LETTER OF INTENT

BY WHICH

HEARTLAND, INC.

(a Maryland corporation)

SHALL ACQUIRE

OHIO VALLEY LUMBER

(a Delaware corporation)

 

This letter, when countersigned, will confirm our intent to purchase, in the
transaction described below, all of the outstanding stock of NKR, Inc./dba Ohio
Valley Lumber. This letter of intent is delivered for the purpose of setting
forth our intentions and to confirm your interest in proceeding further to an
acquisition contract. Our agreement is on the terms, and subject to the
conditions, described below.

This Letter of Intent (“LOI”) is made and dated this 12 day of September, 2005
and is not a contract between the parties.

I.              THE INTERESTED PARTIES

A.

THE PARTIES TO THIS AGREEMENT

 

 

1.

Heartland, Inc., a Maryland corporation (“Heartland”).

 

 

2.

NKR, Inc., a Delaware corporation (“Ohio Valley Lumber”).

3.         Natalie K. Robbins, an individual, is the owner of a majority of the
outstanding stock of Ohio Valley Lumber (“Shareholder”).

4.         Heartland, Ohio Valley Lumber, and the Shareholder may be referred to
collectively herein as the “Parties.”

II.             RECITALS

A.

THE CAPITAL OF HEARTLAND AND Ohio Valley Lumber

1.         The capital of Heartland consists of 100,000,000 shares of common
stock, $.001 par value, authorized, of which 24,164,106 are issued and
outstanding as of the date of this Agreement, and 5,000,000 shares of preferred
stock, $.01 par value, authorized, of which none are issued and outstanding as
of the date of this Agreement.

2.         The capital of Ohio Valley Lumber consists of 10,000,000 shares of
common stock, .01 par value, authorized, of which 9,000,000 shares are issued
and 8,640,000 of which are owned by Shareholder.

B.

THE BACKGROUND FOR THE INTENDED ACQUISITION

Heartland desires to acquire Ohio Valley Lumber and the directors and
Shareholder desire to sell Ohio Valley Lumber to Heartland.

 

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III.           CONDITIONS PRECEDENT TO STOCK SALE

A.

Buyer Contingencies

 

 

1.

Satisfactory Review of Seller’s books and records.

 

2.

SEC qualified audited financials.

 

 

3.

All standard due diligence completed.

 

B.

SELLER CONTINGENCY

 

1.         A letter verifying the Financial Ability of Heartland for the total
amount of the proposed purchase of Ohio Valley Lumber is to be presented to the
Board of Directors of Ohio Valley Lumber.

C.

DIRECTOR APPROVAL

The Board of Directors of the Parties respectively shall have determined that it
is advisable and in the best interests of each of them and both of them to
proceed with the acquisition by Heartland of Ohio Valley Lumber, in a manner
mutually agreed upon by the Parties.

D.

SHAREHOLDER APPROVAL

To the extent required by law, the shareholders of the Parties shall have
approved the acquisition and this Agreement.

E.

EFFECTIVE DATE

An ACQUISITION CONTRACT shall become effective on the date designated therein as
the "Closing Date"; provided that the following conditions precedent shall have
been met, or waived in writing by the Parties:

1.         At the Closing, Heartland shall pay $4,000,000.00 in cash to the
shareholders of Ohio Valley Lumber, and 2,000,000 shares of Common stock in
Heartland to the shareholders of Ohio Valley Lumber, in exchange for 100% of the
issued and outstanding shares of Ohio Valley Lumber common stock. In addition
Heartland will make a $2,000,000.00 Capital Cash Infusion into Ohio Valley
Lumber to be used exclusively for the reduction of debt. Heartland will agree to
promptly file a Registration Statement under the Securities Act of 1933 to
register all shares received by the shareholders of Ohio Valley Lumber.

2.         Each Party shall have furnished to the other Party all corporate and
financial information which is customary and reasonable, to conduct its
respective due diligence, normal for this kind of transaction. If any Party
determines that there is a reason not to

 

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complete the ACQUISITION CONTRACT as a result of their due diligence
examination, then they must give written notice to the other Parties prior to
the expiration of the due diligence examination period. The Due Diligence
period, for purposes of this paragraph, shall expire on a date determined by the
Parties, which shall be no later than sixty days after the signing of the Letter
of Intent.

3.         The rights of all dissenting shareholders, if any, of each Party
shall have been satisfied and the Board of Directors of each Party shall have
determined to proceed with the ACQUISITION CONTRACT.

4.         All of the terms, covenants and conditions of the ACQUISITION
CONTRACT to be complied with or performed by each Party for Closing shall have
been complied with, performed or waived in writing.

5.         The representations and warranties of the Parties, contained in the
ACQUISITION CONTRACT, as herein contemplated, except as amended, altered or
waived by the Parties in writing, shall be true and correct in all material
respects at the Closing Date with the same force and effect as if such
representations and warranties are made at and as of such time; and each Party
shall provide the other with a corporate certificate, of a director of each
Party, dated the Closing Date, to the effect, that all conditions precedent have
been met, and that all representations and warranties of such Party are true and
correct as of that date. The form and substance of each Party's certification
shall be in form reasonably satisfactory to the other.

