<PAGE>
As filed with the Securities and Exchange Commission on April 27, 1995.
REGISTRATION NO. 33-58163
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
NORTH STAR UNIVERSAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0498850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
610 PARK NATIONAL BANK BUILDING
5353 WAYZATA BOULEVARD
MINNEAPOLIS, MINNESOTA 55416
(612) 546-7500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
PETER E. FLYNN
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER AND SECRETARY
NORTH STAR UNIVERSAL, INC.
610 PARK NATIONAL BANK BUILDING
5353 WAYZATA BOULEVARD
MINNEAPOLIS, MINNESOTA 55416
(612) 546-7500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
J. ANDREW HERRING, ESQ.
DORSEY & WHITNEY P.L.L.P.
220 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402
(612) 340-5683
Approximate date of commencement of sales of the securities to the public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. / /
If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to
Item 11(a)(1) of this form, check the following box. /X/
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
North Star Universal, Inc.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Item Number and Caption Heading in Prospectus
- --------------------------------------------------------------------
1. Forepart of the Registration Forepart of the Registration
Statement and Outside Front Statement and Outside Front
Cover Page of Prospectus. Cover Page of Prospectus.
2. Inside Front and Outside Back Inside Front and Outside Back
Cover Pages of Prospectus. Cover Pages of Prospectus.
3. Summary Information, Risk Prospectus Summary, Special
Factors and Ratio of Earnings Factors.
to Fixed Charges.
4. Use of Proceeds. Special Factors and Use of
Proceeds.
5. Determination of Offering Price. *
6. Dilution. *
7. Selling Security Holders. *
8. Plan of Distribution. Plan of Distribution.
9. Description of Securities to Description of Time Certificates.
be Registered.
10. Interests of Named Experts and *
Counsel.
11. Information with Respect to the Outside Front Cover Page,
Registrant. Prospectus Summary and Special
Factors.
12. Incorporation of Certain Incorporation of Certain
Information by Reference. Information by Reference.
13. Disclosure of Commission *
Position on Indemnification
for Securities Act Liabilities.
_________________________
*Not applicable.
<PAGE>
$40,000,000
NORTH STAR UNIVERSAL, INC.
<TABLE>
<CAPTION>
SUBORDINATED EXTENDIBLE TIME CERTIFICATES SUBORDINATED FIXED-TERM TIME CERTIFICATES
<S> <C>
4.50% Six Month 8.75% Two Year
5.00% Twelve Month 10.00% Five Year
11.00% Ten Year
<FN>
Minimum Investment of $1,000
____________________________
</TABLE>
The Time Certificates offered hereby are unsecured obligations of North
Star Universal, Inc. (the "Company") and subordinated to all Senior Indebtedness
(as defined in the Indenture) of the Company. The Indenture pursuant to which
the Time Certificates will be issued does not limit the amount of Senior
Indebtedness of the Company, which may vary from time to time. As of December
31, 1994, the total amount of Senior Indebtedness of the Company was $4.2
million.
The interest rates of the Time Certificates are expected to change from
time to time based on the Company's financial needs and current market
conditions, but any such change will not affect the interest rate of any Time
Certificates purchased prior to the effective date of such change. Any changes
in interest rates of the Time Certificates will be made by post-effective
amendment to this Prospectus setting forth such changes to the interest rates.
See "Plan of Distribution."
Interest rates on Extendible Time Certificates will be adjusted (upon
notice to the holder) each six or twelve months from the date of issuance
thereof, as applicable (each such date is herein called a "Roll-Over Date"). On
any Roll-Over Date or within ten business days thereafter, Extendible Time
Certificates are redeemable at the option of the Time Certificate holder. Both
the Extendible and Fixed-Term Time Certificates may be redeemed at any time, in
whole or in part, at the election of the Company. See "Description of Time
Certificates."
The Time Certificates are offered by officers and employees of the Company
directly without an underwriter and on a continuous basis with an expected
termination date of April 30, 1998; however the Company reserves the right to
terminate this offering of Time Certificates at any time prior to such date.
No minimum amount of Time Certificates must be sold in order for the Company to
accept and deposit the proceeds of this offering. There is no assurance that
all or any portion of the offered Time Certificates will be sold and, even if
all of the Time Certificates offered hereby are sold, it is not expected that
there will be a trading market for the Time Certificates. The Company reserves
the right to reject any subscription, in whole or in part.
THE TIME CERTIFICATES OFFERED HEREBY ARE NOT DEPOSITS OR ACCOUNTS WITH A
BANK, SAVINGS AND LOAN ASSOCIATION OR OTHER FINANCIAL INSTITUTION REGULATED BY
FEDERAL OR STATE BANKING AUTHORITIES AND SUCH SECURITIES ARE NOT ENTITLED TO ANY
OF THE REGULATORY PROTECTIONS APPLICABLE TO DEPOSITS OR ACCOUNTS WITH SUCH
REGULATED FINANCIAL INSTITUTIONS, INCLUDING DEPOSIT INSURANCE OR GOVERNMENTAL
GUARANTEES. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET
FORTH UNDER "SPECIAL FACTORS."
This Prospectus is accompanied by the Company's 1994 Annual Report to
Shareholders, portions of which are incorporated herein by reference. See
"Incorporation of Certain Information by Reference."
_______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Underwriting
Price to Discount and Proceeds to
Public Other Commissions Company(1)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Time Certificate 100% None 100%
Total $40,000,000 None $40,000,000
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
<FN>
(1) Before deducting expenses estimated at $150,000.
</TABLE>
The Date of this Prospectus is April 27, 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports and other information can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C., and its regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10007
and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can also be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates. The common stock of the Company is listed on the Pacific
Stock Exchange, and reports, proxy statements and other information filed by the
Company with the Commission may be inspected at the offices of the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104.
The Company furnishes to its shareholders annual reports containing audited
financial statements and quarterly reports containing unaudited financial
information for the first three quarters of each year. Copies of such reports
are available upon written request.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference in the Prospectus the
following documents filed with the Commission (File No. 0-15638):
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1994.
(2) The following portions of the Company's 1994 Annual Report to
Shareholders:
(a) Description of the Company's business furnished in accordance
with Rule 14a-3(b)(6) under the Exchange Act on the inside front
cover; all of the information found on page 1 under the heading
"Financial Highlights" and the text under the heading "To Our
Shareholders" on pages 2 and 3 are specifically excluded from
incorporation herein.
(b) Audited consolidated financial statements of the Company and the
report of independent certified public accountants furnished in
accordance with Rule 14a-3(b)(1) under the Exchange Act on pages
10 through 20.
(c) Selected financial data relating to the Company furnished as
required by Item 301 of Regulation S-K on page 20.
(d) Information relating to industry segments, classes of similar
products or services, foreign and domestic operations, and export
sales furnished as required by paragraphs (b), (c)(l)(i) and (d)
of Item 101 of Regulation S-K on page 19.
(e) Supplementary financial information furnished as required by Item
302 of Regulation S-K on page 21.
(f) Management's discussion and analysis of results of operations and
financial condition furnished as required by Item 303 of
Regulation S-K on pages 4 through 9.
(3) The Company's Annual Report on Form 10-K/A-1 for the year ended
December 31, 1993, which contains the audited consolidated financial
statements of CorVel Corporation at March 31, 1994 and the report of
the independent certified public accountants related thereto.
Any statement contained in any document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as modified or superseded, to constitute part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any document
incorporated by reference in this Prospectus, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Written or telephone requests should be directed to Investment
Department, North Star Universal, Inc., 610 Park National Bank Building, 5353
Wayzata Boulevard, Minneapolis, Minnesota 55416, Telephone (612) 546-7500.
-2-
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS.
THE COMPANY
North Star Universal, Inc. ("North Star" or the "Company"), is a holding
company. North Star's direct and indirect wholly owned subsidiaries include
Americable, Inc. ("Americable"), Transition Engineering, Inc. ("Transition
Engineering") and C.E. Services, Inc. and its United Kingdom subsidiary, C.E.
Services (Europe) Limited (together, "C.E. Services"). Americable is a provider
of connectivity and networking products and services. Transition Engineering is
a manufacturer of connectivity devices and equipment used in local area network
("LAN") applications. C.E. Services is a third-party provider of systems, parts
and services for mainframe computers and peripherals.
