U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
NORTHSTAR INDUSTRIES, INC.
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(Name of Small Business Issuer as specified in its charter)
NEVADA
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(State or other jurisdiction of organization)
(I.R.S. incorporation or Employer I.D. No.)
50 West Liberty Street, Suite 880,
Reno, Nevada 89501
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 363-7411
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 Par Value Common Voting Stock
------------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
Item 1. Description of Business.
(a) Business Development.
(1) Form and year of organization
Northstar Industries, Inc., a Nevada corporation (the "Company"),
was organized on March 22, 1989, for the purpose of engaging in any
lawful activity.
At inception, the Company was authorized to issue 25,000 shares
of non-assessable common voting stock, par value one dollar ($1.00)
per share. All shares have equal voting rights.
As of the date of this Registration Statement, there are
21,702,001 shares of common stock, par value $0.001, issued and
outstanding.
Copies of the Company's Articles of Incorporation and Bylaws are
attached hereto and incorporated herein by this reference. See
Exhibit 3.1 - Articles of Incorporation and Exhibit 3.4 - By-Laws of
the Corporation.
Charter Amendments
On November 10, 1993 the Company's Articles of Incorporation were
amended, authorizing the Company to issue up to 50,000,000 shares of
common stock.
On February 16, 1996, the Company amended its Articles of
Incorporation changing its name from Top Dollar Realty, Inc., to
Northstar Industries, Inc., in contemplation of a merger with IPP.
(2) Bankruptcy, receivership or similar proceeding
None - not applicable.
(3) Material reclassification, merger, consolidation etc.
In February, 1996, the Company performed a Class B reorganization,
by completing an Agreement and Plan of Reorganization whereby
Northstar issued 7,800,000 shares of its common stock in exchange
for all of the outstanding common stock of IPP-Industria Portuguesa
de Producao de Lareiras, S.A. (IPP), a manufacturer of modular, pre-
fabricated, light-weight fireplace surrounds.
Northstar Industria de Portuguesa de Lareiras S.A., formerly
Industria de Portuguesa de Lareiras S.A. (IPP), was founded in
Lisbon, Portugal in October 1989 by Mr. Morten Henriksen and Mr.
Bjarne Varre, based on Mr. Henriksen's ideas to manufacture
high quality fireplace surrounds of unique and traditional designs
from special lightweight concrete.
Simultaneously with the take-over of IPP, USD 990,000 was raised
through a private placement of 2,475,000 shares to European
investors at USD 0.40 a share. The capital raised was used to
acquire two new factory buildings totalling 4,300m (46,200 sq.ft)
(inaugurated on September 12, 1996), new production equipment and
to reduce debt. The increase in production capacity was required
to meet market demand, as growth in 1995 and the first half of
1996 was limited by production capacity.
Production capacity was raised from approx. 3,000 fireplace
casings to approx. 12,000 per year. The new factory also
facilitates production of marble parts for fireplaces and
marble furniture, with a capacity in excess of 10,000m2 of processed
marble per annum.
<PAGE>
The reorganization was accounted for as a recapitalization of IPP
because the shareholders of IPP control the Company after the
acquisition. Therefore, IPP is treated as the acquiring
entity. Accordingly, there was no adjustment to the carrying value
of the assets or liabilities of Northstar. Northstar is the
acquiring entity for legal purposes and IPP is the surviving
entity for accounting purposes.
On January 6, 1997, the Company purchased Nordmur AS (Nord-Mur),
a Norwegian company that had developed, patented and manufactured a
modular, light weight and insulated Heat Protection Wall Panel on a
convection principle, to be used behind fireplaces and stoves, as a
replacement for a brick or low weight building block wall. The
acquisition was made by issuing 1,179,000 shares of the Company's
common stock, and a promise to pay $420,000 in cash by April 1, 1998
in exchange for 100% of the issued and outstanding stock of Nord-
Mur. The purchase was recorded at predecessor cost which
approximates fair market value.
On January 6, 1997, the Company purchased Nord-Interioer AS
(Nord-Interior), the Company's Norwegian distributor for its
fireplace surrounds. The acquisition was made by issuing 585,000
shares of the Company's common stock, and a promise to pay $140,000
in cash by April 1, 1998 in exchange for 100% of the issued and
outstanding stock of Nord-Interior. The purchase was recorded at
predecessor cost which approximates fair market value.
In May, 1998, the Company acquired the entire business, assets,
machines, inventory and brand name of Peismaker'n AS, Norway, a
Norwegian manufacturer of pre-fabricated fireplace surrounds,
having an approximate market of 30% in the Norwegian market for
pre-fabricated surrounds, for a cash consideration of NOK 6 million
(approximately USD 811,102), and NOK 3 million (approximately USD
384,118) in shares of the Company's common stock (934,600 shares).
Effective January 1, 1999, the Company's subsidiary Nord Mur AS
(Nord-Mur), changed its name to Peismaker'n AS.
On August 5, 1999, the Company's subsidiary, Nord Interioer AS,
acquired 100% of the shares in Scandia Varme AS, Norway ("Scandia"),
a manufacturer of cast iron stoves. The acquisition was made as
follows:
1) The value of the existing shares was written down to zero
2) The company performed a debt remission in the amount of NOK
2,710,345 (approximately USD 348,239)
3) Nord Interioer AS, Northstar's subsidiary, invested NOK
1,000,000 (approximately USD 128,485) in equity; and
4) a further NOK 1,000,000 (approximately USD 128,485) as a
sub-ordinated loan to Scandia.
Following the reorganization of Scandia Varme AS, Nord Interioer AS
owns 100% of the issued and outstanding stock in Scandia.
Financially, Northstar will benefit from a loss carry forward
which will reduce the group's future taxes. No other compensation
has been paid. Substantial extraordinary depreciation, extraordinary
and introduction cost has been added to the accounts for the first
nine months in 1999. Please refer to the Management's discussion on
accounts and the enclosed financials for the interim period.
<PAGE>
The acquisition has added a range of cast iron stoves to the
Company's product range. The products were introduced at a large
exhibition for the construction business in Oslo, Norway, in
September 1999. The products have been positively recieved, and
enquiries have come in from a number of European and other
countries. The products will be distributed through Northstar's
distribution network in Europe. The figures for Scandia Varme AS
are part of the consolidated interim accounts as of September 30,
1999, enclosed hereto.
The key figures for the Company have developed as follows over
the last three fiscal years, and in the interim period:
Year Net Sales Net Income Stockhold. Equity BIPS
1996 $2,278,923 $193,356 $1,179,552 $0.02
1997 $3,625,246 $522,641 $1,168,016 $0.04
1998 $4,994,083 $402,413 $4,302,923 $0.02
BIPS = Basic Income Per Share
Net Income is calculated after provisions for tax.
Interim Period Net Sales Net Income BIPS
1st 9 months 1998 $3,407,088 $120,442 $0.01
1st 9 months 1999 $3,582,536 $332,526 $0.02
(b) Business of Issuer.
(1) Northstar's business vision is to become a complete turnkey
supplier, and the preferred, one-stop-shopping European supplier
for all components related to "live fire", i.e. units based on
burning fuel to generate heat, with a visible flame, as a piece of
furniture creating warmth and atmosphere, such as fireplaces, ovens,
chimneys and accessories. People focus more and more on these issues
with increased standard of living. The principal products of the
Company are:
* Surrounds for fireplaces
* Open Fireplace Inserts
* Heat Protection Wall Panels
* Cast Iron Ovens
Surrounds for fireplaces (manufactured in the company's own
factories)
The current core business of Northstar and the original business
idea, is the design, manufacture, distribute and sell high quality
surrounds for fireplaces with exclusive designs, based on the idea
of a modular design for fireplace surrounds cast in light weight
concrete, available at reasonable prices to the end user.
The surrounds are manufactured in 6 - 20 pieces, which can easily
be assembled by professionals as well as DIYs. unique designs. The
weight of the individual pieces ranges from approximately 6kgs
(13lbs) up to a maximum of 40 kgs (88 lbs), and can easily be
handled by one person.
The first market was identified by Northstar (IPP) was Norway,
which, despite its limited population of 4.3 million people, is the
fifth largest market for fireplaces and stoves in Europe (estimated
65,000 units per year).
<PAGE>
Norway is per capita by far the biggest market. The reason is
anticipated to be Norway's cold climate, wide spread population,
traditions, good and reasonable supply of burning wood, high
standard of living and the fact that approximately 70% of the
Norwegian population live in their own detached or semi-detached
houses. Further more, Norwegian building regulations require that
all houses in Norway are built with a chimney, to allow installation
of burning fuel based heating.
In Norway there is a high demand for fireplaces, also for more
sophisticated and exclusive designs. However, many people would not
be able to afford and/or be prepared to pay the cost of having a
qualified mason to design and purpose build a fireplace on site.
Due to Northstar's design and manufacturing methods, high quality
fireplaces with exclusive, advanced and complicated designs are
available at much lower cost than traditional fireplaces.
Typical cost for a traditional fireplace such as IPP model Multi
(corner fireplace) is around USD 3,000 incl. work and insert, whilst
the same fireplace insert complete with an IPP model Multi fireplace
casing is approx. USD 1,400. If the customer wants the IPP fireplace
installed by a professional the additional cost is approx. USD 400,
a total saving of 53% and 40% respectively over traditional cost.
A more exclusive continental model such as IPP model Madrid built
in a traditional way by a mason, would cost a minimum of USD 6,700,
whilst the IPP complete "kit" would cost USD 3,900. Additional cost
for the installation would add approximately USD 600, savings of 42%
and 33% respectively. An additional benefit is that the customer is
assured a high quality, no chipping solution in conformity with all
regulations, which may not always be the case with a mason.
The second advantage of the Northstar fireplace surrounds is the
reduced weight. The weight of an IPP Multi fireplace casing is a
mere 110 kg including a horizontal marble plate. A traditional
masonry fireplace of the same design and size (excluding insert),
would weigh approximately 270 kg. Model Madrid weighs approx 580 kg.
A traditional solution would weigh approx. 900 kg, i.e. model Multi
is 59% and model Madrid 47% lower in weight than traditional
solutions.
Consideration of total weight is important to allow universal
installation of fireplaces (including large models) in existing (or
new) houses without reinforced concrete slabs or other sufficient
support. To allow traditional fireplaces to be installed, major and
expensive alterations to the house may have to be made re-enforcing
floors with additional beams or similar construction details. In
such cases the savings become significantly higher. In some cases
installation may be impossible due to static stress on the
construction.
<PAGE>
The true market potential of a new product with first class
design, reasonably priced and also suitable for the DIY market was
recognized by Mr. Henriksen, and he started to develop the idea for
fireplace casings of first class design, quality and safety in
volume at affordable prices.
However, a requirement is that the product must offer excellent
design, equal to or better than a specially designed fireplace,
capable of being installed by the consumer himself on a DIY basis
("foolproof design"), modules low enough in weight to be handled by
one person, as well as being attractive to specialized stores. The
product should also allow enhancement by adding shelves, floor
plates or other details in marble or other exclusive materials.
Solid stone would be too heavy, too expensive to manufacture
(especially with complex shapes) and have unacceptable restrictions
on design.
Concrete casting would allow flexibility in design, but standard
concrete would be too heavy and require complicated and expensive
re-enforcement.
Extensive experiments with various concrete types, adding low
weight Leca stone and other materials were performed. The result
is a low weight, steel fibre re-enforced concrete with specific
weight only 1.2kg/dm (litre), less than half the weight of standard
concrete. As no re-enforcement steel bars are required, any shape
can be cast. Design is limited by phantasy only. Once the material
was found, designs were made and broken down to modules which could
be easily manufactured, packed, transported and installed.
Although the initial markets were Norway and other Nordic
countries, a significant potential was identified on the European
market. Currently more than 70 Northstar fireplace models, many of
them designed to suit specific markets, are being manufactured and
sold throughout Europe for corner, front or side installation in
traditional nordic design, traditional continental designs as well
as modern and futuristic designs. However, design, research and
development is continuously ongoing to meet market requirements.
Open Fireplace Inserts
In August, 1998, Northstar introduced its own open fireplace
insert, adapted to several of Northstar's fireplace designs, with
bar-b-q accessories as an option. The products has been introduced
to take part of the market which does not demand a closed fireplace
insert (estimated to represent some 65% of the Norwegian market).
The introduction of this first product of that kind is a first
step to offer a complete "kit" also for open fireplaces for those
not requiring the heating capacity of a closed fireplace insert.
The insert is approved by SINTEF, Norway.
<PAGE>
Cast Iron Ovens
Northstar has, with its acquisition of Scandia Varme AS ("Scandia
Heating Ltd.") of Norway, added a range of three cast iron ovens to
its range of products. They are all approved by SINTEF, Norway, to
the highest standards. The ovens will be distributed in Europe
through Northstar's network of distributors and retailers.
Heat Protection Wall Panels (patented)
The Heat Protection Wall Panel is a light weight, low cost,
modular unit, superior in quality with respect to reduction of heat,
easy and quick to install, and also suitable for the DIY market.
Before installing a fireplace or stove, all walls behind it made of
or containing combustible materials, must be protected by a Heat
Protection Wall.
