HAWKS INDUSTRIES, INC.
913 Foster Road
Casper, Wyoming 82601
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________, 1999
To the Shareholders of
HAWKS INDUSTRIES, INC.
On June 10, 1999, Hawks Industries, Inc., a Wyoming Corporation (the
"Company"), entered into an Agreement (the "Agreement") with Universal Equities,
Ltd., David H. Peipers, The Cornerhouse Limited Partnership and the Winsome
Limited Partnership (collectively referred to as "Buyers"), which will allow
Buyers to secure a controlling interest in the Company's common stock through a
Private Placement. The value placed on the Company's shares in the Agreement
was $1.60 per share for at least 6,250,000 shares of common stock yielding the
Company a consideration of $10,000,000. The Agreement also included the right
to buy up to an additional 14,375,000 shares at the same price. The maximum
consideration to be received by the company is $33,000,000 if all the additional
shares are purchased.
The terms of the Agreement require a payment of at least $5,000,000 in
cash, with the remainder of the consideration being paid in cash and/or transfer
of Buyer's rights to receive payment from a debt obligation from North Star
Exploration, Inc. ("North Star"), and/or North Star common stock, and/or Zeus
Consolidated Holdings, Inc. ("Zeus") common stock. North Star and Zeus are
private Nevada Corporations which own or hold options on mineral rights in
Alaska. The options, held by North Star, cover approximately 7,000,000 acres in
Alaska.
The Agreement also requires the redemption of shares in the Company owned
by three principal shareholders in exchange for certain assets of the Company.
Therefore, on June 9, 1999, the Company entered into a Redemption of Shares
Agreement with officers and directors, Bruce A. Hinchey and James E. Meador, Jr.
and principal shareholder Anne D. Zimmerman Revocable Trust dated November 14,
1991 (collectively referred to as "Shareholders"), to acquire all of
Shareholders' common stock in the Company, excluding their ESOP shares, in
exchange for assets of the Company.
The June 9, 1999 Redemption of Shares Agreement was determined as a result
of arms-length negotiations between the Directors and the three principal
shareholders using as part of the consideration, book values for the shares and
exchanged assets as reported by the Company in the most recent 10-K Report. The
Agreement was unanimously approved by the Company's Board of Directors with
Bruce A. Hinchey and James E. Meador, Jr. abstaining from said approval.
The Company entered into the Agreement to provide a substantial injection
of capital and to allow the Company to participate in future exploration and
development of the North Star mineral rights in Alaska. As a result of this
Agreement, the principal business of the Company will change from an
environmental testing business to a natural resource exploration and development
business.
The Company expects to use the proceeds of the transaction for general
corporate purposes and future operations, which may include, in addition to
mineral exploration on the option lands held by North Star, projects related to
to sustainable (i.e.environmentally friendly) development of energy natural
resources. The ownership of the company's common stock by shareholders will not
be affected by the proposed transaction, the Company will continue to be subject
to the reporting requirements of the Securities Exchange Act of 1934 following
completion of the transaction, and the company's common stock may continue to
trade on the NASDAQ Stock Exchange to the extent a market continues to exist.
The Company has no control whether a market will continue to exist.
If the transaction is not approved by the Shareholders, the Company
anticipates that it will continue with its current operations which consist
mainly of environmental testing. The private placement and redemption of shares
described above will be subject to the Company's shareholders' approval at its
Annual Meeting.
The discussion of the information set forth above is intended only as a
summary, and is qualified in its entirety by the information contained in the
accompanying Proxy Statement.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of HAWKS
INDUSTRIES, INC., a Wyoming Corporation (the "Company"), will be held at the
office of the Company at 913 Foster Road, Casper, Wyoming 82601 on
_______________, 1999 at 2:00 P.M. or at any postponement or adjournment thereof
for t,he following purposes:
1. To elect one director to serve until the Annual Meeting of the Shareholders
to be held in 2002 or until his successor has been elected and qualified.
2. To increase the authorized number of shares of common stock from 5 million
to 50 million shares for the purpose of raising additional capital through
a private placement of common stock.
3. To approve the private placement of up to 20,625,000 shares of common stock
with Universal Equities Ltd., David H. Peipers, The Cornerhouse Limited
Partnership and the Winsome Limited Partnership.
4. To approve the redemption of common stock through a disposition of Company
assets to principal shareholders, Bruce A. Hinchey, James E. Meador, Jr.
and the Anne D. Zimmerman Revocable Trust dated November 14, 1991.
5. To approve a change of domicile for the Company from Wyoming to Nevada.
6. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only shareholders of record at the close of business on _______________,
1999, will be entitled to notice of and to vote at the meeting. All
shareholders are cordially invited to attend and to meet the management and
Board of Directors of the Company.
By Order of the Board of Directors
Bob Despain
Secretary
Casper, Wyoming
_______________, 1999
IMPORTANT
IF YOU DO NOT PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY
NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES
PROXY STATEMENT
HAWKS INDUSTRIES, INC.
913 FOSTER ROAD
CASPER, WYOMING 82601
SHAREHOLDERS ENTITLED TO VOTE
THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF HAWKS
INDUSTRIES, INC. (the "Company") for use at the Annual Meeting of the
Shareholders of the Company. It is anticipated that these proxy materials will
be mailed to Shareholders on or about ________________, 1999.
Holders of shares of the Common Stock of the Company of record at the
close of business __________, 1999, will be entitled to vote at the Annual
Meeting of Shareholders to be held on ______________, 1999 at 2:00 P.M. at the
offices of the Company at 913 Foster Road, Casper, Wyoming 82601 or at any
postponement or adjournment thereof.
This Proxy Statement relates to the approval of a number of matters as
summarized in the notice which is attached to this Proxy Statement and described
in more detail herein. The Company is also delivering with this proxy statement
the following documents which are hereby incorporated herein: Northstar
Exploration, Inc. Financial Statements for the Periods Ended June 30, 1999
(Unaudited), December 31, 1998 and 1997 and for the Periods from Inception
(January 31, 1997) to June 30, 1999 (Unaudited) and December 31, 1998 together
with the Report of Independent Public Accountants. The Company further
incorporates by reference into this Proxy Statement the Company's annual report
on Formr10-K for the year ended December 31, 1998, the Company's quarterly
reports on Form 10-Q for the quarters ended March 31, 1999 and June 30, 1999,
its current reports on Form 8-K reporting events of June 10, 1999 and any
amendments thereto, and all other reports filed since December 31, 1998, in
accordance with Sections 13(a) or 15(d) of the Securities and Exchange Act of
1934, as amended.
Shareholders who execute proxies retain the right to revoke them at any
time before they are voted by filing with the Secretary of the Company either an
instrument revoking the proxy or a duly executed proxy bearing a later date.
Proxies may be revoked by any Shareholder present at the meeting who expresses a
desire to vote his or her shares in person. A proxy, when executed and not so
revoked, will be voted in accordance therewith.
Abstentions will be treated as shares present or represented and entitled
to vote for purposes of determining the presence of a quorum, but will not be
considered as votes cast in determining whether a matter has been approved by
the shareholders. Any shares a broker indicates on its proxy that it does not
have the authority to vote on any particular matter because it has not received
direction from the beneficial owner thereof, will not be counted as voting on a
particular matter. The officers, directors, and/or principal Shareholders,
Bruce A. Hinchey, James E. Meador, Jr., and Anne D. Zimmerman Revocable Trust
dated November 14, 1991 of the Company (holders of approximately 389,640 shares,
29.3% of the outstanding shares) have indicated their intention to abstain from
voting on the Redemption of Shares Proposal 3 as they have a conflict of
interest in said proposals. No other shareholder has indicated his or her
intentions with respect to voting on any of the proposals. All properly
executed and unrevoked proxies, if received in time, will be voted in accordance
with the instructions of the beneficial owners contained thereon. All properly
executed and unrevoked proxies that do not contain voting instructions will be
voted in favor of Proposals 1, 2 and 3.