Additionally, at March 1, 1995, the Company owned approximately 38% of the
outstanding common stock of Michael Foods, Inc. ("Michael Foods"). Michael
Foods is a food processing and distribution company, which the Company brought
public in 1987. In June of 1991, the Company's health care services subsidiary,
CorVel Corporation (formerly FORTIS Corporation) ("CorVel"), completed an
initial public offering of its common stock. As of March 1, 1995, the Company's
ownership in CorVel was approximately 37%. The Company directly employs six
management and administrative employees.
Americable provides products and services in the field of voice and data
communication networking. Americable seeks to be a single-source provider for
all of its customers' needs. As a value-added reseller and distributor,
Americable supplies cables and connectors, network products, patch panels and
fiber optics to various customers in the voice and data communications
aftermarket, including resellers, other distributors installers and end-users.
Americable also manufactures a wide variety of cable assemblies, sub-assemblies
and specialty products for its customers. While some of the products are
manufactured to standard specifications for sale by Americable as part of its
product inventory, most are custom designed and manufactured to its customers'
specifications. Additionally, Americable designs and supervises the
implementation of the physical layer of LAN systems for its customers. In
connection with such projects, the company offers products and services for all
levels of computing, including mainframe, mini- and micro-workstations and
personal computer based LAN systems.
Transition Engineering designs, manufactures and markets hardware equipment
that provides physical connectivity for LAN's and mini- and mainframe networks.
Physical connectivity devices enable computing and other electronic devices to
communicate over a network. These devices include transceivers, hubs,
concentrators, adapters and related communications modules.
C.E. Services is a third-party provider of systems, parts and services for
mainframe computers and peripherals. Many of the company's services are
especially valuable to computer leasing and credit companies that acquire large
quantities of computer components and supply many different configurations of
computer equipment to their end-user customers.
Michael Foods is a diversified producer and distributor of food products
operating in four basic areas--eggs and egg products, distribution of
refrigerated grocery products, refrigerated and frozen potato products and dairy
products. Michael Foods, through its eggs and egg products division, is one of
the largest producers, processors and distributors of shell eggs, extended
shelf-life liquid eggs and dried, hard-cooked and frozen egg products in the
United States. The refrigerated distribution division also distributes a broad
line of refrigerated grocery products directly to supermarkets, including
cheese, shell eggs, bagels, butter, margarine, muffins, potato products, juices
and ethnic foods. The potato products division processes and distributes
refrigerated and frozen potato products for foodservice and retail markets
throughout the United States. The dairy products division processes and
distributes soft serve mix, ice cream mix, frozen yogurt mix and extended shelf-
life, ultrapasteurized milk and
-3-
<PAGE>
specialty dairy products to fast food businesses and other foodservice outlets,
independent retailers, ice cream manufacturers and others.
CorVel is an independent nationwide provider of medical cost containment
and managed care services designed to address escalating medical costs.
CorVel's services include preferred provider organizations, automated medical
fee auditing, medical case management, independent medical examinations,
utilization review and vocational rehabilitation services. Such services are
provided to insurance companies, third party administrators and employers to
assist them in managing the medical costs and monitoring the quality of care
associated with medical claims.
The Company's principal executive offices are located at 610 Park National
Bank Building, 5353 Wayzata Boulevard, Minneapolis, Minnesota 55416. Telephone:
(612) 546-7500.
THE OFFERING
SECURITIES OFFERED . . . . . . The Company is offering up to $40,000,000
principal amount Subordinated Time Certificates
(the "Time Certificates"). The Six and Twelve
Month Subordinated Extendible Time Certificates
(together, the "Extendible Time Certificates"),
unless earlier redeemed by the holder thereof
on or within ten business days after their
respective Roll-Over Dates, mature four years
from the date of issuance. The Two, Five and
Ten Year Subordinated Fixed-Term Time
Certificates (collectively, the "Fixed-Term
Time Certificates") have maturities of two,
five and ten years, respectively, and mature on
the first day of the month immediately
following the second, fifth and tenth
anniversary of the date of issuance,
respectively. See "Description of Time
Certificates-General."
INTEREST RATE AND PAYMENT. . . Interest on the Time Certificates will accrue
from the date of issuance. Interest will be
payable with respect to Extendible Time
Certificates semi-annually and with respect to
the Fixed-Term Time Certificates, quarterly or
at maturity at the option of the Certificate
holder. If the interest is paid at maturity
only, it will be compounded quarterly.
Additionally, holders of Fixed-Term Time
Certificates in denominations of $5,000 or
more, may elect to receive interest payments
monthly. The interest rate applicable to each
Six and Twelve Month Extendible Time
Certificate will automatically adjust each six
and twelve months, respectively, on each Roll-
Over Date, unless redeemed by the Time
Certificate holder. Not less than ten business
days prior to the Roll-Over Date, the Company
will mail to holders of Extendible Time
Certificates a notice of the upcoming Roll-Over
Date and the new interest rate that will be
payable with respect to the Extendible Time
Certificates until the next Roll-Over Date.
See "Description of Time Certificates-
Extendible Time Certificates." Once issued,
the interest rate applicable to a Fixed-Term
Time Certificate will not adjust prior to
maturity. See "Description of Time
Certificates-Fixed-Term Time Certificates."
REDEMPTION . . . . . . . . . . The Extendible Time Certificates are redeemable
in whole or in part at the option of the holder
on or within ten business days after any Roll-
Over Date. See "Description of Time
Certificates-Extendible Time Certificates-
Interest Rate Adjustment and Roll-Over." Both
the Extendible Time Certificates and the Fixed-
Term Certificates are redeemable at the
Company's option, in whole or in part, at any
time. See "Description of Time Certificates-
Provisions Relating to All Time Certificates-
Redemption at the Option of the Company."
-4-
<PAGE>
REPAYMENT UPON DEATH
OR DISABILITY. . . . . . . . . Under certain circumstances, the Company will
repay up to $25,000 in aggregate principal
amount of Time Certificates at par upon the
death or disability of a Time Certificate
holder. See "Description of Time Certificates-
Provisions Relating to All Time Certificates-
Redemption by the Holder Upon Death or
Disability."
SUBORDINATION. . . . . . . . . The Time Certificates are unsecured obligations
of the Company and subordinated to all present
and future Senior Indebtedness of the Company,
as defined in the Indenture. There are no
restrictions in the Indenture on incurring
additional Senior Indebtedness or other
indebtedness. See "Description of the Time
Certificates-Provisions Relating to All Time
Certificates-Subordination."
-5-
<PAGE>
SPECIAL FACTORS
Prospective investors should consider, together with the other matters set
forth in this Prospectus, the following factors in evaluating an investment in
the Time Certificates:
ABSENCE OF INSURANCE AND GUARANTEES. The Time Certificates are not insured
or guaranteed by any governmental agency or any public or private entity as are
certificates of deposit or other accounts offered by banks, savings and loan
associations or credit unions. In these respects, the Time Certificates are
similar to the subordinated debt securities of other commercial entities, but
are unlike certificates of deposits or other similar accounts offered by banks
and savings institutions.
HIGH LEVERAGE AND CASH FLOW DEFICITS. Historically, the Company has had a
high debt to equity ratio and, since the formation of Michael Foods in May 1987,
the Company (exclusive of Michael Foods) has experienced operating cash flow
deficits. The Company and its consolidated subsidiaries had long term debt
(including current maturities) and short-term notes payable of approximately
$45.7 million as of December 31, 1994, and the Company's debt-to-equity ratio at
December 31, 1994, was 1.33 to 1. Also, the Company had cash flow deficits from
operations of approximately $4.6 million in 1994, $3.1 million in 1993 and
approximately $3.9 million in 1992, and operating cash flow deficits are
expected to continue. The Company intends to fund such operating cash flow
deficits through its available cash and cash equivalents, proceeds from the sale
of Time Certificates pursuant to this offering, amounts available under the
credit facilities of the Company and its consolidated subsidiaries, and
dividends from Michael Foods. Because the Company remains leveraged, however,
a significant decline in the earnings of the Company's operating subsidiaries,
a prolonged interruption or significant reduction in sales of Time Certificates
pursuant to this offering, or a significant reduction in the cash dividends the
Company receives from Michael Foods, could have a material adverse effect on the
Company's ability to make scheduled payments of interest and principal on its
indebtedness, including the Time Certificates offered hereby. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition-Capital
Resources and Liquidity" contained in the copy of the Company's 1994 Annual
Report to Shareholders, which accompanies this Prospectus.