The minimum Norwegian requirement has been a 10 cm plastered
brick wall, and a maximum temperature on the back of the Heat
Protection Wall of 80degC (176degF). Despite apparently complying
with the regulations for construction, fires emerging from fireplace
and stove installations seem to have become more frequent in Norway
over the last few years.
The reasons for the increased number of fires or near fires, are
by experts believed to be a combination of increased capacity of
the burning units (stove or fireplace inserts), changes in the
heating pattern and improved insulation also of internal partition
walls, leading to higher accumulation of energy (heat).
Following these fires SINTEF (The Central Institute for
Scientific and Technical Research) in Norway, a world renowned
technical institute, researched the area and performed a number of
comprehensive tests. In addition to the SINTEF tests, manufacturers
like Joetul in Norway, one of the leading European manufacturers of
fireplace inserts and stoves, have made their own tests.
The tests have shown that the heat radiation from fireplace
inserts and stoves can reach extreme levels, in particular with high
capacity units. During tests, temperatures up to 174 degC (345
degF), have been measured on the surface of the wooden wall behind
the Heat Protection Wall (requirement 80degC (176 degF).
Temperatures above 80degC (176 degF) are considered to be
potentially hazardous. The tests also show that a Heat Protection
Wall made of brick or light weight isolation blocks is not the best
solution for reducing temperatures, and that an air gap between the
brick wall and the wall is a better solution. The tests also show
that there is no significant gain by increasing the thickness of
a traditional wall.
The tests and research led to new and improved Norwegian
regulations in July 1995. Fireplace inserts or stoves which have
been approved, and with heat radiation below certain levels, may
still be installed with the a traditional 10cm brick wall as
protection.
<PAGE>
All other fireplaces and stoves must be installed with a minimum
10 cm brick wall, with an air gap of 15 mm between the Heat Protec-
tion Wall and the wall containing combustible materials. A
minimum of one third of the width at floor level and a minimum of
half the width on top must be vented. Alternatively, a shield fixed
to the Heat Protection Wall, with a minimum gap of 15 mm, can be
installed. Both solutions are complicated, expensive and requires a
high degree of craftsmanship.
All of the problems described above have been solved with the
patented Nordmur Heat Protection Wall Panel in one, light weight,
low cost solution suitable for installation both by professional
and DIY users.
It is a known fact that hot air, being lighter than colder air,
rises (the convection principle). The behaviour of a hot air balloon
or the pattern of air and gas flow around a camp fire or candle
illustrate this natural law. The Nordmur elements is based on this
principle.
The Heat Protection Wall Panel consists of a sandwich
construction of fibre glass reinforced light weight concrete, with
a body of Rockwool insulation material, with a built in air gap
behind the panel, covering the panel's full width, an air inlet at
floor level and an air outlet on top of the elements. The panels
have a thickness of only 6.5 cm (2.6") and are available in two
sizes, 115x60cm (45.3"x23.6") and 115x90cm (45.3"x35.4"), with a
weight of only 35 kgs/m .
The hot stove or fireplace will heat the wall behind the
fireplace or stove, the air in the air gap will rise, escape through
the air vent on top of the elements, sucking in colder air through
the bottom air vent. Unlike a traditional heat Protection Wall
constructed of brick, the efficiency of the elements increase with
increasing temperature in the fireplace, as the flow of air will
increase with increasing temperatures. Tests have shown that the
temperature behind the elements is in fact lower by excess load on
the stove or fireplace, never exceeding 70degC (158 degF), even
under the most extreme conditions. In addition to very efficient
cooling, the system contributes to more evenly distribution of the
heat (energy) in the room for which it is intended, created by the
convection effect created by the Heat Protection Wall.
The range of panels currently consists of six different types of
elements, four panels, with and without air vents on top, one
element to lead the smoke channel through the Heat Protection Wall,
and one element to lead the smoke channel through the Heat
Protection Wall and the combustible wall behind it. The full range
of panels and elements covers all types of fireplace and stove
installation, including corner solutions. The primary advantage is
that the elements can be used for any stove or fireplace,
manufacturer independent, not being limited for use with Northstar's
product line. The market potential is therefore regarded to be
substantial. On request and special order, elements can be
manufactured in virtually any size and shape.
<PAGE>
The product was tested and approved by SINTEF NBL (the Norwegian
Fire Research Laboratory) and approved July 1995, and is now
approved for use in Norway, Sweden, Finland and Japan. The product
is covered by a registered patent.
Additional Products
Northstar also distributes the following products from other
manufacturers:
Joetul fireplace inserts in Portugal
Austroflamm ovens in Norway
Steel tubular chimnies from Nalden, Sweden, in Norway
(1) Distribution methods of the products or services
Distribution of the company's products is generally through a
network of national importers, distributors and resellers. In
Norway, distribution is made through the Company's wholly owned
subsidiary, Nord Interioer AS, acquired by Northstar in 1998. In
Portugal, distribution is made directly from the company's
manufacturing company, Northstar I.P.P. SA.
The Company's main markets are:
Norway
Sweden
Germany/Austria
Finland
Netherlands
Italy
Portugal
Japan
Denmark
Markets in development are:
Poland
Czechia
Baltic Rim countries
Main Markets
Europe
The total European market for solid fuel burning units (wood,
coal etc.) is estimated to be approximately one million units per
annum, of which approximately 60% (i.e. 600,000 units) is estimated
to be fireplaces, representing Northstar's market potential for
fireplace surrounds.
A precise estimate of the market potential for Northstar's
fireplace surrounds is difficult, as there is no absolute line
between stoves and fireplaces. The statistics available are for
units fuelled with solid, i.e. is usually firewood, alternatively
coke or specially manufactured products.
As an example, approximately 65,000 solid fuel burning units are
sold in Norway per year. It is estimated that 65% is represented by
various types of ovens, and 35% by fireplace inserts, or
approximately 23,000 units. We estimate that 55% - 60% of these are
traditional fireplaces built by brick and other similar materials,
<PAGE>
whilst 40% - 45% is represented by prefabricated fireplace surrounds
(approx. 10,000 units), of which Northstar has an estimated market
share of 50% - 60%. Northstar regards, however, the entire market
for solid fuel, and gas burning units, as a potential market. Ratios
between fireplaces and stoves vary significantly between different
markets. As an example, 80% of the French market is represented by
fireplaces.
Traditionally, the reason for preferring stoves over fireplaces
has been price. Part of Northstar's business idea is to capture
market shares from the stove market, due to the competitive prices
of Northstar's fireplace surrounds.
Northstar also believes that it can tap into the market
currently covered by open fireplaces, as they are not energy
efficient and pollute more than modern fireplace inserts. Increasing
attention paid to environmental and energy efficiency aspects leads
Northstar to believe the trend will go towards more efficient
heating units.
However, the entire market for stoves and fireplaces represents a
potential for Northstar's Heat Protection Wall Panels.
In Norway the Northstar products are exclusively distributed
through Northstar's own subsidiary, Nord Interioer AS. In the rest
of Europe, distribution is made through the distributors of
fireplace inserts. A key factor for future success will be the
ability to deliver design attractive to the individual markets.
Therefore, Northstar co-operates with several local designers
throughout Europe to develop models specifically suited for the
individual national markets.
Norway
The total Norwegian market for solid fuel burning units
represents approximately 65,000 wood burning units, and an
additional 15,000 custom built open fireplaces per year.
Fireplaces represent an estimated 35% of the 65,000 units, or a
total of 23,000 units, of which an estimated 55% - 60% are built
on site with traditional techniques, and the balance of
approximately 9000 - 10,000 units are pre fabricated units.
Northstar has an approximate market share of 6,000 units
equivalent to a market share of around 30%. The Heat
Protection Wall Panel market is estimated to be 100,000m2 per
year.
Distribution in Norway is done through Northstar's own 100%
owned subsidiary, Nord Interioer AS. In addition to Northstar's
fireplace surrounds and panels, they distribute "Nordpipen", a
high quality Swedish steel chimney manufactured by Nalden Varme
Industri, Sweden, Austroflamm free-standing stoves from Austria,
and cast iron stoves from Scandia Varme AS, a 100% owned
subsidiary of Nord Interioer AS.
Nord Interioer sells its fireplace surrounds through Maxbo
("Maxliving") and Bygger'n ("the Builder"), two of the three
<PAGE>
largest DIY franchise chains in Norway) under the brand name of
Nordpeis. In addition to that, Nord Interioer sells a special
high-line range of products under the brand name Mesterpeis
("Master Fireplace"), to 40 specialized fireplace retailers. Both
brand names are well established brand names in Norway. The total
number of retail outlets in Norway is approximately 400.
Northstar's major in Norway for fireplace surrounds is
Kvaalsethpeisen AS, having products similar to Northstar.
Kvaalseth is primarily supplying Norgros (Byggmakker), the third
of the three large Norwegian DIY franchise chains. They are
primarily selling small and cheaper models. Sales amount to
approximately NOK 15 million (USD 1.9 million).
The main competition for the Heat Protection Wall Panels is
site built brick or Leca walls. However, new regulations have
been applied from January 1st, 1998. The Company expects that the
Northstar panels will have an increasing price advantage over
traditional walls, due to these new regulations.
It is estimated that 30% of the units are sold in connection
with development or refurbishment projects through property
developers, and 70% to individuals through retail outlets.
Developers with projects of 30+ houses or apartments are usually
contacted directly by Nord Interioer.
Sweden
Distribution in Sweden is made through Joetul AB, a company
privately owned by Mr. John Erik Brekke. The company also has the
exclusive distributorship for Joetul, Norway and Austroflamm,
Austria, and supplies the Swedish market through more than 100
DIY and specialized retailers.
The future Swedish market is very promising, as the Swedish
government has decided to close down all their nuclear power
stations. As a consequence of this decision, the Government
grants subsidies of SEK 4,000 per alternative heating unit plus
30% of the installation cost. The market is currently
approximately 35,000 solid fuel burning units per annum, but is
expected to grow significantly over the next few years.
The Heat Protection Wall Panel market is estimated to be
20,000m per year.
There are two minor local competitors with a volume of
approximately 400 units, and the Norwegian company Kvaalseth is
selling a further 300 units through NIBE. NIBE started selling
Northstar products spring 98.
Competition for the Heat Protection Wall Panels is site built
brick or Leca(TM)walls, and two manufacturers of walls based on
the convection principle made with Leca material.
Germany and Austria
The product range sold in Austria is fireplace surrounds for
Joetul and Austroflamm. The products are being distributed
through Austroflamm, which also represents Joetul in these
markets.
<PAGE>
Austroflamm has approximately 800 customers throughout Germany
and Austria, primarily specialized fireplace retailers.
The total market in Germany and Austria is approximately
250,000 units per year. The strong activity in the construction
market in the former East Germany has led to an increase in the
market for fireplaces.
The potential for the Heat Protection Wall Panels could be
increased through an integrated fireplace design, which would
allow installation of fireplaces in Germany without the 10cm heat
insulation wall required today.
The competition for pre-fabricated fireplace surrounds is
limited, and the main competition comes from traditional
fireplaces.
Some French companies have attempted to enter the market with
solid stone pre-fabricated surrounds, which is the standard in
France. Caminetti Montegrappa from Italy have recently started
marketing their products in Germany, but with solid stone units
like the French.
The market feedback indicates that Northstar products have a
competitive advantage over solid stone pre-fabricated fireplaces
are not popular in Germany.
The biggest local manufacturer on the German market is Hark,
distributing their products through direct sales to the public
via sales representatives.
However, Joetul has strong competition on the insert market
from German companies like Spartherm (15,000 units), Leda (5,000
units) Oldsberg (8,000 units) and R egg from Switzerland.
Finland
The product range sold in Finland is fireplace surrounds for
Joetul and Dovre inserts, and Heat Protection Wall Panels
(Nordmur).
The total volume in Finland is approximately 30,000 units.
Sauna stoves account for approximately one third of the market.
Distribution of fireplace surrounds for Joetul inserts is made
through the Joetul distributor, H"ganes OY, Helsinki, which is
also the distributor for our panels. Fireplace surrounds for
Dovre inserts are distributed through the Dovre distributor,
Focus OY.
Both companies primarily distribute their products through DIY
shops.
The strongest competitor in Finland is Tulikivi with its
limestone fireplace surrounds, with an estimated 35% market
share. Finland is to a large extent dominated by the DIY market,
which gives Northstar a good potential.
Netherlands
Co-operation has recently started with Helex BV, Amsterdam,
who has its own production of sheet-steel fireplace inserts and
stoves.
<PAGE>
Helex BV is also the distributor for Joetul in the Be-Ne-Lux
countries, and presented a new product line at the Batibau
exhibition in Brussels in February 98.
The total market for solid fuel burning units in the Be-Ne-Lux
countries is estimated to be 40,000 units per annum.
Spain and Italy
Spain and Italy are dominated by solid stone, marble
fireplaces. Northstar has sold limited quantities through the
Joetul distributors.
Due to low cost labour, resulting in relatively low cost of
individually built fireplaces, these markets are currently not
top priority for Northstar.
