assignments are sometimes made to fill vacancies in a client's work force caused by vacations, illnesses, terminations or reassignments of the clients full-time employees and, in other cases to supplement the clients normal work force to meet peak work loads, handle special projects or provide special expertise. Often clients elect to staff a portion of their service requirements on a longer term basis with personnel employed and provided by the Company. The client is charged an hourly rate that comprises the direct labor rate of the personnel provided, associated costs (such as fringe benefits and payroll taxes) and a mark-up to cover the Company's overhead and profit. In 1998, the Company initiated a van transportation program to transport some of its commercial staffing workers to job sites. Employees who use this service, which is voluntary, pay a daily fee which currently partially offsets the cost of the program. During 1999, the number of office and light industrial workers on assignment per week averaged 1600, and such services contributed approximately 38%, 37% and 38% of revenues in 1999, 1998 and 1997, respectively. 2 The Company's technical employees include engineers, designers, draftsmen, information technology personnel, scientists and lab technicians, who are often furnished on a project basis. Recruitment and assignment of these personnel are conducted from Edison, New Jersey and, since the acquisition of Ideal, from Mobile, Alabama and Houston, Texas. A client that has an in-house engineering or other technical department, such as a laboratory, is able to supplement its permanent staff in a particular skill or for a specific project by utilizing personnel provided by the Company to implement the clients designs or program. Generally, several candidates are interviewed by the client before an assignment is made. The work is performed at the client's facility under the client's supervision. The Company is neither an independent consultant nor professionally liable. The client is charged at an hourly rate that comprises the direct labor rate of the personnel provided, associated costs (such as fringe benefits and payroll taxes) and a mark-up to cover the Company's overhead and profit. There are many technical personnel who choose to work on temporary assignments rather than hold permanent positions because of the opportunity to work on diverse projects and to choose times of employment. While they are not guaranteed steady employment, are not eligible for promotion and receive lesser fringe benefits than their full-time counterparts, such persons frequently are compensated at higher rates than full-time, permanent personnel with similar backgrounds and experience and have a greater opportunity for overtime compensation. During 1999, the number of technical workers on assignment per week averaged nearly 400, and such services contributed approximately 30%, 30% and 27% of revenues in 1999, 1998 and 1997, respectively. The Company also provides skilled craft industrial plant and facility maintenance labor services at oil refineries, utilities, chemical, pharmaceutical and industrial plants, and office buildings. These assignments often encompass responsibility for performance of discrete functions for customers on an ongoing basis. Recruitment and assignment of such personnel is done from offices in New Jersey, Maryland, New York, and Illinois. The Company provides the services of welders, electricians, millwrights, insulators, pipefitters and other tradesmen as well as the necessary supervisory personnel and certain materials and equipment. The Company may furnish a base crew of tradesmen that is assigned to the clients facility on a full-time basis that can be supplemented as needed to provide additional services requested by the client. The Company also undertakes specific projects, such as oil and chemical plant repairs, shutdowns, dismantling, and relocation and re-assembly of plant equipment. It also sends crews throughout the United States to install original equipment for manufacturers. The Company generally charges clients at hourly rates, which include a mark up for overhead and profit, for the different classifications of tradesmen and supervisory personnel and on a cost-plus basis for materials and equipment. Travel expenses are also billed to customers when appropriate. During 1999, the average number of such skilled industrial service personnel on assignment per week to clients was nearly 300. Historically, a substantial percentage of industrial services contracts are renewed. Skilled industrial services contributed approximately 32%, 33% and 35% of revenues in fiscal 1999, 1998 and 1997, respectively. The use by clients of staffing services personnel provided by the Company allows them to hire only such permanent employees as are required for their regular core work loads. Clients are thus able to shift to the Company the cost and inconvenience associated with the employment of non-core personnel, including advertising, interviewing, screening, testing, training, fringe benefits, record keeping, payroll taxes and insurance. The Company is able to absorb such costs more effectively than its clients because its employees, once recruited, are generally assigned to a succession of positions with different clients. 3 Customers and Marketing A significant portion of the Company's business represents repeat orders. For fiscal 1999 over 70% of the Company's revenues were derived from assignments to clients with which the Company had done business for more than two years. The Company markets its services primarily through sales calls by its own sales personnel and through direct mail solicitation, participation in trade exhibitions and advertising. No customer accounted for more than 10% of revenues in 1999, 1998 or 1997. Personnel Assignment and Recruitment The Company maintains a computerized data base of information on potential employees. It uses optical scanning equipment, where appropriate, to enhance its resume' data base retrieval system. The data base contains information on office services and light industrial personnel, engineering and other technical and scientific personnel, and skilled industrial personnel, classified by skill, residence, experience and current availability for assignment. When called upon to fill an assignment, the Company's recruiting specialists match the client's specifications with the information in the data base on these potential employees. The ability to update, expand and rapidly access the data base is important to the Company's success. The Company's branch offices have direct, on-line access to the data base. Direct access is especially important in the office services and technical areas where immediate response to client orders is required. In addition, it is important in the technical services operation because of the diversity of skills involved. The Company recruits personnel through advertisements in local media and trade journals, at job fairs, and through referrals by current and past employees. Personnel listed in the Company's data base generally do not work exclusively for the Company. Compensation and location of the assignment are the principal factors considered by such personnel when choosing from competing assignments. The Company considers its pay scale to be competitive. Competition The Company faces intense competition from a large number of local and regional firms as well as national firms. The Company competes with these firms for potential employees as well as for clients. Many of the regional firms and all of the national firms with which it competes are substantially larger and possess substantially greater operating, financial and personnel resources than the Company. The Company competes primarily on the basis of price, quality and reliability of service. 4 Employees At September 30, 1999, the Company employed approximately 180 full and part-time permanent employees in its headquarters and branch offices other than those on assignment to clients and had approximately 2400 persons on assignment. The Company is a party to collective bargaining agreements covering approximately 200 employees engaged in skilled craft industrial and facility maintenance work. The Company considers its relationships with its employees to be satisfactory. ITEM 2. PROPERTIES The Company leases most of its facilities. The Company's corporate headquarters are located in Edison, New Jersey and comprise approximately 8,000 square feet. The Company owns that building and also owns a building adjacent to its corporate headquarters which serves as operational headquarters for one of the Company's divisions. These buildings are linked to other offices by computer network and communications equipment. Three facilities are leased from Emanuel N. Logothetis, the Chairman of the Board of the Company, at an aggregate annual rent of approximately $50,000, plus applicable real estate taxes, under terms and conditions that, in the opinion of management, are not less favorable than would have been available from unaffiliated parties. The Company entered into a three year lease with the purchaser of property formerly owned by an affiliate in 1997. Annual rentals under this lease approximate $133,000. The Company subleases most of this space to the affiliate which reimburses the Company approximately $115,000 annually. Sixteen additional facilities, comprising approximately 40,000 square feet of space, are leased from unaffiliated parties at rentals and under terms and conditions prevailing in the various locations. The Company's facilities are appropriate and adequate for its current needs. ITEM 3. LEGAL PROCEEDINGS In the opinion of management, there are no material pending legal proceedings to which the Company is a party or of which any of its property is the subject. In October 1998, the Company decided to settle a lawsuit. While the Company felt that the case was without merit, it settled to contain legal expenses. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. 5 Executive Officers of the Company The names, ages and positions of all of the executive officers of the Company as of December 21, 1999 are listed below along with their business experience during the past five years. Officers are elected annually by the Board of Directors and serve at the pleasure of the Board. There are no arrangements or understandings between any officer and any other person pursuant to which the officer was selected. Emanuel N. Logothetis and John Logothetis are second cousins. Emanuel N. Logothetis, age 69, founded the Company in 1965 and was President and Chief Executive Officer until August 10, 1987, when he was elected Chairman of the Board. He was reelected President on August 3, 1988. In February, 1999 he relinquished the Presidency but was reelected Chairman of the Board. John G. Wellman, Jr., age 51, was elected President and Chief Operating Officer in February, 1999. He was elected Executive Vice President and Chief Operating Officer on May 6, 1998. He was appointed to the same positions when he joined the Company in March, 1998. Prior to that he was Executive Vice President of Oxford and Associates, Inc., a technical staffing firm, from 1986 through March, 1998. Bernard G. Clarkin, age 50, was elected Vice President in February 1994 and Chief Financial Officer, Treasurer, and Secretary in February 1990. He was Controller, Treasurer and Secretary of the Company from February 1989 until February 1990. John Logothetis, age 46, was elected a Vice President on July 1, 1986. He had been General Manager of the Facilities Maintenance Operation since June 1984 and prior thereto had been Manager of Supplemental Services since joining the Company in December 1976. Stephen Demanovich, age 45, was elected a Vice President in May, 1997. He had been General Manager of Joule Technical Staffing since March, 1995 and prior thereto had been Recruiting Manager since joining the Company in February, 1989. Anthony Trotter, age 42, was elected a Vice President on February 4, 1998. He was appointed Vice President in August, 1997 when he joined the Company. Prior to that he was employed as Vice President of Staff Management Services from October, 1995 through July, 1997. He was Vice President of Best Temporaries from December, 1994 through September, 1995. Prior to that he was an Area Manager for Novell Services, Inc. from March, 1992 through August, 1994. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The information required by this Item is incorporated by reference to the information under the caption "Stock Market Information" on inside back cover of the 1999 Annual Report. 6 ITEM 6. SELECTED FINANCIAL DATA The information required by this Item is incorporated by reference to the "Selected Financial Information", included on the inside front cover of the 1999 Annual Report. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this Item is incorporated by reference to the information under the same caption on page 6 of the 1999 Annual Report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item is incorporated by reference to the Consolidated Financial Statements appearing on pages 7 to 12 of the 1999 Annual Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information with respect to the directors of the Company required to be included pursuant to this Item 10 will be included under the caption "Election of Directors - Director Compensation" in the Company's Proxy Statement, and is incorporated in this Item 10 by reference. The information with respect to the executive officers of the Company required to be included pursuant to this Item 10 is included under the caption "Executive Officers of the Company" in Part I of this Annual Report on Form 10-K. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent of the Common Stock, to file reports of 7 ownership and changes in ownership of the Common Stock with the Securities and Exchange Commission and to provide copies to the Company. Based upon a review of the copies of the forms furnished to the Company and upon written representations from certain reporting persons that no forms were required, the Company believes that all Section 16(a) filing requirements were complied with during fiscal 1999 other than the late filing by Mr. Wellman of Forms 4 to report four transactions relating to the acquisition of an aggregate of 1,200 shares of Common Stock and the disposition of 350 shares of Common Stock by a trust for the benefit of his minor children of which he is the trustee. ITEM 11. EXECUTIVE COMPENSATION The information with respect to executive compensation required to be included pursuant to this Item 11 will be included under the caption "Compensation of Executive Officers-Certain Transactions" in the Proxy Statement and is incorporated in this Item 11 by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information regarding security ownership of certain beneficial owners and management that is required to be included pursuant to this Item 12 will be included under the captions "Beneficial Ownership of More than 5% of the Outstanding Common Stock" and "Beneficial Ownership of Management" in the Proxy Statement and is incorporated in this Item 12 by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information with respect to any reportable transaction, business relationship or indebtedness between the Company and the beneficial owners of more than 5% of the Common Stock, the directors or nominees for director of the Company, the executive officers of the Company or the members of the immediate families of such individuals that is required to be included pursuant to this Item 13 will be included under the caption "Compensation of Executive Officers-Certain Transactions" in the Proxy Statement and is incorporated in this Item 13 by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements The following Financial Statements of JOULE Inc. and subsidiaries and Report of Independent Public Accountants are incorporated in Part IV by reference to the 1999 Annual Report. Report of Independent Public Accountants with respect to the financial statements for the fiscal years, 1999, 1998 and 1997, respectively. Consolidated Balance Sheets as of September 30, 1999 and 1998, respectively. 8 Consolidated Statements of Income for the Years Ended September 30, 1999, 1998 and 1997, respectively. Consolidated Statements of Changes in Stockholders Equity for the Years Ended September 30, 1999, 1998 and 1997, respectively. Consolidated Statements of Changes in Cash Flows for the Years Ended September 30, 1999, 1998 and 1997, respectively. Notes to Consolidated Financial Statements. The following financial statement schedules are included at the indicated page in this Annual Report on Form 10-K and incorporated in this Item 14(a) by reference: Report of Independent Public Accountants as to Schedules...........................................F-1 Financial Statement Schedules: VIII - Valuation and Qualifying Accounts............................................F-2 IX - Short-term Borrowings..........................................F-3 All other schedules are omitted since they are not required or are not applicable or since the information is furnished elsewhere in the financial statements or notes thereto. (b) Reports on Form 8-K Form 8-K dated May 20, 1999 with respect to the acquisition of the principal operating assets of Ideal (the "initial 8-K") pursuant to item 2. Form 8-K/A dated August 2, 1999 which amends the initial 8-K to include the following financial information pursuant to item 7: (a) Financial statements of Ideal o Balance Sheet as of December 31, 1998 o Statement of Operations and Accumulated Deficit for the year ended December 31, 1998 o Statement of Cash Flows for the year ended December 31, 1998 o Notes to Financial Statements - December 31, 1998 (b) Pro Forma financial information o Pro Forma Condensed Balance Sheet as of March 31, 1999 o Related Pro Forma Statements of Income for the year ended September 30, 1998 and the six months ended March 31, 1999 o Notes to the Unaudited Pro Forma Condensed Financial Statements 9 (c) Exhibits 3.1 --Certificate of Incorporation, filed as Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 33-7617) under the Securities Act of 1933, as amended (the "Form S-1"), and incorporated herein by reference. 3.2 --By-laws, as amended, filed as Exhibit 3.2 to the Form S-1 and incorporated herein by reference. 4.1 --Loan and Security Agreement, dated as of February 20, 1991, between Registrant and United Jersey Bank Central, N.A., filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 4.1a --Third Modification and Extension Agreement, dated August 23, 1995, between Registrant and United Jersey Bank, filed as Exhibit 4.1a to the Company's Annual Report on Form 10-k for the year ended September 30, 1995 and incorporated herein by reference. 