RATIO OF EARNINGS TO FIXED CHARGES. The Company's ratio of earnings to
fixed charges for each of the five fiscal years ended December 31, 1990, 1991,
1992, 1993 and 1994 was 2.46, 1.53, .02, .28 and (.51), respectively. During
each of the last three fiscal years, the Company's earnings were inadequate to
cover its fixed charges. The coverage deficiency was approximately $7,642,000,
$3,615,000 and $4,822,000 for the fiscal years ended December 31, 1994, 1993 and
1992, respectively. Based on the Company's recent cash flow deficits and its
historically high debt to equity ratio, the Company does not expect its fixed
charges to decrease significantly or its earnings from its principal operating
subsidiaries, C.E. Services, Americable and Transition Engineering, to improve
significantly. Accordingly, the Company's earnings may continue to be
inadequate to cover its fixed charges. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Capital Resources
and Liquidity" contained in the copy of the Company's 1994 Annual Report to
Shareholders which accompanies this Prospectus.
RELIANCE UPON SALES OF NEW TIME CERTIFICATES. The Company relies upon the
sale of new Time Certificates to retire maturing debentures (under the Company's
earlier debenture programs) and Time Certificates and, to a much lesser extent,
to finance operations. Aggregate sales of new Time Certificates include the
reinvestment of proceeds from maturing Time Certificates or debentures into new
Time Certificates and the sale of Time Certificates unrelated to maturing Time
Certificates or debentures. During 1994, 1993 and 1992, approximately 63%, 54%
and 52%, respectively, of the proceeds from maturing Time Certificates or
debentures was reinvested in new Time Certificates. During 1994, 1993 and 1992,
total new sales of Time Certificates (including the reinvestment of compounded
interest) exceeded redeemed Time Certificates and debentures, resulting in net
cash proceeds of approximately $1.8 million, $680,000 and $1.3 million,
respectively, to the Company. In 1991 and 1990, however, maturing Time
Certificates and debentures exceeded total new sales of Time Certificates
(including the reinvestment of compounded interest), resulting in net cash
deficits of approximately $313,000 and $2.6 million, respectively. While the
Company intends to offer Time Certificates at competitive rates
-6-
<PAGE>
relative to other comparable investment products, no assurance can be made that
future sales of Time Certificates (including reinvested proceeds) will equal or
exceed maturing Time Certificates and debentures. Approximately $12.1 million
and $11.2 million principal amount of Time Certificates and debentures mature in
1995 and 1996, respectively. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition-Capital Resources and Liquidity"
contained in the copy of the Company's 1994 Annual Report to Shareholders, which
accompanies this Prospectus.
MICHAEL FOODS AND CORVEL. Because Michael Foods and CorVel are not wholly
owned subsidiaries, the Company does not have the ability to utilize cash flow
from Michael Foods or CorVel in connection with its wholly owned operating
subsidiaries or to repay its indebtedness. The only cash the Company can obtain
from Michael Foods and CorVel are cash dividend payments made to all Michael
Foods or CorVel shareholders. During 1994, the Company received cash dividends
equal to $1,471,000, with respect to its shares of Michael Foods common stock.
Since its initial public offering, CorVel has not paid any dividends and it has
indicated that it does not anticipate doing so during the foreseeable future.
There can be no assurance that Michael Foods will continue to declare quarterly
cash dividends. Any reduction in the amount of such quarterly cash dividends
could have an adverse effect on the ability of the Company to make scheduled
payments of principal and interest on its indebtedness, including the Time
Certificates offered hereby. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition-Capital Resources and Liquidity"
contained in the copy of the Company's 1994 Annual Report to Shareholders, which
accompanies this Prospectus.
CERTAIN OPERATING RISKS RELATED TO THE COMPANY'S OPERATING SUBSIDIARIES.
There are certain operating risks relating to each of the Company's principal
operating subsidiaries, C.E. Services, Americable and Transition Engineering.
Further, the earnings and cash flows of these subsidiaries have varied
substantially from year to year. In the event these operating subsidiaries
experience cash flow deficits that require the Company to provide working
capital to fund operations or make other cash investments, the Company's
ability to make scheduled payments of interest and principal on its
indebtedness, including the Time Certificates offered hereby, could be
materially adversely affected. See "Management's Discussion and Analysis of
Results of Operations and Financial Condition -- Capital Resources and
Liquidity" contained in the copy of the Company's 1994 Annual Report to
Shareholders which accompanies this Prospectus.
SUBORDINATION OF TIME CERTIFICATES. The Time Certificates are subordinate
and junior to any and all Senior Indebtedness of the Company, as defined in the
Indenture. Also, with respect to certain of the Company's Senior Indebtedness,
the Company has pledged its shares of Michael Foods stock to secure such
indebtedness. There are no restrictions in the Indenture regarding the amount
of Senior Indebtedness of the Company, which may fluctuate. In the event of a
default on the Senior Indebtedness or the liquidation of the Company, all Senior
Indebtedness must be paid prior to any payment of principal or interest on the
Time Certificates. The Time Certificates are in parity with all of the
subordinated debentures and Time Certificates that have previously been offered
by the Company. As of December 31, 1994, the outstanding Senior Indebtedness of
the Company was $4.2 million and there was $41.4 million principal amount of
subordinated indebtedness of the Company outstanding (subordinated debentures
and Time Certificates), which rank in parity with the Time Certificates. See
"Description of the Time Certificates--Provisions Relating to All Time
Certificates-Subordination."
NO SECURITY FOR PAYMENT. The Time Certificates offered hereby are
unsecured and do not have the benefit of a sinking fund or other similar
provision providing for retirement of the Time Certificates at their maturity.
The Company's ability to repay the Time Certificates could be adversely affected
if the Company were unable to raise additional funds through the issuance of new
debt or equity securities or the sale of Company assets. See "Management's
Discussion and Analysis of Results of Operations and Financial Condition-Capital
Resources and Liquidity" contained in the copy of the Company's 1994 Annual
Report to Shareholders, which accompanies this Prospectus.
-7-
<PAGE>
REDEMPTION. The Company, at its option, may at any time redeem any or all
of the outstanding Extendible or Fixed-Term Time Certificates of any type
selected by interest rate or maturity. If the Company redeems less than all of
the outstanding Time Certificates selected for redemption, the Company will
redeem the Time Certificates ratably or by lot. The Time Certificates will be
redeemed at 100% of the principal amount plus accrued but unpaid interest. See
"Description of Time Certificates-Provisions Relating to all Time Certificates-
Redemption at the Option of the Company."
NO PUBLIC TRADING MARKET FOR THE TIME CERTIFICATES. It is unlikely that
any trading market for the Time Certificates offered hereby will develop, or, if
developed, will be sustained, or that the Time Certificates offered hereunder
may be resold at any price. In addition, the Time Certificates offered
hereunder may be issued in uneven amounts which could further restrict the
ability to trade the Time Certificates.
NO FIRM UNDERWRITING COMMITMENT. The Time Certificates are being offered
by officers and employees of the Company without a firm underwriting commitment.
No assurance can be given as to the principal amount of Time Certificates that
will be sold or whether the proceeds received by the Company from the sale of
Time Certificates will be sufficient for the uses required by the Company. See
"Use of Proceeds."
USE OF PROCEEDS
The Company anticipates applying net proceeds from the sale of the Time
Certificates first to retire outstanding subordinated debentures and Time
Certificates and related accrued interest, as such subordinated debentures and
Time Certificates mature. As of December 31, 1994, $41.4 million principal
amount of subordinated debentures and Time Certificates were outstanding.
During 1995 and 1996, approximately $12.1 million and $11.2 million principal
amount of subordinated debentures and Time Certificates, respectively, will
mature. The Company's maturing subordinated debentures and Time Certificates
during 1995 and 1996 will have a weighted average to maturity interest rate of
approximately 9.25% and 9.6% respectively. In the event that proceeds from the
sale of the Time Certificates exceed the amount necessary to repay maturing
subordinated debentures and Time Certificates and prior to the maturity of such
subordinated debentures and Time Certificates, the Company will include such
proceeds in the general funds of the Company, which the Company expects to use
for corporate costs, working capital and other operating purposes.
