CHARLES L. JOEKEL
TEXAS STAFFING SERVICES, INC.
3000 Richmond Avenue, Suite 120
Houston, Texas 77098
Phone (713) 529-0202
Fax (713) 524-4454
April 25, 2000
PRIVILEGED AND CONFIDENTIAL
VIA FACSIMILE: 713-771-7536
Elorian Landers, President
Internet Venture Group, Inc.
9307 West Sam Houston Parkway
Building 100
Houston, Texas 77099
RE: Internet Venture Group, Inc. ("iVG"); Proposed purchase of the stock of
Texas Staffing Services, Inc., d/b/a Trendsetter Staffing Services
("TSS") from Charles L. Joekel ("Joekel")
Dear Elorian:
This letter of intent is intended to outline and summarize the terms being
proposed by iVG, a Florida corporation (the "Purchaser"), for the purchase and
acquisition of all of the issued and outstanding capital stock of TSS, a Texas
corporation (the "Company"), from Joekel (hereinafter referred to as "Seller").
I am pleased to submit this Letter of Intent ("LOI") reflecting some but
not all of the essential terms that will be included in a definitive stock
purchase agreement to be prepared by out respective counsel as quickly as
possible and in no event later than July 18, 2000. Hopefully this letter
accurately confirms the results of our meetings, recent conversations and most
of our negotiations with regard to the proposed acquisition of the Company by
the Purchaser and is based on the information furnished to me and in all
respects subject to the approval of the boards of directors of the Seller and
Purchaser, respectively, the definitive Stock Purchase Agreement (the
"Agreement") and to the other terms and conditions precedent to the closing
("Closing") either herein expressed or as set forth in the Agreement.
As stated above, we intend to execute a definitive Agreement to be prepared
by our respective legal counsel and approved by all parties which will
essentially encompass the purchase of all of the issued and outstanding stock of
the Company subject to the following terms and conditions:
1. As promptly as possible after the delivery of this LOI the
parties shall use diligent good faith efforts to work toward the
preparation and execution of a definitive contract of sale, a
stock purchase agreement, the Agreement, covering the terms,
types of representations, warranties, covenants, indemnities,
conditions, and
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Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 2
provisions, together with appropriate exhibits disclosing
material information all of which used be, as to form and
substance, mutually acceptable to the parties as discussed in
this LOI, such Agreement to be executed by and between the
parties on or before July 18, 2000.
2. The execution of any such agreement would be subject to the com-
pletion of Seller and Purchaser's investigation and due dili-
gence of iVG and the Company, respectively, in all respects sat-
isfactory to each party, the approval of the board of directors
of the Company and Purchaser and, to the extent necessary, all
appropriate regulatory authorities.
Based on the information you have furnished to me and on information
currently known to the Purchaser, Purchaser proposes that the Agreement include
at least the terms set forth as follows:
I. Transactions and Actions to an Agreement:
1. The Transaction. The Seller will sell all of the issued and out-
standing capital stock (including all issued and outstanding
options, warrants, or rights to purchase the capital stock of
the Company calculated on a fully diluted basis) (the "Stock")
of the Company to the Purchaser at the price (the "Purchase
Price") set forth in Paragraph 2, free and clear of all liens,
claims or encumbrances whatsoever. Closing of this transaction
would occur as set forth below. Seller owns or controls through
contract the Stock, being 1,000 shares of commons capital stock.
2. Purchase Price. The consideration to be paid by Purchaser to
Seller for the acquisition of the Stock of the Company will be
THIRTEEN MILLION DOLLARS (U.S. $13,000,000.00) subject to such
items and amounts to be held in the Escrow Account pursuant to
the Escrow Agreement contemplated in Section 8 of this Letter,
as set forth in and included in the Agreement, or separately,
established at Closing, the Purchase Price therefore is as
follows:
2.1 Cash at Closing. TWO MILLION DOLLARS (U.S.
$2,000,000.00), such FIVE HUNDRED THOUSAND DOLLARS (U.S.
$4,500,000,00), such Note payable on or before a date
180 days from Closing together with a Security Agreement
(the "Security Agreement") securing payment of the Note
by the shares of stock transferred to Purchaser at Clos-
ing such shares to be held for the duration of the Note
in the Escrow Account pursuant to the terms of the
Escrow Agreement established at Closing. The Note in
the amount of
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Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 3
FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS
($4,500,000.00) payable on or before 180 days from the
date of Closing together with the Security Agreement
securing payment of such amounts by the stock of the
Company delivered by Seller to Purchaser by delivery to
the escrow agent in accordance with the Escrow Paragraph
8 hereof. The Note shall bear no interest unless such
Note remains unpaid on and after the Payment Date as set
forth in the Note pursuant to the Agreement. The Secur-
ity Agreement shall guarantee payment of the Note and
shall be in a form consistent and satisfactory to
counsel for the Seller.
