Corvallis, Inc.
1486 South 1100 East
Salt Lake City, Utah 84105
August 14, 2000
Mr. Kelly Turner, President
USAStarNet.Com, LLC
1 Executive Blvd., Suite LL1
Owensboro, KY 42301
Dear Mr. Turner:
This letter is to confirm our various discussions regarding the terms and
conditions of a proposed Agreement and Plan of Reorganization (the
"Agreement") between Corvallis, Inc., a Nevada corporation (hereinafter
referred to as "Corvallis") and USA StarNet.Com, LLC, a Kentucky limited
liability company (hereinafter referred to as "USAStarNet"). The Agreement,
among other things, will provide for the various matters as set forth below
and be contingent upon a complete due diligence of both companies.
1. It is proposed that Corvallis and USAStarNet will enter into an
Agreement intending to qualify as a stock-for-stock, tax free transaction
calculated to comply with the provisions of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended, whereby USAStarNet shall agree to
sell, assign, transfer and deliver all of its issued and outstanding shares of
USAStarNet in exchange for 13,500,000 restricted common shares of Corvallis.
As part of the pre-negotiations of the merger Corvallis has issued 13,500,000
shares of its common stock and has placed these shares in escrow with Daniel
W. Jackson, the escrow attorney.
Upon completion of the Agreement USAStarNet will merge into Corvallis
and Corvallis shall become the surviving corporation. The name of Corvallis
will be changed to reflect USAStarNet's business.
2. USAStarNet has 24 hours to accept and execute this letter of
intent. Upon the execution hereof by and the return to us of this letter of
intent the parties hereto shall complete their formal due diligence of the
companies, management and the products, and counsel for the parties hereto
shall prepare and the parties shall execute a formal Agreement containing
provisions in accord with the foregoing, together with such other appropriate
terms and conditions as such counsel may mutually determine. Such Agreement
shall be subject in all respects to the approval of the parties hereto.
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3. Upon the acceptance and the execution hereof by the President of
USAStarNet and as duly authorized by USAStarNet's Board of Directors, and the
return to us of this letter of intent, the parties hereto shall complete their
formal due diligence of the companies within sixty (60) days.
4. The transaction contemplated hereby is based in part upon the
representations and warranties made by both USAStarNet and Corvallis that no
litigation, arbitration, claims, governmental proceedings or investigations
exist, either formal or informal that would have a material impact upon the
business being conducted or intended to be conducted by USAStarNet and
Corvallis. Following your signature hereto, USAStarNet and Corvallis agree
that until the transaction is consummated or negotiations with respect thereto
are terminated, they will conduct their business and operations in all
material respects in the ordinary course of business.
5. Following the execution of this letter of intent and until the
transaction is consummated or negotiations with respect thereto are
terminated, each party will (i) afford to the officers, employees, counsel,
agents, accountants and other representatives of the other party working on
the transaction and lenders, investors and prospective lenders and investors
of Corvallis free and full access to its properties, books and records, (ii)
permit them to make extracts from and copies of such books and records, and
(iii) from time to time furnish them with such additional financial and
operation dates and other information as to its financial condition, results
of operations, business, properties, assets, liabilities or future prospects
as they from time to time may request. Each party will cause its accountants
to make available to the other party and its accountant, the work papers
relating to any audit of its financial statements in any of the last three
years.
6. Each party shall insure that all confidential information which
such party or any of its respective officers, directors, employees, counsel,
agents or accountants may now possess or may hereafter create or obtain
relating to the financial condition, results of operations, business,
properties, assets, liabilities or future prospects of the other party, any
affiliate of the other party, or any customer or supplier of such other party
or any such affiliate shall not be published, disclosed or made accessible by
any of them to any other person or entity at any time or used by any of them,
in each case without the prior written consent of the other party; provided,
however, that the restrictions of this sentence shall not apply (a) as may
otherwise be required by law; (b) as may be necessary or appropriate in
connection with the enforcement of this Letter of intent, or (c) to the extent
such information shall have otherwise become publicly available. Each party
shall cause all of such other persons and entities who received confidential
data from it to deliver to the other party all tangible evidence of such
confidential information to which the restrictions of the foregoing sentence
apply at such time as negotiations with respect to the transaction are
concluded. Each party shall cause all such other persons and entities who
received confidential data from it to deliver to the other party all tangible
evidence of such received confidential data from it to which the restrictions
of the foregoing sentence apply at such time as negotiations with respect to
the transaction are terminated before the parties enter into any formal
agreement as contemplated by this letter of intent.
7. It is understood that the parties hereto agree to the contents
hereof and agree to proceed in good faith to work out and consummate the
transaction. This letter of intent is
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intended only to express the desires of the parties hereto and does not
constitute a binding agreement except with respect to the preceding paragraph.
This letter may not be assigned by either of the parties hereto. Neither
party shall be responsible for any of the other's expenses in connection with
the negotiations, document preparation or transactions contemplated hereby.
8. In consideration for the substantial expenditure of time and
effort of the proposed Agreement, and the various investigations and reviews
referred to herein, the parties hereto agree (a) that neither party shall,
between the date of the execution of this letter of intent by the parties and
the closing date, enter into or conduct any discussion with any other
prospective purchaser of the stock or assets of USAStarNet and (b) that
Corvallis will have the sale and exchange right to assist USAStarNet in any
decisions regarding any potential business combinations with any other person,
and (c) that all parties hereto shall use their best efforts to preserve
intact USAStarNet's business organization and goodwill, and the good will of
its customers, suppliers, and others having a business relationship with them.
9 The parties hereto acknowledge that time is of the essence in
consummation of this Agreement. It is understood that although this letter
constitutes a brief summarization evidencing the discussions among the parties
as of the date hereof, all parties agree that the terms and conditions as
outlined herein shall herewith be binding on the parties hereto, and shall be
merged into the Agreement between the parties, to be finally consummated upon
the approval of each party's respective shareholders, which approval shall be
sought as soon as practicable hereafter.
If the foregoing meets with the approval of USAStarNet, kindly so
signify, by signing and returning the enclosed duplicate copy of this letter
within 24 hours to Corvallis. This letter of intent may be executed in any
number of counter parts, each of which when executed and delivered shall be
deemed to be an original, and all of which together shall constitute one and
the same instruments.
This letter of intent may be executed in one or more counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one instrument.
CORVALLIS, INC.
/s/ Whitney O. Cluff
By: _____________________________
Whitney O. Cluff, President
AGREED TO AND ACCEPTED BY:
USASTARNET.COM, LLC
/s/ Kelly Turner
By: _____________________________
Kelly Turner, President