PLAN OF DISTRIBUTION
The Company is offering hereby an aggregate of up to $40,000,000 principal
amount of Time Certificates, which will be offered by authorized officers and
employees of the Company directly without an underwriter and on a continuous
basis with an expected termination date of April 30, 1998; however, the Company
reserves the right to terminate this offering of Time Certificates at any time
prior to such date. In compliance with Rule 3a4-1 of the Exchange Act, the
officers and employees of the Company limit their participation in the offering
of the Time Certificates to preparation of written communication or delivery of
such communication through the mail or other means that does not involve oral
solicitation by the officer or employee, responding to inquiries of a potential
purchaser in a communication initiated by the potential purchaser, or performing
ministerial and clerical work related to the offering. No underwriting
discounts or commissions of any kind will be paid to such officers or employees
in connection with this offering. Also, the Company does not use agents or
finders to locate potential purchases of Time Certificates. No minimum amount of
the Time Certificates must be sold in order for the Company to accept and
deposit the proceeds of this offering.
The Time Certificates only may be purchased by means of the offer to
purchase Time Certificates contained in the form of Subscription Agreement
provided by the Company (the "Subscription Agreement"). The Company will not
accept an offer to purchase Time Certificates or negotiate checks delivered for
payment on the sale of Time Certificates unless the prospective purchaser has
previously received this Prospectus and a current post-effective amendment
thereto, if
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<PAGE>
any, setting forth changes to the initial interest rates for each series of
Time Certificates set forth on the cover page hereof.
In the event that the Company receives a properly executed Subscription
Agreement and payment for the purchase of Time Certificates from any person who
has previously received this Prospectus, but who has not received a current
post-effective amendment thereto, the Company will not accept the Subscription
Agreement nor accept any payment therefor until the lapse of five business days
following the mailing of a confirmation of sale and current post-effective
amendment to such prospective purchaser. During this five business day period,
any prospective purchaser of Time Certificates may revoke his or her offer,
orally or in writing, and the Company will promptly return any checks or funds
previously delivered to it. Once the Company accepts an offer, however, orders
to purchase Time Certificates and the issuance of such certificates will be
deemed to have occurred as of the date of receipt by the Company of a
Subscription Agreement and payment. The Company reserves the right to reject
any offer to purchase in whole or in part.
Prospective purchasers who have submitted Subscription Agreements and
payment of the purchase price for Time Certificates may revoke their offer by
writing the Company at 610 Park National Bank Building, 5353 Wayzata Boulevard,
Minneapolis, Minnesota 55416. Attention: Investment Department, or by calling
(612) 546-7500. Investors seeking information as to the current interest rates
for the Time Certificates may contact the Company at 1-800-247-1246 to receive a
current quote as to such rates.
DESCRIPTION OF TIME CERTIFICATES
GENERAL
The Time Certificates will be issued under an Indenture, dated as of
April 26, 1989, as amended by that certain First Supplemental Indenture, dated
as of March 16, 1992 and by that certain Second Supplemental Indenture, dated as
of March 16, 1995 (as amended, the "Indenture"), between the Company and
National City Bank of Minneapolis, as Trustee (the "Trustee"). The Indenture
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and a copy is available for inspection at the principal
executive offices of the Trustee. The following discussion summarizes certain
provisions of the Indenture and is subject to, and is qualified in its entirety
by reference to all of the provisions of the Indenture, including the
definitions therein of certain terms. Whenever particular provisions of or
terms defined in the Indenture are referred to in this Prospectus, such
provisions or defined terms are incorporated herein by reference. Section and
article references appearing below are to the Indenture.
The First Supplemental Indenture increased the principal amount of Time
Certificates that may be issued under the Indenture from $40 million to $80
million. The Second Supplemental Indenture increased the principal amount of
Time Certificates that may be issued under the Indenture from $80 million to
$120 million. As of March 1, 1995, approximately $73.9 million principal amount
of Time Certificates had been issued under the Indenture and approximately
$33.3 million principal amount of Time Certificates was outstanding under the
Indenture. There is no limitation on the respective principal amount of any
type of Time Certificates that may be outstanding at any time. The Extendible
Time Certificates will mature four years after their date of issue, unless
previously redeemed at the option of the Company or, as described below, at the
option of the holder. The Fixed-Term Time Certificates will mature on the first
day of the month immediately following the second, fifth and tenth anniversary
of their respective dates of issue, unless previously redeemed at the option of
the Company.
The Time Certificates are unsecured obligations of the Company and rank on
a parity with other outstanding subordinated debt of the Company, including
previously issued debentures of the Company issued under its debenture programs,
previously issued Time Certificates issued under the Indenture and, except as
stated below, general creditors of the Company. See "Provisions Relating to All
Time Certificates- Subordination." There is no sinking fund or similar
provision for payment of the Time Certificates at maturity. Maturing Time
Certificates will be paid from general funds of the Company or from the sale of
new Time Certificates.
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The initial interest rates payable on any unsold Time Certificates will be
subject to change by the Company from time to time based on market conditions
and the Company's financial requirements, but no such change will affect the
interest rate on any Time Certificate purchased prior to the effective date of
such change. The interest rate applicable to each type of Time Certificate will
be the rate set forth in this Prospectus or in a post-effective amendment to
this Prospectus, if any, in effect as of the date of issuance of such Time
Certificate. Interest payable on the Time Certificates will be calculated based
on a 365 day year.
The Time Certificates will be issued only in registered form, without
coupons, in any amount of $1,000 or more. (Section 2.02(a)).
EXTENDIBLE TIME CERTIFICATES
INTEREST. Interest on each Extendible Time Certificate will accrue from
its date of issuance and will be payable semi-annually beginning on the day
before the same calendar day of the sixth month following the date of issuance
of such certificate. If, however, the date of issuance was the 29th, 30th or
31st day of any calendar month and the calendar month six months following the
date of issuance does not include the actual calendar day of the date of
issuance, then such interest shall be payable on the last calendar day of the
sixth month following the date of issuance. Interest on each Extendible Time
Certificate will be payable to the person in whose name the Extendible Time
Certificate is registered at the close of business on the 15th day before
interest is payable.
INTEREST RATE ADJUSTMENT AND ROLL-OVER. The interest rate applicable to
each Six Month Extendible Subordinated Time Certificate will be adjusted every
six months. The first adjustment will occur on the same calendar day of the
sixth month following the date of issuance of such certificate. If, however,
the date of issuance was the 29th, 30th or 31st day of any calendar month and
the calendar month six months following the date of issuance does not include
the actual calendar day of the date of issuance, then the interest rate will be
adjusted on the last calendar day of the sixth month following the date of
issuance. Thereafter, the interest rate will continue to adjust every six
months on the anniversary date of the date of issuance and on the anniversary
date of the date of the first interest rate adjustment until maturity, unless
earlier redeemed. The interest rate applicable to each Twelve Month Extendible
Subordinated Time Certificate will be adjusted on each anniversary date of the
date of issuance of the certificate.
Each such date, whereupon the interest rate applicable to such Extendible
Time Certificates is adjusted, is referred to as a "Roll-Over Date." From and
after the Roll-Over Date, the new interest rate will be paid by the Company with
respect to such Extendible Time Certificates until the next Roll-Over Date.
The Company will give each registered holder of an Extendible Time
Certificate written notice at least ten business days prior to a Roll-Over Date
(such date is herein referred to as the "Notice Date") reminding the holder of
such date and notifying the holder of the interest rate applicable to such
Extendible Time Certificate as of the Notice Date. A holder of an Extendible
Time Certificate may elect to hold such Extendible Time Certificate at the so
announced interest rate until the next Roll-Over Date or present the Extendible
Time Certificate to the Company within ten days after the Roll-Over Date for
redemption at 100 percent of the certificate's principal amount or a portion
thereof. However, if the interest rate applicable to such Extendible Time
Certificate on the Roll-Over Date is different from the interest rate as of the
Notice Date, the holder will be notified of the change in interest rate and be
given ten business days from the date of such notice of the change in interest
rates to present the Extendible Time Certificate to the Company for redemption.
Failure by a holder to so present an Extendible Time Certificate for redemption
will be deemed an election to hold such Extendible Time Certificate until the
following Roll-Over Date. If a holder submits an Extendible Time Certificate
for redemption, no interest will be paid during the period from the Roll-Over
Date to the date of redemption. Registered holders of the Extendible Time
Certificates will be determined at the close of business on the 15th day prior
to the Roll-Over Date.
FIXED-TERM TIME CERTIFICATES
INTEREST. Interest on each Fixed-Term Time Certificate will accrue from
the date of issuance and will be payable, at the election of the initial
purchaser, quarterly, at maturity, or if the Fixed-Term
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Time Certificate is in a denomination of $5,000 or more, monthly. If interest
is paid at maturity only, it will be compounded quarterly.