2.3 In addition to the cash to be paid by Purchaser to Sell-
er contained in Paragraphs 2.1 and 2.2, Purchaser shall
deliver to Seller at Closing common capital stock of iVG
valued at SIX MILLION FIVE HUNDRED THOUSAND DOLLARS
(U.S. $6,500,000.00). The Stock of iVG shall be valued
based on the average trading price of the Stock of iVG
for the 20-day period immediately preceding the Closing.
As an example only, the exchange rate calculation is as
follows: if the average Closing bid price for iVG Stock
is FIVE DOLLARS (U.S. $5.00), then iVG shall case to be
transferred to Seller at Closing ONE MILLION THREE HUN-
DRED THOUSAND (1,300,000) shares of the capital stock of
iVG that bear a restriction legend under Rule 144 of the
Securities Act of 1933 preventing the sale of the under-
lying securities for a period of one (1) year from the
date of transfer. Pursuant to the terms of such Escrow,
the stock of iVG will be held in the Escrow Account and
shall be returned to the Purchaser in the event Pur-
chaser fails to pay the Note in full when due in accord-
ance with the terms of the Note.
2.4 Consulting Agreement, Employment Agreement. Non-Competi
-tion Agreement. As additional consideration for the
shares Seller shall deliver to Purchaser a consulting,
employment, and non-competition agreement in form and
substance pursuant to the provisions of the Agreement
which shall bind Seller to be e mployed by and consult
with the Company for a period of three (3) years from
the Closing for a salary to be negotiated and agreed to
in the Agreement, which employment and consulting agree-
ment shall contain a non-competition covenant and agree-
ment whereby Seller will covenant and agree that contemp
-oraneous with the execution and delivery of the employ-
ment and consulting agreement from Seller to Purchaser
at Closing, that Seller will not compete with iVG or the
Company or otherwise compete with iVG in the profession-
al staffing and skilled temporary industry for a period
of three (3) years and confined geographically to Harris
County, Texas. Such covenant shall exclude from its term
the employment or other participation of Seller in the
non-professional and labor staffing employment
industries.
<PAGE>
Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 4
2.5 Key Employees' Employment Agreements. Seller has advised
Purchaser that certain key employees and the principal
executive officer of TSS have employment agreements with
the Company and that such employment agreements pursuant
to their terms, survive the purchase and Closing of the
purchase of the Company by Purchaser. As additional con
-sideration, Seller will use his best and good faith
efforts to assist the Purchaser in negotiating new
employment, consulting, and non-competition agreements
to be entered into contemporaneous with the Closing of
the Agreement on such reasonable terms and conditions
set forth in the Agreement.
3. Nature of Shares of iVG Delivered to Purchaser at Closing. In
addition to the representations and warranties as set forth in
Paragraph 5 of this LOI, iVG will make certain representations
concerning the corporate status of iVG and its Capital Stock.
Such representations and warranties to be contained in the Agree
-ment and provide at least the following:
3.1.1 Good Standing. iVG represents and warrants that iVG is a
corporation in good standing under the laws of the State
of Florida.
3.1.2 Capital structure. iVG represents and warrants the Art-
icles of Incorporation of iVG authorize the issuance of
up to THREE HUNDRED MILLION SHARES (300,000,000) shares
of common stock.
3.1.3 Issued and outstanding shares. iVG represents and
warrants that at Closing there shall be no more than
FORTY-NINE MILLION FIVE HUNDRED EIGHTY-TWO THOUSAND FOUR
HUNDRED NINETY-NINE (49,582,499) shares of common stock
issued and outstanding or reserved to be issud as of the
date of closing.
3.1.4 Stock Options. iVG represents and warrants that the
board of directors of iVG has authorized the 2000
Incentive Stock Option Plan (2000 Plan) under which NINE
MILLION (9,000,000) shares of common stock are reserved
for the issuance on the exercise of the Company's stock
options under such 2000 Plan.
3.1.5 Shares to trade on public security exchange. iVG repre-
sents and warrants that it has filed a form 15(2)(c)(11)
with the Securities and Exchange Commission (SEC) and
that iVG will take all steps reasonably necessary to
result in the public trading of shares of iVG on a pub-
lic securities exchange prior to Closing.