4.1b --Fourth Modification and Extension Agreement dated February 6, 1996 between Registrant and United Jersey Bank, filed as Exhibit 4.1b to the Company's Annual Report on form 10-K for the year ended September 30, 1996 and incorporated herein by reference. 4.1c --Fifth Modification and Extension Agreement dated May 31, 1996 between Registrant and United Jersey Bank, filed as Exhibit 4.1c to the Company's Annual Report on form 10-K for the year ended September 30, 1996 and incorporated herein by reference. 4.1d --Sixth Modification and Extension Agreement dated May 31, 1997 between Registrant and Summit Bank, filed as Exhibit 4.1d to the Company's Annual Report on form 10-K for the year ended September 30, 1997 and incorporated herein by reference. 4.1e --Seventh Modification and Extension Agreement dated May 31, 1998 between registrant and Summit bank, filed as Exhibit 4.1e to the Company's Annual Report on form 10-K for the year ended September 30, 1998 and incorporated herein by reference 4.1f --Eighth Modification and Extension Agreement dated February 5, 1999 between registrant and Summit bank. 4.1g --Ninth Modification and Extension Agreement dated May 10, 1999 between registrant and Summit Bank. The Company hereby agrees to furnish to the Commission upon its request any instrument defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries and for any of its unconsolidated subsidiaries for which 10 financial statements are required to be filed with respect to long-term debt which does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis. 10.1 --Lease Agreement, dated April 1, 1986, between Registrant and Emanuel N. Logothetis for premises at 362 Parsippany Road, Parsippany, New Jersey, filed as Exhibit 10.5 to the Form S-1 and incorporated herein by reference. 10.2 --Lease Agreement, dated January 1, 1987, between Registrant and E. N. Logothetis for Unit G, Mercerville Professional Park Condominiums, 2333 Whitehorse - Mercerville Road, Hamilton Township, New Jersey, filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended September 25, 1987 and incorporated herein by reference. 10.3*--1988 Non-qualified Stock Option Plan, filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 10.4*--1991 Stock Option Plan, filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 13 --Annual Report to Stockholders for the year ended September 30, 1999. 21 --List of Subsidiaries. 23 --Consent of Independent Public Accountants 27 --Financial Data Schedule (in EDGAR filing only) - ---------- * Compensatory Plan 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JOULE INC. Dated: December 28, 1999 Emanuel N. Logothetis --------------------- Emanuel N. Logothetis, Chairman of the Board Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on December 28, 1999. Emanuel N. Logothetis Bernard G. Clarkin - ---------------------- ------------------ Emanuel N. Logothetis Bernard G. Clarkin Chairman of the Board and Vice President and Chief Financial Director (Principal Executive Officer (Principal Financial Officer and Officer) and Accounting Officer) Nick M. Logothetis - ---------------------- ------------------ Nick M. Logothetis - Director Steven Logothetis - Director Richard Barnitt Paul De Bacco - ---------------------- ------------------ Richard Barnitt- Director Paul DeBacco - Director - ---------------------- Robert W. Howard - Director 12 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Joule Inc.: We have audited in accordance with generally accepted auditing standards, the financial statements included in Joule Inc. and subsidiaries annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated November 12, 1999. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the index above are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Roseland, New Jersey November 12, 1999 F-1 SCHEDULE VIII JOULE INC. AND SUBSIDIARIES VALUATION AND QUALIFICATION ACCOUNTS AND RESERVES
BALANCE CHARGED TO CHARGED BALANCE BEGINNING COSTS AND TO OTHER END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD - ----------- --------- -------- -------- ---------- ------ Allowance for doubtful accounts: Years Ended: September 30, 1997 $217,000 $ 87,000 -- $104,000 $200,000 September 30, 1998 $200,000 $ 93,000 -- $ 26,000 $267,000 September 30, 1999 $267,000 $778,000 -- $661,000 $384,000
F-2 SCHEDULE IX JOULE INC AND SUBSIDIARIES SHORT-TERM BORROWINGS
WEIGHTED MAXIMUM AVERAGE WEIGHTED CATEGORY OF AVERAGE AMOUNT AMOUNT AVERAGE AGGREGATE INTEREST RATE OF BORROWINGS OUTSTANDING INTEREST RATE SHORT-TERM BALANCE AT AT END DURING DURING DURING THE BORROWINGS END OF YEAR OF YEAR THE YEAR THE YEAR* YEAR* ---------- ----------- ------- -------- --------- ----- YEARS ENDED SEPTEMBER 30, 1997 BANKS $1,295,000 7.75% $2,743,000 $2,070,000 7.83% SEPTEMBER 30, 1998 BANKS $3,100,000 7.16% $3,271,000 $2,538,000 7.80% SEPTEMBER 30, 1999 BANKS $7,700,000 6.94% $8,200,000 $4,833,000 6.82%
*Average amount outstanding is based on daily averages. Weighted average interest rate during each year is calculated by dividing interest expense on short term borrowings by the average amount outstanding. F-3 Exhibit Number Page EXHIBIT INDEX Description of Exhibit ---------------------- 3.1 Certificate of Incorporation, filed as * Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File No. 33-7617) under the Securities Act of 1933, as amended (the "Form S-1"), and incorporated herein by reference. 3.2 By-laws, as amended, filed as Exhibit 3.2 to * the Form S-1 and incorporated herein by reference. 4.1 Loan and Security Agreement, dated as of * February 20, 1991, between Registrant and United Jersey Bank Central, N.A., filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 4.1a Third Modification and Extension Agreement, * dated August 23, 1995, between Registrant and United Jersey Bank, filed as Exhibit 4.1a to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference. 4.1b Fourth Modification and Extension Agreement * dated February 6, 1996 between Registrant and United Jersey Bank, filed as Exhibit 4.1b to the Company's Annual Report on form 10-K for the year ended September 30, 1996 and incorporated herein by reference. 4.1c Fifth Modification and Extension Agreement * dated May 31, 1996 between Registrant and United Jersey Bank, filed as Exhibit 4.1c to the Company's Annual Report on form 10-K for the year ended September 30, 1996 and incorporated herein by reference. 4.1d Sixth Modification and Extension Agreement * dated May 31, 1997 between Registrant and Summit Bank, filed as Exhibit 4.1d to the Company's Annual Report on form 10-K for the year ended September 30, 1997 and incorporated herein by reference. 4.1e Seventh Modification and Extension * Agreement dated May 31, 1998, between registrant and Summit bank, filed as Exhibit 4.1e to the Company's Annual Report on form 10-K for the year ended September 30, 1998 and incorporated herein by reference. 4.1f Eighth Modification and Extension 19 Agreement dated February 5, 1999 between registrant and Summit Bank. 4.1g Ninth Modification and Extension 38 Agreement dated May 10, 1999 between registrant and Summit Bank The Company hereby agrees to furnish to the Commission upon its request any instrument defining the rights of holders of long-term debt of the Company and its consolidated subsidiaries and for any of its unconsolidated subsidiaries for which financial statements are required to be filed with respect to long-term debt which does not exceed 10 percent of the total assets of the registrant and its subsidiaries on a consolidated basis. 10.1 Lease Agreement, dated April 1, 1986, * between Registrant and Emanuel N. Logothetis for premises at 362 Parsippany Road, Parsippany, New Jersey, filed as Exhibit 10.5 to the Form S-1 and incorporated herein by reference. 10.2 Lease Agreement, dated January 1, 1987, * between Registrant and E.N. Logothetis for Unit G, Mercerville Professional Park Condominiums, 2333 Whitehorse - Mercerville Road, Hamilton Township, New Jersey, filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended September 25, 1987 and incorporated herein by reference. 10.3** 1988 Non-qualified Stock Option Plan, * filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 10.4** 1991 Stock Option Plan, filed as Exhibit * 10.11 to the Company's Annual Report on Form 10-K for the year ended September 30, 1991 and incorporated herein by reference. 13 Annual Report to Stockholders for the 56 year ended September 30, 1999. 21 List of Subsidiaries 73 23 Consent of Independent Public Accountants 75 27 Financial Data Schedule ( in EDGAR Filing only) * Incorporated by Reference ** Compensatory Plan EX-4.1(F) 2 EIGHTH AMENDMENT ================================================================================ EIGHTH AMENDMENT AND MODIFICATION AGREEMENT by and among JOULE, INC., as the Borrower and JOULE MAINTENANCE CORPORATION, JOULE TECHNICAL SERVICES, INC. and JOULE TECHNICAL STAFFING, INC., collectively as the Corporate Guarantors and SUMMIT BANK, as the Lender Dated: February 5th, 1999 - -------------------------------------------------------------------------------- EIGHTH AMENDMENT AND MODIFICATION AGREEMENT THIS EIGHTH AMENDMENT AND MODIFICATION AGREEMENT (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as this "Eighth Modification Agreement"), is made this 5th day of February, 1999, by and among JOULE, INC., a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as the "Borrower"), AND JOULE MAINTENANCE CORPORATION, a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Maintenance Corporation"), AND JOULE TECHNICAL SERVICES, INC., as successor-in-interest pursuant to the merger of JOULE ENGINEERING CORP., JOULE TEMPORARIES CORPORATION, JOULE MAINTENANCE OF MARYLAND, INC., JOULE TECHNICAL CORPORATION, JOULE MAINTENANCE OF GIBBSTOWN, INC., JOULE MAINTENANCE OF NEW YORK, INC. AND TIGER MAINTENANCE, a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Technical Services, Inc."), AND JOULE TECHNICAL STAFFING, INC., a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Technical Staffing, Inc." and hereinafter Joule Maintenance Corporation, Joule Technical Services, Inc. and Joule Technical Staffing, Inc. shall be collectively be referred to as the "Corporate Guarantors"), AND SUMMIT BANK, as successor-in-interest to UNITED JERSEY BANK, having an office located at 210 Main Street, Hackensack, New Jersey 07601, being a banking institution duly organized and validly existing under the laws of the State of New Jersey (hereinafter referred to as the "Lender"). 1 W I T N E S S E T H: - - - - - - - - - - WHEREAS, on or about February 20, 1991, the Borrower requested and the Lender agreed to make a revolving credit loan in the aggregate principal amount of up to Four Million and 00/100 ($4,000,000.00) Dollars for the purposes of (i) refinancing certain of the Borrower's then existing indebtedness to First Fidelity Bank, National Association and (ii) financing the general working capital requirements of the Borrower (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Revolving Credit Loan"), all as more fully provided for in that certain Loan and Security Agreement dated February 20, 1991, executed by and between the Borrower and the Lender (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Loan Agreement"); and WHEREAS, the Revolving Credit Loan is evidenced by a certain Revolving Note dated February 20, 1991, executed by the Borrower, as the maker, and delivered to the Lender, as the payee, in the original aggregate principal amount of the Revolving Credit Loan (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Revolving Note"); and WHEREAS, pursuant to the terms, conditions and provisions of the Loan Agreement, the Borrower, Joule Maintenance Corporation, Joule Maintenance of Gibbstown, Inc. (hereinafter referred to as "Joule Maintenance of Gibbstown, Inc."), Joule Engineering Corp. (hereinafter referred to as "Joule Engineering Corp."), Joule Engineering of California, Inc. (hereinafter referred to as "Joule Engineering of California, Inc."), Joule Technical Corporation (hereinafter referred to as "Joule Technical Corporation"), Joule Temporaries Corporation (hereinafter referred to as "Joule Temporaries Corporation"), Joule Maintenance of New York, Inc. (hereinafter referred to as "Joule Maintenance of New York, Inc."), Joule Maintenance of Maryland, Inc. (hereinafter referred to as "Joule Maintenance of Maryland, Inc."), Joule Engineering of Pennsylvania, Inc. (hereinafter referred to as "Joule Engineering of Pennsylvania, Inc."), Joule Constructors, Inc. (hereinafter referred to as "Joule Constructors, Inc."), Joule Temporaries of Edison, Inc. (hereinafter referred to as "Joule Temporaries of Edison, Inc."), Joule Temporaries of Parsippany, Inc. (hereinafter referred to as "Joule Temporaries of Parsippany, Inc."), Joule Operating Services, Inc. (hereinafter referred to as "Joule Operating Services, Inc."), Tiger Maintenance, Inc. (hereinafter referred to as "Tiger Maintenance, Inc.") and Joule Maintenance of Bayonne, Inc. (hereinafter referred to as "Joule Maintenance of Bayonne, Inc." and hereinafter Joule Maintenance Corporation, Joule Maintenance of Gibbstown, Inc., Joule Engineering Corp., Joule Engineering of California, Inc., Joule Technical Corporation, Joule Temporaries Corporation, Joule Maintenance of New York, Inc., Joule Maintenance of Maryland, Inc., Joule Engineering of Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc., Joule Temporaries of Parsippany, Inc., Joule Operating Services, Inc., Tiger Maintenance, Inc., and Joule Maintenance of Bayonne, Inc. shall be collectively referred to as the "Original Corporate Guarantors") granted to the Lender a valid first lien security interest in and to certain Collateral, as more fully and accurately described in the Loan Agreement; and 2 WHEREAS, as of February 20, 1991, Emanuel N. Logothetis, as the guarantor (hereinafter referred to as the "Individual Guarantor"), executed and delivered to the Lender, as the lender, a certain Individual Guaranty, pursuant to which the Individual Guarantor agreed to guaranty the full, prompt and unconditional payment of when due of any and all present and future obligations or liabilities of any kind of the Borrower owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Individual Guaranty"); and WHEREAS, as of February 20, 1991, each Original Corporate Guarantor, each as a guarantor, executed and delivered to the Lender, as the lender, a separate Corporate Guaranty, pursuant to which each Original Corporate Guarantor agreed to guaranty the full, prompt and unconditional payment of when due of any and all present and future obligations or liabilities of any kind of the Borrower owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan (hereinafter as each may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented collectively referred to as the "Corporate Guaranty"); and WHEREAS, on January 17, 1991, the Borrower, as the assignor, delivered to the Lender, as the assignee, a certain Assignment of Life Insurance Policy as Collateral with respect to that certain life insurance policy no. U01426631 issued by the Hartford Insurance Company upon the life of the Individual Guarantor (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Assignment #1"), as collateral security for the Borrower's obligations under the Loan Agreement; and WHEREAS, on February 20, 1991, Joule Maintenance Corporation, as successor-in-interest to Joule Maintenance Corp., as the assignor, executed and delivered to the Lender, as the assignee, a certain Collateral Assignment of Contract Proceeds with respect to that certain contract between Joule Maintenance Corporation and the United States Government identified as Contract No. DAHC21-85-C-0021 (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Assignment #2"), as collateral security for the repayment of the liabilities and obligations of Joule Maintenance Corporation to the Lender under the Loan Agreement and under the Corporate Guaranty; and WHEREAS, on September 1, 1991, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Promissory Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "September 1, 1991", to a new maturity date of "January 15, 1992" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #1"); and WHEREAS, on January 15, 1992, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 15, 1992" to a new 3 maturity date of "January 31, 1993" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #2"); and WHEREAS, on January 31, 1993, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 31, 1993" to a new maturity date of "January 31, 1994" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #3"); and WHEREAS, on January 31, 1994, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 31, 1994" to a new maturity date of "March 31, 1994" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #4"); and WHEREAS, on March 31, 1994, the Borrower, the Original Corporate Guarantors, the Individual Guarantor and the Lender entered into a certain First Modification and Extension Agreement for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then current Termination Date of "March 31, 1994" to a new Termination Date of "January 31, 1995"; (ii) amending and modifying the Lender's address from the old address of "630 Franklin Boulevard, Somerset, New Jersey 08875" to "4365 Route 1 South, Princeton, New Jersey 08540"; (iii) providing for a mutual waiver of jury trial; and (iv) providing for semi-annual audits of Collateral (hereinafter referred to as the "First Modification Agreement"); and WHEREAS, on March 31, 1994, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain First Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then current maturity date of "March 31, 1994" to a new maturity date of "January 31, 1995" and (ii) amending and modifying the Lender's address from the old address of "630 Franklin Boulevard, Somerset, New Jersey 08875" to "4365 Route 1 South, Princeton, New Jersey 08540" (hereinafter referred to as the "First Allonge"); and WHEREAS, Joule Engineering of California, Inc., Joule Engineering of Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc., Joule Temporaries of Parsippany, Inc. and Joule Operating Services, Inc. each had their respective charters revoked and are no longer doing business; and WHEREAS, as of January 31, 1995, the Borrower, the Original Corporate Guarantors, the Individual Guarantor and the Lender entered into a certain Second Modification and Extension Agreement (hereinafter referred to as the "Second Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date 4 of the Revolving Note from the then current Termination Date of "January 31, 1995" to a new Termination Date of "January 31, 1996"; (ii) in Article II, Section 2.4 of the