The election by the purchaser at the time of the purchase for payment of
interest at maturity may be changed only once to provide for the payment either
quarterly or monthly. Accrued and unpaid interest as of the effective date of
the change will be added to the principal amount of the Fixed-Term Time
Certificate and simple interest will be paid thereafter on the new principal
amount. To change the payment option a holder of a Fixed-Term Time Certificate
must: (a) furnish the Company with a written notice of such election;
(b) forward the actual certificate evidencing the Fixed-Term Time Certificate to
the Company for notation of current value and change in interest payment; and
(c) provide such additional documentation and other materials as the Company
deems necessary.
PROVISIONS RELATING TO ALL TIME CERTIFICATES
SUBORDINATION. Payment of principal and interest on the Time Certificates
is subordinated and subject to the prior payment in full of all Senior
Indebtedness. Upon (i) the maturity of such Senior Indebtedness, including by
lapse of time, acceleration or otherwise, (ii) the happening of an event of
default with respect to any Senior Indebtedness permitting the holders thereof
to accelerate the maturity thereof, or (iii) any distribution of the assets of
the Company upon the dissolution, winding up, liquidation or reorganization of
the Company, the holders of such Senior Indebtedness will be entitled to receive
payment in full before the holders of the Time Certificates are entitled to
receive any payment. (Article 10).
Under the Indenture, "Senior Indebtedness" means all Indebtedness (other
than the Time Certificates and other subordinated debentures of the Company),
whether outstanding on the date of execution of the Indenture or thereafter
created, incurred, assumed, or guaranteed by the Company (and all renewals,
extensions or refunding thereof), unless the instrument under which such
Indebtedness is created, incurred, assumed or guaranteed expressly provides that
such Indebtedness is not senior or superior in right of payment to the Time
Certificates. "Indebtedness" means any indebtedness, contingent or otherwise, in
respect of borrowed money, or evidenced by bonds, notes, debentures or similar
instruments or letters of credit, or representing the balance deferred and
unpaid of the purchase price of any property or interest therein, except any
such balance that constitutes a trade payable.
The Indenture does not limit the amount of additional indebtedness,
including Senior Indebtedness, which the Company or any subsidiary can create,
incur, assume or guarantee. As a result of these subordination provisions,
holders of the Time Certificates may recover less ratably than holders of Senior
Indebtedness of the Company, in the event of insolvency. As of December 31,
1994, the outstanding Senior Indebtedness of the Company was $4.2 million.
Also, as of December 31, 1994, there was $41.4 million principal amount of
subordinated debentures and Time Certificates of the Company outstanding. The
Time Certificates currently outstanding and those to be sold pursuant to this
offering rank in parity with each other and with the outstanding subordinated
debentures.
INTEREST ACCRUAL DATE. Interest on the Time Certificates accrues from the
date of issuance, which is deemed to be the date the Company receives a properly
executed Subscription Agreement and appropriate funds, provided such are
received prior to 3:00 p.m. on a business day. Otherwise, if the Company
receives such funds on a non-business day or after 3:00 p.m. on a business day,
then the date of issuance will be deemed to be the next business day. For this
purpose, the Company's business days will be deemed to be Monday through Friday,
except for Minnesota legal holidays. (Sections 1.01 and 2.02).
TAXES. The following discussion is based on provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable regulations
thereunder, judicial authority and current administrative rulings, all of which
may be retroactively subject to change. Each prospective purchaser of Time
Certificates is advised to consult his or her own tax advisor. Interest on the
Time Certificates is taxable as it accrues, including interest on Fixed-Term
Time Certificates which is payable only at maturity. As a consequence, a holder
of a Fixed-Term Time Certificate who elects payment of interest at maturity is
required to recognize the interest income on such Time Certificate as it accrues
although payment of such interest is deferred until maturity. Under the Code,
the Company is required to report the interest earned on Time Certificates with
respect to each holder to the Internal Revenue Service. No portion of interest
will be withheld for holders providing the Company with a taxpayer
identification number on Forms W-8 or W-9, except on accounts held by foreign
business
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<PAGE>
entities. With respect to those investors who do not provide the Company with
a taxpayer identification number on Forms W-8 or W-9, the Company will withhold
31% of any interest paid. It is the Company's policy that no sale will be made
to anyone refusing to provide a taxpayer identification number on Forms W-8 or
W-9.
ADDITIONAL INTEREST. In addition to the interest rates payable as set
forth above, the Company may make such additional payments of interest, premiums
or other benefits ("Additional Interest") on such of the Time Certificates, in
such amounts, in such form, on such terms and at such times as shall be
determined from time to time by the Company. Such Additional Interest payments
may be modified or discontinued at any time. For example, such Additional
Interest payments may be limited to new investors, or to current investors
increasing or renewing their investments in the Company's Time Certificates.
Also, such Additional Interest payments may be limited to current or new
investors residing in a particular geographic area. (Section 2.02).
REDEMPTION AT THE OPTION OF THE COMPANY. The Company may, at its option,
redeem any or all of the Time Certificates on at least 30 days notice to each
holder of Time Certificates to be redeemed at his or her registered address at a
price of 100 percent of the principal amount of the Time Certificates, plus
accrued interest on a daily basis to the redemption date. The Company may
select for redemption of the Time Certificates a single class, interest rate or
maturity. In the event of redemption of less than all of a series or class of
Time Certificates selected for redemption by the Company, the Time Certificates
will be chosen for redemption by the Trustee as provided in the Indenture,
generally pro rata or by lot. On and after the redemption date, interest ceases
to accrue on Time Certificates or portions of them called for redemption.
(Article 3).
REDEMPTION BY THE HOLDER UPON DEATH OR DISABILITY; OFFERS BY THE COMPANY
TO REPURCHASE TIME CERTIFICATES. A maximum principal amount of $25,000 in one
or more Time Certificates may be redeemed at the election of the original owner
(if such person is still the holder) following such person's total permanent
disability or by such person's estate, following the holder's death, as
established to the satisfaction of the Company. The redemption price, in the
event of such a death or disability, will be the principal amount of the Time
Certificate, plus interest accrued and not previously paid, to the date of
redemption. If two or more persons are joint record owners of a Time
Certificate, the election to redeem will not apply until all record owners are
either deceased or disabled, except that, if the joint owners are husband and
wife, the election may be made after the death or total permanent disability of
either spouse. Except as described above, Time Certificate holders have no
right to require redemption of amounts under the Time Certificate. Any offer to
repurchase Time Certificates made by the Company at the holders' option will be
made in compliance with any applicable tender offer rules under the Exchange
Act, including Rule 14e-1 thereunder. (Article 3).
MODIFICATION OF INDENTURE. The Indenture may be modified by the Company
and the Trustee at any time or times with the consent of the holders of not less
than a majority in principal amount of the Time Certificates then outstanding,
but no modification of the Indenture may be made which will affect the terms of
payment of, the principal of, or any interest on any Time Certificate, without
the consent of the holder thereof, or reduce the percentage of Time Certificate
holders whose consent to modification is required. Without action by the Time
Certificate holders, the Company and the Trustee may enter into supplemental
indentures adding covenants or agreements of the Company for the protection of
the Time Certificate holders, clarifying any ambiguity or correcting any defect
in the Indenture, consistent with its terms, or making any change to the
Indenture that does not adversely affect the legal rights of the Time
Certificate holders. (Article 9). The Company and the Trustee have entered
into that certain First Supplemental Indenture dated as of March 16, 1992, which
amended the Indenture dated as of April 26, 1989, to increase the principal
amount of Time Certificates that may be issued thereunder from $40,000,000 to
$80,000,000. In addition, the Company and the Trustee have entered into that
certain Second Supplemental Indenture, dated as of March 16, 1995, which amended
the Indenture dated as of April 26, 1989, to increase the principal amount of
the Time Certificates that may be issued thereunder from $80,000,000 to
$120,000,000.
PLACE, METHOD AND TIME OF PAYMENT. Principal and interest on the Time
Certificates will be payable at the principal executive office of the Company,
as it may be established from time to time, or at such other place as the
Company may designate for that purpose; provided, however, that payments may be
made at the option of the Company by check or draft mailed to the person
entitled thereto at his or her address appearing in the register which the
Company maintains for that purpose.
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<PAGE>
Any payment of principal or interest which shall be due on a non-business day
will be payable by the Company on the next business day immediately following
such non-business day. (Sections 2.03 and 11.07).