However, our new line of "Design Kamine" is being sold through
Austroflamm in northern Italy.
Portugal
In Portugal the products are distributed directly from
Northstar IPP in Sabugo, to retailers in Portugal. In addition to
Northstar's own product range, Northstar is also the importer in
Portugal for fireplace inserts from Joetul, Norway.
Japan
Northstar have made their first shipments to Japan, selling
both fireplace surrounds for Joetul and Heat Protection Wall
Panels.
Due to a high percentage of houses of wooden construction and
its high population, Japan could become a significant future
market for Northstar.
Denmark
The current product range sold in Denmark is fireplace
surrounds. Distribution in Denmark is through the same channel as
for Joetul, Norway, i.e. Peisecenteret Omega, Copenhagen. Their
distribution is primarily through specialized shops.
The Danish market represents an estimated 15,000 units per
year. All wooden summer houses represent an interesting market
for Heat Protection Wall Panels. 90% of the Danish market is
represented by free-standing sheet-steel stoves. The biggest
actors in the market are ABC-Peisen, Jydepeisen, Scan and Morsae.
The Company believes that sales to DIY shops of fireplace
surrounds combined with a cheap insert represents a significant
market potential.
Markets in Development
Poland/Eastern Europe
Eastern Europe represents a potentially very large market for
pre-fabricated products. Purchasing power is increasing and
fireplaces are regarded as status symbols.
The current market potential is conservatively being estimated
at 50,000 units, but could grow to several hundred thousand
units.
<PAGE>
Northstar's first priority in Eastern Europe will be Poland,
where Northstar has bought a 41,000 sq.m. (440,000 sq.ft.)
property with industrial buildings and offices. The plant will
manufacture fireplace surrounds, heat protection wall panels, and
will perform assembly of cast iron ovens.
Poland will also function as a base for further expansion into
Eastern Europe.
Czechia and Baltic Rim countries
Smaller number of products are already been delivered to these
countries, and various alliances and distributorships are being
negotiated and prepared. Eastern Europe will be handled directly
from Northstar's new manufacturing facility in Poland, planned to
start production in Q2, 2000.
Future Markets
United Kingdom
Northstar has not yet started distribution in the UK, but
advanced discussions are taking place with UK parties for mutual
co-operation on several markets. The main UK market for Northstar
will be flat wall, traditional English fireplace surrounds in
marble.
The market information available to the Company indicates the
market to be in excess of 100,000 solid fuel burning units per
annum. Additionally more than 600,000 gas units are sold per
annum. Stovax is one of the larger suppliers, supplying
approximately 15,000 units per year.
Apart from some larger competitors such as Stovax, the
competition consists of hundreds of small local suppliers.
France
The total market for solid fuel burning units in France is
estimated to more than 250,000 units per year.
There are several large companies such as Chemin e Philippe,
Brisac, Supra, Richard le Droff and Godin, representing strong
competition. However, the overall majority of the surrounds
made in France are large monumental fireplaces made from solid
stone.
Northstar participated at one of the largest trade shows in
France in November 1997, together with Joetul, and received
positive response. However, models have to be specifically
designed for the French market, and a decision has not been made
with respect to partner(s) for distribution.
Joetul ASA are distributing its inserts through their own 100%
owned subsidiary located in Lyon. Joetul may appear to be the
logical partner for Northstar in France, but as retailers in
France to a large extent are controlled by or have a strong
relationship to French manufacturers, other strategies will
be further investigated.
<PAGE>
USA/Canada
Northstar believes that there is a significant potential for
its products in North America. However, Northstar will use the
required time to evaluate the market, potential partners,
strategic alliances and possible acquisition targets, as well as
the product requirements and market strategy before a decision is
made to actively enter the markets.
(2) Status of any publicly announced new product or service
None - not applicable.
(3) Competitive business conditions/competitive position in
the industry/methods of competition
Northstar has the following comparative advantages, compared to
other European manufacturers:
1) Portugal is one of the leading marble countries in Europe, and
the area in which IPP is located has long traditions for
marble manufacture.
2) Good supply of other raw materials.
3) The climate is very beneficial and the factory requires no
heating during the winter season, dramatically reducing
heating cost vs. production in Northern Europe.
4) Portugal has a good supply of skilled labour, particularly so
for marble production.
5) Sufficient availability of cheap labour, with average pay
around USD 5/hour, compared to a European average of approx.
USD 20/hour.
6) Portugal is a member of the EU (single 380 million+ population
market), and there are no import taxes or duties to other EU
countries or to countries in the European Economic Area (EEA),
i.e. Norway, Iceland and Switzerland. This is regarded as a
major advantage, as as many as 27 countries could over a
relative short period of years become members of the EU.
Czechia, Poland and Hungary are expected to become members in
the near future.
7) Excellent port for overseas and other shipments with Lisbon
(area where Northstar is located), being a major Atlantic
port.
The fireplace casings are:
Highly competitive on price
Attractive in design
Modular in design (6 - 20 modules per unit) from low weight
concrete, specific weight only 1.2kg/dm (litre), half that of
standard concrete
Offers full freedom in design
Easy to handle with modules from 6kg to 40kg
In compliance with all safety regulations
Suitable for the DIY market
Entire range suitable for the professional market
Special design range for specialized fireplace retailers
<PAGE>
(4) Sources and availability of raw materials and the names of principal
suppliers
The primary raw materials in used for the manufacture of fireplace
surrounds are:
Expanded clay
Sand
Cement
Marble
Expanded clay can be bought from Leca Portugal, Germany, Norway,
Poland and Spain, and has very good availability with virtually
unlimited supply. It is a standard commodity, also available from
other manufacturers and other countries world wide.
Sand and cement are standard commodities with unlimited global
supply.
Marble is available in virtually unlimited supply with very short
transportation to Northstar's manufacturing plant in Portugal.
Portugal is one of the major suppliers of marble in Europe, and
there are approximately 200 suppliers, most of which are found in
the area where Northstar's plant in Portugal is located.
The primary raw materials for cast iron ovens/open fireplace
inserts, are:
Pig iron
Sheet steel
Bolts/assembly parts
Materials as for surrounds above
Fireproof tiles
All of these materials are available in unlimited supply anywhere
in the world. The Company is not dependent on a specific supplier,
and has numerous alternatives for supply both locally, and from
other European countries.
(4) Dependence on one or a few major customers
The products are distributed in nine countries, through a number of
distributors and retailers. No single customers more than a few
percent of the total revenue, and within each country, products are
sold to several franchise companies and retailers.
The company is therefore not, in the opinion of the
management, dependent on one or a few major customers.
(5) Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labour contracts, including duration
The Company's Heat Protection Wall Panel is patented in the
following countries:
Norway Patent No. 300432, expiry September 13, 2015
USA Patent No. 5913789, expiry April 15, 2016
<PAGE>
Europe (EPO) Patent No. 96912332.2
The patent application has been approved and
protected for the EPO area, consisting of
Austria, Belgium, Cyprus, Denmark,
Finland, France, Germany, Greece, Ireland,
Italy, France/Liechtenstein, Luxembourg,
Monaco, Netherlands, Portugal, Spain, Sweden,
Switzerland and United Kingdom. The EPO area
also has an extended area, consisting of
Albania, Latvia, Lithuania, Macedonia, Rumania
and Slovenia. Following the approval, and
within February 15, 2000, the Company has to
decide for which countries it will obtain
full protection, which is subject to payment of
an additional fee for each individual country.
The Company intends, as a minimum, to register
the approved patent in Austria, Germany,
Switzerland, Finland, France, Sweden and the
United Kingdom.
Canada Patent pending, application No. 2,218,338.
The Company anticipates the patent to be
awarded, as the patent has already been
approved for the United States of America.
(7) Need for any government approval of principal products or services
All the Company's current products, to the extent required, have
been approved in the countries where they are being sold. There are
currently no pending approvals.
(8) Effect of existing or probable governmental regulations on the
business
None - not applicable.
(9) Estimate of Research and Development Activities
It is estimated that Northstar has spent the following amounts on
research and development activities in the last two fiscal years
(1998 and 1997):
Fiscal Year 1997 USD 100,000
Fiscal Year 1998 USD 150,000
All development cost is accounted for as ordinary expenses. No
development cost has been activated on the balance sheet. Molds and
plugs are being depreciated in the ordinary course of business.
There is a close co-operation on development with several
manufacturers of fireplace inserts, including Joetul, Norway, one of
the leading European manufacturers, and Dovre, Belgium, another major
European manufacturer. The type of relationship involves external
design of the fireplace surrounds, and internal adaptations and
improvements to both inserts and surrounds, to reduce cost, simplify
installation, and to increase quality and safety.
<PAGE>
There is an ongoing, very close development relationship with
Austroflamm, Austria. Northstar adapts its design to the Austroflamm
fireplace inserts, with close co-operation on the design for German-
speaking areas (Germany, Austria and Switzerland). The parties carry
their own development cost.
No development cost is borne by customers.
(10) Costs and effects of compliance with environmental laws
The company complies with all local federal, state or local laws
and regulations, and there are no special regulations, other than
general environmental regulations, applicable to the company. The
company produces no toxic waste, and there are neither a need for,
nor is there a requirement for, special cleaning systems or other
environmental systems.
(11) Number of total employees and number of full time employees
The companies in the group have employees listed below:
Company Full Time Part Time
------------------------------------------------
Northstar IPP SA 70 0
Nord Interioer AS 14 0
Northstar Poland 4 0
Peismaker'n AS 0 0
Scandia Varme AS 3 0
-----------------------------------------------
Total Employees in Group 91 0
-----------------------------------------------
None of the companies in the group have part time employees.
(c) Reports to security holders
(1) Effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a
"reporting issuer" which is required to file reports under Section
13 or 15(d) of the Securities and Exchange Act of the 1934, as
amended (the "1934 Act"). The Company is not currently a "reporting
issuer," and this Registration Statement will bring the Company into
compliance with these listing provision of the OTC Bulletin Board
and should prevent the NASD from "delisting" quotations of the
Company's common stock.
Under the "phase-in" schedule of the NASD, the Company has until
February 24, 2000, within which to become a "reporting issuer" and
to satisfy all comments of the Securities and Exchange Commission
with respect to this Registration Statement.
It is the Company's intention, although not required by law, to
provide its shareholders with an annual report, which will include
audited financial statements.
(2) Following the approval of this Registration Statement, the Company
will file quarterly forms (10-QSB) and annual forms (10-KSB) with
the Securities and Exchange Commission.
(3) The public may read and copy any materials filed with the SEC at
the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. The Company has filed its form electronically, and the SEC
maintains an Internet site that contains reports, proxy and
<PAGE>
information statements, and any other information regarding the
Company which the Company may file electronically with the SEC at
(http://www.sec.gov).
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of operation
(1) Plan of operation next twelve months
(i) Manufacture
Demand for the Company's products and the addition of cast iron
ovens to the product range, requires additional production
capacity. The Company will therefore significantly increase its
manufacturing capacity during year 2000. The increase in
capacity will be achieved through start-up of the Company's new
manufacturing plant in Poland. The Company purchased a 41,000m
property in Poland in May, 1999, and completed the transaction
in August, 1999. The property is currently being upgraded and
prepared for production.
The plant will produce the following products/performing the
following tasks:
Manufacture of fireplace surrounds
Manufacture of heat protection wall panels
Assembly of cast iron ovens
Casting of the ovens will be outsourced to various third
party suppliers, whilst assembly will be made by the plant in
Poland.
The Company's cash resources and cash generated from
operations can satisfy the cash requirements in the next twelve
months at the current rate of growth. The Company's operation
does not require raising of additional capital in the next
twelve months.
(ii) Cash Resources
The Company's current cash resources and credit lines are
sufficient to support the Company's current plan of operation
and anticipated growth. There is currently no plan to raise cash
in the next twelve months, and the Management does not foresee
any need for additional cash requirements under its current plan
of operation.
(iii)Summary of Product Research
The Company's research & development in the next twelve
months will be concentrated on the following areas:
Development of lighter concrete
Development of artificial slate to reduce cost, create
stronger plates and a wider range of attractive plates for
fireplaces
Further optimization and automation of production
Continued development of market adapted design
Further development to optimize the casting process and
assembly details
(iv) Planned Sale of Plant or Equipment
There are currently no plans for any significant sale of
plant or significant equipment, expected purchase or sale of
plant and significant equipment.
<PAGE>
(v) Employees
The total number of employees in the group expected to grow
significantly as a result of start-up of the Polish
manufacturing plant. Within the next twelve months the number of
employees at the Polish plant is expected to grow to
approximately 20 people. The number of employees at the Nord
Interioer, the Company's Norwegian subsidiary, is expected to
grow with an additional 3 people. The number of employees at the
manufacturing plant in Poland is expected to remain constant.
The total growth in number of employees is expected to grow
with approximately 30 people, or an estimated total growth of
approximately 20%.
(b) Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(i) Specific Trends
There are no specific trends, events or uncertainties, which,
to the knowledge of the management, are likely to have a
material impact on the company's business. The market for the
company's products has been stable, and there are presently no
indications that the market will not remain stable in the
foreseeable future.