The Company will bear the cost of the proxy solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy materials to the beneficial
owners of the Company's Common Stock for whom they hold shares and will
reimburse them for their reasonable expenses in so doing.
DISSENTERS' RIGHTS
The Wyoming Business Corporation Act provides shareholders a right to
dissent and obtain payment of the fair value of their shares from the Company
under certain circumstances; provided, that, if the shareholder has a right to
dissent, the shareholder strictly follows the statutory procedures for doing so
to perfect his or her dissenters' rights. In connection with the Redemption of
Shares Proposal 3 contained in this Proxy Statement shareholders may have the
right to dissent if the Company completes the proposed transaction. For a
detailed description of these dissenters' rights and the statutory provisions
governing them, see the section entitled "DISSENTERS' RIGHTS" appearing
immediately after the description of the Redemption of Shares in Proposal 3.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The voting securities entitled to vote at the meeting consist of shares of
Common Stock of the Company with each share entitling its owner to one vote upon
each matter submitted to a vote.
The close of business on _____________, 1999, has been fixed by the Board
of Directors as the record date for determination of Shareholders entitled to
vote at the meeting, and the number of outstanding shares on October 12, 1999
was 1,326,705.
The following table shows the beneficial ownership of the shares of the
Company as of the close of business on October 12, 1999, of each person known to
the Company to be the beneficial owner of more than 5% of the Company's issued
and outstanding Common Stock and of all officers and directors as a group.
Unless noted to the contrary, each person or entity has direct ownership and
sole voting dispositive power.
Percent
Of Class
Name and Address Shares Owned Outstanding
- ---------------- ------------ -----------
Bruce A. Hinchey 115,928 (a) (c) 8.7
913 Foster Road
Casper, Wyoming 82601
James E. Meador, Jr. 120,545 (b) (c) 9.1
913 Foster Road
Casper, Wyoming 82601
Anne D. Zimmerman 153,167 11.5
Revocable Trust
400 E. 1st St.
Casper, Wyoming 82601
All Officers and Driectors
and 5% Shareholders as Group
(three in number) 389,640 29.3
(a) Included are 11,553 shares allocated in the Company's Employee Stock
Ownership Plan-Trust.
(b) Included are 11,629 and 2,491 shares allocated to Mr. Meador and his spouse
respectively in the Company's Employee Stock Ownership Plan-Trust.
(c) Included are 1,675 shares Mr. Meador and Mr. Hinchey own through H & M
Properties.
INTEREST OF PARTIES IN MATTERS TO BE ACTED ON
Bruce A. Hinchey, President of Hawks Industries, Inc.; James E. Meador,
Jr., Vice President of Hawks Industries, Inc.; and Anne D. Zimmerman, a
Physician, through her Revocable Trust (collectively referred to as
"Shareholders"), will receive certain assets of the Company in exchange for
their common stock in the Company if the proposed Redemption of Shares is
approved by the shareholders of the Company at the Annual Meeting. For this
reason, Bruce A. Hinchey, James E. Meador, Jr. and Anne D. Zimmerman Revocable
Trust dated November 13, 1991 will abstain from voting on that proposed
transaction at the Annual Meeting.
None of the Shareholders has been convicted in a criminal proceeding during
the past ten years. Shareholders have purchased the following shares of common
stock of the Company in the past two years:
Name Date of Purchase Shares
Bruce A. Hinchey January, 1998 200
James E. Meador, Jr. October, 1998 1,000
March, 1999 2,000
Anne D. Zimmerman February 1998 153,167
Revocable Trust dated
November 13, 1991
Shareholders have not sold any shares during the past two years. The
shares purchased were through cash transactions. Shareholders are not party to
any contract, arrangements, or understandings with any person with respect to
any securities of the Company. Shareholders have no arrangement or understanding
with any person with respect to any future employment by the Company or its
affiliates' or with respect to any future transactions to which the Company or
any of its affiliates will or may be a party.
ELECTION OF DIRECTORS
Pursuant to the Company's Certificate of Incorporation and By-laws,
Directors are divided into three classes that contain one or more Directors and
hold a term of office of three years.
As of the date of this Proxy Statement, one Class II Director will be
elected to serve until 2002 or until a successor is duly elected and qualified.
At the meeting it is proposed that Gerald M. Moyle, who is presently the
Class II Director of the Company and whose term expires in 1999, be elected for
a three year term. Upon election he shall serve in such capacity until the 2002
Annual Meeting of the Shareholders or until a successor is duly elected and
qualified.
If the enclosed Proxy is duly executed and received in time for the
meeting, and if no contrary specification is made as provided therein, it is the
intention of the persons named therein to vote the shares represented thereby
for the person nominated for election as Director of the Company. If the
nominee should refuse or be unable to serve, the proxy will be voted for such
person as shall be designated by the Board of Directors to replace such nominee.
The management presently has no knowledge that any nominee will refuse or be
made unable to serve.
The following information is furnished as of October 12, 1999, with respect
to the nominee and the other Directors whose terms in office will continue after
the meeting.
<TABLE>
<CAPTION>
Principle Occupation
During the Last Five
Years Year Since Share of
and Position with Which Common Stock Percent
Company Continuously Beneficially of
Name/Age (In Addition to Director) A Director Owned Class
<S> <C> <C> <C> <C>
Dwight B. Despaine/45 Appointed as a Class III 1992 2,050 .2
Director August 24, 1992.
Attorney with Dixon
& Despain, Casper, WY
since 1990; Warnick &
Blood Law Offices from
1985-1990.
Bruce A. Hinchey/50 Appointed as a Class III 1993 115,928(a)(c) 8.7
Director May 12, 1993;
President of Western
Environmental Services
and Testing, Inc. 1981 to
1997. President of Hawks
Industries, Inc. and
Vice-President of Western
Environmental Services &
Testing, Inc. since 1998.
James E. Meador, Appointed as a Class I 1993 120,545(b)(c) 9.1
Jr/46 Director May 12, 1993;
Vice President of Western
Environmental Services
and Testing,Inc. 1981
to 1997. President of
Western Environmental
Services & Testing, Inc.
and Vice-President of Hawks
Industries, Inc. since
1998.
Gerlad M. Moyle/44 Appointed as a Class II 1994 8 -0
Director June 30, 1994;
Land Manager of Brown
Operating, Inc. since
1984.
<FN>
(a) Included are 11,553 shares allocated in the Company's Employee Stock
Ownership Plan-Trust.
(b) Included are 14,120 shares allocated to Mr. Meador and his spouse in the
Company's Employee Stock Ownership Plan-Trust.
(c) Included are 1,675 shares Mr. Meador and Mr. Hinchey own through H & M
Properties.
</TABLE>
(E)RESUME OF NOMINEE GERALD E. MOYLE
Gerald E. Moyle, Director
Mr. Moyle graduated from the University of Wyoming in 1977 with a Bachelor of
Science degree. He was a staff accountant for Fox & Company from 1977 to 1979
when he became controller of LR Company to 1980; was vice president of Cowboy
Resources, Inc. from 1980 to 1984. From 1984 to the present, Mr. Moyle has been
the land manager for Maurice W. Brown and Brown Operating, Inc. He was elected
to the Board of Directors for Hawks
Industries, Inc. June 30, 1994.