EVENTS OF DEFAULT. An "Event of Default" is defined in the Indenture as
being a default in payment of principal on the Time Certificates which has not
been cured; a default for 30 days in payment of any installment of interest on
the Time Certificates; acceleration of maturity of any Senior Indebtedness in an
amount exceeding $500,000 under the terms of the instrument under which such
Senior Indebtedness is or may be outstanding, if such acceleration is not
annulled within 30 days after written notice; or certain events of bankruptcy,
insolvency or reorganization or default in the performance or breach of any
covenant or warranty of the Company in the Indenture and continuance of such
default in performance or breach for a period of 60 days after notice of such
default has been received by the Company from the Trustee or from the holders of
25% in principal amount of the outstanding Time Certificates. The Company is
required to file annually with the Trustee an Officer's Certificate as to the
absence of certain defaults under the terms of the Indenture. The Indenture
provides that the holders of 51% in aggregate principal amount of the Time
Certificates at the time outstanding may, on behalf of all holders, waive any
past default or Event of Default except in payment of principal or interest on
the Time Certificates. (Article 6).
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default shall occur and be continuing, the Trustee
is under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Time Certificate
holders, unless such Time Certificate holders shall have offered to the Trustee
reasonable indemnity. Subject to such provisions for the indemnification of the
Trustee, the holders of a majority in principal amount of the Time Certificates
at the time outstanding have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any power conferred on the Trustee. The Indenture contains certain limitations
on the right of an individual Time Certificate holder to institute legal
proceedings in the event of the Company's default. (Section 6.06).
MERGER OR REORGANIZATION OF THE COMPANY. The Indenture prohibits the
Company from consolidating or merging with or into, or transferring or leasing
all or substantially all its assets to, a third party, unless the third party
agrees to assume all obligations of the Company under the Indenture. The
Company would also remain obligated to pay the principal and interest on the
Time Certificates in the event of such a transaction. The Indenture does not
prohibit or require consent of the holders of Time Certificates for a highly
leveraged transaction, consolidation or merger which complies with the foregoing
restrictions even though such transaction, consolidation or merger could
adversely affect the holders of Time Certificates. (Section 5.01).
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture may be discharged
upon the payment of all Time Certificates outstanding thereunder or upon deposit
in trust of funds sufficient therefor, plus compliance with certain formal
procedures. (Article 8).
REPORTS. The Company publishes annual reports containing audited financial
statements and quarterly reports containing unaudited financial information for
the first three quarters of each fiscal year. Copies of such reports will be
sent to any Time Certificate holder upon written request.
SERVICE CHARGES. The Company reserves the right to assess service charges
for issuing Certificates to replace lost or stolen Time Certificates, changing
the registration of a Certificate when such change is occasioned by a change in
name of the holder, issuing a replacement interest payment check, or a
transferring (whether by operation of law or otherwise) of the Time Certificate
by the holder to another holder. (Sections 2.05, 2.07 and 2.08).
TRANSFER AND EXCHANGE. A holder may transfer or exchange Time Certificates
in accordance with the Indenture. The Company, as the registrar under the
Indenture, may require a holder, among other things to furnish appropriate
endorsements and transfer documents, and to pay any taxes and fees required by
law or permitted by the Indenture. The Company is not required to transfer or
exchange any Fixed-Term Time Certificates selected for redemption. Also, the
Company is not required to transfer or exchange any Time Certificate for a
period of fifteen business days before the maturity of such Time Certificates.
(Section 2.07).
CONCERNING THE TRUSTEE. The Trustee acts as the trustee under that certain
Indenture, dated as of December 1, 1986, pursuant to which the Company's
Subordinated Debentures, Series 87/88 were previously issued. The Time
Certificates rank in parity with outstanding Subordinated Debentures, Series
87/88, of the Company. Also, the Indenture contains certain limitations on the
right of the
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Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property with respect to any such
claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest (as
defined) and if any of the Indenture securities are in default it must eliminate
such conflict or resign.
The holders of a majority in principal amount of the then outstanding Time
Certificates issued under the Indenture will have the right to direct the time,
method and place of conducting any proceeding for exercising any remedy
available to the Trustee. The Indenture provides that in case an Event of
Default shall occur, and is not cured, the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the Time Certificates issued thereunder, unless
they shall have offered to the Trustee security and indemnity satisfactory to
it.
EXPERTS
The consolidated financial statements of North Star Universal, Inc. and
Subsidiaries have been audited by Grant Thornton LLP, independent certified
public accountants, to the extent and for the periods indicated in their report
appearing in the copy of the Company's 1994 Annual Report to Shareholders, which
accompanies this Prospectus.
Such financial statements are included in the copy of the Company's 1994
Annual Report to Shareholders, which accompanies this Prospectus, and
incorporated by reference herein in reliance upon such report of such firm given
upon their authority as an expert in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Time
Certificates will be passed upon for the Company by the law firm of Dorsey &
Whitney P.L.L.P., Minneapolis, Minnesota.
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TABLE OF CONTENTS $40,000,000
Available Information . . . . . . . . . . . . 2 SIX AND TWELVE MONTH
Incorporation of Certain Information SUBORDINATED EXTENDIBLE
by Reference . . . . . . . . . . . . . . . . 2 TIME CERTIFICATES
Prospectus Summary . . . . . . . . . . . . . . 3
Special Factors. . . . . . . . . . . . . . . . 6 TWO, FIVE AND TEN
Use of Proceeds. . . . . . . . . . . . . . . . 8 YEAR SUBORDINATED
Plan of Distribution . . . . . . . . . . . . . 8 FIXED-TERM TIME
Description of Time Certificates . . . . . . . 9 CERTIFICATES
Experts. . . . . . . . . . . . . . . . . . . . 14
Legal Matters. . . . . . . . . . . . . . . . . 14
No person has been authorized in connection with _______________________
the offering to give any information or to make
any representations not contained in this PROSPECTUS
prospectus, and if given or made, such information
or representations must not be relied upon as _______________________
having been authorized by the Company. This
Prospectus does not constitute an offer or
solicitation by anyone in any state in which such
offer or solicitation is not authorized, or in NORTH STAR
which the person making such offer or solicitation UNIVERSAL, INC.
is not qualified to do so, or to any person to 610 Park National Bank
whom it is unlawful to make such offer or Building
solicitation. Neither the delivery of this 5353 Wayzata Boulevard
Prospectus nor any sales made hereunder shall, Minneapolis, MN 55416
under any circumstances, create any implication
that there has been no change in the affairs of The date of this
the Company since the date of this Prospectus Prospectus is
April 27, 1995
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
With the exception of the SEC registration fee, the following expenses
to be paid by the Registrant in connection with the distribution of
the Time Certificates being registered have been estimated.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . $ 13,792
Printing. . . . . . . . . . . . . . . 30,000
Legal fees and expenses . . . . . . . 50,000
Accounting fees . . . . . . . . . . . 35,000
Trustee's fee . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . 11,208
-------
Total . . . . . . . . . . . . . . . $150,000
-------
-------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 302A.521 of the Minnesota Statutes provides in substance that,
unless prohibited by its articles of incorporation, a corporation must
indemnify an officer or director who is made or threatened to be made
a party to a proceeding because of his or her capacity as an officer
or director, against judgments, penalties and fines and reasonable
expenses, including attorneys' fees and disbursements incurred by such
person in connection with the proceeding, if certain criteria are met.
These criteria, all of which must be met by the person seeking
indemnification are (a) that no other organization has paid the
expenses for which indemnification is requested; (b) that such person
must have conducted himself or herself in good faith; (c) that no
improper personal benefits were obtained by such person and such
person did not engage in self-dealing as defined in the Minnesota
Business Corporation Act; (d) that if the action is a criminal
prosecution, there must have been no reasonable cause for such person
to have believed that the conduct was unlawful; and (e) that such
person must have acted in a manner reasonably believed to have been in
the best interests of the corporation. Provision is made in the
statute for determinations as to eligibility for indemnification. The
determination is made by the members of the corporation's board of
directors who are at the time not a party to the proceedings under
consideration, by special legal counsel selected by the board of
directors, by the shareholders who are not parties to the proceedings
or by a court in the State of Minnesota. Article IX of the Amended
and Restated Bylaws of the Company provides that the Company shall
indemnify such persons, for such liabilities, in such manner, under
such circumstances and to such extent as permitted by Section
302A.521, as now enacted or hereafter amended.
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<PAGE>
ITEM 16. EXHIBITS.
4.1 Form of Indenture, dated as of April 26, 1989, between the Company and
National City Bank of Minneapolis, as trustee (filed as Exhibit 4.1 to
Registration No. 33-26176 and incorporated herein by reference).