The company sells its products in the local currency of the
country to which the products are exported. Most of the
countries in which the majority of the Company's products are
sold are members of the European Monetary Union (EU), or have a
stable currency towards EUR. The balance of the export is
divided between a number of countries, and significant financial
effects of currency translation cost is not anticipated to have
any material effect on the company's short-term or long-term
liquidity, nor on the Company's Profit & Loss accounts.
(ii) Internal and external sources of liquidity
The company's sources of liquidity are equity and bank loans.
The Company has the following credit lines:
Debt Outstanding
Line of Sept. 30, Dec. 31,
Credit 1999 1998
--------- --------- ---------
(Unaudited)
Multi-currency line of credit $ 362,888 $ 316,231 $ 234,805
Multi-currency line of credit $ 155,523 $ 155,523 $ 58,197
Multi-currency line of credit $ 103,682 $ 103,682 $ 59,439
Multi-currency line of credit $ 258,231 $ 226,999 $ -
Multi-currency line of credit $ 51,841 $ 51,841 $ -
--------- --------- ---------
$932,165 $ 854,276 $ 352,441
--------- --------- ---------
Borrowings under the multi-currency lines of credit are guaranteed by the
Company and bear interest between 8% and 10%. Notes payable consisted of
thefollowing:
<PAGE>
September 30, December 31,
1999 1998
(Unaudited)
Note payable to a bank, secured
by the building, interest at
6.1875%, principal and interest
payments of $8,622 due monthly,
matures on July 31, 1999. $ - $ 60,355
Note payable to a bank, secured by a
building, interest at 5.75%, interest
payments due monthly, principal
payments of $5,161 due monthly,
matures on September 29, 2002. $ 185,795 -
----------- ----------
Total notes payable $ 185,795 $ 60,355
Less: current portion $ (61,932) $ (60,355)
----------- ----------
Long-term notes payable $ 123,863 $ -
----------- ----------
Maturities of long-term debt are as follows:
Year Ending
December 31, Amount
-----------------------------------------------------
2000 $ 61,932
2001 $ 61,932
2002 $ 61,931
2003 and thereafter -
------------
Total $ 185,795
------------
Subsequent Events Long Term Debt
On October 14, 1999, Nord-Interioer AS, Norway, entered into a
purchase contract for a property outside Oslo, and completed on the
agreement on November 25, 1999. The purchase price is NOK 14,750,000
plus fees of NOK 370,711, a total of approximately USD 1,952,319. In
addition, the office section of the property is being upgraded at an
estimated additional cost of NOK 500,000 (approximately USD 64,558).
Nord will relocate its offices and warehouse to the new property as
of January 1, 2000. Part of the new warehouse has already been
utilized. The purchase of the property has been financed with two
loans from two different Norwegian financial institutions.
Norgeskreditt AS NOK 9,060,000 (approximately USD 1,164,000)
K-Bank NOK 6,000,000 (approximately USD 770,911)
The loans have a term of 20 years with semi-annual repayment of
principle in equal instalments, and 8 years with quarterly repayment
<PAGE>
of principle in equal instalments, respectively. The loan from
Norgeskreditt AS carries a fixed interest of 7.95% p.a., payable in
arrears, and the loan from K-bank an interest rate 1.5% above 3
month or 6 month NIBOR (Norwegian Inter Bank Offered Rate), either
can be chosen by the borrower, the aggregate of which is currently
approximately 7.5% p.a.
(iii) Commitments for Capital Expenditure
There are at the time of this filing no commitments made by the
Company for capital expenditures.
(iv) Effect of Known Trends
There are at the time of this filing no trends known to the
Company which reasonably can be expected to have a material
impact on the net sales or revenues or income from continuing
operations.
(v) Significant elements of income or loss not arising from
continuing operations
In connection with the acquisition of Scandia Varme AS, there
has been a debt remission of NOK 2,710,345 (approximately USD
348,239), which is shown in the consolidated accounts as other
income, "Gain on debt forgiveness".
Following the acquisition of Scandia, it was decided apply a
conservative approach for evaluation of assets, and to write off
certain cost activated on the balance sheet. The following
transactions were recorded:
Introduction cost NOK 703,240 (approximately $ 90,356)
Depreciation of
good will NOK 875,537 (approximately $112,494)
Depreciation of
Development Cost NOK 1,185,004 (approximately $152,255)
The net effect of the Scandia acquisition in the consolidated
accounts as per September 30, 1999 is a loss of USD 6,866.
The depreciation is made in accordance with US GAAP
(Generally Accepted Accounting Principles). The result of the
accounting operation is a loss carry forward of approximately
USD 231,000 which will serve to reduce the group's future tax
liability.
(vi) Material changes from period to period
The Depreciation expense shows a significant increase from
USD 175,909 for the year ended December 31, 1997 to USD 439,393
for the year ended December 31, 1998. The primary reason for the
increase is depreciation of assets recorded as a consequence of
the acquisition of Peismaker'n AS, not in the ordinary course of
business.
The acquisition of the business and assets/liabilities of
Peismaker'n was made for a total of NOK 9 million (approximately
USD 1,162,040. The net assets acquired were recorded at NOK
1,326,287 (approximately USD 171,244).
The balance, NOK 7,673,713 (approximately USD 990,796), was
attributed to the Company's assets, and are being depreciated at
a rate of 20% per annum, starting in 1998. The portion of the
<PAGE>
depreciation expense derived from this item for the year ended
December 31, 1998 is NOK 1,534,743 (approximately USD 198,159).
The portion of this expense recorded for the nine months
ended September 30, 1998 and September 30, 1999, is NOK
1,151,057 (approximately NOK 148,619). The amount will have been
fully depreciated at December 31, 2002.
The depreciation expense for the nine months ended September
30, 1999, also includes an extraordinary depreciation amount of
USD 119,803 (full depreciation of development cost).
Adjusted for these amounts, the "Income before other income
(expenses)", would have been (actual figures in brackets):
Year ended December 31, 1998 $ 897,675 ($ 699,516)
Nine months ended September 30, 1998 $ 417,325 ($ 268,706)
Nine months ended September 30, 1999 $ 566,074 ($ 297,652)
(vii) Seasonal aspects which had a material effect on the financial
condition or results of operation
There are no seasonal aspects which have had a material
effect on the financial condition or results of operation.
(c) Interim Periods.
(1) Interim financial statements as of September 30, 1999 are
enclosed in Section Financial Statements to this filing. There
are no material changes in financial condition and results of
operations since the end of the last fiscal year, nor are there
any material changes in such conditions or results for the
interim period for the comparable interim period in the preceding
year.
However, the Company expects to see positive effects in the
overall operating result due to the transfer of the Peismaker'n
product line from Norway to Portugal, the cost for which was
accounted for as ordinary expenses in 1998 and the first half of
1999, and increased scale of manufacture.
Item 3. Description of Property.
(a) Portugal
The Company owns its own manufacturing and office building, located
at Rua da Estacao, Apart 15, Sabugo, 2715 Pero Pinheiro, Portugal,
approximately 20 km north of Lisbon. The property consists of 7,377
m2 of land, 3,742m2 factory space and 600m2 offices and exhibition
space. There is no mortgage on the building as such, as the
original loan has been repaid. However, property is securing multi
currency operating credit and a three year loan in the amount for
the purchase the Company's property in Trzcianka, Poland (see
below).
The total security in the property is USD 590,000. The book value
of the property is USD 170,000, with an estimated market value of
USD 1,500,000.
Poland
The Company has bought a property in Trzcianka, Poland,
approximately 100km north of Poznan, Poland. The property consists
of 41,000m2 of land, 300m2 office space of good standard, 2,000m2
manufacturing space of good standard, both properly insulated and
with double glazing. There are additional buildings on the property
totalling approximately 7,000m2 of poor standard. The property is
currently being upgraded for a cost of approximately NOK 500,000
(approximately USD 64,000). The property will be used as
<PAGE>
Northstar's new manufacturing facility for fireplace surrounds,
heat protection wall panels, and assembly of cast iron ovens. The
book value of the property is USD 171,000, with an estimated market
value of USD 400,000. There is no mortgage on or charge against the
property.
Norway - Subsequent Event not in Balance Sheet
The Company's subsidiary, Nord-Interioer AS, leases its current
offices and warehouse, located at Sopelimskroken 51, N-1341
Slependen, Norway. The current locations consists of approximately
200m2 of office space and approximately 1,000m2 warehouse capacity
and workshops. The monthly lease is NOK 30,000. The lease contract
is valid until December 31, 2001. The company has leased out part
of the space from January 1, 2000, reducing the annual cost by
NOK 102,000, and will lease the rest of the space to a third party.
It is estimated that the entire space will be leased to a third
party no later than July 1, 2000, and the company forecasts a
maximum cost for the leased space in year 2000 of approximately NOK
130,000. Thereafter no cost is projected for the leased space.
On November 10, 1999, the company purchased a property located
at Gjellebekkstubben 9/11, 3420 Lierskogen, Norway. Nord-Interioer
will move its operations to the new location as of January 1, 1999.
The property consists of approximately 15,000m2 of land, with
buildings with a gross area of 3,991m2, broken down as follows:
Warehouse/Office building: 2,747m2
Detached residential house: 158m2
Non-heated warehouse: 495m2
Warehouse and manufacturing: 360m2
Under-ground shelter: 60m2
--------------------------------------
Total area: 3,991m2
--------------------------------------
Part of the buildings have been rented out, and is generating
lease income of NOK 850,000. The property has been finance with two
serial loans, repayable over 20 and 8 years respectively, totalling
NOK 15,060,000. The loans currently carry interest between 7.50%
and 7.95%. The interest payment in year 2000 is NOK 1.143 million,
and repayment of principle NOK 1,203,000. The book value is
equivalent to the purchase amount, and is estimated to be the
market value of the property. The property is mortgaged to the two
lending institutions.Item 4. Security Ownership of Certain
Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners
The following table sets forth the share holdings of the Company's
directors and executive officers and those persons who own more than five
percent of the Company's common stock as of the date hereof. Information
regarding the capacities in which each director and executive officer serves
for the Company is contained in Item 5.
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ --------
<S> <C> <C>
Joern H. Eriksen 6,984,100 (3) 32.18% (3)
Lillevannsveien 70
N-0392 Oslo
Norway
Trond E. Wennberg 6,230,200 (2) 28.71% (2)
Jonsokveien 7
N-1182 Oslo
Norway
</TABLE>
1) For the purposes of Security Ownership of Certain Beneficial Owners
and Management, ownership of certain positions have been attributed to
persons considered to be Control Person, as defined by the Securities
Act.
2) The number of shares attributed to Mr. Wennberg consists of a holding
of 5,794,098 shares by Norgesinvestor AS, Norway and 436,122 shares by
Annexstad-Hartvig-Wennberg AS, Norway. Mr. Wennberg is considered a
Control Person in both Companies, as he is a partner and director of both
companies. His actual ownership represents 141,958 shares, through a
32.55% ownership in Annexstad-Hartvig-Wennberg AS, Norway, represents
141,958 shares (23.55% of 436,122 shares).
3) The number of shares attributed to Mr. Eriksen consists of 1,100,800
shares held directly in his name, directly by companies fully owned by
him, controlled by him, and 6,037,100 shares owned by Heva AS, Norway.
The company was formed to hold Northstar shares only, and is 100% owned
by directors, management and significant employees of Northstar as
follows:
Joern H. Eriksen, Director and Chairman 57.0%
Bjarne H. Varre, Director, CEO and President 20.0%
Morten M. Henriksen, Significant Employee 13.7%
Finn V. Borgersen, Director of Northstar IPP 9.3%
------------------------------------------------------
Total 100.0%
------------------------------------------------------
<PAGE>
The table below shows ownership on the basis of each individual's ideal
ownershipin the various holdings companies:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ --------
<S> <C> <C>
Norgesinvestor AS 5,794,098 26.70%
Haakon VII's gt. 6
N-0124 Oslo
Norway
Joern H. Eriksen 4,388,147 20.22%
Lillevannsveien 70
N-0392 Oslo
Norway
Bjarne H. Varre 2,130,820 9.82%
Avenida Afonso Henriques 538
2765 Estoril
Portugal
Morten M. Henriksen 1,699,083 7.83%
Vaarstigen 14
N-1440 Draebak
Norway
Stian F. Varre 978,000 4.51%
Trulsebakken 13
N-1350 Lommedalen
Norway
Trond E. Wennberg 141,958 0.65%
Jonsokveien 7
N-1182 Oslo
Norway
</TABLE>
<PAGE>
(b) Security ownership of management
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class(1)
- ---------------- ------------------ --------
<S> <C> <C>
Joern H. Eriksen 4,388,147 20.22%
Lillevannsveien 70
Oslo
Norway
Bjarne H. Varre 2,130,820 9.82%
Avenida Afonso Henriques 538
2765 Estoril
Portugal
Morten M. Henriksen 1,699,083 7.83%
Vaarstigen 14
N-1440 Draebak
Norway
Stian F. Varre 978,000 4.51%
Trulsebakken 13
N-1350 Lommedalen
Norway
Trond E. Wennberg 141,958 0.65% (1)
Jonsokveien
Oslo
Norway
</TABLE>
1) Mr. Wennberg's ownership is calculated on the basis of his
32.55%ownership in Annexstad-Hartvig-Wennberg AS, Norway. See Item 4(a)
above.