The Board of Directors met formally twice during the fiscal year. Mr. Moyle was
present for both meetings. All other directors were present for the meetings of
the Board of Directors in fiscal 1998. In addition, discussions were held
frequently on an informal basis, and all action specifically required to be
approved by the Board of Directors, pursuant to the Wyoming Corporation Law, was
taken by written consent setting forth the action so taken signed by
all the directors provided by Section 141 (t) of the Law.
The Board of Directors audit committee consists of Gerald E. Moyle, James E.
Meador, Jr., and Dwight B. Despain.
The Board of Directors has no nominating or compensation committee.
REMUNERATION AND OTHER TRANSACTIONS WITH MANAGEMENT
The following table sets forth all cash compensation paid by the Company during
the fiscal year to executive officers whose cash compensation exceeded $60,000
and to all executive officers as a group.
Name of Individual Capacities in Which Served Cash Compensation
- ------------------- -------------------------- -----------------
or Number in Group
- ------------------
Bruce A. Hinchey President and Director of Hawks $105,000 (a)(b)(c)
Industries, Inc.;Vice President
of Western Environmental Services
and Testing, Inc.
James E. Meador, Jr. Vice President and Director of $105,000 (a)(b)(c)
Hawks Industries, Inc.; President
of Western Environmental Services
and Testing, Inc.
All Executive Officers
as a Group $210,000 (a)
(Two in number)
(a) Messrs. Hinchey and Meador received other compensation valued at less than
10% of the compensation reported in this table.
(b) Not included is the amount which was accrued under the Company's Employee
Stock Ownership Plan-Trust discussed below.
(c) Pursuant to employment agreements expiring September 2004, Messrs. Hinchey
and Meador would receive a lump sum payment of approximately four years'
salary and each would receive approximately $100,000.00 in consideration of
receiving a reduced salary in past years if employment should be terminated
by the Company without cause. The right to receive those payments is being
surrendered as part of the transactions for which approval is being sought.
Directors who are not employees are paid $300 per meeting for their attendance
at Board meetings. All directors are reimbursed for reasonable out-of-pocket
expenses incurred in connection with attending Board and Shareholder's meetings.
Employee Stock Ownership Plan-Trust
The Plan was Adopted in December 1975. Annual contributions by the
Company are not mandatory, but the Plan provides for annual contributions by the
company to the profit-sharing trust for the account of eligible employees in an
amount up to 25% of their salaries subject to the limitation imposed by ERISA.
The Plan provides that the Trustee shall invest the funds in shares of Common
Stock of the Company purchased either in the open market, directly from the
Company, or from existing shareholders. All of the shares will remain with the
Trustee until paid to employees upon leaving the Company's service. In the
event of retirement, disability or death, the entire amount of the employee's
credit will be directly distributed to the employee or his named beneficiary.
Upon termination, other than by reason of death, disability or retirement, the
amount at termination will be a percentage of the amount of his account as
follows:
Years Percentage
2 20%
3 40%
4 60%
5 80%
6 100%
The Company has the right to amend or terminate the Plan at any time. The
purpose of the Plan is to provide employees with additional incentive and
opportunity, through the Company contribution, to acquire an Ownership in the
Company by becoming shareholders.
During the Fiscal year, the amounts accrued by Mr. Hinchey and Mr. Meador
and his spouse were, respectively, $1,898 and $2,417.
Incentive Stock Option Plan
The Plan approved by the Shareholders of the Company on June 15, 1982,
authorized the stock incentives for key executives to further the identity of
their interest with the interests of the shareholders and to increase their
stake in the future growth and prosperity of the Company. This Plan expired
June 15, 1992. The Plan was intended to induce continued employment of key
executives and, by offering comparable incentives, to enable the Company to
compete for, attract, and retain competent executives.
As of the date of this Proxy Statement there are options outstanding for
2,500 shares under the Plan. They were issued in September 1990 and will, if
not exercised previously, expire in September of 2000.
Section 16 Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. Officers, Directors, and
greater than 10% stockholders are also required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons, the Company believes
that, during the period January 1, 1998 to December 31, 1998, all filing
requirements applicable to its officers, Directors, and greater than 10%
beneficial owners were completed and filed.
Proposal 1
Authorize Increase in Common Stock
$0.01 par value from 5,000,000 Shares
to 50,000,000 Shares
The Company requests the authorization from a majority of its voting Common
Stock, $0.01 par value shareholders to increase the number of authorized Common
Stock, $0.01 par value shares from 5,000,000 to 50,000,000.
The increase in the number of authorized shares is necessary to complete the
June 10, 1999 private placement transaction which is described in detail in
Proposal 2 below. The rights of the existing shareholders will not be altered
by this increase and the newly authorized shares will carry the same rights,
privileges and powers which currently exist with the Common Stock, $0.01 par
value shares. The proposed Resolution to increase the authorized number of
shares in the Company is attached hereto as Exhibit ___.*
Proposal 2
Private Placement of Common Stock
On June 10, 1999, the Company entered into an Agreement with Universal
Equities, Ltd., David H. Peipers, The Cornerhouse Limited Partnership and the
Winsome Limited Partnership (collectively referred to as "Buyers") which will
allow Buyers to secure a controlling interest in the Company's common stock
through a private placement. The value placed on the Company's shares in the
offer was $1.60 per share for at least 6,250,000 shares of common stock yielding
the Company a consideration of $10,000,000. The Agreement was amended on
September 23, 1999, and references to the Agreement herein are to the Agreement
as amended. The Agreement also included the right to buy up to an additional
14,375,000 shares at the same price. The maximum consideration to be received
by the Company will be $33,000,000 if all 20,575,000 shares are purchased for
$1.6Theetermsrof the Agreement require a payment of at least $5,000,000 in cash,
with the remainder of the consideration being paid in cash and/or transfer of
Buyer's rights in and to a debt obligation from North Star Exploration, Inc.
("North Star") up to a maximum of $10,000,000, and/or North Star common stock up
to a maximum of $20,000,000, and/or Zeus Consolidated Holdings, Inc. ("Zeus")
common stock, up to a maximum of $1,000,000. North Star and Zeus are private
Nevada Corporations which own or hold options on mineral rights in Alaska. The
options, held by North Star, cover approximately 7,000,000 acres in Alaska. The
principal offices of Northstar and Zeus are located at 12600 West Colfax Avenue,
Suite C-500, Lakewood, Colorado 80215 and their telephone number is (303) 986-
0100.
As a result of this transaction, the controlling interest in the Company
will be owned by the Buyers or their designees in the following amounts.
<TABLE>
<CAPTION>
Required Minimum Amount
of Shares Purchased
Under the Agreement
Percentage
Ownership Consideration
Number of of the $1.60 Per
Purchaser Shares Company Share
<S> <C> <C> <C>
Universal Equities Ltd. 3,125,000 43.20531% $ 5,000,000
David H. Peipers 1,562,500 21.60265% 2,500,000
The Cornerhouse Limited Partnership 937,500 12.96159% 1,500,000
The Winsome Limited Partnership 625,000 8.64106% 1,000,000
Total 6,250,000 86.41061% $ 10,000,000
</TABLE>
<TABLE>
<CAPTION>
Maximum Amount of Shares
Allowed to be Purchased
Under the Agreement
Percentage
Ownership Consideration
Number of of the $1.60 Per
Purchaser Shares Company Share
<S> <C> <C> <C>
Universal Equities Ltd. 10,312,500 47.72558% $ 16,500,500
David H. Peipers 5,156,250 23.86279% 8,250,000
The Cornerhouse Limited Partnership 3,093,750 14.31767% 4,950,000
The Winsome Limited Partnership 2,062,500 9.54512% 3,300,000
Total 20,625,000 95.45116% $ 33,000,000
</TABLE>
The Company's Board of Directors have carefully reviewed the proposed
transaction and believe it to be in the best interest of the Company and its
shareholders. The transaction will inject at least $10,000,000 of capital into
the Company and allow it to participate in natural resource exploration and
development.