Loan Agreement, decreasing the interest rate from the then existing interest rate of "Base Rate plus one and one-half percent (1.5%) per annum" to a new interest rate of "Base Rate plus one percent (1.0%) per annum"; (iii) amending and modifying the Lender's audits of Collateral from semi-annual audits of Collateral to annual audits of Collateral; and (iv) amending and modifying the Lender's name from the then existing name of "United Jersey Bank/Central, N.A." to the new name of "United Jersey Bank"; and WHEREAS, as of January 31, 1995, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Second Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then current maturity date "January 31, 1995" to a new maturity date of "January 31, 1996"; (ii) decreasing the interest rate from the then existing interest rate of "Base Rate plus one and one-half percent (1.5%) per annum" to the new interest rate of "Base Rate plus one percent (1.0%) per annum"; and (iii) amending and modifying the name of the Lender from the Lender's existing name of "United Jersey Bank/Central, N.A." to the Lender's new name of "United Jersey Bank" (hereinafter referred to as the "Second Allonge"); and WHEREAS, on August 23, 1995, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Third Modification and Extension Agreement (hereinafter referred to as the "Third Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, increasing the original aggregate principal amount of the Revolving Credit Loan from the then existing aggregate principal amount of "$4,000,000.00" to the new increased aggregate principal amount of "$4,500,000.00"; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then current Termination Date of "January 31, 1996" to a new Termination Date of "May 31, 1996"; (iii) in Article II, Section 2.2 of the Loan Agreement, providing for the issuance of Letters of Credit; (iv) in Article V of the Loan Agreement, providing for a new section, Section 5.23, which provides for the Borrower's Maximum Debt to Tangible Net Worth Ratio of 2.0 -to- 1.0; (v) in Article V of the Loan Agreement, providing for a new section, Section 5.24, which provides for the Borrower's Maximum Debt Service Coverage Ratio of 1.5 -to- 1.0; (vi) providing for a release of the Individual Guarantor from the Individual Guaranty; and (vii) amending and modifying the Lender's address from the then existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837"; and WHEREAS, on August 23, 1995, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Third Allonge to $4,000,000.00 Revolving Note for the purposes of (i) increasing the original aggregate principal amount of the Revolving Credit Loan from the then existing aggregate principal amount of "$4,000,000.00" to a new increased aggregate principal amount of "4,500,000.00"; (ii) extending the maturity date of the Revolving Note from the then current maturity date of "January 31, 1996" to a new maturity date of "May 31, 1996"; and (iii) amending and modifying the Lender's address from the then existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a new address of "Raritan Plaza II, 5 Fieldcrest Avenue, Edison, New Jersey 08837" (hereinafter referred to as the "Third Allonge"); and WHEREAS, Joule Maintenance Corp. and Joule Maintenance of Bayonne, Inc. were merged and consolidated and Joule Maintenance Corporation is the successor-in-interest to both companies; and WHEREAS, on February 6, 1996, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Fourth Modification and Extension Agreement (hereinafter referred to as the "Fourth Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Borrowing"; (ii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Affiliate"; (iii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Period"; (iv) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Payment Date"; (v) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Rate Determination Date"; (vi) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Portion"; (vii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Rate"; (viii) in Article I, Section 1.1 of the Loan Agreement, providing of the definition of "Eurodollar Rate Loans"; (ix) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Rate Taxes"; (x) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Reserve Percentage"; (xi) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Funding Segment"; (xii) in Article II, Section 2.4 of the Loan Agreement, deleting the then existing Section 2.4 and inserting a new Section 2.4 which provides that the Borrower may select an interest rate from the interest rate options between either (1) the Base Rate option or (2) the Eurodollar Rate Option; (xiii) in Article II of the Loan Agreement, providing for a new section, Section 2.11, which provides for the Borrower's payment of an unused commitment fee; and (xiv) in Article II of the Loan Agreement, providing for a new section, Section 2.12, which provides for the special provisions governing Eurodollar Rate Loans; and WHEREAS, on February 6, 1996, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Fourth Allonge to $4,000,000.00 Revolving Note for the purpose of deleting the then existing Paragraph 2 of the Revolving Note and inserting a new Paragraph 2 which provides that the interest rate to be charged on the outstanding aggregate principal amount of the Loan shall be set forth in Article II, Section 2.4 of the Loan Agreement (hereinafter referred to as the "Fourth Allonge"); and WHEREAS, as of May 31, 1996, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Fifth Allonge to $4,000,000.00 Revolving Note for the purpose of extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1996" to a new maturity date of "May 31, 1997" (hereinafter referred to as the "Fifth Allonge"); and 6 WHEREAS, as of May 31, 1996, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Fifth Modification and Extension Agreement (hereinafter referred to as the "Fifth Modification Agreement") for the purpose of, in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31,1996" to a new Termination Date of "May 31, 1997"; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Engineering Corp. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Temporaries Corporation was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of Maryland, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Technical Corporation was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of Gibbstown, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of New York, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, Tiger Maintenance is no longer doing business and its charter has been revoked; and WHEREAS, as of May 31, 1997, the Borrower, the Corporate Guarantors and the Lender entered into a certain Sixth Modification and Extension Agreement (hereinafter referred to as the "Sixth Modification Agreement"), for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, deleting the then existing definition of "Corporate Guarantors" and inserting a new definition of "Corporate Guarantors" in its place and stead; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31, 1997" to a new Termination Date of "May 31,1998"; (iii) in Article V, Section 5.8(d) of the Loan Agreement providing for the consolidated balance sheet of the Obligors; (iv) in the Loan Agreement, amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601"; (v) in the "Loan Documents" (as such term is hereinafter defined), providing that any and all references to the "Corporate 7 Guarantors" shall be deemed to refer to the Corporate Guarantors; (vi) in the Loan Documents, deleting any and all references to the then existing maturity date of "May 31, 1997" and inserting a new maturity date of "May 31, 1998" in their place and stead and (vii) in the Loan Documents, amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601"; and WHEREAS, as of May 31, 1997, the Borrower as the maker, executed and delivered to the Lender, as the payee, a certain Sixth Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1997" to a new maturity date of "May 31, 1998" and (ii) amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601" (hereinafter referred to as the "Sixth Allonge"); and WHEREAS, as of May 31, 1998, the Borrower, as the maker, has executed and delivered to the Lender, as the payee, a certain Seventh Allonge to $4,000,000.00 Revolving Note Dated February 21, 1991 for the purposes of (i) extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1998" to a new maturity date of "May 31, 1999" (hereinafter referred to as the "Seventh Allonge"); and WHEREAS, as of May 31, 1998, the Borrower, the Corporate Guarantors and the Lender entered into a certain Seventh Modification Agreement for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, amending and modifying the definition of "Loan Documents" to provide for the Extension Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the Extension Agreement #4, the First Modification Agreement, the First Allonge, the Second Modification, the Second Allonge, the Third Modification Agreement, the Third Allonge, the Fourth Modification Agreement, the Fourth Allonge, the Fifth Modification Agreement, the Fifth Allonge, the Sixth Modification Agreement, the Sixth Allonge, the Seventh Allonge and the Seventh Modification Agreement; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31, 1998" to a new Termination Date of "May 31, 1999"; (iii) in Article I, Section 1.1 of the Loan Agreement, providing for the new definitions of: "Extension Agreement #1", "Extension Agreement #2", "Extension Agreement #3", "Extension Agreement #4", "First Modification Agreement", "First Allonge", "Second Modification", "Second Allonge", "Third Modification Agreement", "Third Allonge", "Fourth Modification Agreement", "Fourth Allonge", "Fifth Modification Agreement", "Fifth Allonge", "Sixth Modification Agreement", "Sixth Allonge", "Seventh Allonge" and "Seventh Modification Agreement"; (iv) in Article II, Section 2.4 of the Loan Agreement, amending and modifying the interest rate options from the then existing interest rate options of (a) Base Rate or (b) two and one-quarter percent (2.25%) over the Eurodollar Rate to the new interest rate options of (1) Base Rate minus one quarter percent (0.25%) or (2) one and one-half percent (1.5%) over the Eurodollar Rate; (v) in Article II, Section 2.11 of the Loan Agreement, deleting the unused commitment fee; (vi) in the Loan Documents, deleting any and all references to the then existing maturity date of "May 31, 1998" and inserting a new maturity date of "May 31, 1999" in their 8 place and stead; (vii) in Article V of the Loan Agreement, providing for a new Section 5.23 with respect to the year 2000; (viii) in the Loan Documents, providing that any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Seventh Allonge; and (ix) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including the Seventh Modification Agreement; and WHEREAS, as of even date herewith, the Borrower, as the maker, has executed and delivered to the Lender, as the payee, a certain Eighth Allonge to $4,000,000.00 Revolving Note Dated February 21, 1991 for the purposes of (i) amending and modifying the aggregate principal amount of the Revolving Credit Loan from the existing aggregate principal amount of "$4,500,000.00" to a new, increased aggregate principal amount of "$6,000,000.00"; (ii) extending the maturity date of the Revolving Note from the existing maturity date of "May 31, 1999" to a new maturity date of "May 31, 2000"; and (iii) in Paragraph 5 of the Revolving Note, deleting the existing Paragraph 5 and inserting a new Paragraph 5 in its place and stead (hereinafter referred to as the "Eighth Allonge"); and WHEREAS, as of even date herewith, the Borrower, the Corporate Guarantors and the Lender have agreed to enter into this Eighth Modification Agreement for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, increasing the Commitment amount of the Revolving Credit Loan from the existing Commitment amount of "$4,500,000.00" to a new, increased Commitment amount of "$6,000,000.00"; (ii) in Article I, Section 1.1 of the Loan Agreement, amending and modifying the definition of "Loan Documents" to provide for the Eighth Allonge and this Eighth Modification Agreement; (iii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the existing Termination Date of "May 31, 1999" to a new Termination Date of "May 31, 2000"; (iv) in Article I, Section 1.1 of the Loan Agreement, providing for the new definitions of "Eighth Allonge" and "Eighth Modification Agreement"; (v) in the Loan Documents, deleting any and all references to the existing Termination Date / maturity date of "May 31, 1999" and inserting a new Termination Date / maturity date of "May 31, 2000" in their place and stead; (vi) in the Loan Documents, providing that any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Eighth Allonge; and (vii) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including this Eighth Modification Agreement; and WHEREAS, all words and terms not defined here shall have the meaning as contained in the Loan Agreement, as amended and modified up through and including the Seventh Modification Agreement; and WHEREAS, the aforesaid Revolving Note, the Loan Agreement, the Corporate Guaranty, the Assignment #1, the Assignment #2, the Extension Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the Extension Agreement #4, the First Allonge, the First Modification Agreement, the Second Allonge, the Second Modification Agreement, the Third Allonge, the Third Modification Agreement, the Fourth Allonge, the Fourth Modification 9 Agreement, the Fifth Allonge, the Fifth Modification Agreement, the Sixth Allonge, the Sixth Modification Agreement, the Seventh Allonge, the Seventh Modification Agreement, the Eighth Allonge, this Eighth Modification Agreement and any and all of the documents, agreements, certificates and instruments executed in connection herewith shall be hereinafter collectively referred to as the "Loan Documents"; and NOW, THEREFORE, in consideration of these premises and the mutual representations, covenants and agreements of the Borrower, the Corporate Guarantors and the Lender, each party binding itself and its successors and assigns does hereby promise, covenant and agree as follows: 1. There is, as of February 22, 1999, presently due and owing on the Revolving Note the principal sum $3,700,000.00, without defense, offset or counterclaim, all of which are hereby expressly waived by the Borrower and the Corporate Guarantors as of the date hereof. The foregoing principal balance is allocated as follows: (a) $3,700,000.00 for outstanding Advances of direct loans under the Note and (b) $ -0- for Letters of Credit. 2. By execution hereof, the Borrower and the Corporate Guarantors acknowledge and agree that the Lender's consent to enter into this Eighth Modification Agreement is contingent upon the following: (a) the payment by the Borrower of all costs, expenses and fees of the transaction contemplated by this Eighth Modification Agreement, including, but not limited to (i) all search costs and expenses, (ii) all fees and expenses of the Lender's attorneys and (iii) all accrued and unpaid interest up to and including the date hereof; and (b) the continued delivery by the Borrower to the Lender of copies of all valid insurance certificates with respect to worker's compensation, general liability, umbrella liability and other insurance required pursuant to the Loan Agreement, as previously amended and modified, all of which name the Lender as lender and/or loss payee with respect to Accounts Receivable, Inventory, Equipment and other corporate assets. 3. To the best of the Borrower's and each Corporate Guarantor's knowledge, the Borrower and each Corporate Guarantor hereby represent that the lien on the Collateral granted to the Lender under the Loan Agreement, as amended and modified up through and including this Eighth Modification Agreement, continue to be valid and enforceable first lien on the Collateral. 4. The Loan Agreement, as previously amended and modified, is hereby further amended and modified, as follows: (a) Article I, Section 1.1 shall be amended and modified as follows: (i) Subsection (m) shall be amended and modified by deleting the existing Commitment amount of "Four Million Five Hundred Thousand and 00/100 10 ($4,500,000.00) Dollars" and inserting a new increased Commitment amount of "Six Million and 00/100 ($6,000,000.00) Dollars" in its place and stead. (ii) Subsection (cc) shall be amended and modified by inserting a reference to "Eighth Allonge" and "Eighth Modification Agreement". (iii) Subsection (ll) shall be amended and modified by deleting the existing Termination Date of "May 31,1999" and inserting a new Termination Date of "May 31, 2000" in its place and stead. (iv) The following new definitions shall be inserted: ""Eighth Allonge" shall mean that certain Eighth Allonge to $4,000,000.00 Revolving Note Dated February 20, 1991 dated February 5th, 1999 pursuant to which the Borrower and the Lender agreed to further amend and modify the terms of the Note for the purposes of (i) amending and modifying the aggregate principal amount of the loan from the then existing aggregate principal amount of "$4,500,000.00" to a new, increased aggregate principal amount of "$6,000,000.00"; (ii) extending the maturity date of the Note from the existing maturity date of "May 31, 1999" to a new maturity date of "May 31, 2000"; and (iii) in Paragraph 5 of the Note, deleting the existing Paragraph 5 and inserting a new Paragraph 5 in its place and stead." ""Eighth Modification Agreement" shall mean that certain Eighth Modification Agreement dated February 5th, 1999, pursuant to which the Borrower, the Corporate Guarantors and the Lender agreed to further amend and modify the terms of this Agreement and the other Loan Documents, all as previously amended and modified for the purposes of (i) in Article I, Section 1.1 of this Agreement, increasing the Commitment amount from the existing Commitment amount of "$4,500,000.00" to a new, increased Commitment amount of "$6,000,000.00"; (ii) in Article I, Section 1.1 of this Agreement, amending and modifying the definition of "Loan Documents" to provide for the Eighth Allonge and this Eighth Modification Agreement; (iii) in Article I, Section 1.1 of this Agreement, extending the Termination Date of the Revolving Note from the existing Termination Date of "May 31, 1999" to a new Termination Date of "May 31, 2000"; (iv) in Article I, Section 1.1 of this Agreement, providing for the new definitions of "Eighth Allonge" and "Eighth Modification Agreement"; (v) in the Loan Documents, deleting any and all references to the existing Termination Date / maturity date of "May 31, 1999" and inserting a new Termination Date / maturity date of "May 31, 2000" in their place and stead; (vi) in the Loan Documents, providing that any and all references to the "Note" shall be deemed to refer to the Note as amended and modified up through and including the Eighth Allonge; and 11 (vii) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including the Eighth Modification Agreement." 