(c) Changes in control
There are currently no arrangements in place which may result in a change
in control of the Company in the future.
Item 5. Directors and Executive Officers, Promoters and Control Persons.
(a) Identification of directors and executive officers
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are
elected or appointed and qualified, or their prior resignations or
terminations.
<PAGE>
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Bjarne H. CEO 2/96 *
Varre President 2/96 *
Director 2/96 *
Treasurer 12/98 *
Joern H. Eriksen Chairman 2/96 *
Director 2/96 *
Secretary 12/98 *
Trond E. Wennberg Director 8/98 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Bjarne H. Varre, Chief Executive Officer, President and Director
Mr. Varre, 50 years old, is educated in Business Administration at the
University of Fribourg, Switzerland, where he graduated 1975. In 1989, he
was co-founder of Industria Portuguesa de Producao de Lareiras (now
Northstar I.P.P.). He has served as the President, CEO and Director of
the Company since February 1996 until today. Mr. Varre does not hold any
other directorships in reporting companies. After graduation in 1975 he
took up a position as Sales Manager of Friman & Adde AB, Sweden, the
general agent for the Swiss diesel engine manufacturer Sulzer Brothers
Ltd. After three years he became managing director. Between 1984 and
1988, in addition to being Managing Director of Friman & Adde,
he built up Scan-Va Trading, a ships brokerage company, and between 1984
and 1986 he was Managing Director of Mediasentrum AS, Norway, a publisher
for 35 publications. After 12 years in international sales involved with
Sulzer Brothers, he left Friman & Adde in 1988 as Managing Director and
sold the ships brokerage company to move to Portugal to start IPP. He
speaks Norwegian, Swedish, Danish, English, German, French and
Portuguese. He does not hold any other directorships in any US reporting
company.
Joern H. Eriksen, Chairman of the Board of Directors
Mr. Eriksen, 49 years old, is educated at the Oslo Institute of
Business Administration, and the University of Wisconsin where he
received an MBA, Finance Major in 1980. He has served as Chairman of the
Board of Directors since February 1996 until today. From 1982 to 1984 he
was Investment Manager, Vesta Hygea, Norway (insurance company). In 1984
he became Senior Vice President, Finance of Klosters Rederi, Oslo (owner
of one of the world's largest cruise lines, Norwegian Cruise Lines), and
in 1986 President, Klosters Rederi, Oslo. From 1987 to 1991 he was
<PAGE>
President of Vard, Oslo (merger between Klosters Rederi, Larvik Line and
Kloster Cruise). Since 1991 Mr. Eriksen has been an active investor
focusing on business development through Tobi AS, Norway, where he is
chairman and owner. He does not hold any other directorships in any US
reporting company.
Trond Wennberg, Director
Mr. Wennberg, 48 years old, has served as a Director of the Company
since August 1998 until today. Mr. Wennberg was President of
Norgeskreditt, a Norwegian banking group, from 1987 - 1996. Since March
1996 he has been a partner in NorgesInvestor, a Norwegian private equity
company. Mr. Wennberg does not hold any other directorships in any US
reporting company.
Finn V. Borgersen, Director of Northstar I.P.P. SA, Portugal
Mr. Borgersen, 78 years old, has a Masters Degree in Law from the
University of Oslo 1943, qualified solicitor in 1947 and qualified to
appear for the Supreme Court since 1954. 1967 - 1986 he was a director
of Den norske Creditbank (DnC). From 1971 until retirement in 1986 he was
Deputy Managing Director. 1974 - 1986 he was a board member of the
Norwegian Export Finance Institute (chairman 1983 - 1986), has been
chairman of the Norwegian Ship Mortgage Bank, Ship Mortgage International
Amsterdam and the Executive Committee of DnC, Luxembourg. He has also
served as a Director of Northstar Industries, Inc. from 1996 until he was
replaced by Mr. Wennberg in August, 1998. He is currently a the chairman
of the finance committee of Frupor, Portugal, a large agricultural group
with greenhouse production of vegetables, and member of the Board of
Directors of a shipyard for fishing vessels in Peniche, Portugal. Mr.
Borgersen does not hold any other directorships in any US reporting
companies.
Stian F. Varre, Managing Director of Nord-Interioer AS
Mr. Stian Varre, 38 years old, is Managing Director of Nord-Interioer
AS, the Company's Norwegian distributor. Mr. Varre founded Nord-Interioer
AS in 1990, and was the sole owner of the company until it was acquired
by Northstar Industries, Inc. in 1997. He has been a member of the Board
of Directors of Nord-Interioer AS since 1990, and has been a member of
the Board of Directors of Scandia Varme AS (acquired by Nord-Interioer in
August 1999), since August 1999. Mr. Varre does not hold any directorship
in any US reporting company.
Gyrd Skraning, Director of Nord-Interioer AS
Mr. Skraning, 61 years old, has been a director of Nord-Interioer AS
since November 1998. His past experience involves being President and CEO
of Helly-Hansen AS, a Norwegian, internationally renowned apparel
manufacturer, 1990 - 1995. From 1995 to June 1998 he was President and
CEO of Gresvig ASA, Norway, a large sporting goods wholesale and retail
group. He is currently an advisor to the group management of Gresvig ASA.
He does not hold any directorship in US reporting company.
(b) Significant Employees
Mr. Henriksen, 52 years old, (born 1947), is founder of Northstar IPP,
Portugal, together with Mr. Varre. He is a qualified stone mason and is a
certified master in construction, and invented the patented method used at
IPP for the manufacture of fireplace casings. Between 1967 and 1989 he
worked exclusively with design and construction of fireplaces. Mr.
Henriksen is acting as the group's responsible for Research & Development
<PAGE>
at IPP, makes a significant contribution in sales, in particular in
transforming market demand for design and function into products, and will
be a key man in Northstar's future R&D.
The Company does not currently have other employees who are not
executive officers, but who are expected to make a significant
contribution to its business.
(c) Family Relationships
Mr. Bjarne Varre, CEO and Director of Northstar Industries, Inc., is
the older brother of Mr. Stian Varre, Managing Director of the Company's
Norwegian subsidiary, Nord-Interioer AS. There are no other family
relationships among directors or executive officers.
(d) Involvement in certain legal proceedings
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the
bankruptcy or within two years prior to that time;
(2) was convicted in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
Item 6. Executive Compensation.
(a) Summary Compensation Table.
<PAGE>
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bjarne H. 12/31/98 64,000 -0- 13,747 -0- -0- -0- -0-
Varre
CEO, Pres.
and Director
Stian F. 12/31/98 64,000 -0- 13,503 -0- -0- -0- -0-
Varre
MD, Pres.
Nord-Interioer
Joern H. 12/31/98 -0- -0- 7,747 -0- -0- -0- -0-
Eriksen
Chairman
Trond E. 12/31/98 -0- -0- 5,165 -0- -0- -0- -0-
Wennberg
Director
Finn V. 12/31/98 -0- -0- 5,165 -0- -0- -0- -0-
Borgersen
Previous
Director
</TABLE>
Note: Other Annual Compensation for Mr. Bjarne H. Varre, CEO, includes an
annual fee of USD 2,582 as a Director of Nord-Interioer AS. Other
Annual Compensation for Mr. Stian F. Varre represents an annual fee as
Director of Nord-Interioer AS. The Company does not have other
executive officers than Mr. Bjarne H. Varre, CEO & President, and Mr.
Stian F. Varre, Managing Director of Nord-Interioer AS.
<PAGE>
(c) Option/SAR Grants Table
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
(a) (B) (c) (d) (e)
Name Number of Securities % of Total Exercise Expiration
Underlying Options/ Options Price Date
SARs Granted Granted
- ----------------------------------------------------------------------------
<S> <C> C> <C> <L>
Joern H. Eriksen 1,100,000 55.0% $0.40 December 31, 2001
Bjarne H. Varre 450,000 22.5% $0.40 December 31, 2001
Morten M. Henriksen 250,000 12,5% $0.40 December 31, 2001
Finn V. Borgersen 200,000 10.0% $0.40 December 31, 2001
</TABLE>
The above options were originally issued in February, 1996. In a meeting
ofthe Board of Directors on July 28, 1999, the expiration dates for the expiry
ofthe options were extended from August 31, 1999 to December 31, 2001. The
abovetable therefore represents extension of expiring options.
(d) Aggregated Option/SAR exercises and Fiscal Year-End Option/SAR Value
Table
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
(a) (B) (c) (d) (e)
Name Shares Value Value of Value of
Acquired Realized Underlying Unexercised
On Unexercised In-the-Money
Exercise Options Options
At FY-End At FY-End
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joern H. Eriksen -0- -0- 1,100,000 $220,000
Bjarne H. Varre -0- -0- 450,000 $ 90,000
Morten M. Henriksen -0- -0- 250,000 $ 50,000
Finn V. Borgersen -0- -0- 200,000 $ 40,000
</TABLE>
Note: The value used for the "fair market value" in calculating the "Value of
Unexercised In-the-Money Options at Fiscal-Year End", is USD 0.60,
being the average between "High" and "Low" quotations in the period
from October 1, 1999 through December 3, 1999, on days with actual
trades. Please refer to PART II, Item 1, "Market Price of and Dividends
on the Registrant's Common Equity and Related Stockholder Matters".
The stock to be issued subject to exercising the options, would be
restricted according to Rule 144, with a 2 year restriction on sale. No
adjustment has been made to the "Fair Market Value" due to restriction
by Rule 144.
<PAGE>
(e) Long-Term Incentive Plan ("LTIP") Awards Last Fiscal Year
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the
year ended December 31, 1998, or the period ended September 30, 1999,
other than as in (c) above.
(f) Compensation of Directors
The Chairman of the Company receives an annual fee of NOK 60,000
(approximately USD 7.747). The other members of the Board of Directors
receive an annual fee of NOK 40,000 (approximately USD 5,165). The
members of the Board of Directors of Nord-Interioer AS, the Company's
Norwegian subsidiary, receive an annual fee of NOK 20,000
(approximately USD 2,582). No additional amounts are payable to the
Company's directors for committee participation or special assignments.
(g) Employment Contracts and Termination of Employment and Change in
Control Agreements
In connection with the acquisition of Nord-Interioer AS, Norway,
there is an obligation on Mr. Stain Varre to continue as Managing
Director for a minimum period of 36 months from the date of the
acquisition agreement (April 4, 1997), the period of 36 months ending
on April 3, 2000. If Northstar Industries, Inc. or the Board of
Directors of Nord-Interior should terminate Mr. Varre's employment
before such date, the acquisiton has a provision which obligates
Northstar Industries, Inc. to pay Mr. Varre his salary and benefits for
the full period ending April 3, 2000. The acquisition agreement is
attached as Exhibit 10.1 hereto.
There are no other employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with
respect to any director or executive officer of the Company which would
in any way result in payments to any such person because of his or her
resignation, retirement or other termination of employment with the
Company or its subsidiaries, any change in control of the Company, or a
change in the person's responsibilities following a change in control
of the Company.
Item 7. Certain Relationships and Related Transactions.
(a) Transactions involving Directors and Officers of the Company
(1) In January, 1997, The Company purchased Nordmur AS, Norway, from the
persons listed below, for a compensation of cash and restricted
stock:
Gertie Varre (Wife of Bjarne H. Varre, CEO, President and Director)
Stian F. Varre (Managing Director of Nord-Interioer AS, Norway, and
the brother of Bjarne H. Varre
Morten M. Henriksen (Significant employee and co-founder of
Northstar IPP, Portugal)
The above persons each owned one third of Nordmur AS. The
compensation is reflected in the notes to the audited accounts
enclosed hereto, and in Part II, Item 4, "Recent Sales of
Unregistered Stock".
(2) In May, 1998, the Company completed a private placement to
Norgesinvestor AS, Norway. Mr. Trond E. Wennberg, currently serving
as a Director of the Company, was at the time of the transaction,
and remains a Control Person of Norgesinvestor, as defined by the
Securities Act. Mr. Wennberg joined Board of Directors of the
Company in August, 1998. He did not have any relationship to
the Company as defined by this Item before the private placement
took place.
(3) In January, 1997, the Company purchased Nord-Interioer AS, Norway,
from Mr. Stian F. Varre, for a compensation of cash and restricted
stock. Mr. Stian F. Varre is the brother or Mr. Bjarne H. Varre,
CEO, President and Director of the Company. The compensation is
reflected in the notes to the audited accounts enclosed hereto, and
in Part II, Item 4, "Recent Sales of Unregistered Stock".
<PAGE>
(b) Item not applicable.
(c) Parents of the Company
None - not applicable
(d) Transactions with promoters
(1) Promotional Activities
Howard Bronson & Associates, New York, a promotion agency in New
York, USA, has in 1999 been paid a total fee of USD 25,000 for
promotional services.
(2) Assets acquired or to be acquired from a promoter
None - not applicable
Item 8. Description of Securities.