The total consideration in the private placement will be used by the Company
for general corporate purposes and future operations, which may include, in
addition to exploration of North Star's mineral rights, projects related to
sustainable (i.e. environmentally friendly) development of energy natural
resources. The rights of the Company shareholders after the transaction will
not differ materially from their rights before said transaction.
The transaction will be accounted for as a sale of common stock by the
Company and should not result in a taxable event. If a gain were recognized by
the Company, it would be offset by the Company's operating loss carry-forwards.
No federal or state regulatory requirements must be met or approval obtained in
connection with this Transaction.
Prior to the proposed transaction, none of the Company, its directors,
officers or affiliates has had any material contracts, arrangements,
understandings, relationships, negotiations, or transactions with the Buyers,
North Star or Zeus.
The Agreement also requires the redemption of shares in the Company owned by
Bruce A. Hinchey, James E. Meador, Jr. and the Anne D. Zimmerman Revocable
Trust, dated November 14, 1991, in exchange for certain assets of the Company.
Details of this transaction are discussed in Proposal 3 below.
The private placement described above is subjec to the Company's
Shareholder approval at its Annual Meeting. A majority of the shareholders in
attendance or voting by proxy in favor of the Proposal will be required for its
approval. A copy of the June 10, 1999 Agreement has been filed with the SEC in
the form of an 8-K Report and is incorporated herein by reference.
Proposal 3
Redemption of Principal Shareholders'
Stock with Corporate Assets
On June 9, 1999, the Company entered into an Agreement with officers and
directors, Bruce A. Hinchey and James E. Meador, Jr. and principal shareholder
Anne D. Zimmerman Revocable Trust dated, November 14, 1991 (collectively
referred to as "Shareholders"), to acquire all of Shareholders common stock in
the Company excluding their ESOP shares, and their release of the company from
certain liabilities, in exchange for assets of the Company. A copy of the
Agreement has been filed with the SEC in the form of an 8-K Report and is
incorporated by reference. Said Agreement sets forth the terms and conditions
of the redemption of shares. The redemption of shares is required pursuant to
the North Star Group Agreement dated June 10, 1999, which has also been filed
with the SEC in the form of an 8-K Report and is incorporated by reference.
THE FOLLOWING ARE THE PRO FORMA FINANCIAL STATEMENTS
WHICH ARE A RESULT OF PROPOSAL 2 AND PROPOSAL 3.
HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements illustrate the
effect of Proposal 2 Private Placement of Common Stock and Proposal 3 Redemption
of Principal Shareholders' Stock with Corporate Assets. The condensed
consolidated balance sheet as of June 30, 1999 is based on the historical
balance sheet of the Company as of that date and assumes the transactions took
place on that date. The condensed consolidated statements of operations for the
year ended December 31, 1998 and six months ended June 30, 1999 are based on the
historical statements of the Company for those periods. The pro forma condensed
statements of operations assume the transactions took place on January 1, 1998.
The pro forma condensed consolidated balance sheet reflects the purchase of
6,250,000 share of common stock. It does not reflect the right to buy up to
additional 14,375,000 shares.
The pro forma condensed consolidated financial statements may not be indicative
of the actual results of the transactions. The operations of the Environmental
Testing segment are cyclical in nature and can change significantly each
quarter. The net assets to be used in the redemption could decrease by as much
as 25% before the time of closing. The accompanying condensed pro forma
financial statements should be read in connection with the historical financial
statements of the Company incorporated herein by reference.
<TABLE>
<CAPTION>
HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, 1999 As
ASSETS reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 14,000 $ 5,000,000 (1) $ 5,011,000
(3,000 ) (2)
Accounts receivable 790,000 (775,000 ) (2) 15,000
Short-term invesments 200,000 (200,000 ) (2) -
Costs on uncompleted contracts in excess
of related billings 101,000 (101,000 ) (2) -
Other current assets 66,000 (45,000 ) (2) 21,000
Total current assets 1,171,000 5,047,000
PROPERTY AND EQUIPMENT, net 1,625,000 (109,000 ) (2) 551,000
(965,000 ) (2)
INVESTMENTS AND OTHER ASSETS
Note receivable 31,000 31,000
Land investment 196,000 (196,000 ) (2) -
Other investments - 5,000,000 (1) 5,000,000
Available for sale investments 100,000 (100,000 ) (2) -
Other assets 245,000 (203,000 ) (2) 42,000
572,000 5,073,000
LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,368,000 $ 10,671,000
CURRENT LIABILITIES
Notes payable $ 288,000 (223,000 ) (2) $ 65,000
Current maturities on long-term debt 134,000 (134,000 ) (2) -
Accounts payable 273,000 (222,000 ) (2) 51,000
Accrued liabilities 49,000 (24,000 ) (2) 25,000
Total current liabilities 744,000 141,000
LONG TERM DEBT 322,000 (322,000 ) (2) -
CONTINGENT LIABILITY - -
SHAREHOLDERS' EQUITY
Capital stock:
Preferred stock - -
Common stock 13,000 63,000 (1) 76,000
Capital in excess of par value on
common stock 2,879,000 9,937,000 (1) 12,816,000
Retained deficit (536,000 ) (109,000 ) (2) (645,000 )
Less common stock held in treasury (54,000 ) (1,663,000 ) (2) (1,717,000 )
2,302,000 10,530,000
$ 3,368,000 $ 10,671,000
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited).
<TABLE>
<CAPTION>
HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Six months ended June 30, 1999
As
reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
Operating revenue $ 1,571,000 $ (1,526,000 ) (3) $ 45,000
Operating expenses 1,354,000 (1,262,000 ) (3) 92,000
Operating income (loss) 217,000 (47,000 )
Other income (expense) (22,000 ) 27,000 (3) 5,000
Income (loss) before income taxes 195,000 (42,000 )
Provision for taxes - -
Net income (loss) $ 195,000 $ (42,000 )
Weighted average number of common
shares outstanding 1,290,283 6,250,000 (4) 7,182,666
(357,617 ) (3)
Earnings (loss) per common share $ 0.15 $ (0.01 )
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited).
<TABLE>
<CAPTION>
HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Year ended December 31, 1998
As
reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
Operating revenue $ 2,445,000 $ (2,318,000 ) (3) $ 127,000
Operating expenses 2,317,000 (1,999,000 ) (3) 318,000
Operating income (loss) 128,000 (191,000 )
Otherincome (expense) 22,0000 55,000 (3) 77,000
Income (loss) before income taxes 150,000 (114,000 )
Provision for taxes - -
Net income (loss) $ 150,000 $ (114,000 )
Weighted average number of common
shares outstanding 1,351,451 6,250,000 (4) 7,243,834
(357,617 ) (3)
Earnings (loss) per common share $ 0.11 $ (0.02 )
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited).
HAWKS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
NOTE A _ The pro forma adjustments to the condensed consolidated balance sheet
are as follows:
(1) To reflect the injection of capital per Proposal 1 Private Placement of
Capital Stock. The components of the purchase price for 6,250,000 shares of
Hawks Industries, Inc. $.01 par value, common stock are as follows:
<TABLE>
<S> <C>
Cash $ 5,000,000
Buyers' right to debt obligation
from North Star Exploration and/or
North Star Exploration common
stock and/or Zeus Exploration,
Inc. common stock 5,000,000
Total guaranteed purchase price $ 10,000,000
</TABLE>
Based on $.01 par value, the components of Shareholders' Equity are as follows:
<TABLE>
<S> <C>
Common stock $ 63,000
Capital in excess of par value on
common stock 9,937,000
Total equity increase $ 10,000,000
</TABLE>
(2) To reflect the Redemption of Principal Shareholders' Stock with Corporate
Assets per Proposal 3 and settlement of goodwill, employment agreements, and
release of liabilities.The components of the corporate assets, and
liabilities to be exchanged in the redemption of 357,617 shares of Hawks
Industries, Inc. $.01 par value, common stock from Bruce A. Hinchey, James A.