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Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 5
4. The Closing of this transaction shall take place within ten (10)
business days of the completion and receipt of the following and
in no event later than September 1, 2000:
(a) Completion of due diligence review, investigation and
examination of iVG by Seller and its representatives,
such due diligence review in all respects satisfactory
to Seller;
(b) Completion of due diligence review, investigation and
examination of the Company by Purchaser and its rep-
resentatives, such due diligence review in all respects
satisfactory to Purchaser;
(c) A favorable report by Purchaser's counsel concerning the
corporate status and proceedings of the Company,
including, but not limited to, title to the stock, lia-
bilities, pending and threatened litigation, the form
and content of the Agreement, and such other aspects of
the Company's business, as Purchaser may deem relevant;
(d) A favorable report by Seller's counsel concerning the
corporate status and proceedings of the Company,
including, but not limited to, title to the stock, lia-
bilities, pending and threatened litigation, the form
and content of the Agreement, and such other aspects of
the Company's business, as Seller may deem relevant;
(e) A favorable review of Purchaser of the Company's most
recent audited and unaudited financial statements, and
accounting records, and the absence of any absolute or
contingent liabilities of the Company, except as reflect
-ed therein;
(f) A favorable review of Seller of the Company's most re-
cent audited and unaudited financial statements, and
accounting records, and the absence of any absolute or
contingent liabilities of the Company, except as reflect
-ed therein;
(g) Receipt of opinion of Seller's counsel as to various
aspects of the transaction and the status of Seller and
the Company as required by the Agreement;
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Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 6
(h) Receipt of opinion of Purchaser's counsel as to various
aspects of the transaction and the status of Seller and
the Company as required by the Agreement;
(i) Approval of the Documents by the Board of Directors of
Seller and Purchaser, respectively, as evidenced by
resolutions and supporting documentation and opinions
that the parties may reasonably require;
(j) Approval by any and all banks, lenders, or other cred-
itors of Seller or the Company, as the case may be, of
the transactions contained in the Agreement requiring
approval pursuant to its loan documents;
(k) Completion to the satisfaction of Seller and Purchaser
of any and all other conditions precedent to Closing
contained in the Agreement.
5. Representations and Warranties. The Agreement will contain
representations and warranties of the Seller, including represen
-tations and warranties customary to transactions of this type
including, but not limited to organization, business and capital
structure of the Company, financial statements of the Company
prepared in accordance with GAAP, litigation or claims, known or
unknown, involving the Company, employment matters, the status
of all taxes and tax returns, the status of all leases,
contracts and obligations of the Company including customer
lists and producer contracts, the status, existence and proper
description of the Company's assets, liabilities, inventories,
accounts receivable, accounts payable, accounts current,
payables and net worth, compliance by the Company with all legal
requirements, the status and funding of the Company's employee
benefit plans, convenants relating to the operation of the
Company from the execution of the Agreement until Closing and
the absence of any material misstatements or omissions with re-
spect to information and documents obtained with respect to the
Company.
6. Consents. The Purchaser and the Seller will cooperate with each
other and proceed, as promptly as is reasonably practical, to
prepare and file the notifications or applications for approval
required by any applicable laws or regulations and to obtain all
third party consents, if any, for the purchase.
7. Other Terms. Seller an Purchaser will make representations and
warranties to each party, and will provide covenants and other
protections for the benefit of the parties as set forth in the
Agreement. The consummation of the purchase by the Seller and
Purchaser will be subject to the satisfaction of various condi-
tions, including without limitation: no material adverse change
in the value of the Company's assets or the Company's ability to
operate in the ordinary course of business in the State of Texas
and the continuation of iVG and the Company's business, and all
other licenses and permits, as the case may be.
<PAGE>
Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 7
8. Escrow Agreement. There shall be established at Closing a escrow
and account (the "Escrow Account") established and maintained
pursuant to the terms of the Agreement and as agreed to by the
parties for a period of time following Closing to secure the
Note pursuant to the terms of the Escrow Agreement in form and
substance satisfactory to Purchaser and Seller.
II. Binding and Enforceable Agreement ("Binding Provisions"):
Seller and Purchaser agree that the following paragraphs of this Letter
are intended to establish legal, binding and enforceable agreements between the
Purchaser, the Company and the Seller:
1. Access to Records. From and after the date of the execution of
this Letter of Intent by Seller and Purchaser, the parties will
permit each other, their counsel, accountants and other rep-
resentatives, at the party's expense, full access, upon prior
notice to party and during normal business hours, to all of the
assets, properties, facilities, employees, agents, accountants,
books and records of the Company and Purchaser; and data concern
-ing the business, operations or affairs of the Company and
Purchaser as the party or party's representatives may reasonably
request; provided, however, that all such information and the
data shall be kept confidential by that party in accordance with
Paragraph II(4) of this LOI. All obligations of Seller and
Purchaser, as contained in this Letter and the Agreement, shall
be conditioned on Seller and Purchaser's completion and satis-
faction of due diligence review of such business and records.
2. Exclusive Dealing; Standstill. For a period commencing at the
execution of this LOI until July 18, 2000, the Seller shall not
directly or indirectly solicit any offer or proposal from any
person other than the Purchaser regarding the sale or possible
sale of the Company or deal, negotiate, or release any Company
information to any such offeror. In the event that the Company
or any Seller receives any proposals from any person other than
the Purchaser with respect to such a sale or possible sale,
Company or the Seller shall notify the Purchaser of such
proposal immediately, will reject such proposal and will not in
any way act on such proposal.