(a) Common Stock
(1) The Company's stock, at the time of this filing, consists of
21,702,001 shares of common stock. Holders of the Company's stock
shall be entitled to vote at all corporate elections and may cast
one vote for each share held in their name. There are no dividend,
voting or preemptive rights.
The Company's common stock is quoted on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD")
under the symbol "NSTI." For information concerning these stock
quotations during the past two years, see Part II, Item 1, "Market
Price of and Dividends on the Registrant's Common Equity and Related
Stockholder Matters". The quotations presented do not represent
actual transactions or broker/dealer markups, markdowns or
commissions.
Effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on
the OTC Bulletin Board of the NASD that such issuer must be a
"reporting issuer" which is required to file reports under Section
13 or 15(d) of the Securities and Exchange Act of the 1934, as
amended (the "1934 Act"). The Company is not currently a "reporting
issuer," and this Registration Statement will bring the Company into
compliance with these listing provision of the OTC Bulletin Board
and should prevent the NASD from "delisting" quotations of the
Company's common stock. Under the "phase-in" schedule of the NASD,
the Company has until February 24, 2000, within which to become a
"reporting issuer" and to satisfy all comments of the Securities and
Exchange Commission with respect to this Registration Statement.
(2) Classes of Stock
There is only one class of stock, and there are no special
dividend, voting, conversion and liquidation rights, nor are there
any redemption or sinking fund provisions.
(3) Designated Trustee(s)
None - non applicable.
(4) There is no provision in the charter or by-laws of the Company
that would delay, defer or prevent a change in control of the small
business issuer.
(b) Debt Securities
None - not applicable.
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
(a) Market information.
(1) Principal market for the Company's common equity
The Company's shares are traded on the OTC Bulletin Board. Please
refer to Part I, Section 8, "Description of Securities".
(i) Stock quotations
The quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual
transactions.
<TABLE>
<CAPTION>
TRADING INFORMATION TRADING INFORMATION
AVAILABLE AS REPORTED BY
FROM THE CNBC.COM THE NASD (2)
DATABASE (1) CLOSING BID
Quarter ended: High Low High Low
- -------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
March 31, 1997 $1.062 $0.375 $1.0625 $0.2500
June 30, 1997 $0.562 $0.125 $0.4375 $0.1250
September 30, 1997 $0.500 $0.312 $0.3750 $0.21875
December 31, 1997 $0.500 $0.187 $0.40625 $0.1250
March 31, 1998 $0.500 $0.281 $0.4375 $0.21875
June 30, 1998 $0.593 $0.218 $0.5625 $0.1875
September 30, 1998 $0.420 $0.310 $0.4000 $0.3100
December 31, 1998 $0.450 $0.340 $0.4000 $0.3400
March 31, 1999 $0.500 $0.340 $0.5000 $0.3200
June 30, 1999 $1.250 $0.250 $1.03125 $0.2500
September 30, 1999 $0.812 $0.400 $0.6250 $0.3125
December 3, 1999 $0.640 $0.560 $0.5900 $0.5000
(last available date)
</TABLE>
(1) The information is historical information obtained from the database of
CNBC.com. The table has been processed to show the high and low
quotations on days with actual trades only.
(2) The information has been obtained from the National Quotation Bureau,
LLC, which states:
Trading information as reported by the National Association of Securities
Dealers composite feed or other qualified inter dealer quotation medium.
The primary stock market listing is noted.
NOTE: The information is compiled with care from sources believe to be
reliable, but we cannot guarantee the accuracy nor warrantee its
use for any purpose.
NOTE: The above quotations represent prices between dealers and do not
include retail markup, markdown or commission. They do not
represent actual transactions and have not been adjusted for stock
dividends or splits.
<PAGE>
Item 2. Legal Proceedings
None - not applicable.
Item 3. Changes in and Disagreements with Accountants.
None - not applicable.
Item 4. Recent Sales of Unregistered Securities.
<TABLE>
<CAPTION>
Common Stock
------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
<S> <C> <C> <C>
Subscribers of
offering under
Rule 502D 05/28/98 6,230,220 $2,616,692
Subscribers under 05/09/98 934,600 $ 384,118 (1)
Rule 144
Subscribers under 01/07/97 330,000 $ 115,013 (2)
Rule 144
Subscribers under 01/07/97 383,000 $ 145,966 (3)
Rule 144
Subscribers under 01/07/97 383,000 $ 145,966 (3)
Rule 144
Subscribers under 01/07/97 383,000 $ 145,966 (3)
Rule 144
Subscribers under 01/07/97 585,000 $ 79,360 (4)
Rule 144
(1) This item was issued pursuant to the obligations under the
Agreement to acquire the business of Peismaker'n AS, Norway
(2) This item was issued as commission for arranging private
placements of stock
(3) These items were issued pursuant to the obligations under the
Agreement to Nordmur AS, Norway.
(4) This item was issued pursuant to the obligations under the
Agreement to acquire Nord-Interioer AS, Norway.
</TABLE>
Management believes each of the foregoing persons or entities was
either an "accredited investor," or "sophisticated investor" as defined
in Rule 506 of Regulation D of the Securities and Exchange Commission.
Each had access to all material information regarding the Company prior
to the offer, sale or issuance of these "restricted securities." The
<PAGE>
Company believes these shares were exempt from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act"),
pursuant to Section 4(2).
The Company has taken the following factors into account in
determining the valuations of the above-referenced shares:
(i) the fact that the shares are "restricted"; and
(ii) the limited market for the Company's common stock on the OTC Bulletin
Board of the NASD.
Item 5. Indemnification of Directors and Officers
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer,
employee, or corporate agent "who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation" due to his or her
corporate role. Section 78.751(1) extends this protection "against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection
with the action, suit or proceeding if he or she acted in good faith and
in a manner which he or she reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or
her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by
or in the right of the corporation. The party must have been acting in
good faith and with the reasonable belief that his or her actions were
not opposed to the corporation's best interests. Unless the court rules
that the party is reasonably entitled to indemnification, the party
seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.751(1) or 78.751(2), Section
78.751(3) of the NRS requires that he be indemnified "against expenses,
including attorneys' fees, actually and reasonably incurred by him or her
in connection with the defense."
Section 78.751 (4) of the NRS limits indemnification under
Sections 78.751 (1) and 78.751(2) to situations in which either
(1) the stockholders, or
(2) the majority of a disinterested quorum of directors, or
(3) independent legal counsel determine that indemnification is proper
under the circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any
action or proceeding upon receipt of an undertaking. Section 78.751(6)(a)
provides that the rights to indemnification and advancement of expenses
shall not be deemed exclusive of any other rights under any bylaw,
agreement, stockholder vote or vote of disinterested directors. Section
78.751(6)(b) extends the rights to indemnification and advancement of
expenses to former directors, officers, employees and agents, as well as
their heirs, executors, and administrators.
<PAGE>
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase
and maintain insurance on his behalf against liability resulting from his
or her corporate role.
Article IX of the Company's Articles of Incorporation limits the
personal liability of a director or executive officer for damages for
breach of fiduciary duty to acts or omissions to substantially the same
extent as the NRS. See Part III, Item 1, "Index to Exhibits".
Section IX of the Company's Articles of Incorporation states:
"As fully as possible under the laws of the State of Nevada as they
now exist and as they may from time to time be revised, the corporation
intends that its Directors be protected from legal action by stockholders
or other persons (natural or otherwise) on account of service as
Directors of the corporation. A director shall not be liable for damages
for actions of the corporation to stockholders or to any other person
(natural or otherwise) unless such Director engaged in personal fraud
directly affecting such action or actions of the corporation."
There are no other provisions which insure or indemnify a controlling
person, director or officer of the company affecting his or her liability
in the capacity as a director or officer.
Item 6. Year 2000 compliance
None of the Company's manufacturing equipment is of such a nature that
it could potentially be sensitive to the "Year 2000 Problem". All of the
Company's computers and software are Year 2000 compliant. As a matter of
general security procedures, system backups are performed on a regular,
scheduled basis.
<PAGE>
Item 7. Financial Statements and Supplementary Data
<PAGE>
NORTHSTAR INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999 and December 31, 1998
<PAGE>
CONTENTS
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations. . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . . 7
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . 8
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
Northstar Industries, Inc. and Subsidiaries
Pero Pinheiro, Portugal
We have audited the accompanying consolidated balance sheet of Northstar
Industries, Inc. and Subsidiaries as of December 31, 1998 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years ended December 31, 1998 and 1997. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated 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 audits 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 consolidated financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Northstar Industries, Inc. and Subsidiaries as of December 31, 1998 and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1998 and 1997, in conformity with generally accepted
accounting principles.
/s/Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
February 25, 1999
<PAGE>
<TABLE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
------
<S> <C> <C>
September 30, December 31,
1999 1998
(Unaudited)
CURRENT ASSETS
Cash $ 711,675 $ 1,321,418
Accounts receivable, net (Note 1) 849,296 514,394
Prepaids 20,654 7,466
Inventory (Notes 1 and 2) 979,954 793,735
----------- -------------
Total Current Assets 2,561,579 2,637,013
----------- -------------
PROPERTY AND EQUIPMENT (Note 1)
Building and improvements 1,130,830 944,766
Equipment 1,771,833 1,416,342
Molds 1,515,337 1,009,288
Vehicles 286,771 241,851
Machinery and utilities 62,367 54,063
Furniture and office equipment 165,281 155,260
Less - accumulated depreciation (1,316,254) (930,602)
------------ -----------
Total Property and Equipment 3,616,165 2,890,968
------------ -----------
OTHER ASSETS
Taxes recoverable 13,441 66,485
Deposits 21,431 21,274
Investments 8,262 8,262
Patents, net (Note 4) 9,264 12,073
Deferred costs 4,332 8,912
Other assets 22,215 -
----------- -----------
Total Other Assets 78,945 117,006
----------- -----------
TOTAL ASSETS $ 6,256,689 $ 5,644,987
----------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 416,554 $ 561,304
Accrued expenses 285,841 305,532
Lines of credit (Note 7) 854,276 352,441
Capital leases, current portion (Note 9) 31,378 10,202
Notes payable, current portion (Note 3) 61,932 60,355
------------ ------------
Total Current Liabilities 1,649,981 1,289,834
------------ ------------
LONG-TERM LIABILITIES
Capital leases (Note 9) 49,241 52,230
Notes payable (Note 3) 123,863 -
------------ ------------
Total Long-Term Liabilities 173,104 52,230
------------ ------------
Total Liabilities 1,823,085 1,342,064
------------ ------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 50,000,000
shares authorized, 21,702,001 shares issued
and outstanding 21,702 21,702
Additional paid-in capital 4,038,453 4,038,453
Other comprehensive income (133,895) (102,696)
Retained earnings 685,484 498,317
------------ ------------
4,611,744 4,455,776
Due from shareholders (Note 5) (178,140) (152,853)
------------ ------------
Total Stockholders' Equity 4,433,604 4,302,923
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,256,689 $ 5,644,987
------------ ------------
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
For the Nine Months Ended For the Years Ended
September 30, December 31,
------------------------ ----------------------
1999 1998 1998 1997
---------- --------- ---------- ----------
(Unaudited)(Unaudited)
<S> <C> <C> <C> <C>
NET SALES $3,582,536 $3,407,088 $4,994,083 $3,625,246
COST OF SALES 1,665,719 1,541,657 2,073,969 1,474,179
---------- ---------- ---------- ----------
GROSS MARGIN 1,916,817 1,865,431 2,920,114 2,151,067
---------- ---------- ---------- ----------
EXPENSES
Selling, general and
administrative 1,221,572 1,268,442 1,771,200 1,365,825
Bad debt expense 9,132 4,270 6,259 7,112
Amortization expense 2,809 2,722 3,746 4,609
Depreciation expense 385,652 321,291 439,393 175,909
---------- --------- ---------- ----------
Total Expenses 1,619,165 1,596,725 2,220,598 1,553,455
---------- --------- ---------- ----------
INCOME BEFORE OTHER
INCOME (EXPENSES) 297,652 268,706 699,516 597,612
OTHER INCOME (EXPENSES)
Other income (expense) (14,527) (42,309) (168,770) 34,475
Interest expense (38,760) (37,443) (50,472) (55,694)
--------- ---------- ---------- ----------
Total Other Income (Expenses) (53,287) (79,752) (219,242) (21,219)
--------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 244,365 188,954 480,274 576,393
PROVISION FOR INCOME
TAXES (Note 1) 57,198 68,512 77,861 54,731
--------- ---------- ---------- ----------
NET INCOME 187,167 120,442 402,413 521,662
--------- ---------- ---------- ----------
OTHER COMPREHENSIVE
INCOME (LOSS)
Currency translation adjustment (31,199) 16,097 (21,774) (119,671)
--------- ---------- ---------- ----------
Total Other Comprehensive
Income (Loss) (31,199) 16,097 (21,774) (119,671)
--------- ---------- ---------- ----------
NET COMPREHENSIVE INCOME $ 155,968 $ 136,539 $ 380,639 $ 401,991
========= ========== ========== ==========
BASIC EARNINGS PER SHARE
(Note 13) $ 0.01 $ 0.01 $ 0.02 $ 0.04
========= ========= ========= =========
DILUTED EARNINGS PER SHARE
(Note 13) $ 0.01 $ 0.01 $ 0.02 $ 0.03
========= ========= ========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<CAPTION>
Additnl. Other
Common Stock Paid-In Compreh. Retained Due From
Shares Amount Capital Income EarningsShareholders
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1996 12,443,181 $12,443 $1,679,173$38,749$(425,758)$(125,055)
Common stock issued
in purchase of Nord-