Meador, Jr., and Anne D. Zimmerman Revocable Trust dated November 14, 1991
and payment of goodwill and release of liability on employment agreements as
of June 30, 1999 are as follows:
<TABLE>
<S> <C>
Redemption of 357,617 shares for:
All assets of W.E.S.T., Inc.
Cash $ 3,000
Accounts receivable 775,000
Short-term investments 200,000
Costs on uncompleted contracts in excess of
related billings 101,000
Other current assets 45,000
Property and equipment, net 962,000
Other assets 203,000
Assume all liabilities of W.E.S.T., Inc.
Notes payable (223,000)
Current maturities of long-term debt (134,000)
Accounts payable (222,000)
Accrued liabilities (24,000)
Long-term debt (322,000)
All assets of W.E.S., Inc.
Property and equipment, net 3,000
All Shares of Central Wyoming
Properties, Inc.
Land investment 196,000
All shares of W.E.R.C. preferred stock
Available for sale investments 100,000
Other property and equipment 109,000
Net assets and liabilities transferred in
redemption of common stock and settlement of
goodwill, employment agreements, and release
of liabilities $ 1,772,000
</TABLE>
NOTE B _ The pro forma adjustments to the condensed consolidated statements of
operations are as follows:
(3) To remove the operations for the Environmental Testing segment and all
operations from the oil and gas overriding royalties, as these assets will be
used for redemption of shareholders' common stock and in settlement of goodwill,
employment agreements, and release of liabilities per (2) above:
<TABLE>
<CAPTION>
Year Ended Six Months
December 31, Ended June
1998 30, 1999
<S> <C> <C>
Operating revenue
Environmental Testing $ (2,211,000 ) $ (1,500,000 )
Oil and gas (107,000 ) (26,000 )
Operating expenses
Environmental Testing 1,856,000 1,075,000
Depreciation and depletion
Environmental Testing 124,000 100,000
Oil and gas 19,000 87,000
Other income (expense)
Interest expense
Environmental Testing 55,000 27,000
Net change $ (264,000 ) $ (237,000 )
</TABLE>
(4) The weighted average number of common shares outstanding would increase to
reflect the 6,250,000 shares to issued upon acceptance of Proposal 1 Private
Placement of Capital Stock.
The June 9, 1999 Redemption of Shares Agreement was determined as a result
of arms-length negotiations between the non-interested Directors and three
principal shareholders.
The Agreement requires in part, an exchange of the assets used by the
Company in its environmental testing business. Those assets were originally
transferred to the Company in 1993 by Mr. Hinchey and Mr. Meador in exchange for
their stock in the Compnay. Ther current exchange basically returns the stock to
the Company and the assets to Mr. Hinchey and Mr. Meador which is the way they
were held prior to the 1993 exchange.
The Agreement also eliminates all liability the Company has to Mr. Hinchey
and Mr. Meador as a result of their termination under their Employment
Agreements.
The Agreement was unanimously approved by the Company's Board of Directors
with Bruce A. Hinchey and James E. Meador, Jr. abstaining from said approval.
The redemption of shares described above is subject to the Company's shareholder
approval at its Annual Meeting. A majority of the voting shareholders casting
votes in favor of the Proposal will be required for its approval.
DISSENTERS' RIGHTS
To the extent shareholders may be entitled under Wyoming law to dissent from
the transaction described in Proposal 3 and obtain payment of the fair value of
their shares from the Company, they must strictly comply with the provisions of
Article 13 of the Wyoming Business Corporation Act (the "Dissenters' Rights
Statute"). A copy of the Dissenters' Rights Statute is included in this Proxy
Statement as Exhibit ___.
Proposal 4
Change of Domicile
If the transactions set forth in Proposal 2 and Proposal 3 are approved by a
majority of the Company's shareholders, the Company proposes that its Articles
of Incorporation be amended to allow the Company to change its domicile from
from Wyoming to Nevada.
The change of domicile will allow the Company to have the same domicile as
North Star and Zeus, which will translate in smoother operations between the
Company and those entities. Nevada's corporate laws are friendly to mineral
exploration and development companies and will aid in future activities in
Alaska. The change of domicile will not result in any significant changes in
the existing shareholders' rights, powers and privileges.
The proposed change of domicile will be made in accordance with the
requirements of Wyoming Statutes S 17-16-1720. This proposal will be voted upon
at the Company's Annual Meeting if Proposal 2 and Proposal 3 are approved. A
majority of the Company's shareholders must vote for the proposal in order for
it to be approved.
FINANCIAL STATEMENTS
Financial information with respect to Zeus, the shares of which are
permitted to constitute a maximum of $1,000,000 out of the total of $33,000,000
that is payable if purchasers elect to buy all the shares they are permitted to
buy, has not been deemed material and is not included in the proxy statement.
The purchasers have undertaken that they will not exercise their right to
deliver Zeus shares unless sufficient other consideration is delivered to cause
the Zeus shares to constitute less than five percent of the total.
THE FOLLOWING ARE NORTH STAR'S FINANCIAL STATEMENTS.
NORTH STAR EXPLORATION, INC.
(An Exploration Stage Corporation)
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1999 (UNAUDITED),
DECEMBER 31, 1998 AND 1997 AND FOR THE PERIODS
FROM INCEPTION (JANUARY 31, 1997) TO JUNE 30, 1999
(UNAUDITED) AND DECEMBER 31, 1998
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of North Star Exploration, Inc.:
We have audited the accompanying balance sheets of NORTH STAR EXPLORATION, INC.
(a Nevada corporation in the exploration stage) as of December 31, 1998 and
1997, and the related statements of operations, shareholders' deficit, and cash
flows for the periods ended December 31, 1998 and 1997 and for the period from
inception (January 31, 1997) to December 31, 1998. 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 North Star Exploration, Inc. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the periods ended December 31, 1998 and 1997, and for the period from
inception (January 31, 1997) to December 31, 1998 in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Denver, Colorado,
June 11, 1999,
NORTH STAR EXPLORATION, INC.
----------------------------
<TABLE> (An Exploration Stage Corporation)
<CAPTION>
BALANCE SHEETS
--------------
December 31, June 30,
1997 1998 1999
Unaudited
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 13,489 $ 10,936 $ 106,600
Accounts receivable _ affiliates 37,608 45,188 58,228
Other receivables - 3,728 58,125
Total current assets 51,097 59,852 222,953
Lease acquisition costs 200,000 400,000 650,000
Equipment, net of accumulated depreciation
of $1,155, $10,937 and $25,615, respectively 22,668 69,538 226,413
Total assets 273,765 529,390 1,099,366
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Advances from affiliate $ 988,602 $ 3,689,807 $ 6,462,642
Accounts payable 53,276 420,899 431,519
Accrued interest 22,824 175,287 351,539
Accrued liabilities 3,941 14,061 10,781
Total current liabilities 1,068,643 4,300,054 7,256,481
COMMITMENTS AND CONTINGENCIES (Note 4)
SHAREHOLDERS' DEFICIT:
Common stock; no par value; 25,000 shares
authorized, issued and outstanding 1,000 1,000 1,000
Accumulated deficit (795,878 ) (3,771,664 ) (6,158,115 )
Total shareholders' deficit (794,878 ) (3,770,664 ) (6,157,115 )
Total liabilities and shareholders'
deficit $ 273,765 $ 529,390 $ 1,099,366
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
NORTH STAR EXPLORATION, INC.