F.

TERMINATION

The LOI may be terminated at any time prior to the Closing Date, whether before
or after approval by the shareholders of the Parties: (i) by mutual consent of
the Parties; (ii) by any Party if any other Party is unable to meet the specific
conditions precedent applicable to its performance within a reasonable time;
(iii) by either Party if the Closing Date shall not have occurred within 120
days of contract date; or (iv) by the Board of Directors of Heartland or Ohio
Valley Lumber, if either such Board shall have determined in its sole discretion
that because of the institution or threatened institution of any litigation or
proceeding, or for any other reason, it is inadvisable to consummate the
acquisition herein provided for. In the event that termination of the
ACQUISITION CONTRACT occurs, as provided above, the ACQUISITION CONTRACT shall
forthwith become void and, except for the potential forfeiture of the earnest
money deposit described above, there shall be no liability on the part of any
Party or its respective officers and directors.

IV.           PLAN OF ACQUISITION

A.

REORGANIZATION AND ACQUISITION

Heartland and Ohio Valley Lumber will be reorganized, such that Heartland shall
acquire all the capital stock of Ohio Valley Lumber with all of its current
assets, liabilities and businesses, and Ohio Valley Lumber shall become a wholly
owned subsidiary of

 

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Heartland. The precise form of this transaction will be as set forth in the
ACQUISITION CONTRACT.

B.

ISSUANCE OF STOCK

At Closing, Heartland shall issue and deliver the appropriate number of stock
certificates to Shareholder representing a total of 2,010,000 shares of
Heartland common stock.

Also at the Closing, Ohio Valley Lumber shall issue and deliver stock
certificates to Heartland representing a total of 100% of the issued and
outstanding capital stock of Ohio Valley Lumber.

C.

OTHER CONDITIONS OF ACQUISITIONS

1.          Ohio Valley Lumber shall own all of the assets it currently owns
except as may be sold or transferred in the ordinary course of business;

2.         Employment agreements will be in place for all key employees of Ohio
Valley Lumber. The following are stipulations for the Executive Employment
Contract of Terry Robbins:

EXECUTIVE EMPLOYMENT CONTRACT

I.

JOB TITLE & DESCRIPTION.

Job title will be Chief Executive Officer with complete authority and decision
making power in the total operation of Ohio Valley Lumber.

II.

TERM OF EMPLOYMENT CONTRACT.

The term of this employment contract shall be for a period of 5 full calendar
years.

III.

SALARY.

The base salary is to be $300,000 per year.

IV.

OTHER COMPENSATION

1.

Company expense account for Business Travel and Entertainment.

2.

Insurance

 

 

a.

Health insurance to be paid by the Company.

b.

Two Term Life insurance policies of $5,000,000 each with the Company as
beneficiary of one $5,000,000 term

 

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life policy and Natalie K. Robbins as beneficiary of one $5,000,000 term life
policy.

c.

Directors and Officers Liability Insurance coverage.

 

3.

Vacation allowance of 3 weeks paid vacation annually for employment years 1, and
2 and 4 weeks paid vacation annually for employment years 3,4,5.

 

4.

Bonuses and/or Stock Options based upon performance. A minimum increase of 10%
Net Profit each year will entitle a bonus of 5% of the Net Profit which may be
taken at Employee’s discretion either as Cash or as Stock Options at a
discounted rate of 25% of average market price over the previous 12 month
period, and a 10% increase in salary added to the existing base salary. In
addition, for each increase of 5% in Net Profit that exceeds the minimum
increase of 10%, a bonus of 10% of the Net Profit shall be paid in Cash or in
Stock as I determine and 20% shall be added to the existing base salary for the
coming fiscal year.

 

5.

Company Contribution to self-directed Retirement Plan. The Company shall
contribute the maximum amount allowed by law to a Self-directed Retirement Plan.

V.

NON-RESTRICTIVE COVENANT AGREEMENT FOR OPERATION OF EXISTING COMPANIES OWNED BY
TERRY A. ROBBINS & NATALIE K. ROBBINS.

This involves Ohio Valley Hardwood, Chip & Bark, Inc., and Chipco of Virginia.
These companies may continue to due business at “arms length” with Ohio Valley
Lumber in the regular course of business.

VI.

REMEDIES, DAMAGES, SEVERANCE PACKAGE FOR BREACH OF EMPLOYMENT CONTRACT.

If there is no legal ground for dismissal, the only ground for dismissal being
any inability to perform the duties of CEO, mismanagement or misconduct, and the
CEO is terminated from the CEO position, the remedy and damages for such
dismissal will result in 2 times the total Salary remaining on the Employment
Contract due and payable at the time of dismissal. If there is mutual agreement
for termination of the CEO position, the Severance Package will consist of
payment of 6 months Salary based upon the present years base Salary. If there is
a Breach of Contract by the Employer, the total amount of the Salary Package
becomes due and payable at the time of termination of the employment contract.
If there is a Breach of Contract by the

 

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Employee, the Employer will have no obligation to pay the Severance Package of 6
months Salary.