Mur at approximately
$0.00 per share 1,179,000 1,179 (439,077) - - -
Common stock issued
in purchase of Nord-
Interior at approxi-
mately $0.00 per share 585,000 585 (79,945) - - -
Repayments by
shareholders - - - - - 103,731
Currency translation
adjustment - - - (119,671) - -
Net income for the
year ended December
31, 1997 - - - - 521,662 -
Balance, December 31,
1997 14,207,181 14,207 1,160,151 (80,922) 95,904 (21,324)
Common stock issued
in purchase of
Peismaker'n at
approximately $0.42
per share 934,600 935 383,183 - - -
Common stock issued for
cash at approximately
$0.42 per share 6,230,220 6,230 2,610,462 - - -
Stock offering costs 330,000 330 (115,343) - - -
Advances to
shareholders - - - - - (131,529)
Currency translation
adjustment - - - (21,774) - -
Net income for the
year ended
December 31, 1998 - - - - 402,413 -
Balance, December 31,
1998 21,702,001 21,702 4,038,453 (102,696) 498,317 (152,853)
Advances to
shareholders
(unaudited) - - - - - (25,287)
Currency translation
adjustment (unaudited) - - - (31,199) - -
Net income for the
nine months ended
September 30, 1999
(unaudited) - - - - 187,167 -
Balance, September 30,
1999 (unaudited) 21,702,001 21,702 4,038,453 (133,895)685,484(178,140)
</TABLE>
<PAGE>
<TABLE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
For the Nine Months Ended For the Years Ended
September 30, December 31,
1999 1998 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 187,167 $ 120,442 $ 402,413 $521,662
Adjustments to reconcile net
income to net cash provided (used)
by operating activities:
Depreciation 385,652 321,291 439,393 175,909
Amortization 2,809 2,722 3,746 4,609
Bad debt expense 9,132 4,270 6,259 7,112
Currency translation adjustment (31,199) 16,097 (21,774)(102,537)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable (344,034) (252,427) 100,800 (31,352)
(Increase) decrease in employee
advances - 6,526 13,355 -
(Increase) decrease in taxes
recoverable 53,044 (17,267) (37,520) (12,718)
(Increase) decrease in prepaids
and other assets (35,403) (66,067) (1,813) -
(Increase) decrease in investments
and patents - - (9,625) (6,849)
(Increase) decrease in inventories (186,219) (127,712) (209,961) (65,327)
(Increase) decrease in deposits and
deferred costs 4,423 2,547 (4,054) 5,443
Increase (decrease) in accounts
payable (144,750) (25,847) 129,886 (138,659)
Increase (decrease) in payable to
related parties - (560,000) (560,000) -
Increase (decrease) in accrued
expenses (19,691) 10,529 (167,697) 44,620
Net Cash Provided (Used) by
Operating Activities (119,069) (564,896) 83,408 401,913
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in purchase of
subsidiaries - 300,884 300,884 24,242
Purchase of property and equipment (888,522)(1,399,081)(1,448,963)(335,494)
Net Cash (Used) by Investing
Activities (888,522)(1,098,197)(1,148,079)(311,252)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from lines of credit 501,835 282,307 43,066 -
Common stock issued for cash - 2,616,692 2,616,692 -
Stock offering costs - (115,013) (115,013) -
Advances to shareholders (25,287) (124,258) (131,529) 17,511
Payment on notes payable and
leases payable (78,700) (89,338) (118,124) (30,795)
Net Cash Provided (Used) by
Financing Activities $ 397,848 $2,570,390 $2,295,092 $(13,284)
NET INCREASE (DECREASE) IN CASH $ (609,743)$ 907,297 $1,230,421 $ 77,377
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 1,321,418 90,997 90,997 13,620
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 711,675 $998,294 $1,321,418 $ 90,997
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 38,760 $ 37,443 $ 48,279 $ 55,694
Income taxes $ - $ 54,731 $ 54,731 $ -
NON-CASH FINANCING ACTIVITIES
Property and equipment purchased
under capital leases and notes
payable $ 222,327 $ - $ 65,354 $ -
Payable to related party
issued in purchase
of subsidiaries $ - $ - $ - $560,000
Common stock issued in purchase
of subsidiaries $ - $384,118 $ 384,118 $ -
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 -ORGANIZATION
The consolidated financial statements include those of Northstar
Industries, Inc. (Northstar) and its wholly-owned subsidiaries, IPP-Industria
Portuguesa de Producao de Lareiras, S.A. (IPP), Peismaker'n, Nord Interior A/S
(Nord-Interior) and Scandia Varme A/S (Scandia). Collectively, they are
referred to herein as "the Company". Effective January 1, 1998, the Company's
subsidiary Nord Mur A/S (Nord-Mur) changed its name to Peismaker'n.
Northstar was incorporated under the laws of the State of Nevada on March
23, 1989 under the name of Top Dollar Realty, Inc. It later changed its name
to Northstar Industries, Inc. on February 16, 1996 in contemplation of a
merger with IPP. Northstar was incorporated for the purpose of creating a
vehicle to obtain capital to seek out, investigate and acquire interests in
products and businesses which may have a potential for profit.
IPP was incorporated under the laws of the nation of Portugal during
October 1989. IPP produces fireplace casings fitted to iron-cast inserts.
IPP distributes these fireplace casings through a network of importers and
dealers throughout Europe. The product was developed under the idea of
prefabricating the entire casing in 6 to 20 pieces.
Nord-Mur was incorporated under the laws of the nation of Norway during
January 1996. Nord-Mur has developed a patented heat protection wall panel.
The production of the panels has been transferred to IPP in Portugal.
Nord-Interior was incorporated under the laws of the nation of Norway
during January 1996. Nord-Interior is a distributor of IPP's fireplace
castings and modular firewalls. Nord-Interior is also a distributer of steel
chimneys produced by an unrelated company.
On February 16, 1996, the Company completed an Agreement and Plan of
Reorganization whereby Northstar issued 7,800,000 shares of its common stock
in exchange for all of the outstanding common stock of IPP. Pursuant to the
reorganization, the name of the Company was changed to Northstar Industries,
Inc.
The reorganization was accounted for as a recapitalization of IPP because
the shareholders of IPP control the Company after the acquisition. Therefore,
IPP is treated as the acquiring entity. Accordingly, there was no adjustment
to the carrying value of the assets or liabilities of Northstar. Northstar is
the acquiring entity for legal purposes and IPP is the surviving entity for
accounting purposes.
On January 6, 1997, Northstar purchased Nord-Mur for by issuing 1,179,000
shares of its common stock and a promise to pay $420,000 in cash by April 1,
1998 in exchange for 100% of the issued and outstanding stock of Nord-Mur.
The purchase was recorded at predecessor cost which approximates fair market
value.
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 -ORGANIZATION (Continued)
On January 6, 1997, Northstar purchased Nord-Interior by issuing 585,000
shares of its common stock and a promise to pay $140,000 in cash by April 1,
1998 in exchange for 100% of the issued and outstanding stock of
Nord-Interior. The purchase was recorded at predecessor cost which
approximates fair market value.
On August 5, 1999, the Company purchased Scandia by assuming all the
outstanding debt for the assets of Scandia. Scandia had a net book value of
$-0- at the date of purchase. The purchase was recorded at predecessor cost
which approximates fair market value.
b. Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting. The Company has elected a December 31 year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Provision for Taxes
The provision for income taxes charged to operations for the nine months
ended September 30, 1999 and 1998 and for the years ended December 31, 1998
and 1997 was $57,198, $68,512, $77,861 and $54,731, respectively. This amount
is based on the income tax rates in the countries of Portugal and Norway and
has been converted to U.S. dollars.
e. Principles of Consolidation
The consolidated financial statements include those of Northstar
Industries, Inc. and its wholly-owned subsidiaries, IPP-Industria Portuguesa
de Producao de Lareiras, S.A., Peismaker'n, Nord Interior A/S and Scandia
Varme A/S. All significant intercompany accounts and transactions have been
eliminated.
For the Company's foreign subsidiaries (IPP, Nord-Mur, Nord-Interior and
Scandia), the functional currency has been determined to be the local
currency. Accordingly, assets and liabilities are translated at year-end
exchange rates, and operating statement items are translated at average
exchange rates prevailing during the year. The resultant cumulative
translation adjustments to the assets and liabilities are recorded as a
separate component of stockholders' equity. Exchange adjustments resulting
from foreign currency transactions are included in the determination of net
income (loss). Such amounts are immaterial for all years presented.
In accordance with Statement of Financial Accounting Standards No. 95,
"Statements of Cash Flows," cash flows from the Company's foreign subsidiaries
are calculated based upon the local currencies. As a result, amounts related
to assets and liabilities reported on the statements of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheets.
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 -ORGANIZATION (Continued)
f. Inventory
Inventory supplies are stated at the lower of purchase or production cost
(computed on a first-in, first-out basis) or market. The inventory cost
includes all expenses necessary to place the inventory in a saleable condition
and includes, therefore, appropriate manufacturing overhead, etc.
g. Property and Equipment
Property and equipment are stated at cost. Expenditures for small tools,
ordinary maintenance and repairs are charged to operations as incurred. Major
additions and improvements are capitalized. Depreciation is computed using
the straight-line and accelerated methods over estimated useful lives as
follows:
Building and improvements 27 years
Equipment 5 to 8 years
Molds 5 years
Vehicles 5 years
Machinery and utilities 5 to 7 years
Furniture and office equipment 5 to 7 years
Depreciation expense for the nine months ended September 30, 1999 and 1998
and for the years ended December 31, 1998 and 1997 was $385,652, $321,291,
$439,393 and $175,909, respectively.
h. Accounts Receivable
Accounts receivable are recorded net of the allowance for doubtful
accounts of $80,633 and $91,027 as of September 30, 1999 and December 31,
1998, respectively.
i. Revenue Recognition
Revenue is recognized upon shipment of goods to the customer.
j. 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
k. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 -ORGANIZATION (Continued)
l. Concentrations of Risk
Foreign Currency Translation
Since IPP is a Portuguese company and Peismaker'n, Nord-Interior and
Scandia are Norwegian companies whose financial statements must be translated
into U.S. Dollars to conform with the requirements of the Securities and
Exchange Commission, major changes in the currency exchange rate between
Portuguese Escudos and U.S. Dollars or Norwegian Kroners and U.S. Dollars may
have a significant impact on operations of the Company. Although the Company
does not anticipate the currency exchange rate to be significantly different
over the next 12 months, no such assurances can be given.
Accounts Receivable
Credit losses, if any, have been provided for in the financial statements
and are based on management's expectations. The Company's accounts receivable
are subject to potential concentrations of credit risk. The Company does not
believe that it is subject to any unusual, or significant risks in the normal
course of its business.
Customers
The Company, through IPP, continues to manufacture and sell the fireplace
casings and related parts that were the focal points of its business prior to
the acquisition by Northstar. The stoves are distributed through a network of
importers and dealers throughout Europe. The Company does not believe that it
is subject to any unusual risks beyond the normal risks attendant to operating
its business.
m. New Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and Statement of
Financial Accounting Standards No. 129 "Disclosures of Information About an
Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than was previously used in accordance with APB
Opinion No. 15, "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar
to fully diluted earnings per share. SFAS No. 129 establishes standards for
disclosing information about an entity's capital structure. SFAS No. 128 and
SFAS No. 129 are effective for financial statements issued for periods ending
after December 15, 1997. Their implementation did not have a material effect
on the financial statements.
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 -ORGANIZATION (Continued)
m. New Accounting Pronouncements (Continued)
The Financial Accounting Standards Board has also issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures, SFAS No. 130 requires that all items that
are required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that displays
with the same prominence as other financial statements. SFAS No. 131
supersedes SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that public
companies report financial information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It
also establishes standards for disclosure regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments
as components of a company about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
SFAS 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Their implementation did not have a material
effect on the financial statements.
NOTE 2 -INVENTORY
Inventory consisted of the following:
September 30, December 31,
1999 1998
------------- -------------
(Unaudited)
Raw materials $ 275,370 $ 104,903
Work-in-process 84,442 69,024
Finished goods 620,142 619,808
----------- -----------
Total $ 979,954 $ 793,735
=========== ===========
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 3 -NOTES PAYABLE
Notes payable consisted of the following:
September 30, December 31,
1999 1998
(Unaudited)
Note payable to a bank, secured by the building,
interest at 6.1875%, principal and interest
payments of $8,622 due monthly, matures on
July 31, 1999. $ - $ 60,355
Note payable to a bank, secured by a building,
interest at 5.75%, interest payments due
monthly, principal payments of $5,161 due
monthly, matures on September 29, 2002. 185,795 -
Total notes payable 185,795 60,355
Less: current portion (61,932) (60,355)
Long-term notes payable $ 123,863 $ -
Maturities of long-term debt are as follows:
Year Ending
December 31, Amount
2000 $ 61,932
2001 61,932
2002 61,931
2003 -
2004 -
2005 and thereafter -
Total $ 185,795
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 4 -PATENTS
Patent costs incurred are as follows:
September 30, December 31,
1999 1998
(Unaudited)
Patents $ 23,317 $ 23,317
Less accumulated amortization (14,053) (11,244)
Total $ 9,264 $ 12,073
Amortization expense for the nine months ended September 30, 1999 and 1998
and for the years ended December 31, 1998 and 1997 was $2,809, $2,722, $3,746
and $4,609, respectively.