5. The Loan Documents, as previously amended and modified, are hereby further amended and modified as follows: (a) Any and all references to the existing Commitment amount of "Four Million Five Hundred Thousand and 00/100 ($4,500,000.00) Dollars" shall be deleted and the new increased Commitment amount of "Six Million and 00/100 ($6,000,000.00) Dollars" shall be inserted in their place and stead. (b) Any and all references to the existing Termination Date / maturity date of "May 31, 1999" shall be deleted and a new Termination Date / maturity date of "May 31, 2000" shall be inserted in their place and stead. (c) Any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Eighth Allonge. (d) Any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including this Eighth Modification Agreement. 6. To the best of the Borrower's and each of the Corporate Guarantors' knowledge, all representations and warranties contained in the Loan Documents, as amended and modified through this Eighth Modification Agreement are true, accurate and complete as of the date hereof and shall be deemed continuing representations and warranties so long as the Revolving Credit Loan shall remain outstanding. 7. The Borrower and the Corporate Guarantors expressly confirm and affirm that the Corporate Guaranty remains in full force and effect as a continuing guaranty of the full, prompt and unconditional payment of all present and future obligations and/or liabilities of any kind of the Borrower due and owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan. 8. All other terms and conditions of the Loan Documents, as amended and modified through this Eighth Modification Agreement, remain in full force and effect, except as amended and modified herein, and the parties hereto hereby expressly confirm and reaffirm all of their respective liabilities, obligations, duties and responsibilities under and pursuant to said Loan Documents, including, without limitation, the obligations of the Corporate Guarantors under the Corporate Guaranty, as amended and modified by this Eighth Modification Agreement. 9. It is the intention of the parties hereto that this Eighth Modification Agreement shall not constitute a novation and shall in no way adversely affect or impair the lien priority of 12 the Loan Documents. In the event this Eighth Modification Agreement, or any portion hereof in any of the instruments executed in connection herewith shall be construed or shall operate to affect the lien priority of the Loan Documents, then to the extent such instrument creates a charge upon the Loan Documents in excess of that contemplated and permitted thereby, and to the extent third parties acquiring an interest in the Loan Documents between the time of recording of the Loan Documents and the recording of this Eighth Modification Agreement are prejudiced hereby, if any, this Eighth Modification Agreement shall be void and of no force and effect; provided, however, that notwithstanding the foregoing, the parties hereto, as between themselves, shall be bound by all terms and conditions hereof until all indebtedness evidenced by the Revolving Note shall have been paid in full and the Revolving Credit Loan terminated. 10. The Borrower and the Corporate Guarantors do hereby: (a) ratify, confirm and acknowledge that, as amended and modified hereby, the Loan Documents continue to be valid, binding and in full force and effect; (b) covenant and agree to perform all of their respective obligations contained in the Loan Documents, as amended and modified hereby; (c) represent and warrant that, after giving effect to the transactions contemplated by this Eighth Modification Agreement, no "Event of Default" (as such term is defined in the Loan Agreement), exists or will exist upon the delivery of notice, passage of time, or both; (d) acknowledge and agree that nothing contained herein and no actions taken pursuant to the terms hereof are intended to constitute a novation of the Revolving Note or of the Revolving Credit Loan, or any waiver of any of the other Loan Documents, and do not constitute a release, termination or waiver of any of the liens, security interests or rights or remedies granted to the Lender under the Loan Documents, all of which liens, security interests, rights or remedies are hereby ratified, confirmed and continued as security for the Revolving Credit Loan, as amended and modified hereby; and (e) acknowledge and agree that the failure by the Borrower and/or the Corporate Guarantors to comply with or perform any of their respective covenants, agreements or obligations contained herein shall constitute an Event of Default under the Loan Agreement. 13 IN WITNESS WHEREOF, the parties have caused this Eighth Modification Agreement to be duly executed, sealed and attested and/or witnessed, as appropriated, and delivered, all as of the day and year first above written. [SEAL] JOULE, INC., a Delaware ATTEST: corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE MAINTENANCE ATTEST: CORPORATION, a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE TECHNICAL ATTEST: SERVICES, INC., a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE TECHNICAL ATTEST: STAFFING, INC., a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman SUMMIT BANK By: ----------------------------- Bonnie Gershon Vice President 14 STATE OF NEW JERSEY : : ss. COUNTY OF MIDDLESEX : BE IT REMEMBERED, that on this ____ day of February, 1999, before me, the subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to take acknowledgments for use in the State of New Jersey, personally appeared Bonnie Gershon, who, I am satisfied is the person who executed the within Instrument, as the Vice President of Summit Bank, the corporation named therein, and I having first made know to her the contents thereof, she did thereupon acknowledge that the said Instrument made by the said corporation and sealed with its corporate seal and delivered by her as such officer, is the voluntary act and deed of said corporation, made by virtue of authority from its Board of Directors, for the uses and purposes therein expressed. Notary Public of the State of New Jersey STATE OF NEW JERSEY : : ss. COUNTY OF MORRIS : BE IT REMEMBERED, that on this ____ day of February, 1999, before me, the subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to take acknowledgments for use in the State of New Jersey, personally appeared Emanuel N. Logothetis, who, I am satisfied is the person who executed the within Instrument, as the Chairman of Joule, Inc., Joule Maintenance Corporation, Joule Technical Services, Inc. and Joule Technical Staffing, Inc., the corporations named therein, and I having first made know to him the contents thereof, he did thereupon acknowledge that the said Instrument made by said corporations and sealed with their corporate seals and delivered by him as such officer, is the voluntary act and deed of said corporations, made by virtue of authority from their respective Boards of Directors, for the uses and purposes therein expressed. Notary Public of the State of New Jersey EX-4.1(G) 3 NINTH AMENDMENT - -------------------------------------------------------------------------------- NINTH AMENDMENT AND MODIFICATION AGREEMENT by and among JOULE, INC., as the Borrower and JOULE MAINTENANCE CORPORATION, JOULE TECHNICAL SERVICES, INC. and JOULE TECHNICAL STAFFING, INC., collectively as the Corporate Guarantors and SUMMIT BANK, as the Lender Dated: As of May 10th, 1999 - -------------------------------------------------------------------------------- NINTH AMENDMENT AND MODIFICATION AGREEMENT THIS NINTH AMENDMENT AND MODIFICATION AGREEMENT (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as this "Ninth Modification Agreement"), is made as of the 10th day of May, 1999, by and among JOULE, INC., a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as the "Borrower"), AND JOULE MAINTENANCE CORPORATION, a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Maintenance Corporation"), AND JOULE TECHNICAL SERVICES, INC., as successor-in-interest pursuant to the merger of JOULE ENGINEERING CORP., JOULE TEMPORARIES CORPORATION, JOULE MAINTENANCE OF MARYLAND, INC., JOULE TECHNICAL CORPORATION, JOULE MAINTENANCE OF GIBBSTOWN, INC., JOULE MAINTENANCE OF NEW YORK, INC. AND TIGER MAINTENANCE, a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Technical Services, Inc."), AND JOULE TECHNICAL STAFFING, INC., a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, having its principal executive office located at 1245 Route 1 South, Edison, New Jersey 08837 (hereinafter referred to as "Joule Technical Staffing, Inc." and hereinafter Joule Maintenance Corporation, Joule Technical Services, Inc. and Joule Technical Staffing, Inc. shall be collectively be referred to as the "Corporate Guarantors"), AND SUMMIT BANK, as successor-in-interest to UNITED JERSEY BANK, having an office located at 210 Main Street, Hackensack, New Jersey 07601, being a banking institution duly organized and validly existing under the laws of the State of New Jersey (hereinafter referred to as the "Lender"). 1 W I T N E S S E T H: WHEREAS, on or about February 20, 1991, the Borrower requested and the Lender agreed to make a revolving credit loan in the aggregate principal amount of up to Four Million and 00/100 ($4,000,000.00) Dollars for the purposes of (i) refinancing certain of the Borrower's then existing indebtedness to First Fidelity Bank, National Association and (ii) financing the general working capital requirements of the Borrower (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Revolving Credit Loan"), all as more fully provided for in that certain Loan and Security Agreement dated February 20, 1991, executed by and between the Borrower and the Lender (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Loan Agreement"); and WHEREAS, the Revolving Credit Loan is evidenced by a certain Revolving Note dated February 20, 1991, executed by the Borrower, as the maker, and delivered to the Lender, as the payee, in the original aggregate principal amount of the Revolving Credit Loan (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Revolving Note"); and WHEREAS, pursuant to the terms, conditions and provisions of the Loan Agreement, the Borrower, Joule Maintenance Corporation, Joule Maintenance of Gibbstown, Inc. (hereinafter referred to as "Joule Maintenance of Gibbstown, Inc."), Joule Engineering Corp. (hereinafter referred to as "Joule Engineering Corp."), Joule Engineering of California, Inc. (hereinafter referred to as "Joule Engineering of California, Inc."), Joule Technical Corporation (hereinafter referred to as "Joule Technical Corporation"), Joule Temporaries Corporation (hereinafter referred to as "Joule Temporaries Corporation"), Joule Maintenance of New York, Inc. (hereinafter referred to as "Joule Maintenance of New York, Inc."), Joule Maintenance of Maryland, Inc. (hereinafter referred to as "Joule Maintenance of Maryland, Inc."), Joule Engineering of Pennsylvania, Inc. (hereinafter referred to as "Joule Engineering of Pennsylvania, Inc."), Joule Constructors, Inc. (hereinafter referred to as "Joule Constructors, Inc."), Joule Temporaries of Edison, Inc. (hereinafter referred to as "Joule Temporaries of Edison, Inc."), Joule Temporaries of Parsippany, Inc. (hereinafter referred to as "Joule Temporaries of Parsippany, Inc."), Joule Operating Services, Inc. (hereinafter referred to as "Joule Operating Services, Inc."), Tiger Maintenance, Inc. (hereinafter referred to as "Tiger Maintenance, Inc.") and Joule Maintenance of Bayonne, Inc. (hereinafter referred to as "Joule Maintenance of Bayonne, Inc." and hereinafter Joule Maintenance Corporation, Joule Maintenance of Gibbstown, Inc., Joule Engineering Corp., Joule Engineering of California, Inc., Joule Technical Corporation, Joule Temporaries Corporation, Joule Maintenance of New York, Inc., Joule Maintenance of Maryland, Inc., Joule Engineering of Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc., Joule Temporaries of Parsippany, Inc., Joule Operating Services, Inc., Tiger Maintenance, Inc., and Joule Maintenance of Bayonne, Inc. shall be collectively referred to as the "Original Corporate Guarantors") granted to the Lender a valid first lien security interest in and to certain Collateral, as more fully and accurately described in the Loan Agreement; and 2 WHEREAS, as of February 20, 1991, Emanuel N. Logothetis, as the guarantor (hereinafter referred to as the "Individual Guarantor"), executed and delivered to the Lender, as the lender, a certain Individual Guaranty, pursuant to which the Individual Guarantor agreed to guaranty the full, prompt and unconditional payment of when due of any and all present and future obligations or liabilities of any kind of the Borrower owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Individual Guaranty"); and WHEREAS, as of February 20, 1991, each Original Corporate Guarantor, each as a guarantor, executed and delivered to the Lender, as the lender, a separate Corporate Guaranty, pursuant to which each Original Corporate Guarantor agreed to guaranty the full, prompt and unconditional payment of when due of any and all present and future obligations or liabilities of any kind of the Borrower owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan (hereinafter as each may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented collectively referred to as the "Corporate Guaranty"); and WHEREAS, on January 17, 1991, the Borrower, as the assignor, delivered to the Lender, as the assignee, a certain Assignment of Life Insurance Policy as Collateral with respect to that certain life insurance policy no. U01426631 issued by the Hartford Insurance Company upon the life of the Individual Guarantor (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Assignment #1"), as collateral security for the Borrower's obligations under the Loan Agreement; and WHEREAS, on February 20, 1991, Joule Maintenance Corporation, as successor-in-interest to Joule Maintenance Corp., as the assignor, executed and delivered to the Lender, as the assignee, a certain Collateral Assignment of Contract Proceeds with respect to that certain contract between Joule Maintenance Corporation and the United States Government identified as Contract No. DAHC21-85-C-0021 (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Assignment #2"), as collateral security for the repayment of the liabilities and obligations of Joule Maintenance Corporation to the Lender under the Loan Agreement and under the Corporate Guaranty; and WHEREAS, on September 1, 1991, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Promissory Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "September 1, 1991", to a new maturity date of "January 15, 1992" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #1"); and 3 WHEREAS, on January 15, 1992, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 15, 1992" to a new maturity date of "January 31, 1993" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #2"); and WHEREAS, on January 31, 1993, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 31, 1993" to a new maturity date of "January 31, 1994" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #3"); and WHEREAS, on January 31, 1994, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Master Advance Note for the purpose of extending the term of the Revolving Credit Loan from the then current maturity date of "January 31, 1994" to a new maturity date of "March 31, 1994" (hereinafter as it may be from time to time amended, modified, extended, renewed, refinanced and/or supplemented referred to as the "Extension Agreement #4"); and WHEREAS, on March 31, 1994, the Borrower, the Original Corporate Guarantors, the Individual Guarantor and the Lender entered into a certain First Modification and Extension Agreement for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then current Termination Date of "March 31, 1994" to a new Termination Date of "January 31, 1995"; (ii) amending and modifying the Lender's address from the old address of "630 Franklin Boulevard, Somerset, New Jersey 08875" to "4365 Route 1 South, Princeton, New Jersey 08540"; (iii) providing for a mutual waiver of jury trial; and (iv) providing for semi-annual audits of Collateral (hereinafter referred to as the "First Modification Agreement"); and WHEREAS, on March 31, 1994, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain First Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then current maturity date of "March 31, 1994" to a new maturity date of "January 31, 1995" and (ii) amending and modifying the Lender's address from the old address of "630 Franklin Boulevard, Somerset, New Jersey 08875" to "4365 Route 1 South, Princeton, New Jersey 08540" (hereinafter referred to as the "First Allonge"); and WHEREAS, Joule Engineering of California, Inc., Joule Engineering of Pennsylvania, Inc., Joule Constructors, Inc., Joule Temporaries of Edison, Inc., Joule Temporaries of Parsippany, Inc. and Joule Operating Services, Inc. each had their respective charters revoked and are no longer doing business; and 4 WHEREAS, as of January 31, 1995, the Borrower, the Original Corporate Guarantors, the Individual Guarantor and the Lender entered into a certain Second Modification and Extension Agreement (hereinafter referred to as the "Second Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then current Termination Date of "January 31, 1995" to a new Termination Date of "January 31, 1996"; (ii) in Article II, Section 2.4 of the Loan Agreement, decreasing the interest rate from the then existing interest rate of "Base Rate plus one and one-half percent (1.5%) per annum" to a new interest rate of "Base Rate plus one percent (1.0%) per annum"; (iii) amending and modifying the Lender's audits of Collateral from semi-annual audits of Collateral to annual audits of Collateral; and (iv) amending and modifying the Lender's name from the then existing name of "United Jersey Bank/Central, N.A." to the new name of "United Jersey Bank"; and WHEREAS, as of January 31, 1995, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Second Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then current maturity date "January 31, 1995" to a new maturity date of "January 31, 1996"; (ii) decreasing the interest rate from the then existing interest rate of "Base Rate plus one and one-half percent (1.5%) per annum" to the new interest rate of "Base Rate plus one percent (1.0%) per