3. Conduct of Business. During the period from the execution of
this LOI until Closing, the Company shall maintain its good
standing and refrain from conducting any business other than as
currently being conducted, and Seller will not dispose of
assets, or increase its liabilities in any way.
4. Confidentiality and Restricted Use of Information. Except as and
to the extent required by law, neither the Seller nor the Pur-
chaser will disclose or use and will direct its representatives
not to disclose or use to the detriment of the Company, any
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Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 8
Confidential Information (as defined below) with respect to iVG
or the Company furnished, or to be furnished, by either iVG or
the Company, or their representatives to the Purchaser or Seller
or its representatives, other than in connection with its evalua
-tion of the transaction proposed in this Letter. For purposes
of this paragraph, "Confidential Information" means any informa-
tion about iVG or the Company stamped "confidential" or identi-
fied in writing as such to the Purchaser by the Company or
Seller, as the case may be, at the time of its disclosure unless
(a) such information is already known to that party or its
representatives, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or
approval required for the consummation of the purchase, or (c)
the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
5. Costs. Purchaser, Seller, and the Company will each be respons-
ible for and bear all of its own costs and expenses including,
but not limited to, legal and accounting expenses and including
any investment banking firm(s), broker's or finder's fees and
the expenses of its representatives incurred at any time in
connection with pursuing or consummating the purchase. It is
agreed that there will be no fees, expenses or any other amount
due any parties to this LOI or the Agreement should the purchase
not be consummated and closed.
6. Entire Agreement. The Binding Provisions in Part II of this
Letter constitute the entire agreement between the parties, and
supersede all prior oral or written agreements, understandings,
representations and warranties, and courses of conduct and deal-
ing between the parties on the subject matter hereof. Except as
otherwise provided herein, the Binding Provisions may be amended
or modified only by a writing executed by all the parties.
7. Governing Law. The Binding Provisions will be governed by and
construed under the laws of the State of Texas without regard to
conflict of laws principles.
8. Jurisdiction; Service of Process. Any action or proceeding seek
-ing to enforce any provision of, or based on any right arising
out of, this Letter may be brought against any of the parties in
the courts of the State of Texas, County of Harris, or, if it
has or can acquire jurisdiction in the United States District of
Southern Texas, and each of the parties consents to the juris-
diction of such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referr-
ed to in the preceding sentence may be served on any party any-
where in the world.
9. Termination. Except as provided in this Paragraph 9, the Bind-
ing Provisions will automatically terminate on July 18, 2000
(the "Termination Date"). The parties further agree that either
party shall have the right to immediately terminate this LOI
<PAGE>
Elorian Landers, President
Internet Venture Group, Inc.
April 25, 2000
Page 9
without penalty in the event that (i) the non-terminating party
has breached any covenant contained in this LOI, (ii) any rep-
resentation or warranty made by the non-terminating party in
this LOI is determined to be materially incorrect, or (iii) the
terminating party determined based on its due diligence that the
transactions set forth herein no longer are in the best
interests of the terminating party. Provided, however, that the
termination of the Binding Provisions will not affect the liabil
-ity of a party for breach of any of the Binding Provisions
prior to the termination. Upon termination of the Binding Pro-
visions, the parties will have no further obligations hereunder,
except as stated in Paragaraphs 2, 4, 5, 6, 7, 8, 9, 10 and 11
of this Part II, which will survive any such termination.
10. Counterparts. This LOI may be executed in one or more counter-
parts, each of which will be deemed to be an original copy of
this LOI and all of which, when taken together, will be deemed
to constitute one and the same agreement.
11. No Liability. The paragraphs and provisions of Part I of this
LOI do not constitute and will not give rise to any legally bind
-ing obligation on the part of any of the parties. Moreover,
except as expressly provided in the Binding Provisions (or as
expressly provided in any binding written agreement that the
parties may enter into the future), no past or future action,
course of conduct, or failure to act relating to the purchase,
or relating to the negotiation of the terms of the purchase or
any definitive Agreement, will give rise to or serve as a basis
for any obligation or other liability on the part of the
parties.
If you agree with and accept the foregoing, please date, sign and return
one copy of this LOI, which will then constitute our agreement with respect to
its subject matter, please do so on or before April 25, 2000 or this LOI will
have no further force or effect in its entirety.
Very truly yours,
CHARLES J. JOEKEL (Seller)
/s/ Charles L. Joekel
---------------------------------
AGREED AND ACCEPTED on the 25th day of April, 2000.
INTERNET VENTURE GROUP, INC. (Purchaser)
By: /s/ Elorian Landers
--------------------------
Elorian Landers, President