VII.

FUTURE ACQUISITIONS.

All future acquisitions during the executive employment period which are a
direct result of contact and negotiations performed by the CEO will be
compensated as follows:

1.

5% of the purchase price

2.

25% of the appraised value above the purchase price of the acquisition to be
paid either in Cash, or taken as a Note Receivable from Heartland, or taken in
Stock to be determined at my discretion.

VIII.

A SEAT ON THE BOARD OF DIRECTORS OF HEARTLAND.

To have a seat on the Board of Directors of Heartland for the term of the
employment contract.

3.         At Closing, the Directors of Ohio Valley Lumber shall resign after
appointing three new directors to be elected by Heartland.

4.         Ohio Valley Lumber shall provide Heartland with the financial records
necessary for Heartland’s accountants to audit Ohio Valley Lumber for the years
ending December 31, 2002 and December 31, 2003, and to prepare a nine month
unaudited financial statement ending September 30, 2004.

D.

FURTHER ASSURANCE, GOOD FAITH AND FAIR DEALING

The Directors of each Party shall and will execute and deliver any and all
necessary documents, acknowledgments and assurances and do all things proper to
confirm or acknowledge any and all rights, titles and interests created or
confirmed herein; and all Parties covenant hereby to deal fairly and in good
faith with each other and each others shareholders.

E.

BROKERS' OR FINDER'S FEES

Finders feed will be paid by Heartland Inc.

V.            MISCELLANEOUS

A.

EXPENSES

Whether or not the transactions contemplated hereby are consummated, each of the
Parties hereto shall bear all taxes of any nature (including, without
limitation, income, franchise, transfer, and sales taxes) and all fees and
expenses relating to or arising from its

 

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compliance with the various provisions of this Agreement and such Party's
covenants to be performed hereunder, and except as otherwise specifically
provided for herein, each of the Parties hereto agrees to pay all of its own
expenses (including, without limitation, attorneys and accountants' fees, and
printing expenses) incurred in connection with this Agreement, the transactions
contemplated hereby, the negotiations leading to the same and the preparations
made for carrying the same into effect, and all such taxes, fees, and expenses
of the Parties hereto shall be paid prior to Closing.

B.

NOTICES

Any notice, request, instruction, or other document required by the terms of
this Agreement, or deemed by any of the Parties hereto to be desirable, to be
given to any other party hereto shall be in writing and shall be given by
facsimile, personal delivery, overnight delivery, or mailed by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses:

TO HEARTLAND:

3300 Fernbrook Lane, Suite # 180

Minneapolis, Minnesota, 55447

 

TO OHIO VALLEY LUMBER:

 

16523 State Route 124

P.O. Box 398

Piketon, Ohio 45661

 

The persons and addresses set forth above may be changed from time to time by a
notice sent as aforesaid. If notice is given by facsimile, personal delivery, or
overnight delivery in accordance with the provisions of this Section, said
notice shall be conclusively deemed given at the time of such delivery. If
notice is given by mail in accordance with the provisions of this Section, such
notice shall be conclusively deemed given seven days after deposit thereof in
the United States mail.

C.

ACQUISITION CONTRACT

Within sixty (60) days after the date of this LOI, the Parties understanding
will be reduced to a definitive ACQUISITION CONTRACT. The ACQUISITION CONTRACT
will contain customary representations, warranties and indemnification from the
respective parties. In addition, the ACQUISITION CONTRACT will contain customary
conditions as to the obligations of the Parties to close the transaction.

D.

CONFIDENTIALITY

Prior to exchanging any information, the Parties agree to enter and execute a
mutual confidentiality and nondisclosure agreement which will protect all
information delivered and reviewed by either Party with respect to the other
Party or the transaction contemplated

 

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herein. In addition, until the execution of a ACQUISITION CONTRACT, the Parties
agree to keep confidential all negotiations and discussions and to not release
any information or press releases regarding the potential transaction without
the consent of the other Party.

E.

NATURE OF PROPOSAL

This proposal, when accepted, will not constitute as definitive contract with
respect to the transaction but will be considered a statement of present
intention and understanding of the Parties justifying the expenditure of their
time, effort, and expenses in an attempt to achieve the Closing. Accordingly,
the transaction will be binding only in accordance with the terms of the
ACQUISITION CONTRACT and the other documents referred to herein. Notwithstanding
the foregoing, the confidentiality provisions described below will be binding
and enforceable.

This LOI may be executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. The Parties agree that facsimile signatures of this
LOI shall be deemed a valid and binding execution of this Agreement.

This LOI is executed on behalf of each Party by its duly authorized
representatives, and attested to, pursuant to the laws of its respective place
of incorporation and in accordance with its constituent documents.

HEARTLAND, INC.,

 

/S/ TRENT SOMMERVILLE

BY: Trenton Sommerville

ITS: Chief Executive Officer

 

OHIO VALLEY LUMBER

/S/ TERRY ROBBINS

BY: Terry Robbins

ITS: President

 

 

 

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