annum"; and (iii) amending and modifying the name of the Lender from the Lender's existing name of "United Jersey Bank/Central, N.A." to the Lender's new name of "United Jersey Bank" (hereinafter referred to as the "Second Allonge"); and WHEREAS, on August 23, 1995, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Third Modification and Extension Agreement (hereinafter referred to as the "Third Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, increasing the original aggregate principal amount of the Revolving Credit Loan from the then existing aggregate principal amount of "$4,000,000.00" to the new increased aggregate principal amount of "$4,500,000.00"; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then current Termination Date of "January 31, 1996" to a new Termination Date of "May 31, 1996"; (iii) in Article II, Section 2.2 of the Loan Agreement, providing for the issuance of Letters of Credit; (iv) in Article V of the Loan Agreement, providing for a new section, Section 5.23, which provides for the Borrower's Maximum Debt to Tangible Net Worth Ratio of 2.0 -to- 1.0; (v) in Article V of the Loan Agreement, providing for a new section, Section 5.24, which provides for the Borrower's Maximum Debt Service Coverage Ratio of 1.5 -to- 1.0; (vi) providing for a release of the Individual Guarantor from the Individual Guaranty; and (vii) amending and modifying the Lender's address from the then existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837"; and 5 WHEREAS, on August 23, 1995, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Third Allonge to $4,000,000.00 Revolving Note for the purposes of (i) increasing the original aggregate principal amount of the Revolving Credit Loan from the then existing aggregate principal amount of "$4,000,000.00" to a new increased aggregate principal amount of "4,500,000.00"; (ii) extending the maturity date of the Revolving Note from the then current maturity date of "January 31, 1996" to a new maturity date of "May 31, 1996"; and (iii) amending and modifying the Lender's address from the then existing address of "4365 Route 1 South, Princeton, New Jersey 08540" to a new address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" (hereinafter referred to as the "Third Allonge"); and WHEREAS, Joule Maintenance Corp. and Joule Maintenance of Bayonne, Inc. were merged and consolidated and Joule Maintenance Corporation is the successor-in-interest to both companies; and WHEREAS, on February 6, 1996, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Fourth Modification and Extension Agreement (hereinafter referred to as the "Fourth Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Borrowing"; (ii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Affiliate"; (iii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Period"; (iv) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Payment Date"; (v) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Interest Rate Determination Date"; (vi) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Portion"; (vii) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Rate"; (viii) in Article I, Section 1.1 of the Loan Agreement, providing of the definition of "Eurodollar Rate Loans"; (ix) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Rate Taxes"; (x) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Eurodollar Reserve Percentage"; (xi) in Article I, Section 1.1 of the Loan Agreement, providing for the definition of "Funding Segment"; (xii) in Article II, Section 2.4 of the Loan Agreement, deleting the then existing Section 2.4 and inserting a new Section 2.4 which provides that the Borrower may select an interest rate from the interest rate options between either (1) the Base Rate option or (2) the Eurodollar Rate Option; (xiii) in Article II of the Loan Agreement, providing for a new section, Section 2.11, which provides for the Borrower's payment of an unused commitment fee; and (xiv) in Article II of the Loan Agreement, providing for a new section, Section 2.12, which provides for the special provisions governing Eurodollar Rate Loans; and WHEREAS, on February 6, 1996, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Fourth Allonge to $4,000,000.00 Revolving Note for the purpose of deleting the then existing Paragraph 2 of the Revolving Note and inserting a new Paragraph 2 which provides that the interest rate to be charged on the outstanding aggregate principal amount of the Loan shall be set forth in Article II, Section 2.4 of the Loan Agreement (hereinafter referred to as the "Fourth Allonge"); and 6 WHEREAS, as of May 31, 1996, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Fifth Allonge to $4,000,000.00 Revolving Note for the purpose of extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1996" to a new maturity date of "May 31, 1997" (hereinafter referred to as the "Fifth Allonge"); and WHEREAS, as of May 31, 1996, the Borrower, the Original Corporate Guarantors and the Lender entered into a certain Fifth Modification and Extension Agreement (hereinafter referred to as the "Fifth Modification Agreement") for the purpose of, in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31,1996" to a new Termination Date of "May 31, 1997"; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Engineering Corp. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Temporaries Corporation was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of Maryland, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Technical Corporation was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of Gibbstown, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, pursuant to a certain Certificate of Merger from the Office of the Secretary of State of the State of New Jersey dated February 3, 1997, Joule Maintenance of New York, Inc. was merged with Joule Technical Services, Inc.; and WHEREAS, Tiger Maintenance is no longer doing business and its charter has been revoked; and 7 WHEREAS, as of May 31, 1997, the Borrower, the Corporate Guarantors and the Lender entered into a certain Sixth Modification and Extension Agreement (hereinafter referred to as the "Sixth Modification Agreement"), for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, deleting the then existing definition of "Corporate Guarantors" and inserting a new definition of "Corporate Guarantors" in its place and stead; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31, 1997" to a new Termination Date of "May 31,1998"; (iii) in Article V, Section 5.8(d) of the Loan Agreement providing for the consolidated balance sheet of the Obligors; (iv) in the Loan Agreement, amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601"; (v) in the "Loan Documents" (as such term is hereinafter defined), providing that any and all references to the "Corporate Guarantors" shall be deemed to refer to the Corporate Guarantors; (vi) in the Loan Documents, deleting any and all references to the then existing maturity date of "May 31, 1997" and inserting a new maturity date of "May 31, 1998" in their place and stead and (vii) in the Loan Documents, amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601"; and WHEREAS, as of May 31, 1997, the Borrower as the maker, executed and delivered to the Lender, as the payee, a certain Sixth Allonge to $4,000,000.00 Revolving Note for the purposes of (i) extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1997" to a new maturity date of "May 31, 1998" and (ii) amending and modifying the Lender's address from the then existing address of "Raritan Plaza II, Fieldcrest Avenue, Edison, New Jersey 08837" to a new address of "210 Main Street, Hackensack, New Jersey 07601" (hereinafter referred to as the "Sixth Allonge"); and WHEREAS, as of May 31, 1998, the Borrower, as the maker, has executed and delivered to the Lender, as the payee, a certain Seventh Allonge to $4,000,000.00 Revolving Note Dated February 21, 1991 for the purposes of (i) extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1998" to a new maturity date of "May 31, 1999" (hereinafter referred to as the "Seventh Allonge"); and WHEREAS, as of May 31, 1998, the Borrower, the Corporate Guarantors and the Lender entered into a certain Seventh Modification and Extension Agreement (hereinafter referred to as the "Seventh Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, amending and modifying the definition of "Loan Documents" to provide for the Extension Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the Extension Agreement #4, the First Modification Agreement, the First Allonge, the Second Modification, the Second Allonge, the Third Modification Agreement, the Third Allonge, the Fourth Modification Agreement, the Fourth Allonge, the Fifth Modification Agreement, the Fifth Allonge, the Sixth Modification Agreement, the Sixth Allonge, the Seventh Allonge and the Seventh Modification Agreement; (ii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31, 1998" to a new Termination Date of "May 31, 1999"; (iii) in 8 Article I, Section 1.1 of the Loan Agreement, providing for the new definitions of: "Extension Agreement #1", "Extension Agreement #2", "Extension Agreement #3", "Extension Agreement #4", "First Modification Agreement", "First Allonge", "Second Modification", "Second Allonge", "Third Modification Agreement", "Third Allonge", "Fourth Modification Agreement", "Fourth Allonge", "Fifth Modification Agreement", "Fifth Allonge", "Sixth Modification Agreement", "Sixth Allonge", "Seventh Allonge" and "Seventh Modification Agreement"; (iv) in Article II, Section 2.4 of the Loan Agreement, amending and modifying the interest rate options from the then existing interest rate options of (a) Base Rate or (b) two and one-quarter percent (2.25%) over the Eurodollar Rate to the new interest rate options of (1) Base Rate minus one quarter percent (0.25%) or (2) one and one-half percent (1.5%) over the Eurodollar Rate; (v) in Article II, Section 2.11 of the Loan Agreement, deleting the unused commitment fee; (vi) in the Loan Documents, deleting any and all references to the then existing maturity date of "May 31, 1998" and inserting a new maturity date of "May 31, 1999" in their place and stead; (vii) in Article V of the Loan Agreement, providing for a new Section 5.23 with respect to the year 2000; (viii) in the Loan Documents, providing that any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Seventh Allonge; and (ix) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including the Seventh Modification Agreement; and WHEREAS, on February 5, 1999, the Borrower, as the maker, executed and delivered to the Lender, as the payee, a certain Eighth Allonge to $4,000,000.00 Revolving Note Dated February 21, 1991 for the purposes of (i) amending and modifying the aggregate principal amount of the Revolving Credit Loan from the then existing aggregate principal amount of "$4,500,000.00" to a new, increased aggregate principal amount of "$6,000,000.00"; (ii) extending the maturity date of the Revolving Note from the then existing maturity date of "May 31, 1999" to a new maturity date of "May 31, 2000"; and (iii) in Paragraph 5 of the Revolving Note, deleting the then existing Paragraph 5 and inserting a new Paragraph 5 in its place and stead (hereinafter referred to as the "Eighth Allonge"); and WHEREAS, on February 5, 1999, the Borrower, the Corporate Guarantors and the Lender entered into a certain Eighth Modification and Extension Agreement (hereinafter referred to as the "Eighth Modification Agreement") for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, increasing the Commitment amount of the Revolving Credit Loan from the then existing Commitment amount of "$4,500,000.00" to a new, increased Commitment amount of "$6,000,000.00"; (ii) in Article I, Section 1.1 of the Loan Agreement, amending and modifying the definition of "Loan Documents" to provide for the Eighth Allonge and the Eighth Modification Agreement; (iii) in Article I, Section 1.1 of the Loan Agreement, extending the Termination Date of the Revolving Note from the then existing Termination Date of "May 31, 1999" to a new Termination Date of "May 31, 2000"; (iv) in Article I, Section 1.1 of the Loan Agreement, providing for the new definitions of "Eighth Allonge" and "Eighth Modification Agreement"; (v) in the Loan Documents, deleting any and all references to the then existing Termination Date / maturity date of "May 31, 1999" and inserting a new Termination Date / maturity date of "May 31, 2000" in their place and stead; (vi) in the Loan Documents, providing that any and all references to the "Revolving Note" shall be deemed to refer to the Revolving 9 Note as amended and modified up through and including the Eighth Allonge; and (vii) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including the Eighth Modification Agreement; and WHEREAS, as of even date herewith, the Borrower, as the maker, has executed and delivered to the Lender, as the payee, a certain Ninth Allonge to $4,000,000.00 Revolving Note Dated February 21, 1991 for the purposes of amending and modifying the aggregate principal amount of the Revolving Credit Loan from the existing aggregate principal amount of "$6,000,000.00" to a new, increased aggregate principal amount of "$8,500,000.00" (hereinafter referred to as the "Ninth Allonge"); and WHEREAS, as of even date herewith, the Borrower, the Corporate Guarantors and the Lender have agreed to enter into this Ninth Modification Agreement for the purposes of (i) in Article I, Section 1.1 of the Loan Agreement, increasing the Commitment amount of the Revolving Credit Loan from the existing Commitment amount of "$6,000,000.00" to a new, increased Commitment amount of "$8,500,000.00"; (ii) in Article I, Section 1.1 of the Loan Agreement, amending and modifying the definition of "Loan Documents" to provide for the Ninth Allonge and this Ninth Modification Agreement; (iii) in Article I, Section 1.1 of the Loan Agreement, providing for the new definitions of "Ninth Allonge" and "Ninth Modification Agreement"; (iv) in the Loan Documents, providing that any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Ninth Allonge; and (v) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including this Ninth Modification Agreement; and WHEREAS, all words and terms not defined here shall have the meaning as contained in the Loan Agreement, as amended and modified up through and including the Eighth Modification Agreement; and WHEREAS, the aforesaid Revolving Note, the Loan Agreement, the Corporate Guaranty, the Assignment #1, the Assignment #2, the Extension Agreement #1, the Extension Agreement #2, the Extension Agreement #3, the Extension Agreement #4, the First Allonge, the First Modification Agreement, the Second Allonge, the Second Modification Agreement, the Third Allonge, the Third Modification Agreement, the Fourth Allonge, the Fourth Modification Agreement, the Fifth Allonge, the Fifth Modification Agreement, the Sixth Allonge, the Sixth Modification Agreement, the Seventh Allonge, the Seventh Modification Agreement, the Eighth Allonge, the Eighth Modification Agreement, the Ninth Allonge, this Ninth Modification Agreement and any and all of the documents, agreements, certificates and instruments executed in connection herewith shall be hereinafter collectively referred to as the "Loan Documents"; and 10 NOW, THEREFORE, in consideration of these premises and the mutual representations, covenants and agreements of the Borrower, the Corporate Guarantors and the Lender, each party binding itself and its successors and assigns does hereby promise, covenant and agree as follows: 1. There is, as of April 28,1999, presently due and owing on the Revolving Note the principal sum $4,300,000.15, without defense, offset or counterclaim, all of which are hereby expressly waived by the Borrower and the Corporate Guarantors as of the date hereof. The foregoing principal balance is allocated as follows: (a) $4,300,000.15 for outstanding Advances of direct loans under the Note and (b) $0 for Letters of Credit. 2. By execution hereof, the Borrower and the Corporate Guarantors acknowledge and agree that the Lender's consent to enter into this Ninth Modification Agreement is contingent upon the following: (a) the payment by the Borrower of all costs, expenses and fees of the transaction contemplated by this Ninth Modification Agreement, including, but not limited to (i) all search costs and expenses, (ii) all fees and expenses of the Lender's attorneys and (iii) all accrued and unpaid interest up to and including the date hereof; and (b) the continued delivery by the Borrower to the Lender of copies of all valid insurance certificates with respect to worker's compensation, general liability, umbrella liability and other insurance required pursuant to the Loan Agreement, as previously amended and modified, all of which name the Lender as lender and/or loss payee with respect to Accounts Receivable, Inventory, Equipment and other corporate assets. 3. To the best of the Borrower's and each Corporate Guarantor's knowledge, the Borrower and each Corporate Guarantor hereby represent that the lien on the Collateral granted to the Lender under the Loan Agreement, as amended and modified up through and including this Ninth Modification Agreement, continue to be valid and enforceable first lien on the Collateral. 4. The Loan Agreement, as previously amended and modified, is hereby further amended and modified, as follows: (a) Article I, Section 1.1 shall be amended and modified as follows: (i) Subsection (m) shall be amended and modified by deleting the existing Commitment amount of "Six Million and 00/100 ($6,000,000.00) Dollars" and inserting a new increased Commitment amount of "Eight Million Five Hundred Thousand and 00/100 ($8,500,000.00) Dollars" in its place and stead. (ii) Subsection (cc) shall be amended and modified by inserting a reference to "Ninth Allonge" and "Ninth Modification Agreement". 11 (iii) The following new definitions shall be inserted: ""Ninth Allonge" shall mean that certain Ninth Allonge to $4,000,000.00 Revolving Note Dated February 20, 1991 dated as of May 10th, 1999 pursuant to which the Borrower and the Lender agreed to further amend and modify the terms of the Note for the purposes of amending and modifying the aggregate principal amount of the loan from the then existing aggregate principal amount of "$6,000,000.00" to a new, increased aggregate principal amount of "$8,500,000.00"." ""Ninth Modification Agreement" shall mean that certain Ninth Amendment and Modification Agreement dated as of May 10th, 1999, pursuant to which the Borrower, the Corporate Guarantors and the Lender agreed to further amend and modify the terms of this Agreement and the other Loan Documents, all as previously amended and modified for the purposes of (i) in Article I, Section 1.1 of this Agreement, increasing the Commitment amount from the then existing Commitment amount of "$6,000,000.00" to a new, increased Commitment amount of "$8,500,000.00"; (ii) in Article I, Section 1.1 of this Agreement, amending and modifying the definition of "Loan Documents" to provide for the Ninth Allonge and the Ninth Modification Agreement; (iii) in Article I, Section 1.1 of this Agreement, providing for the new definitions of "Ninth Allonge" and "Ninth Modification Agreement"; (iv) in the Loan Documents, providing that any and all references to the "Note" shall be deemed to refer to the Note as amended and modified up through and including the Ninth Allonge; and (v) in the Loan Documents, providing that any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including the Ninth Modification Agreement." 