4.2 Form of First Supplemental Indenture, dated as of March 16, 1992,
amending the Indenture described in Exhibit 4.1 above (filed as
Exhibit 4.2 to Registration No. 33-40629 and incorporated herein by
reference).
*4.3 Form of Second Supplemental Indenture, dated as of March 16, 1995,
amending the Indenture described in Exhibit 4.1 above.
*4.4 Proposed form of Six and Twelve Month Subordinated Extendible Time
Certificates (included as part of Exhibit 4.3 above).
*4.5 Proposed form of Two, Five and Ten Year Subordinated Fixed-Term Time
Certificates (included as part of Exhibit 4.3 above).
4.6 Form of Subscription Agreement for use in connection with offers to
purchase the Time Certificates by prospective purchasers (filed as
Exhibit 4.4 to Registration No. 33-26176 and incorporated herein by
reference).
*5.1 Opinion and consent of counsel to the Registrant with respect to the
legality of the Time Certificates.
10.1 Severance Agreement, dated December 31, 1990, between the Company and
Miles E. Efron (filed as Exhibit 10.1(a) to Registration No. 33-26176
and incorporated herein by reference).
10.2 North Star Universal, Inc. Incentive Stock Option Plan, including the
form of Stock Option Agreement related thereto (filed as Exhibit 10.19
to Registration No. 33-10558 and incorporated herein by reference).
10.3 North Star Universal, Inc. Non-Qualified Stock Option Plan, including
the form of Stock Option Agreement related thereto (filed as Exhibit
10.19 to Registration No. 33-10558 and incorporated herein by
reference).
10.4 Letter Agreement, dated March 25, 1987, between North Star Universal,
Inc. and Michael Foods, Inc., pursuant to which the Company agreed not
to acquire any additional food related businesses as long as it owns
25% of the capital stock of Michael Foods, Inc. (filed as Exhibit
10.34 to Registration No. 33-10558 and incorporated herein by
reference).
10.5 Indenture, dated as of December 1, 1986, between the Company and
National City Bank of Minneapolis, as Trustee, relating to $25,000,000
principal amount of Subordinated Debentures Series 87/88 (filed as
Exhibit 4.1 to Registration No. 33-10558 and incorporated herein by
reference).
10.6 Indenture, dated as of September 1985, between the Company and
American National Bank and Trust Company, as Trustee, relating to
$14,000,000 principal amount of Subordinated Debentures, Series 1985
(filed as Exhibit 4 to Registration No. 2-99100 and incorporated
herein by reference).
II-2
<PAGE>
10.7 Restated and Amended Credit Loan Agreement, dated May 17, 1990,
between the Company and First Bank National Association ("First Bank")
(filed as Exhibit 19.1 to the Company's quarterly report on Form 10-Q
for the quarter ended June 30, 1990, and incorporated herein by
reference).
10.8 Amendment to Restated and Amended Revolving Credit Loan Agreement,
dated January 11, 1991, between the Company and First Bank, amending
the Restated and Amended Revolving Credit Loan Agreement described in
Exhibit 10.9 above (filed as Exhibit 10.11(d) to Registration
Statement No. 33-26176 and incorporated herein by reference).
10.9 Letter Agreement, dated February 28, 1991, amending the terms of the
Amendment to Restated and Amended Revolving Credit Loan Agreement
described in 10.10 above (filed as Exhibit 10.11(e) to Registration
No. 33-26176 and incorporated herein by reference).
10.10 Second Amendment to Restated and Amended Revolving Credit Loan
Agreement, dated January 2, 1992, between the Company and First Bank,
amending the Restated and Amended Revolving Credit Loan Agreement
described in Exhibit 10.9 above, including a promissory note executed
in connection therewith (filed as Exhibit 10.2 to the Company's
Annual Report on Form 10-K for the year ending December 31, 1991 and
incorporated herein by reference).
10.11 Third Amendment to Restated and Amended Revolving Credit Loan
Agreement, dated November 18, 1992, between the Company and First
Bank, amending the terms of the Restated and Amended Revolving Credit
Loan Agreement described in 10.9 above (filed as Exhibit 10.12(a) to
Registration Statement No. 33-40629 and incorporated herein by
reference).
*10.12 Fourth Amendment to Restated and Amended Revolving Credit Loan
Amendment, dated January 3, 1994, between the Company and First Bank
National Association, amending the terms of the Restated and Amended
Revolving Credit Loan Agreement described in 10.6 above.
*10.13 Waiver and Fifth Amendment to Restated and Amended Revolving Credit
Loan Amendment, dated March 16, 1994, between the Company and First
Bank National Association, amending the terms of the Restated and
Amended Revolving Credit Loan Agreement described in 10.6 above.
*10.14 Sixth Amendment to Restated and Amended Revolving Credit Loan
Amendment, dated January 31, 1995, between the Company and First Bank
National Association, amending the terms of the Restated and Amended
Revolving Credit Loan Agreement described in 10.6 above.
10.15 Loan Agreement, dated as of May 1, 1989, between the City of Welcome,
Minnesota and Eagle Engineering and Manufacturing Company, Inc., a
subsidiary of the Company ("Eagle Engineering") relating to $1,470,000
Industrial Development Revenue Bonds, Series 1989 (Eagle Engineering
and Manufacturing Company, Inc. Project, (filed as Exhibit 10.15 to
Registration No. 33-26176 and incorporated herein by reference).
10.16 Mortgage and Security Agreement, dated as of May 1, 1989, securing the
obligations of Eagle Engineering under the Loan Agreement described in
Exhibit 10.20 above, pursuant to which Eagle Engineering granted a
mortgage to American National Bank and Trust Company, St. Paul,
Minnesota, as trustee under that certain Indenture, dated as of May 1,
1989, relating to its facility in Welcome, Minnesota (filed as Exhibit
10.16 to Registration No. 33-26176 and incorporated herein by
reference).
II-3
<PAGE>
10.17 Guaranty Agreement, dated as of May 1, 1989, executed by the Company
as guarantor, pursuant to which the Company guaranties the obligations
of Eagle Engineering under the Loan Agreement described in Exhibit
10.20 above (filed as Exhibit 10.17 to Registration No. 33-26176 and
incorporated herein by reference).
10.18 North Star Universal, Inc. 1988 Nonqualified Stock Option Plan, as
amended April 26, 1989 and May 15, 1989, including form of Stock
Option Agreement related thereto (filed as Exhibit 10.18 to
Registration No. 33-26176 and incorporated herein by reference).
10.19 Employment Agreement, dated April 1, 1993, between the Company,
Transition Engineering, Inc. and Peter E. Flynn (filed as Exhibit 10.
22 to the Company's Annual Report on Form 10-K for the year ending
December 31, 1993 and incorporated herein by reference).
10.20 Lease, dated July 12, 1990, between C.E. Services Inc. and Kingsland
Properties Ltd., relating to the leased facility in Batavia, Illinois
(filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for
the year ending December 31, 1991 and incorporated herein by
reference).
10.21 Commercial Lease Agreement, dated January 31, 1990, between C.E.
Services, Inc. and Post and Paddock Associates, relating to the leased
facility in Grand Prairie, Texas (filed as Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the year ending December 31,
1991 and incorporated herein by reference).
10.22 Registration Rights Agreement, dated May 16, 1991, between the Company
and FORTIS Corporation (filed as Exhibit 10.17 to Registration No. 33-
40629 and incorporated herein by reference).
10.23 Form of North Star Indemnification Agreement, dated May , 1991,
between the Company and FORTIS Corporation (filed as Exhibit 10.20 to
Registration No. 33-40629 and incorporated herein by reference).
10.24 Promissory Note, dated June 1, 1991, executed in favor of the Company
by James H. Michael (filed as Exhibit 10.8 to the Company's Annual
Report on Form 10-K for the year ending December 31, 1991 and
incorporated herein by reference).
10.25 Purchase and Sale Agreement by and among Leslie C. Malmquist,
Universal Press and Label, Inc. and the Company, dated December 22,
1992, relating to the sale of Universal Press and Label, Inc.
10.26 Amended and Restated Loan and Security Agreement dated June 1, 1993
among Americable, Transition Engineering, Inc., Cable Distribution
Systems, Inc. and First Bank (filed as Exhibit 10.31 to the Company's
quarterly report on Form 10-Q for the quarter ended June 30, 1993, and
incorporated herein by reference.)
10.27 Subordination Agreement executed by the Company and Americable for the
benefit of First Bank in connection with the loans described in
Exhibit 10.26 above (filed as Exhibit 10.25(b) to Registration No. 33-
26176 and incorporated herein by reference).