----------------------------
(An Exploration Stage Corporation)
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
------------------------
Period Period
From From
Inception Incep-
tion
(January 31,(January 31,
1997) TO 1997) TO
December 31, June 30, December 31, June 30,
1997 1998 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C> <C>
COSTS AND EXPENSES:
Exploration $ 701,734 $ 2,323,692 $ 843,140 $ 1,725,444 $ 3,025,426 $ 4,750,870
General and
administrative 70,165 489,849 45,797 470,077 560,014 1,030,091
Depreciation 1,155 9,782 3,038 14,678 10,937 25,615
Interest expense 22,824 152,463 84,272 176,252 175,287 351,539
NET LOSS $ 795,878 $ 2,975,786 $ 976,247 $ 2,386,451 $ 3,771,664 $ 6,158,115
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
NORTH STAR EXPLORATION, INC.
----------------------------
(An Exploration Stage Corporation)
STATEMENTS OF CASH FLOWS
------------------------
<TABLE>
<CAPTION>
Period From Period
Inception From
(January Incep-
tion
31, 1997) (January
Year Ended Six Months Ended To December 31, 1997)
December 31, June 30, 31, To June 30,
1997 1998 1998 1999 1998 1999
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (795878) $ (2975786) $ (976247) $ (2386451) $ (3771664) $ (6158115)
Adjustments to reconcile net loss to net
cash used in operating activities-
Depreciation 1155 9782 3038 14678 10937 25615
Increase in accounts payable 53276 367623 176119 10620 420899 431519
Increase in accrued interest 22824 152463 84272 176252 175287 351539
Increase (decrease) in accrued
liabilities 3941 10120 2008 (3280) 14061 10781
Increase in accounts receivable-
affiliates (37608) (7580) (107150) (13040) (45188) (58228)
Increase in other receivables - (3728) - (54397) (3728) (58125)
Net cash used in operating activities (752290) (2447106) (817960) (2255618) (3199396) (5455014)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Lease acquisition costs (200000) (200000) (200000) (250000) (400000) (650000)
Purchase of equipment (22823) (56652) (35937) (171553) (79475) (251028)
Net cash used in investing activities (222823) (256652) (235937) (421553) (479475) (901028)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from affiliate 988602 2701205 1065050 2772835 3689807 6462642
Net cash provided by financing activities 988602 2701205 1056050 2772835 3689807 6462642
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 13489 (2553) 11153 95664 10936 106600
CASH AND CASH EQUIVALENTS,
at beginning of period - 13489 13489 10936 - -
CASH AND CASH EQUIVALENTS,
at end of period $ 13489 $ 10936 $ 24642 $ 106600 $ 10936 $ 106600
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES:
Issuance of common stock for
promissory notes $ 900 $ - $ - $ - $ 900 $ 900
Issuance of common stock to Doyon
in connection with lease acquisition
agreement $ 100 $ - $ - $ - $ 100 $ 100
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
NORTH STAR EXPLORATION, INC.
----------------------------
(An Exploration Stage Corporation)
<TABLE>
<CAPTION>
STATEMENT OF SHAREHOLDERS' DEFICIT CAPITAL
------------------------------------------
FOR THE PERIOD FROM INCEPTION (JANUARY 31, 1997)
------------------------------------------------
THROUGH DECEMBER 31, 1998
-------------------------
AND JUNE 30, 1999 (UNAUDITED)
-----------------------------
Shares of
Common Common Accumulated
Stock Stock Deficit Total
<S> <C> <C> <C> <C>
INCEPTION, January 31, 1997 - $ - $ - -
Issuance of common stock for
promissory notes 22,500 900 - 900
Issuance of common stock to Doyon
in connection with lease acquisition
agreement 2,500 100 - 100
Net loss - - (795,878) (795,878)
BALANCE, December 31, 1997 25,000 1,000 (795,878) (794,878)
Net loss - - (2,975,786) (2,975,786)
BALANCE, December 31, 1998 25,000 1,000 (3,771,664) (3,770,664)
Net loss - - (2,386,451) (2,386,451)
BALANCE, June 30, 1999 (unaudited) 25,000 $ 1,000 $ (6,158,115) $ (6,157,115)
</TABLE>
The accompanying notes to financial statements
are an integral part of this statement.
NORTH STAR EXPLORATION, INC.
----------------------------
(An Exploration Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1998,1997
----------------------
AND JUNE 30, 1999 (UNAUDITED)
-----------------------------
(1) ORANIZATION AND DECRIPTION OF THE BUSINESS
AND BASIS OF PRESENTATIONN OF
------------------------------------------
Organization and Description of the Business
--------------------------------------------
North Star Exploration, Inc., a Nevada corporation (the "Company" or "North
Star"), is a privately held exploration company formed on January 31, 1997 for
the purpose of acquiring, exploring and developing certain mineral properties in
the State of Alaska.
On May 27, 1997, the Company entered into an Option Agreement (the "Agreement")
with Doyon, Limited ("Doyon") with respect to certain lands in Alaska. The
Agreement provides North Star with the exclusive right to explore for minerals
until January 1, 2002, to lease prospects identified thereon, and to develop and
produce minerals pursuant to such leases. The optioned lands encompass
approximately seven million acres comprised of 24 individually named blocks,
plus additional rights to surrounding lands within areas of interest.
The Agreement requires North Star to spend $9 million over the life of the
Agreement, with minimum commitments per year and with specific minimum
expenditures per block. Exploration expenditures in excess of the minimum
amount may be carried forward and credited to expenditure requirements for
future years with certain limitations.
At any time during the agreement term, North Star may, if it has conducted at
least 5,000 feet of drilling, made exploration expenditures of $500,000, and
received a positive pre-feasibility study with respect to a particular mineral
area, exercise its option to lease that area for mineral development for an
initial term of ten years. If North Star achieves commercial production during
the initial term, the lease will continue so long as there is commercial
production. North Star may obtain leases on an unlimited number of areas
currently owned by Doyon, and may obtain leases on 14 areas from lands selected
by Doyon pursuant to the Alaska Native Claims Settlement Act, but not yet
conveyed to Doyon. North Star has the right to add additional surrounding lease
lands to the base lease in the event that further drilling delineates additional
mineable reserves.
Each mining lease will provide for a payment to Doyon commencing upon the
execution of the lease of an annual amount equal to the greater of $150,000 or
$10 per acre leased, until a feasibility study is delivered to Doyon. If a
feasibility study is not delivered to Doyon before the fifth anniversary of the
lease, such amount will be increased to the greater of $250,000 or $20 per acre.
Under each lease, North Star must also incur minimum expenditures until the
feasibility study is delivered to Doyon. On the date of submittal of a
feasibility study, North Star must pay Doyon yearly advance royalties of
$350,000, which will be recoupable from future royalty payments. From
commencement of commercial production until payback, North Star will pay Doyon a
net smelter royalty of 3% (or 10% net profits), and after payback the royalty
increases to 5% (or 20% net profits). Doyon reserves the right to buy from 10%
to 20% of the equity in a project after deliverance of a positive feasibility
study.
Business Risks
--------------
The Company is currently exploring for minerals and has yet to exercise any
options to lease prospects. The Company has therefore not produced any revenues
since inception and there can be no assurance that revenues will be generated
during fiscal 1999.
The Company's operations will be significantly affected by the market price of
gold. Gold prices can fluctuate widely and are affected by numerous factors
that are beyond the Company's control. In July 1999, the market price for gold
declined to its lowest level in 20 years. A further sustained period of low
gold prices could have a material adverse effect on the Company's financial
position, results of operations and its ability to raise adequate financing.