5. The Loan Documents, as previously amended and modified, are hereby further amended and modified as follows: (a) Any and all references to the existing Commitment amount of "Six Million and 00/100 ($6,000,000.00) Dollars" shall be deleted and the new increased Commitment amount of "Eight Million Five Hundred Thousand and 00/100 ($8,500,000.00) Dollars" shall be inserted in their place and stead. (b) Any and all references to the "Revolving Note" shall be deemed to refer to the Revolving Note as amended and modified up through and including the Ninth Allonge. (c) Any and all references to the "Loan Agreement" shall be deemed to refer to the Loan Agreement as amended and modified up through and including this Ninth Modification Agreement. 12 6. To the best of the Borrower's and each of the Corporate Guarantors' knowledge, all representations and warranties contained in the Loan Documents, as amended and modified through this Ninth Modification Agreement are true, accurate and complete as of the date hereof and shall be deemed continuing representations and warranties so long as the Revolving Credit Loan shall remain outstanding. 7. The Borrower and the Corporate Guarantors expressly confirm and affirm that the Corporate Guaranty remains in full force and effect as a continuing guaranty of the full, prompt and unconditional payment of all present and future obligations and/or liabilities of any kind of the Borrower due and owing to the Lender, including, without limitation, the repayment in full of the Revolving Credit Loan. 8. All other terms and conditions of the Loan Documents, as amended and modified through this Ninth Modification Agreement, remain in full force and effect, except as amended and modified herein, and the parties hereto hereby expressly confirm and reaffirm all of their respective liabilities, obligations, duties and responsibilities under and pursuant to said Loan Documents, including, without limitation, the obligations of the Corporate Guarantors under the Corporate Guaranty, as amended and modified by this Ninth Modification Agreement. 9. It is the intention of the parties hereto that this Ninth Modification Agreement shall not constitute a novation and shall in no way adversely affect or impair the lien priority of the Loan Documents. In the event this Ninth Modification Agreement, or any portion hereof in any of the instruments executed in connection herewith shall be construed or shall operate to affect the lien priority of the Loan Documents, then to the extent such instrument creates a charge upon the Loan Documents in excess of that contemplated and permitted thereby, and to the extent third parties acquiring an interest in the Loan Documents between the time of recording of the Loan Documents and the recording of this Ninth Modification Agreement are prejudiced hereby, if any, this Ninth Modification Agreement shall be void and of no force and effect; provided, however, that notwithstanding the foregoing, the parties hereto, as between themselves, shall be bound by all terms and conditions hereof until all indebtedness evidenced by the Revolving Note shall have been paid in full and the Revolving Credit Loan terminated. 10. The Borrower and the Corporate Guarantors do hereby: (a) ratify, confirm and acknowledge that, as amended and modified hereby, the Loan Documents continue to be valid, binding and in full force and effect; (b) covenant and agree to perform all of their respective obligations contained in the Loan Documents, as amended and modified hereby; (c) represent and warrant that, after giving effect to the transactions contemplated by this Ninth Modification Agreement, no "Event of Default" (as such term is defined in the Loan Agreement), exists or will exist upon the delivery of notice, passage of time, or both; 13 (d) acknowledge and agree that nothing contained herein and no actions taken pursuant to the terms hereof are intended to constitute a novation of the Revolving Note or of the Revolving Credit Loan, or any waiver of any of the other Loan Documents, and do not constitute a release, termination or waiver of any of the liens, security interests or rights or remedies granted to the Lender under the Loan Documents, all of which liens, security interests, rights or remedies are hereby ratified, confirmed and continued as security for the Revolving Credit Loan, as amended and modified hereby; and (e) acknowledge and agree that the failure by the Borrower and/or the Corporate Guarantors to comply with or perform any of their respective covenants, agreements or obligations contained herein shall constitute an Event of Default under the Loan Agreement. 14 IN WITNESS WHEREOF, the parties have caused this Ninth Modification Agreement to be duly executed, sealed and attested and/or witnessed, as appropriated, and delivered, all as of the day and year first above written. [SEAL] JOULE, INC., a Delaware ATTEST: corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE MAINTENANCE ATTEST: CORPORATION, a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE TECHNICAL ATTEST: SERVICES, INC., a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman [SEAL] JOULE TECHNICAL ATTEST: STAFFING, INC., a New Jersey corporation By: - ----------------------------- ----------------------------- Bernard G. Clarkin Emanuel N. Logothetis Secretary Chairman SUMMIT BANK By: ----------------------------- John F. Hurley Vice President 15 STATE OF NEW JERSEY : : ss. COUNTY OF MIDDLESEX : BE IT REMEMBERED, that on this ____ day of ________, 1999, before me, the subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to take acknowledgments for use in the State of New Jersey, personally appeared John F. Hurley, who, I am satisfied is the person who executed the within Instrument, as the Vice President of Summit Bank, the corporation named therein, and I having first made know to her the contents thereof, she did thereupon acknowledge that the said Instrument made by the said corporation and sealed with its corporate seal and delivered by her as such officer, is the voluntary act and deed of said corporation, made by virtue of authority from its Board of Directors, for the uses and purposes therein expressed. Notary Public of the State of New Jersey STATE OF NEW JERSEY : : ss. COUNTY OF MORRIS : BE IT REMEMBERED, that on this ____ day of _________, 1999, before me, the subscriber, an officer duly authorized pursuant to N.J.S.A. 46:14-6 to take acknowledgments for use in the State of New Jersey, personally appeared Emanuel N. Logothetis, who, I am satisfied is the person who executed the within Instrument, as the Chairman of Joule, Inc., Joule Maintenance Corporation, Joule Technical Services, Inc. and Joule Technical Staffing, Inc., the corporations named therein, and I having first made know to him the contents thereof, he did thereupon acknowledge that the said Instrument made by said corporations and sealed with their corporate seals and delivered by him as such officer, is the voluntary act and deed of said corporations, made by virtue of authority from their respective Boards of Directors, for the uses and purposes therein expressed. Notary Public of the State of New Jersey EX-13 4 ANNUAL REPORT One Company-Three Specialties Annual Report 1999 [LOGO]JOULE selected financial information
Years Ended September 30, ----------------------------------------------- 1999 1998 1997 1996 1995 =============================================== (In thousands, except per share data) Revenues ............................. $68,153 $55,301 $48,590 $48,449 $43,641 Net Income ........................... 720 706 1,066 1,026 938 Net Income Per Share Basic and Diluted 0.20 0.19 0.29 0.28 0.26 Total Assets ......................... 18,376 12,913 10,843 10,809 10,802 Long-Term Debt ....................... -- 381 406 431 456 ===============================================
- -------------------------------------------------------------------------------- Specialties Commercial Services ranging from professional, administrative, clerical, customer service and light industrial staffing to work force management solutions. Professional Accounting, financial, human resources and sales staff. Administrative Office automation support, customer service personnel, general clerical and incoming call support. Light Industrial Assembly line/production personnel, freight forwarding handlers, equipment operators, and production supervision. - -------------------------------------------------------------------------------- Technical Offers traditional staffing as well as single source management programs in three core disciplines: Engineering, Scientific and Information Technology. Engineering Engineers, architects, designers, CAD operators, inspectors, planners. Scientific Chemists, biologists, clinical research associates, lab technicians, food scientists, chemical operators, statistical programmers, clinical data coordinators. Information Technology Programmers, system analysts, network engineers, PC techs, computer operators, database administrators, database analysts. - -------------------------------------------------------------------------------- Industrial On demand, project and work force management solutions of craft skilled personnel. Industrial Electrician, welder, millwright, mechanical machinist, mason, rigger, fitter specialist and other trade specialists. Project Solutions Nationwide refurbishing and refitting support of industrial facilities. Outsourcing Multi-year technical maintenance support contracts for industrial or manufacturing clients. Revenue (In Millions of $) [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 1995 $43.6 1996 48.5 1997 48.6 1998 55.3 1999 68.7 1999 significant accomplishments Growth and Expansion--Strategic Advances AND Continuous Improvements o Joule's Technical Staffing now has branch locations in the Southeastern and South Central United States due to Joule's successful Strategic Acquisition of Ideal Technical Services in May 1999. o Ideal Technical added over $3 million in revenue to Joule's results in 1999. o Joule's revenues, without Ideal's revenue, rose over 17%, from $55.3 million to $64.8 million--ALL Joule Business Segments generated increased revenues in 1999! o The quality of Joule's revenue improved. Gross Margin increased from 18.1% of sales in 1998 to 18.5% of sales in 1999. o Joule's Commercial Staffing enhanced by inaugurating Joule PROfessional as a further extension to its service offerings--providing financial, human resources and sales professionals to our clients. o Added 5 new branch locations to Joule's organization in 1999--30% growth in market penetration. o Joule's Industrial Staffing supported clients in 39 states, Canada and Puerto Rico in 1999. - -------------------------------------------------------------------------------- Vision Statement ...Joule is a publicly owned American Stock Exchange staffing services company, founded over 30 years ago, that specializes in changing the "fixed overhead" of Fortune 500 companies into "variable overhead" through outsourcing of non-core staffing needs. Outsourcing allows a company to turn over various support positions to specialized outside vendors so that it can concentrate on building and managing its core business. At the same time it enjoys the benefit of a more variable cost structure along with improved quality since the outsourcing vendor must be competitive as well as specialized in its field. Today's global economy demands that companies constantly strive to become more efficient and flexible in order to survive and prosper. Joule accomplishes this by supplying thousands of employees each year to its customers who are billed on an hourly basis. The staffing services business markets through its branches, using the trademarks "Joule Staffing Services," "Joule PROfessional," "Joule Technical Staffing Services," "Ideal Technical Services" and "Joule Industrial Services." Joule's specialized approach in providing staffing solutions greatly enhances its value and effectiveness in the present competitive environment. As companies have re-engineered their operations, market opportunities have continued to develop for Joule. More and more companies in an increasing number of industries are seeking the advantages of outsourced staffing, thereby improving the quality of their support services while also better controlling their costs. Joule believes this trend toward outsourcing will continue to offer excellent growth opportunities for it in the future. - -------------------------------------------------------------------------------- Geographic Growth--States with Joule Branch Locations at the beginning of Fiscal 1997 by the end of Fiscal 1999 [MAP] [MAP] 1 Dear Shareholders: 1999 was a Milestone Year for Joule Inc. We reached record levels in sales for the eighth consecutive year, increasing sales to over $68 million. We expanded our branch organization both in New Jersey and in neighboring states. We completed our first strategic acquisition, establishing Joule's presence in Southeastern and South Central United States. We added new service offerings that are focused on even higher levels of client value and profitability in each of our business segments. Continued Strong Performance For the eighth consecutive year the Company increased its revenues. Sales for Fiscal 1999 were $68.2 million compared to 1998's $55.3 million, an increase of $12.9 million, or 23.2%. This is exceptional when compared to only 5.2% revenue growth rate for the Temporary Personnel Industry nationally, comparing 1999 to 1998, according to the American Staffing Association. Joule's Gross Margin improved from 18.1% in 1998 to 18.5% in 1999, directly resulting from the Company's efforts to increase its margins in direct relationship to the higher levels of service being offered to our clients. Lastly, despite the requirement to recognize the special reserve of $500,000 related to the bankruptcy of a customer, Joule increased its earnings per share from 19 cents in 1998 to 20 cents in 1999. Successful Service Expansions In 1999 Joule succeeded in achieving our primary business objective: Positive Expansion of our Business. All business segments grew in terms of revenue, geographic markets and service offerings to our clients. May 1999's strategic acquisition of Ideal Technical Services significantly increased Joule's Technical Staffing Business Segment with a strong team of professional sales and technical recruiters and a dynamic new geographic marketplace for Joule. Joule's Industrial Business Segment continued to increase revenues and expand its client relationships on a nationwide basis, providing services in 39 states, Canada and Puerto Rico during 1999. Joule's Commercial Staffing Business Segment added new offices in New Jersey as well as entering Maryland and Delaware in 1999. Furthermore, Commercial Staffing established a new service program--Joule PROfessional--specializing in supplying financial, sales and human resources staff to our New Jersey clients from its Edison, New Jersey location. [PHOTO] Joule's Senior Management Team Left to Right--Front Row: Bernard G. Clarkin, E.N. Logothetis, John G. Wellman, Jr. Left to Right--Back Row: Joseph E. Vendetti, Anthony W. Trotter, Stephen Demanovich, John F. Logothetis, John Porch Joule's Senior Management Team Joule's Senior Management Team is committed to establish a strong organizational foundation. Joule's expansions have created opportunities to invest in managers and staff members at all levels of our organization who are dedicated to service and success. Our Senior Management's experience and skills are providing positive and dynamic leadership to support our strategy of operating independently three separate business concentrations under the Joule name, allowing each segment the freedom to specialize and excel. Looking Ahead Joule's Management Team is dedicated to building a vibrant, exciting Company that is successfully addressing the challenges of the marketplace. As we begin 2000, Joule's financial condition is exceptionally strong. We are focused on being the BEST in each of our three specialties. Because of our Fiscal 1999, Joule is entering the new century with confidence and optimism. /s/ Emanuel N. Logothetis /s/ John G. Wellman, Jr. Emanuel N. Logothetis John G. Wellman, Jr. Chairman and Chief Executive Officer President and Chief Operating Officer 2 A Joule Specialty commercial staffing Joule's Commercial Staffing continues to meet our client's growing staffing needs by expanding our network of branch locations, markets and services. In 1999 we added Wilmington, Delaware and Baltimore, Maryland as new markets and opened several additional branch locations in New Jersey. With the establishment of Joule PROfessional in 1999 Joule now offers financial, human resources and sales staffing solutions to our clients from our Edison, New Jersey location. Entering 2000 Joule can serve the entire spectrum of clerical, light industrial and corporate support staff requirements. As the economy continues to strengthen, our professional recruiting and client support programs, with innovative services such as Joule's transportation services, make Joule THE solution to our clients' temporary staffing requirements. Revenue (In Millions of $) [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 1995 $13.6 1996 15.0 1997 18.5 1998 20.4 1999 26.1 - -------------------------------------------------------------------------------- SITUATION: SIGNIFICANT NEW BUSINESS INVESTMENT HAS TAKEN PLACE IN NEW JERSEY'S RURAL AREA, ALONG ITS INTERSTATE HIGHWAYS, DISTANT FROM NEW JERSEY'S POPULATED URBAN AREAS. [PHOTO] JOULE'S RESPONSE: COMMERCIAL STAFFING OPERATES THE INDUSTRY'S LARGEST FLEET IN NEW JERSEY OF STATE-LICENSED 15-PASSENGER VANS TO TRANSPORT STAFF FROM ITS URBAN RECRUITING OFFICES TO ITS CLIENTS. Quality, Reliable Staff for Critical Needs! 