II-4
<PAGE>
*10.28 First Amendment to Amended and Restated Loan and Security Agreement,
dated November 29, 1993, among Americable, Inc., Transition
Engineering, Inc., Cable Distributions Systems, Inc. and First Bank
National Association, amending the terms of the Amended and
Restated Loan and Security Agreement described in 10.26 above.
*10.29 Waiver and Second Amendment to Amended and Restated Loan and Security
Agreement, dated as of March 3, 1995, among Americable, Inc.,
Transition Engineering, Inc., Cable Distributions Systems, Inc. and
First Bank National Association, amending the terms of the Amended and
Restated Loan and Security Agreement described in 10.26 above.
*10.30 Supplement A to Amended and Restated Loan and Security Agreement,
dated June 1, 1993, among Americable, Inc., Transition Engineering,
Inc., Cable Distributions Systems, Inc. and First Bank National
Association, supplementing the terms of the Amended and Restated Loan
and Security Agreement described in 10.26 above.
*10.31 Amended, Restated and Consolidated Credit Agreement, dated as of
August 1, 1994, by and between C.E. Services, Inc. and Texas Commerce
Bank National Association.
*10.32 First Amendment to Amended, Restated and Consolidated Credit
Agreement, dated as of December 27, 1994, by and between C.E.
Services, Inc. and Texas Commerce Bank National Association, amending
the Amended and Restated Consolidated Credit Agreement described in
10.31 above.
*10.33 Continuing Guaranty by North Star Universal, Inc., dated December
1994, to Texas Commerce Bank National Association, for indebtedness of
C.E. Services, Inc., relating to the Amended and Restated Consolidated
Credit Agreement described in 10.31 above.
**10.34 Letter Agreement, dated March 29, 1995, between the Company and
Peter E. Flynn, amending the Employment Agreement described in
Exhibit 10.19 above.
12.1 Computation of Ratio of Earnings to Fixed Charges for North Star
Universal, Inc. for the year ended December 31, 1991 (filed as Exhibit
12.1 to the Company's Annual Report on Form 10-K for the year ending
December 31, 1991 and incorporated herein by reference).
12.2 Computation of Ratio of Earnings to Fixed Charges for North Star
Universal, Inc. for the years ended December 31, 1988, 1989 and 1990
(filed as Exhibit 12.1 to the Company's Annual Report on Form 10-K for
the year ending December 31, 1990 and incorporated herein by
reference).
12.3 Computation of Ratio of Earnings to Fixed Charges for North Star
Universal, Inc. for the year ended December 31, 1992 (filed as Exhibit
12.3 to the Company's Annual Report on Form 10-K for the year ending
December 31, 1992 and incorporated herein by reference).
12.4 Computation of Ratio of Earnings to Fixed Charges for North Star
Universal, Inc. for the year ended December 31, 1993 (filed as Exhibit
12.4 to the Company's Annual Report on Form 10-K for the year ending
December 31, 1993 and incorporated herein by reference).
*12.5 Computation of Ratio of Earnings to Fixed Charges for North Star
Universal, Inc. for the year ended December 31, 1994.
*13.4 1994 Annual Report to Shareholders of North Star Universal, Inc.
**23.1 Consent of Independent Certified Public Accountants - Grant Thornton
LLP.
**23.2 Consent of Independent Auditors - Ernst & Young
LLP
*24.1 Power of Attorney (included on the signature page of this
Registration Statement previously filed).
*25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of National City Bank of
Minneapolis.
*27.1 Financial Data Schedule
___________
* Previously filed.
** Filed with this Amendment No. 1 to the Registration Statement.
II-5
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered
to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-2 and has duly caused this Amendment
No. 1 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, this 26th day of April, 1995.
NORTH STAR UNIVERSAL, INC.
By /s/Jeffrey J. Michael
-----------------------------------
Jeffrey J. Michael, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1933, this Amendment No. 1 to this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Miles E. Efron Chairman of the Board April 26, 1995
- -------------------------
Miles E. Efron
JAMES H. MICHAEL* Director April 26, 1995
- -------------------------
James H. Michael
/s/Jeffrey J. Michael President, Chief Executive April 26, 1995
- ------------------------- Officer and Director
Jeffrey J. Michael (principal executive officer)
/s/Peter E. Flynn Executive Vice President, April 26, 1995
- ------------------------- Chief Financial Officer
Peter E. Flynn (principal financial and
accounting officer), Secretary
and Director
Director
- -------------------------
Fred E. Stout
RICHARD J. BRAUN* Director April 26, 1995
- -------------------------
Richard J. Braun
*By /s/ Jeffrey J. Michael
------------------------
Jeffrey J. Michael, pro se
and attorney-in-fact
II-7
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Number
- ------- ------
10.34 Letter Agreement amending Employment Agreement
23.1 Consent of Independent Certified Public Accountants-
Grant Thornton LLP
23.2 Consent of Independent Auditors-
Ernst & Young LLP
<PAGE>
NORTH STAR
UNIVERSAL, INC.
5353 Wayzata Boulevard FAX (612) 540-9100
Minneapolis, MN 55416-1370 Telephone (612) 546-7500
March 29, 1995
CONFIDENTIAL
Mr. Peter E. Flynn
TRANSITION ENGINEERING, INC.
7090 Shady Oak Road
Eden Prairie, MN 55344
Dear Peter:
I am writing to confirm the following modifications to your employment with
North Star Universal and Transition Engineering.
1. ALLOCATION OF BASE SALARY. Effective April 1, 1995, your base salary
payable by North Star as part of the regular payroll is at the annual rate of
$136,000. In addition, your base salary payable by Transition is at the annual
rate of $42,500, payable in quarterly installments of $10,625 starting April 1,
1995.
2. INCENTIVE COMPENSATION FOR 1994. Your annual incentive bonus for 1994 is
$45,000, payable immediately.
3. INCENTIVE COMPENSATION FOR 1995. Based upon the 1995 year-to-date
performance of Transition, you have earned an incentive bonus of $25,000. In
addition, you will receive a discretionary bonus for 1995 based upon your
performance in executing North Star's strategic plans. The discretionary bonus
will be an amount ranging from $0 to $75,000, as determined by North Star's
Board of Directors. Both the $25,000 bonus and the discretionary bonus are
payable on or before March 31, 1996.
4. SEVERANCE PAY. In the event your employment is discontinued due to any
transaction described in Paragraph 5.01, subparagraph F(iii) of your Employment
Agreement, you shall receive a severance payment of $297,000.
5. COMPUTER. North Star or Transition is authorized to purchase a lap top
computer for your executive use. You shall have the opportunity to purchase the
computer from the company at a fair value.
<PAGE>
CONFIDENTIAL/PEF
03/29/95
6. BENEFITS. Your existing employment benefits shall remain the same.
Except for the modifications noted above, all other terms of your employment are
unchanged.
Peter, I hope this letter includes all of the changes that we discussed. Let me
know if there are any points that need revision or further clarification.
Otherwise, please indicate your agreement by signing a copy of this letter and
returning it to me. I look forward to working with you to achieve North Star's
goals.
Sincerely,
/s/ Jeffrey J. Michael
Jeffrey J. Michael
AGREED AND ACCEPTED BY:
/s/ Peter E. Flynn
- -----------------------
Peter E. Flynn
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated February 21, 1995 accompanying the
consolidated financial statements and schedule of North Star Universal, Inc. and
Subsidiaries incorporated by reference in the Registration Statement on Form S-
2. We consent to the use of the aforementioned reports in the Registration
Statement and to the use of our name as it appears under the caption "Experts".
We have issued our reports dated February 15, 1995 accompanying the
consolidated financial statements and schedule of Michael Foods, Inc. and
Subsidiaries included in the Annual Report on Form 10-K of North Star Universal,
Inc. for the year ended December 31, 1994, incorporated by reference in the
Registration Statement on Form S-2. We consent to the use of the aforementioned
reports in the Registration Statement.
/s/ GRANT THORNTON LLP
Minneapolis, Minnesota
April 27, 1995
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-2 No. 33-58163) of North Star Universal, Inc. and in the related Prospectus of
our report dated May 10, 1994, with respect to the consolidated financial
statements and schedules of CorVel Corporation included in the Annual Report
(Form 10-K/A-1) for the year ended December 31, 1993 of North Star Universal,
Inc.
/s/ Ernst & Young LLP
Orange County, California
April 26, 1995