The Company has a funding agreement with Equistar Consolidated Holdings LLC
("Equistar"). Equistar is owned 50% by certain shareholders who have a 45%
ownership interest in Northstar. The remaining 50% interest in Equistar is
owned by a Partnership which solely owns a Company that has a 45% interest in
Northstar.
Equistar has funded the operations of the Company since inception and North
Star's ability to continue as a going concern is dependent upon the continued
support of Equistar or obtaining an alternate source of financing. Equistar has
committed to fully fund the operations of the Company until October 31, 2000.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Basis of Presentation
---------------------
The accompanying financial statements are presented on the accrual basis of
accounting, in accordance with generally accepted accounting principles.
Unaudited Periods Presented
---------------------------
In the opinion of management, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring items) necessary to
present fairly the financial position of North Star as of June 30, 1999 and the
results of operations and cash flows for the periods presented. The results of
operations for the period presented are not necessarily indicative of the
results to be expected for the full year. Management believes the disclosures
made are adequate to ensure that the information is not misleading, and
recommends that these financial statements be read in conjunction with the
Company's December 31, 1998 audited financial statements.
Development Stage Enterprise
----------------------------
The Company is accounted for in accordance with Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises."
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents consist of all cash balances and highly liquid
investments with an original maturity of three months or less.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles 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 expenses during the reporting period. Actual results
could differ from those estimates.
Equipment and Mineral Rights
----------------------------
Expenditures for equipment are stated at cost. Depreciation is provided using
the straight-line method over useful lives ranging from 3 to 7 years.
Mineral exploration costs are expensed as incurred. When it has been determined
that a mineral property can be economically developed, the costs incurred to
develop the property will be capitalized. Significant payments related to the
acquisition of exploration interests are also capitalized. If a mineable ore
body is discovered, acquisition costs will be amortized using a units-of-
production method. If no mineable ore body is discovered, acquisition costs
will be expensed in the period in which it is determined the property has no
future economic value.
The Company adopted AICPA Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" ("SOP 98-5"), effective January 1, 1998. Under this
accounting method, certain costs such as organization, training and pre-
feasibility expenses incurred during the start-up phase of a project are
expensed as incurred. Adoption of SOP 98-5 did not have a material impact to
the financial statements.
Long-Lived Assets
-----------------
The Company evaluates potential impairment of long-lived assets and long-lived
assets to be disposed of in accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of" ("SFAS No. 121"). SFAS No. 121 established
procedures for review of recoverability, and measurement of impairment if
necessary, of long-lived assets held and used by the Company. SFAS No. 121
requires that those assets be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be
fully recoverable. SFAS No. 121 also requires any long-lived assets to be
disposed of to be reported at the lower of carrying amount or fair value less
estimated selling costs. Fair value is determined using an estimated future
cash flow analysis. An impairment is considered to exist if total estimated
future cash flows on an undiscounted basis is less than the carrying amount of
the asset. An impairment loss is then measured and recorded based on discounted
estimated future cash flows. Future cash flows include estimates of recoverable
ounces, gold prices (considering current and historical prices, price trends and
related factors), production, capital and reclamation costs.
Segment Reporting
-----------------
In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which established standards for reporting
information about operating segments. SFAS No. 131 also established standards
for related disclosures about products and services, geographic areas and major
customers. As the Company currently operates in a single industry and has
operations concentrated in one location, the Company does not have identifiable
segments.
Income Taxes
------------
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" which requires the use of the
asset and liability method of computing deferred income taxes. The objective of
the asset and liability method is to establish deferred tax assets and
liabilities for the temporary differences between the book basis and tax basis
of the Company's assets and liabilities at enacted tax rates expected to be in
effect when those amounts are realized or settled.
Fair Value of Fiancial Instruments
----------------------------------
The carrying values of the Company's cash and cash equivalents, accounts
payable, accrued liabilities and advances from affiliate approximate their
estimated fair values.
(3) INCOME TAXES
------------
The components of deferred taxes follow:
<TABLE>
<CAPTION>
December December June
31, 31, 30,
1997 1998 1999
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 286,151 $ 1,362,005 $ 2,312,667
Tax basis over book - - 491
Deferred tax liability:
Book basis over tax (867 ) (3,332 ) -
Net deferred tax asset 285,284 1,358,673 2,313,158
Valuation allowance (285,284 ) (1,358,673 ) (2,313,158 )
$ - $ - $ -
</TABLE>
At June 30, 1999, the Company had net operating loss carryforwards ("NOL") to
offset future income for federal income tax purposes of approximately
$5,944,679.
The Company established a valuation allowance against its deferred tax asset due
to the losses incurred by the Company since inception. The Company's ability to
generate future taxable income to utilize the NOL is uncertain.
(4) COMMITMENTS AND CONTINGENCIES
-----------------------------
Doyon Agreement
---------------
In accordance with the Agreement, as of June 30, 1999, the Company is required
to make annual lease acquisition payments of $300,000 for both 2000 and 2001.
The Company's required exploration expenditures under the Agreement, as of June
30, 1999, represent $423,263, $2,300,000 and $2,300,000 for 1999, 2000 and 2001,
respectively.
Future Lease Commitments
------------------------
The Company has certain operating leases for office space and equipment with
terms ranging from three to seven years. The required expenditures are as
follows:
Six months ending December 31,
1999 $ 209,542
Years ending December 31,
2000 258,751
2002 233,794
2003 233,794
Thereafter 463,983
------------
$1,658,615
=========
Environmental Laws and Regulations
----------------------------------
The Company's management believes that it is in compliance with environmental
laws and regulations as currently enacted. The Company's management has filed
all necessary permits to fulfill current environmental compliance requirements.
However, the exact nature of environmental compliance, which the Company may be
exposed to in the future, cannot be predicted. This is primarily due to the
increasing number, complexity and changing character of environmental
requirements that may be enacted by federal and state authorities. Provisions
for reclamation will be made when mining begins.
(5) RELATED PARTY TRANSACTIONS
--------------------------
Advance From Affiliate
----------------------
Advances from Equistar accrue interest at 7% per annum with all amounts
outstanding maturing on October 31, 2000. The Company owed $6,462,642,
$3,689,807 and $988,602 in principal and $351,539, $175,287 and $22,824 in
accrued interest to Equistar as of June 30, 1999, December 31, 1998 and 1997,
respectively.
Management Fee
--------------
Beginning January 1999, Equistar began charging the Company a management fee of
$35,000 per month for administrative services performed on behalf of the
Company. The Company incurred total expense of $210,000 which is included in
the accompanying statements of operations as of June 30, 1999.
(6) SHAREHOLDERS' DEFICIT
On June 13, 1997 the Company's shareholders approved a 25 to 1 stock split. The
Company's financial statements have been retroactively adjusted for all periods
to reflect this transaction.
(7) SUBSEQUENT EVENTS
-----------------
On June 10, 1999, Company shareholders representing 90% of the outstanding
shares of the Company (the "Buyers") entered into an agreement to purchase a
controlling interest in a publicly traded company. As part of the
consideration, the Buyers, at their election, may transfer their right to the
obligations of North Star resulting from the advances made by Equistar, to the
shareholders of the publicly traded company as partial payment for the
acquisition.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the proxy
form and the form of materials used in the solicitation of proxies will be paid
by the Company. The Company will request banks and brokers to solicit their
customers who beneficially own common stock of the Company listed in the names
of the nominees and will reimburse said banks and brokers for the reasonable
out-of-pocket expenses of such solicitation. In addition to the use of the
mails, solicitation may be made by employees of the Company by telephone,
telegraph, cable and personal interview. The Company does not expect to pay any
compensation for the solicitation of proxies.