3 A Joule Specialty technical staffing Joule's Technical Staffing achieved record sales and earnings for the fifth consecutive year. During the 1999 period, we continued to build upon our reputation for offering our clients high-quality staffing solutions for technical personnel in the Engineering, Science and Information Technology disciplines. Our strategy of "partnering" with our clients coupled with very specific candidate recruitment and selection strategies contributed greatly to our positive results. We continue to invest in technology to enhance staff productivity and we utilize internet recruitment and marketing initiatives to better serve our clients and facilitate our expansion into new niche markets. One major highlight of 1999 was the acquisition of Ideal Technical Services. This significant addition immediately expanded our Engineering presence in the Southeastern and South Central U.S. and provides us with a solid platform for continued national expansion. We fully expect that the addition of Ideal Technical Services and our continued dedication to quality and customer service will provide an exceptional foundation for sales and organizational growth in the future. Revenue (In Millions of $) [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 1995 $ 8.8 1996 11.6 1997 13.1 1998 16.5 1999 20.2 - -------------------------------------------------------------------------------- SITUATION: JOULE HAD DEVELOPED A STRONG PRESENCE IN SCIENTIFIC STAFFING WITH NEW JERSEY'S POSITION AS THE GLOBAL LEADER OF THE PHARMACEUTICAL INDUSTRY, BUT NEEDED A STRONGER POSITION IN ENGINEERING STAFFING ON A NATIONAL SCALE. [PHOTO] JOULE'S RESPONSE: JOULE ACQUIRED THE OPERATIONS OF IDEAL TECHNICAL SERVICES IN 1999 (JOULE'S FIRST MAJOR ACQUISITION), AN ESTABLISHED ENGINEERING STAFFING FIRM ON THE GULF COAST AND SOUTHEASTERN UNITED STATES. 4 A Joule Specialty industrial staffing Joule's Industrial Staffing is a leading regional and national provider of skilled craft workers and project support services necessary for the installation or retrofitting of equipment and facilities. Clients are searching for quality, skilled craftworkers, on-site leadership and logistical support from one source, and Joule is recognized as their preferred solution. To provide high-quality solutions to our clients, Joule invests heavily in every facet of our business, including safety, training, recruiting and project management and support. In 1999 Industrial Staffing added a national recruiting program which expanded significantly Joule's available skilled craft labor resources, mobilizing personnel from all over the country for client projects. Client satisfaction with Joule has been so positive, that many have outsourced their facilities management requirements to Joule on annual and multi-year relationships. We continue to offer our clients an expanding range of solutions, delivered with attention to quality and service. Revenue (In Millions of $) [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 1995 $21.2 1996 21.9 1997 17.0 1998 18.4 1999 21.8 - -------------------------------------------------------------------------------- SITUATION: A JOULE CLIENT IN NEW JERSEY IS RELOCATING TO A MAJOR METROPOLITAN AREA IN THE SOUTH DURING 1999, AND THEY REQUIRE A QUALIFIED FACILITIES CONTRACTOR TO SUPPORT AND MANAGE THEIR NEW 1 MILLION SQUARE FOOT PLANT. [PHOTO] JOULE'S RESPONSE: INDUSTRIAL STAFFING PROVIDED STAFF, MANAGEMENT AND LOGISTICAL SUPPORT TO ENSURE A POSITIVE RELOCATION OF THE OLD FACILITY, START-UP OF THE NEW FACILITY AND ONGOING FACILITIES MANAGEMENT OF THE NEW PLANT AFTERWARDS. THE NEW FACILITY WAS IN FULL PRODUCTION AND FULLY SUPPORTED WITHIN THE ONE MONTH SCHEDULED START-UP. JOULE PROVIDED A SUCCESSFUL SOLUTION TO ITS CLIENT ON A NATIONAL SCALE. 5 Joule Inc. and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations The following table sets forth the percentage relationship of certain items in the Company's consolidated statements of income: Year Ended September 30, ------------------------------ 1999 1998 1997 ============================== Revenues ................................... 100.0% 100.0% 100.0% Costs, expenses and other Cost of services ......................... 81.5 81.9 81.3 Selling, general and administrative expenses .............. 16.3 15.6 14.6 Interest expense ......................... 0.5 0.4 0.4 Income before income tax provision ......... 1.7 2.1 3.7 Income tax provision ....................... 0.6 0.8 1.5 Net income ................................. 1.1 1.3 2.2 The Company's revenues are derived from providing staffing services to its customers. Such services include providing commercial (office and light industrial) workers, technical (engineering, scientific and information technology) personnel, and industrial (skilled craft industrial plant and facility maintenance) labor. Approximately 95% of revenue is billed on a direct cost plus markup basis. Revenue increased 23% to $68.2 million in fiscal 1999 from $55.3 million in 1998. This followed a 14% increase in revenue in 1998 from a 1997 level of $48.6 million. Commercial staffing revenue increased 28% to $26.1 million in 1999 from $20.4 million in 1998, following a 10% increase in 1998 over 1997 revenue of $18.5 million. Technical staffing revenue, including $3.4 million related to the acquisition of Ideal Technical Services (Ideal), increased 22% to $20.2 million in 1999, compared to 1998 revenue of $16.5 million. Revenue increased 26% during 1998 over 1997 revenue of $13.1 million. Industrial staffing revenue in 1999 amounted to $21.8 million, an 18% increase over 1998 revenue of $18.4 million, which 1998 revenue reflected an 8% increase over 1997 revenue of $17.0 million. Cost of services were 81.5%, 81.9% and 81.3% of revenue in fiscal 1999, 1998 and 1997, respectively. These expenses consist primarily of compensation to employees on assignment to clients and related costs, including social security, unemployment taxes, general liability and workers' compensation insurance, and other costs of services, including a van transportation service which transports some commercial staffing workers to job sites. Selling, general and administrative expenses amounted to $11.1 million in 1999, compared to $8.6 million in 1998 and $7.1 million in 1997. Such expenses were 16.3%, 15.6% and 14.6% of revenues in 1999, 1998 and 1997, respectively. The 1999 and 1998 increases in selling, general and administrative expenses principally reflect higher staff employee payroll related expenses reflecting the Company's investment in new staff in order to grow the business, and in 1999, includes a special one-time pre-tax charge of $500,000 taken to establish a reserve related to the fourth quarter bankruptcy of a Commercial Staffing customer. Selling, general and administrative expenses also include advertising, professional fees, depreciation and amortization, provision for the allowance for doubtful accounts, rent, and other costs related to maintaining the Company's branch offices. Selling, general and administrative expenses included a provision for a legal settlement and related costs amounting to $323,000 in 1998 related to the Company's decision to settle a lawsuit. While the Company felt that the lawsuit was without merit, it settled to contain legal expenses. The aforementioned two charges, net of taxes, for the bankruptcy and the legal settlement and related costs, reduced earnings per share by $.08 and $.05 in 1999 and 1998, respectively. Interest expense in 1999 increased to $348,000 from $250,000 in 1998 and $214,000 in 1997 reflecting an increase in average borrowings to support the Company's continuing growth, including the Ideal acquisition. After giving effect to the utilization of certain tax credits, the effective tax rate for 1999 was 36%. Effective tax rates for fiscal 1998 and 1997 were 40%. As a result of the above, net income was $720,000 or $0.20 per share basic and diluted in 1999 compared with $706,000 or $0.19 per share basic and diluted in 1998 and $1,066,000 or $0.29 per share basic and diluted in 1997. Liquidity and Capital Resources Current assets at September 30, 1999 were $12,974,000 as compared to $9,125,000 at September 30, 1998 and current liabilities were $10,753,000 compared to $5,640,000 as of September 30, 1998. Employees typically are paid on a weekly basis. Clients generally are billed on a weekly basis. The Company has generally utilized bank borrowings to meet its working capital needs. As of September 30, 1999, the Company had a $8,500,000 bank line of credit; loans thereunder are secured principally by receivables with interest at LIBOR plus one and one-half percent with a prime rate less one-quarter percent option; $7,700,000 was outstanding under this line as of September 30, 1999. In November 1999, this line was increased to $9,000,000. The Company believes that internally generated funds and available borrowings will provide sufficient cash flow to meet its requirements for the next 12 months. Year 2000 Compliance The Company is a staffing company that provides employees to its customers. There is no inventory or production facility involved in providing these services. Computer systems are used to track employee availability, to generate and track sales, and for accounting purposes, including payroll and billing. All of the Company's systems and hardware were purchased in recent years. The Company has been assured by its providers that they are all Year 2000 compliant and has also tested the systems to confirm this. The Company will continue to test its existing and new hardware and software for Year 2000 compliance. The financial impact of insuring Year 2000 compliance is not expected to be material to the Company's financial condition. Forward-Looking Information Certain parts of this document include forward-looking statements within the meaning of the federal securities laws that are subject to risks and uncertainties. Factors that could cause the Company's actual results and financial condition to differ from the Company's expectations include, but are not limited to, a change in economic conditions that adversely affects the level of demand for the Company's services, competitive market and pricing pressures, the availability of qualified temporary workers, the ability of the Company to manage growth through improved information systems and the training and retention of new staff, and government regulation. 6 Joule Inc. and Subsidiaries Consolidated Balance Sheets
September 30, ------------------------- 1999 1998 ========================= ASSETS CURRENT ASSETS: Cash ................................................................... $ 152,000 $ 233,000 Accounts receivable, less allowance for doubtful accounts of $384,000 and $267,000 in 1999 and 1998, respectively ............... 12,680,000 8,549,000 Prepaid expenses and other current assets .............................. 142,000 343,000 ------------------------- Total Current Assets ............................................. 12,974,000 9,125,000 PROPERTY AND EQUIPMENT, NET .............................................. 4,092,000 3,707,000 GOODWILL ................................................................. 1,285,000 60,000 OTHER ASSETS ............................................................. 25,000 21,000 ------------------------- $18,376,000 $12,913,000 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Loans payable to bank .................................................. $ 7,700,000 $ 3,100,000 Accounts payable and accrued expenses .................................. 1,436,000 682,000 Accrued payroll and related taxes ...................................... 1,489,000 1,833,000 Income taxes ........................................................... 128,000 -- Current portion of long-term debt ...................................... -- 25,000 ------------------------- Total Current Liabilities ........................................ 10,753,000 5,640,000 ------------------------- LONG-TERM DEBT ........................................................... -- 381,000 ------------------------- Total Liabilities ................................................ 10,753,000 6,021,000 ------------------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value: Authorized 500,000 shares, none outstanding .......................... -- -- Common stock, $.01 par value: Authorized 10,000,000 shares--issued 3,820,000 and 3,816,000 shares in 1999 and 1998, respectively ....................................... 38,000 38,000 Additional paid-in capital ............................................. 3,669,000 3,658,000 Retained earnings ...................................................... 4,305,000 3,585,000 ------------------------- 8,012,000 7,281,000 LESS: Cost of 146,000 shares of common stock held in treasury ............ 389,000 389,000 ------------------------- Total Stockholders' Equity ....................................... 7,623,000 6,892,000 ------------------------- $18,376,000 $12,913,000 =========================
See accompanying notes to consolidated financial statements. 7 Joule Inc. and Subsidiaries Consolidated Statements of Income
Years Ended September 30, --------------------------------------- 1999 1998 1997 ======================================= REVENUES ........................................ $68,153,000 $55,301,000 $48,590,000 --------------------------------------- COSTS, EXPENSES, AND OTHER: Cost of services .............................. 55,548,000 45,273,000 39,485,000 Selling, general and administrative expenses .. 11,120,000 8,585,000 7,113,000 Interest expense .............................. 348,000 250,000 214,000 Other ......................................... 10,000 17,000 2,000 --------------------------------------- Income before income tax provision .............. 1,127,000 1,176,000 1,776,000 Income tax provision (Note 5) ................... 407,000 470,000 710,000 --------------------------------------- Net income ...................................... $ 720,000 $ 706,000 $ 1,066,000 ======================================= Basic and diluted earnings per share ............ $ 0.20 $ 0.19 $ 0.29 ======================================= Weighted average common shares outstanding--basic 3,673,000 3,670,000 3,664,000 Weighted average common shares and common equivalents outstanding--diluted .............. 3,673,000 3,672,000 3,666,000 =======================================
See accompanying notes to consolidated financial statements. Joule Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity
Shares of Additional Common Common Paid-In Retained Treasury Stock Stock Capital Earnings Stock ================================================================================== Balances, September 30, 1996 ...... 3,811,000 $ 38,000 $3,637,000 $1,813,000 $ (389,000) Net Income ...................... -- -- -- 1,066,000 -- Exercise of Stock Options ....... 5,000 -- 21,000 -- -- ---------------------------------------------------------------------------------- Balances, September 30, 1997 ...... 3,816,000 38,000 3,658,000 2,879,000 (389,000) Net Income ...................... -- -- -- 706,000 -- ---------------------------------------------------------------------------------- Balances, September 30, 1998 ...... 3,816,000 38,000 3,658,000 3,585,000 (389,000) Net Income ...................... -- -- -- 720,000 -- Exercise of Stock Options ....... 4,000 -- 11,000 -- -- ---------------------------------------------------------------------------------- Balances, September 30, 1999 ...... 3,820,000 $ 38,000 $3,669,000 $4,305,000 $ (389,000) ==================================================================================
See accompanying notes to consolidated financial statements. 8 Joule Inc. and Subsidiaries Consolidated Statements of Cash Flows
Years Ended September 30, ------------------------------------------------ 1999 1998 1997 ================================================ CASH FLOWS FROM OPERATING ACTIVITIES: Net income ................................................................. $ 720,000 $ 706,000 $ 1,066,000 Adjustments to reconcile net income to net cash flows (used in) provided by operating activities: Depreciation and amortization .......................................... 703,000 558,000 453,000 Provision for losses on accounts receivable ............................ 778,000 93,000 87,000 Changes in operating assets and liabilities: Accounts receivable .................................................. (4,909,000) (1,822,000) (231,000) Prepaid expenses and other assets .................................... 116,000 (203,000) 206,000 Accounts payable and accrued expenses ................................ 750,000 (790,000) (642,000) Accrued payroll and related taxes .................................... (404,000) 542,000 197,000 Income taxes ......................................................... 204,000 (168,000) 168,000 ------------------------------------------------ Net cash flows (used in) provided by operating activities .......... (2,042,000) (1,084,000) 1,304,000 ------------------------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions of property and equipment ..................................... (870,000) (602,000) (288,000) Acquisition of a business .................................................. (1,374,000) -- -- ------------------------------------------------ Net cash flows used in investing activities ........................ (2,244,000) (602,000) (288,000) ------------------------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in loans payable to bank ............................... 4,600,000 1,805,000 (1,048,000) Payment of long-term debt .................................................. (406,000) (25,000) (25,000) Proceeds from exercise of stock options .................................... 11,000 -- 21,000 ------------------------------------------------ Net cash flows provided by (used in) financing activities .......... 4,205,000 1,780,000 (1,052,000) ------------------------------------------------ NET CHANGE IN CASH ........................................................... (81,000) 94,000 (36,000) CASH, BEGINNING OF PERIOD .................................................... 233,000 139,000 175,000 ------------------------------------------------ CASH, END OF PERIOD .......................................................... $ 152,000 $ 233,000 $ 139,000 ================================================ SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid .............................................................. $ 319,000 $ 244,000 $ 223,000 ================================================ Income taxes paid .......................................................... $ 206,000 $ 714,000 $ 374,000 ================================================ NON-CASH TRANSACTIONS: During 1997, the Company acquired land and buildings in settlement of a $1,750,000 receivable.