DATE OF RECEIPT OF SHAREHOLDER'S PROPOSALS
Shareholder proposals must be received by the Company by December 31, 1999
to be included in the proxy materials for the next Annual Meeting of
Shareholders.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
Annual Meeting. However, if other matters should come before the meeting, it is
the intention of each person named in the proxy to vote in accordance with his
judgment on such matters.
AVAILABILITY OF ANNUAL REPORT
ON FORM 10-K
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 (INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO) FILED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION, TO EACH SHAREHOLDER OF RECORD
OR EACH SHAREHOLDER WHO OWNED COMMON STOCK LISTED IN THE NAME OF A BANK OR
BROKER AS NOMINEE, AT THE CLOSE OF BUSINESS ON , 1999. REQUESTS
-----------
SHOULD BE ADDRESSED TO THE COMPANY, TO THE ATTENTION OF BOB DESPAIN,. SECRETARY,
913 FOSTER ROAD, CASPER, WYOMING 82601.
By Order of the Board of Directors
/s/ Bob Despain
Dwight B. "Bob" Despain
Secretary
RESOLUTION
AUTHORIZED SHARE AMENDMENT
ARTICLES OF INCORPORATION
HAWKS INDUSTRIES, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Wyoming.
DOES HEREBY PROPOSE:
That at a meeting of the Board of Directors of Hawks Industries, Inc.
resolutions were duly adopted setting forth a proposed amendment of the Articles
of Incorporation of said corporation, declaring said amendment to be advisable
and calling a meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Articles of Incorporation of this corporation be amended by
changing the Article thereof numbered "Article 4 - Authorized Capital" so that,
as amended, said Article shall be and read as follows:
ARTICLE 4 - AUTHORIZED CAPITAL
4.1 The total number of shares of capital stock which the Corporation has the
authority to issue is 50,997,000, consisting of 50,000,000 shares of Common
Stock $0.01 par value per share (the "Common Stock"), and 997,000 shares of
Preferred Stock, $0.01 par value per share (the "Preferred Stock").
4.2 The Board of Directors is expressly authorized by resolution or resolutions
from time to time adopted, subject to any limitations and requirements
prescribed by the General Corporation Law of the State of Wyoming and the
provisions hereof, to provide for the issuance of the shares of Preferred
Stock in one or more series and, by filing a Certificate of Designations
pursuant to the applicable law of the State of Wyoming, to establish from
time to time the number of shares to be included in each series, and to fix
the designations, powers, preferences and relative, participating, optional
or other special rights, if any, of the shares of each such series and the
qualifications, limitations and restrictions thereof, if any, with respect
to such series of Preferred Stock.
ARTICLE 13
DISSENTERS' RIGHTS
17-16-1301. Definitions.
(a) As used in this article:
(i) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder;
(ii) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving, new, or acquiring corporation by merger,
consolidation, or share exchange of that issuer;
(iii) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under W.S. 17-16-1302 and who exercises that right when and in
the manner required by W.S. 17-16-1320 through 17-16-1328;
(iv) "Fair value," with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action unless exclusion would be inequitable;
(v) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans, or, if none, at a rate that is fair and equitable
under all the circumstances;
(vi) "Record shareholder" means the person in whose names shares are registered
in the records of a corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with a corporation;
(vii) "Shareholder" means the record shareholder or the beneficial shareholder.
17-16-1302. Right to dissent.
(a) A shareholder is entitled to dissent from, and to obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(i) Consummation of a plan of merger or consolidation to which the corporation
is a party if:
(A) Shareholder approval is required for the merger or the consolidation by
W.S. 17-16-1103 or 17-16-1111 or the articles of incorporation and the
shareholder is entitled to vote on the merger or consolidation; or
(B) The corporation is a subsidiary that is merged with its parent under W.S.
17-16-1104.
(ii) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(iii) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
(1) year after the date of sale;
(iv) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters or abolishes a right in respect of redemption, including a
provision respecting a sinking fund for the redemption or repurchase, of the
shares;
(C) Alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter, or to
cumulate votes, other than a limitation by dilution through issuance of shares
or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under W.S.
17-16-604.
(v) Any corporate action taken pursuant to a shareholder vote to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
17-16-1303. Dissent by nominees and beneficial owners.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(i) He submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(ii) He does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote.
17-16-1320. Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
(b) If corporate action creating dissenters' rights under W.S. 17-16-1302
is taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in W.S. 17-16-1322.
17-16-1321. Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights shall deliver to the corporation before the
vote is taken written notice of his intent to demand payment for his shares if
the proposed action is effectuated and shall not vote his shares in favor of the
proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
of this section is not entitled to payment for his shares under this article.
17-16-1322. Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under W.S.
17-16-1302 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of W.S. 17-16-1321.
(b) The dissenters' notice shall be sent no later than ten (10) days after
the corporate action was taken, and shall:
(i) State where the payment demand shall be sent and where and when
when certificates for certificated shares shall be deposited;
(ii) Inform holders of uncertificated shares to what; extent transfer of the
shares will be restricted after the payment demand is received;
(iii) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(iv) Set a date by which the corporation shall receive the payment demand,
which date may not be fewer than thirty (30) nor more than sixty (60) days after
the date the notice required by subsection (a) of this section is delivered; and
(v) Be accompanied by a copy of this article.
17-16-1323. Duty to demand payment.
(a) A shareholder sent a dissenters' notice described in W.S. 17-16-1322
shall demand payment, certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenters' notice
pursuant to W.S. 17-16-1322(b)(iii), and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
17-16-1324. Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under W.S. 17-16-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
17-16-1325. Payment.
(a) Except as provided in W.S. 17-16-1327, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with W.S. 17-16-1323 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment shall be accompanied by:
(i) The corporation's balance sheet as of the end of a fiscal year ending not
more than sixteen (16) months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year, and
the latest available interim financial statements, if any;
(ii) A statement of the corporation's estimate of the fair value of the shares;
(iii) An explanation of how the interest was calculated;
(iv) A statement of the dissenter's right to demand payment under W.S.
17-16-1328; and
(v) A copy of this article.
17-16-1326. Failure to take action.
(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under W.S. 17-16-1322 and repeat the payment demand
procedure.
17-16-1327. After-acquired shares.
(a) A corporation may elect to withhold payment required by W.S. 17-16-1325
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold ppayment under
subsection (a) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of his demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
W.S. 17-16-1328.
17-16-1328. Procedure if shareholder dissatisfied with payment or offer.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate, less any payment under W.S. 17-16-1325, or reject the
corporation's offer under W.S. 17-16-1327 and demand payment of the fair value
of his shares and interest due, if:
(i) The dissenter believes that the amount paid under W.S. 17-16-1325 or
offered under W.S. 17-16-1327 is less than the fair value of his shares or that
the interest due is incorrectly calculated;
(ii) The corporation fails to make payment under W.S. 17-16-1325 within sixty
(60) days after the date set for demanding payment; or
(iii) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty (60) days after the date set for demanding
payment.
(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
of this section within thirty (30) days after the corporation made or offered
payment for his shares.
17-16-1330. Court action.
(a) If a demand for payment under W.S. 17-16-1328 remains unsettled, the
corporation shall commence a proceeding within sixty (60) days after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the
proceeding within the sixty (60) day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office, or if none in this state, its
registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this section is plenary and exclusive. The court may
appoint one (1) or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers
described in the order appointing them, or in the amendment to it. The
dissenters are entitled to the same discovery rights as parties in other civil
proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for:
(i) The amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation; or
(ii) The fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under W.S. 17-16-1327.
17-16-1331. Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under W.S. 17-16-1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under W.S. 17-16-1328.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(i) Against the corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of W.S.
17-16-1320 through 17-16-1328; or
(ii) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this article.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefitted.