See accompanying notes to consolidated financial statements. 9 Joule Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1---Summary of Significant Accounting Policies: Basis of Presentation--The consolidated financial statements include the accounts of JOULE INC. and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Use of Estimates--The preparation of accrual basis financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Property and Equipment--Property and equipment are stated at cost. Depreciation has been provided primarily by the straight-line method, at rates based upon estimated useful lives of 3 to 5 years for automotive equipment and 5 to 10 years for machinery, equipment, furniture and fixtures. Improvements to leasehold property are amortized on the straight-line method over the remaining lease term or the useful lives of related property, whichever is shorter. Buildings are depreciated over 30 years. Revenue Recognition--Revenue is recorded when services are rendered. Income Taxes--The Company accounts for income taxes pursuant to the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" which utilizes the liability method and results in the determination of deferred taxes based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities using enacted tax rates currently in effect. Earnings Per Share--Statement of Financial Accounting Standards No. 128, "Earnings per Share," establishes new standards for computing and presenting earnings per share (EPS). The standard requires the presentation of basic EPS and diluted EPS. Basic EPS is calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Income available to common shareholders used in determining basic EPS was $720,000 in 1999, $706,000 in 1998, and $1,066,000 in 1997. The weighted average number of shares of common stock used in determining basic EPS was 3,673,000 in 1999, 3,670,000 in 1998, and 3,664,000 in 1997. Diluted EPS is calculated by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding plus additional common shares that could be issued in connection with potentially dilutive securities. The weighted average number of shares of common stock used in determining diluted EPS was 3,673,000 in 1999, 3,672,000 in 1998, and 3,666,000 in 1997 and reflects additional shares in connection with stock option plans. Goodwill--During 1999, the Company acquired Ideal Technical Services ("Ideal") for $1,374,000. It was accounted for as a purchase. In connection with the acquisition, the Company recorded $1,269,000 of goodwill. Goodwill is generally being amortized over a period of approximately twenty years. Amortization of goodwill amounted to $44,000 in 1999, $24,000 in 1998 and $24,000 in 1997. Long-Lived Assets--The provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets" (SFAS 121) require, among other things, that an entity review its long-lived assets and certain related intangibles for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company does not believe that any impairment currently exists related to the long-lived assets. Note 2---Property and Equipment: Property and equipment consists of: September 30, --------------------------- 1999 1998 =========================== Machinery and equipment ...................... $3,264,000 $2,740,000 Furniture and fixtures ....................... 649,000 565,000 Automotive equipment ......................... 1,570,000 1,316,000 Building and leasehold improvements .......... 540,000 361,000 Buildings .................................... 1,834,000 1,834,000 Land ......................................... 671,000 671,000 --------------------------- 8,528,000 7,487,000 Less: Accumulated depreciation and amortization .......................... 4,436,000 3,780,000 --------------------------- $4,092,000 $3,707,000 =========================== Note 3---Loans Payable to Bank and Long-Term Debt: At September 30, 1999, the Company had an annual renewable line of credit of $8,500,000 that bears interest at LIBOR plus one and one-half percent with a prime rate less one-quarter percent option. The average interest rate at September 30, 1999 was 6.96%. At September 30, 1999, $800,000 of the line of credit was unused, all of which was available for use. Related borrowings are collateralized principally by accounts receivable. In November 1999, this line was increased to $9,000,000. There was a mortgage loan for $406,000 on the Company's staffing operations building at September 30, 1998. This mortgage was repaid in April 1999. Note 4---Stock Option Plan: The Company's 1991 Stock Option plan provides for the grant of nonqualified or incentive stock options covering up to an aggregate of 500,000 shares of common stock to directors, officers, and other employees of the Company. The exercise price cannot be less than the fair market value of the stock at the time the options are granted. At September 30, 1999, there were 215,000 stock options outstanding at prices ranging from $3.50 to $5.38, of which 50,000 options are exercisable. There were 4,000 stock options outstanding from a previous stock option plan at a price of $2.63 which were exercised in 1999. In 1997, 5,000 options were exercised and, in 1998, 15,000 options were cancelled. In 1998 and 1997, 110,000 options were granted in each year at prices ranging from $4.00 to $5.38. There were no options granted in 1999. 10 Joule Inc. and Subsidiaries Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation (SFAS 123)," permits an entity to continue to account for employee stock-based compensation under APB Opinion No. 25, "Accounting for Stock Issued to Employees," or adopt a fair value based method of accounting for such compensation. The Company has elected to continue to account for stock-based compensation under Opinion No. 25. Accordingly, no compensation expense has been recognized in connection with options granted. Had compensation expense for options granted subsequent to October 1, 1995 under the Company's stock option plans been determined based on the fair value at the date of grant in accordance with SFAS 123, the Company's net income and net income per share would have been as follows: --------------------------------------------- 1999 1998 1997 ============================================= Net income: As reported ................ $ 720,000 $ 706,000 $ 1,066,000 Pro forma .................. 633,000 671,000 1,062,000 Net income per share: As reported ................ 0.20 0.19 0.29 Pro forma .................. 0.17 0.18 0.29 ============================================= The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model. The weighted average fair values of options granted in fiscal 1998 and 1997 were $5.25 and $4.23, respectively, based upon the following weighted average assumptions: expected volatility (50% in 1998 and 25% in 1997), risk-free interest rate (7.5% in 1998 and 6.5% in 1997), expected life (3 years in 1998 and 1997), and expected dividend yield (0% in 1998 and 1997). There were no options granted during 1999. Note 5---Income Taxes: The provision for income taxes is comprised of the following: September 30, ---------------------------------------- 1999 1998 1997 ======================================== Current: Federal ...................... $306,000 $364,000 $551,000 State and Local .............. 101,000 106,000 159,000 ---------------------------------------- $407,000 $470,000 $710,000 ======================================== The provision for income taxes varied from the tax computed at the U.S. Federal statutory rates of 34% in fiscal 1999, 1998 and 1997 for the following reasons: September 30, ---------------------------------------- 1999 1998 1997 ======================================== U.S. Federal Tax at statutory rates ................ $ 383,000 $ 400,000 $ 604,000 State income taxes, net of Federal tax benefit ............ 68,000 70,000 106,000 Utilization of tax credits ....... (44,000) -- -- ---------------------------------------- $ 407,000 $ 470,000 $ 710,000 ======================================== Note 6---Commitments and Contingencies: The Company's facilities are leased under noncancellable terms expiring through 2002. Rent expense was $291,000, $181,000, and $286,000 for the years ended September 30, 1999, 1998 and 1997, respectively. Aggregate rentals for the remaining lease terms at September 30, 1999 are as follows: - -------------------------------------------------------------------------------- Year Ending September 30, ================================================================================ 2000................................................................ 265,000 2001................................................................ 248,000 2002................................................................ 76,000 -------- $589,000 ======== A provision for legal settlement and related costs amounting to $323,000 in 1998 related to the Company's decision in October 1998 to settle a lawsuit. While the Company felt that the case was without merit, it settled to contain legal expenses. The aforementioned amount was paid in fiscal 1999. Note 7---Transactions with Major Stockholders and Affiliates: The Company rented facilities from certain of its stockholders and their affiliates for approximately $50,000, $50,000 and $199,000 for each of the years ended September 30, 1999, 1998 and 1997. At September 30, 1999, the Company had related lease commitments of $1,000 for the year ending September 30, 2000. Further, in 1997 the Company entered into a three-year lease with the purchaser of property formerly owned by an affiliate. Annual rentals under this lease approximate $133,000. The Company subleases most of this space to the affiliate, which reimbursed the Company approximately $115,000 per year. The Company paid certain major stockholders Board of Director's fees of $19,000, $15,000 and $16,000 for the years 1999, 1998 and 1997; accounts receivable include amounts due from a stockholder of $35,000, $33,000 and $22,000 at September 30, 1999, 1998 and 1997, respectively. During the year ended September 30, 1997, the Company acquired land and buildings from Kahle Engineering Corp. (Kahle), an affiliate, which the Company had previously leased for use in its operations, in settlement of a receivable of $1,750,000 due from Kahle. The appraised value of the property approximated the receivable. Note 8---Acquisition of a Business: On May 16, 1999, the Company completed the acquisition of the principal operating assets (excluding cash and accounts receivable) of Ideal, a staffing company specializing in engineering and other technical services, for $1.3 million of cash. Ideal, which has offices in Mobile, Alabama and Houston, Texas, had been a subsidiary of SkillMaster, Inc. of Houston, Texas. The purchase price was funded by borrowings under the Company's bank credit facility with Summit Bank (the "Bank"). The Bank increased the Company's line of credit from $6.0 million to $8.5 million in May to fund this acquisition and related working capital requirements. Goodwill of $1,269,000 was recorded in connection with this acquisition. Assuming this transaction had 11 Joule Inc. and Subsidiaries Notes to Consolidated Financial Statements been completed on October 1, 1998, unaudited pro forma revenue, net income and earnings per share for the year ended September 30, 1999 would have been $76,598,000, $421,000 and $0.11 per share, basic and diluted; for the year ended September 30, 1998 such amounts would have been $70,617,000, $604,000 and $0.16, respectively. Note 9---Segment Disclosures In fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and Related Information." SFAS 131 supersedes SFAS 14, "Financial Reporting for Segments of a Business Enterprise," replacing the "industry segment" approach with the "management" approach. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments. The Company has determined that its reportable segments are those that are based on the Company's method of internal reporting, which disaggregates its business by segment. The Company's reportable segments are: (1) Commercial Staffing, (2) Technical Staffing and (3) Industrial Staffing. Information concerning operations by operating segment is as follows (in 000's): 1999 1998 1997 ================================== Revenues Commercial ............................ $ 26,112 $ 20,391 $ 18,480 Technical ............................. 20,214 16,466 13,113 Industrial ............................ 21,827 18,444 16,997 ---------------------------------- $ 68,153 $ 55,301 $ 48,590 ================================== Income Before Tax Provision Commercial ............................ $ 586 $ 1,160 $ 1,561 Technical ............................. 1,696 1,476 1,036 Industrial ............................ 1,993 1,165 1,299 Corporate (unallocated, including interest) ................. (3,148) (2,625) (2,120) ---------------------------------- $ 1,127 $ 1,176 $ 1,776 ================================== Depreciation and Amortization Commercial ............................ $ 153 $ 108 $ 59 Technical ............................. 104 59 54 Industrial ............................ 262 241 213 Corporate (unallocated) ............... 184 150 127 ---------------------------------- $ 703 $ 558 $ 453 ================================== Identifiable Assets Commercial ............................ $ 5,991 $ 4,156 $ 2,611 Technical ............................. 5,330 2,062 1,938 Industrial ............................ 4,695 3,976 3,795 Corporate (unallocated) ............... 2,360 2,719 2,499 ---------------------------------- $ 18,376 $ 12,913 $ 10,843 ================================== Additions to Long-Lived Assets(1) Commercial ............................ $ 373 $ 350 $ 58 Technical ............................. 1,508 24 15 Industrial ............................ 323 149 708 Corporate (unallocated) ............... 106 79 1,257 ---------------------------------- $ 2,310 $ 602 $ 2,038 ================================== (1) Includes property and equipment and intangible asset additions. Note 10--Selected Quarterly Financial Data (Unaudited) A summary of quarterly financial information for fiscal 1999 and 1998 is as follows (in 000's, except per share data): First Second Third Fourth Quarter Quarter Quarter Quarter ================================================================================ 1999: Revenues .................. $ 15,413 $ 15,568 $ 16,919 $ 20,253 Net income ................ 358 252 281 (171) Basic and diluted earnings per share ...... 0.10 0.07 0.08 (0.05) 1998: Revenues .................. $ 12,304 $ 13,646 $ 14,392 $ 14,959 Net income ................ 178 210 294 24 Basic and diluted earnings per share ...... 0.05 0.06 0.08 0.01 Report of Independent Public Accountants To the Stockholders and Board of Directors of Joule Inc. We have audited the accompanying consolidated balance sheets of Joule Inc. (a Delaware corporation) and subsidiaries as of September 30, 1999 and 1998 and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the three years in the period ended September 30, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Joule Inc. and subsidiaries as of September 30, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1999 in conformity with generally accepted accounting principles. /s/ ARTHUR ANDERSEN LLP Roseland, New Jersey November 12, 1999 12 Joule Inc. and Subsidiaries Corporate Data Board of Directors Richard P. Barnitt Financial Consultant Paul L. DeBacco President Michael Christopher Group. Inc. Robert W. Howard Chairman of the Board Reisen Lumber Industries, Inc. Emanuel N. Logothetis Chairman of the Board and Chief Executive Officer Nick M. Logothetis President Chartwell Consulting Group Steven Logothetis Attorney Officers Emanuel N. Logothetis Chairman of the Board and Chief Executive Officer John G. Wellman, Jr. President and Chief Operating Officer Bernard G. Clarkin Vice President, Chief Financial Officer and Secretary John F. Logothetis Vice President Stephen Demanovich Vice President Anthony W. Trotter Vice President Corporate Information For a copy of Form 10-K or other information about the Corporation, contact: Investor Relations Secretary JOULE INC. 1245 Route 1 South Edison, New Jersey 08837 (732) 548-5444 E-mail Address: JOL@jouleinc.com Or Visit our Web Site at www.jouleinc.com Auditors Arthur Andersen LLP 101 Eisenhower Parkway Roseland, New Jersey 07068 Transfer Agent & Registrar Continental Stock Transfer & Trust Co. 2 Broadway New York, New York 10275-0491 JOULE Common Stock is traded on the American Stock Exchange under the symbol JOL. Annual Meeting The annual meeting of JOULE Inc. will be held on Wednesday, February 2, 2000 at 10:30 a.m., at the Pines Manor, Edison, New Jersey. Joule Inc. Offices Headquarters 1245 Route 1 South Edison, New Jersey (732) 548-5444 Fax: (732) 494-6346 Technical Staffing Locations Edison, New Jersey Ideal Technical Services Locations Mobile, Alabama Houston, Texas Commercial Staffing Services Locations Edison, New Jersey Parsippany, New Jersey Paramus, New Jersey Northfield, New Jersey Trenton, New Jersey Cherry Hill, New Jersey Union City, New Jersey Passaic, New Jersey New Brunswick, New Jersey Camden, New Jersey Elizabeth, New Jersey Wilmington, Delaware Ft. Lauderdale, Florida Baltimore, Maryland Industrial Staffing Locations Edison, New Jersey Gibbstown, New Jersey Fishkill, New York Baltimore, Maryland Lawrenceville, Illinois Market for Registrant's Common Equity and Related Stockholder Matters The Company's Common Stock is traded on the American Stock Exchange under the symbol JOL. The high and low sales prices for the Common Stock as reported by the American Stock Exchange were as follows: ------------------ High Low ================== Calendar 1997 Fourth Quarter ................................ 6 1/4 4 1/2 ------------------ Calendar 1998 First Quarter ................................. 5 3/4 4 1/2 Second Quarter ................................ 5 1/2 3 1/2 Third Quarter ................................. 4 1/8 2 7/8 Fourth Quarter ................................ 3 3/8 1 7/8 ------------------ Calendar 1999 First Quarter ................................. 4 5/8 2 Second Quarter ................................ 3 1/8 2 1/8 Third Quarter ................................. 2 3/4 2 ------------------ Fourth Quarter (through December 6) ........................ 2 1/8 1 1/2 ================== As of December 6, 1999, there were approximately 600 holders of the Company's Common Stock. No cash dividends have been declared on the Common Stock. Designed by Curran & Connors, Inc. / www.curran-connors.com JOULE 1245 Route 1 South Edison, New Jersey 08837 732-548-5444 Our Web Site www.jouleinc.com is continuing to provide information about Joule to those with access to the internet. EX-21 5 SUBSIDIARIES OF JOULE INC. EXHIBIT 21 SUBSIDIARIES OF JOULE INC. Subsidiary State of Incorporation JOULE Maintenance Corporation New Jersey JOULE Technical Staffing, Inc. New Jersey JOULE Technical Services, Inc. New Jersey 20 Orchard St., Inc. New Jersey JOULE Transportation, Inc. New Jersey EX-23 6 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report incorporated by reference to this Form 10-K, into the Company's previously filed Registration Statement File No. 33-57996. ARTHUR ANDERSEN LLP Roseland, New Jersey December 28, 1999 EX-27 7 FDS --
5 12-MOS SEP-30-1999 SEP-30-1999 152 0 13064 384 0 12974 8528 4436 18376 10753 0 0 0 38 7585 18376 0 68153 0 55548 10352 778 348 1127 407 720 0 0 0 720 .20 .20
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