NOTE 5 -RELATED PARTY RECEIVABLE
The Company made non-interest bearing advances to officers and
shareholders. As of September 30, 1999 and December 31, 1998, $178,140 and
$152,853, respectively, was due to the Company as a result of these advances.
The advances are reflected as a reduction in stockholders' equity.
NOTE 6 -COMMON STOCK OPTIONS
The Company's Board of Directors has authorized and issued a total of
2,414,000 common stock options. Of these options, 2,000,000 have been issued
to management of the Company at $0.40 per share. These options must be
exercised before December 31, 2001.
In addition, the remaining 414,000 options have been issued to Quantum
Economic Development Ltd., Zurich. Of these options, 276,000 were exercisable
at $0.40 per share and must be exercised before December 31, 2001. The other
138,000 options are exercisable at $1.00 per share and must be exercised
before December 31, 2001.
NOTE 7 -LINES OF CREDIT
An analysis of the lines of credit with various banks of the Company and
its subsidiaries is shown below:
Debt Outstanding
Line of September 30, December 31,
Credit 1999 1998
(Unaudited)
Multi-currency line of credit $362,888 $316,231 $ 234,805
Multi-currency line of credit 155,523 155,523 58,197
Multi-currency line of credit 103,682 103,682 59,439
Multi-currency line of credit 258,231 226,999 -
Multi-currency line of credit 51,841 51,841 -
$ 932,165 $ 854,276 $ 352,441
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 7 -LINES OF CREDIT (Continued)
Borrowings under the multi-currency lines of credit are guaranteed by the
Company and bear interest between 8% and 10%.
NOTE 8 -ACQUISITION OF PEISMAKER'N
Effective January 1, 1998, the Company purchased the inventory and fixed
assets of Peismaker'n, a Norwegian manufacturer of fireplaces. The purchase
price was approximately $1,195,220 of which $384,118 was paid in shares of the
Company's common stock and $811,102 was paid in cash. The acquisition was
recorded using the purchase method of accounting.
NOTE 9 - CAPITAL LEASES
The Company entered lease agreements for two vehicles in October and
December, 1998 with lease terms through 2001. Obligations under these capital
leases have been recorded in the accompanying financial statements at the
present value of future minimum lease payments. These vehicles are included
in property and equipment in the accompanying financial statements.
Obligations under capital leases consisted of the following:
September 30, December 31,
1999 1998
(Unaudited)
Total $ 80,619 $62,432
Less: current portion (31,378) (10,202)
Long-term portion $ 49,241 $52,230
The following is a schedule of future minimum lease payments:
Year Ending
December 31,
1999 $18,345
2000 17,965
2001 48,594
2002 -
2003 -
2004 and thereafter -
Total minimum lease payments 84,904
Less amounts representing interest (22,472)
Present value of minimum lease payments $ 62,432
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 10 - OPERATING LEASES
The Company leases its office space in Norway on a month to month basis.
The operating lease lasts through January 1, 2002 and requires a monthly
payment of $4,230.
The Company also leases manufacturing space at $3,277 per month through
January 1, 2000. The following is a schedule of future minimum lease
payments:
Year Ending
December 31,
1999 $90,084
2000 50,760
2001 50,760
Total $191,604
NOTE 11 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS
The historical information contained herein has been consolidated on a
proforma basis. The purchase of the net assets of Peismaker'n on January 1,
1998 is described in Note 8. The purchase is being presented as though it was
effective January 1, 1997. All significant accounting policies for Peismaker'n
are the same as Northstar's as defined in Note 1.
For the Year Ended
December 31, 1997
Northstar and Proforma Proforma
Peismaker'n Subsidiaries Adjustment Combined
REVENUES $1,524,210 $ 3,625,246 $ - $5,149,456
COST AND EXPENSES
Cost of sales 829,876 1,474,179 - 2,304,055
Selling, general and
administrative 610,890 1,365,825 - 1,976,715
Bad debt expense 2,090 7,112 - 9,202
Amortization expense - 4,609 - 4,609
Depreciation expense 4,328 175,909 201,810 382,047
Interest expense 2,383 55,694 - 58,077
Other (income) expense (8,941) 2,587 - (6,354)
Currency translation income - (37,062) - (37,062)
Income tax expense 45,379 54,731 - 100,110
Total Cost and
Expenses 1,486,005 3,103,584 201,810 4,791,399
NET INCOME $ 38,205 $ 521,662 $ (201,810) $ 358,057
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 11 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS (Continued)
The historical information contained herein has been consolidated on a
proforma basis. The purchase of the net assets of Scandia on August 5, 1999
is described in Note 1. The purchase is being presented as though it was
effective January 1, 1998. All significant accounting policies for Scandia are
the same as Northstar's as defined in Note 1.
For the Year Ended
December 31, 1998
Northstar and Proforma Proforma
Scandia Subsidiaries Adjustment Combined
REVENUES $410,148 $4,994,083 $ - $5,404,231
COST AND EXPENSES
Cost of sales 296,141 2,073,969 - 2,370,110
Selling, general and
administrative 379,739 1,771,200 - 2,150,939
Bad debt expense 508 6,259 - 6,767
Amortization expense - 3,746 - 3,746
Depreciation expense 19,422 439,393 - 458,815
Interest expense 1,125 50,472 - 51,597
Other (income) expense - 168,770 - 168,770
Income tax expense - 77,861 - 77,861
Total Cost and
Expenses 696,935 4,591,670 - 5,288,605
NET INCOME $ (286,787) $ 402,413 $ - $115,626
NOTE 12 - SEGMENTS OF BUSINESS
The Company operates primarily in one industry segment which includes the
production and distribution of fireplace casings.
A summary of the Company's sales by geographic area is as follows:
September 30, December 31,
1999 1998
(Unaudited)
Foreign sales:
Europe $ 3,582,536 $4,994,083
Total foreign sales 3,582,536 4,994,083
Domestic sales - -
Total Sales $ 3,582,536 $ 4,994,083
<PAGE>
NORTHSTAR INDUSTRIES, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 13 -BASIC AND DILUTED EARNINGS PER SHARE
The computation of basic and diluted income per share of common stock is
based on the weighted average number of shares outstanding during the period
of the financial statements as follows:
For the Year Ended For the Year Ended
December 31, 1998 December 31, 1997
Income Shares Per-Share Income Shares Per-Share
(Numerator)(Denominator) Amount (Numerator)(Denominator)Amount
Basic Earnings Per Share
Income available
to common
stockholders $402,413 17,334,512 $ 0.02 $521,662 14,183,016 $0.04
Effect of Dilutive Securities
Common stock
options - 2,414,000 - 2,414,000
Diluted Earnings Per Share
Income available
to common
stockholders plus
assumed
conversions $402,413 19,748,512 $ 0.02 $521,662 16,597,016 $0.03
For the Nine Months Ended For the Nine Months Ended
September 30, 1999 (Unaudited) September 30, 1998(Unaudited)
Income Shares Per-Share Income Shares Per-Share
(Numerator)(Denominator) Amount (Numerator)(Denominator)Amount
Basic Earnings Per Share
Income available
to common
stockholders $187,167 21,702,001 $ 0.01 $ 120,442 18,073,454 $0.01
Effect of Dilutive Securities
Common stock options - 2,414,000 - 2,414,000
Diluted Earnings Per Share
Income available
to common
stockholders plus
assumed
conversions $187,167 24,116,001 $ 0.01 $ 120,442 20,487,454 $0.01
Options to purchase 2,276,000 and 138,000 shares of common stock at $0.40
and $1.00 per share, respectively, were outstanding at September 30, 1999 and
December 31, 1998 and 1997 (see Note 6). These options expire on December 31,
2001 and were issued with an exercise price equal to or above the market value
of the stock at the date of issuance and have been included in the computation
of diluted earnings per share.
<PAGE>
PART III
Item 1. Index to Exhibits.
Exhibit 2 - Plan of Exchange and Acquisition Agreement
Exhibit 3.1 - Articles of Incorporation
Exhibit 3.2 - Amended Articles of Incorporation
Exhibit 3.3 - Amended Articles of Incorporation
Exhibit 3.4 - By-Laws of Northstar Industries, Inc.
Exhibit 10.1 - Acquisition of Nord-Interioer AS
Exhibit 10.2 - Acquisition of Nord-Mur AS
Exhibit 10.3 - Acquisition of Peismaker'n
Exhibit 10.4 - Acquisition of Polish Property
Exhibit 10.5 - Acquisition of Scandia Varme AS
Exhibit 21 - Subsidiaries of Northstar Industries, Inc.
Exhibit 27 - FDS
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of1934, the registrant has duly caused this registration statement to be
signedon its behalf by the undersigned, thereunto duly authorized.
NORTHSTAR INDUSTRIES, INC.
Date: 12/24/99 By:/s/Bjarne H. Varre
--------- -----------------------
President, CEO and Director
<PAGE>
</TABLE>
PLAN OF EXCHANGE AND ACQUISITION AGREEMENT
THROUGH AN EXCHANGE BY
TOP DOLLAR REALTY, INC.
OF ITS VOTING STOCK FOR
100% OF THE ISSUED AND OUTSTANDING SHARES OF
INDUSTRIA PORTUGUESE de PRODUCAO de LAREIRAS S.A.
TOP DOLLAR REALTY, INC., a Nevada corporation, hereinafter sometimes
called "TDR" and INDUSTRIA PORTUGUESE de PRODUCAO de LAREIRAS S.A., a Portugal
corporation hereinafter sometimes called "IPP" agree as follows:
ARTICLE 1.
PLAN OF EXCHANGE
Plan Adopted
Section 1.0.1
The Parties agree to adopt this Plan of Exchange through an exchange of stock
hereto pursuant to a tax free exchange according to the provisions of Section
368 of the Internal revenue Code of 1986 as amended, and other applicable
provisions as follows:
a) TOP DOLLAR REALTY, INC., agrees to change its corporate name to
"NORTHSTAR INDUSTRIES, INC."
b) IPP will exchange 7,300 A shares, which constitutes 100% of the issued
and outstanding shares of stock held by the beneficial owners of IPP to
TDR in exchange for 7,800,000 shares of investment common stock of TDR,
to be issued to the exchanging beneficial owner(s).
c) This Plan of Exchange and Acquisition Agreement will be executed by
those appointed with authority to do so at the earliest possible date,
but will be subject to the approval and ratification by a majority of
shareholders of record of TDR, or their assignees, which represent more
than 50% of the shares of TDR issued and outstanding entitled to vote
pursuant to Nevada State stature and the By-Laws of the corporation.
Such vote may be given by written consent of the shareholders of record
of their assignees, according to Nevada Revised Statutes.
d) Upon said ratification of this Agreement by a majority of TDR's
stockholders, the execution thereof, and the completion of other terms
and conditions of tis Agreement between the parties, and any other
agreements pertaining thereto, the current board of directors of TDR
will resign, and a new board of directors consisting of three (3) or
more nominees as nominated by IPP, will serve as directors, effective
February 17, 1996.
Closing Date
Section 1.0.2
Subject to the conditions precedent set forth herein to the obligation of the
parties to consummate the transaction, this Plan of Exchange and Acquisition
Agreement shall be effective upon ratification by a majority of shareholders,
being more than 50% and shall be effective as of February 16, 1996, for
purposes of simplifying and consolidating the financial statements of TDR.
<PAGE>
ARTICLE II.
COVENANTS, REPRESENTATIONS AND WARRANTIES OF IPP
Section 2.0.1.
IPP is a corporation duly organized, validly existing and in good standing
under the laws of the country of Portugal and has the corporate power and is
duly authorized, qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects,
as it is
now being conducted, including qualification to do business as a
foreign corporation in the states of which the character and location of the
assets owned by it or the nature of the business transacted by it requires
qualification and where failure to qualify would have a materially adverse
effect on IPP. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement, in accordance
with the terms hereof will not, violate any provision of IPP's articles of
Incorporation, its bylaws, or otherwise to authorize the execution and
delivery of this Agreement, except for obtaining the formal approval of the
IPP shareholder. Except for such approval, IPP has full power, authority and
legal right and has taken all action required by law, its Articles of
Incorporation, bylaws and otherwise to consummate the transactions herein
contemplated.
Financial Statements
Section 2.0.2
IPP will supply to TDR, at the effective date of the Acquisition, a certified
audited financial statement prepared according to Generally Acceptable
Accounting Principles (GAAP), which will represent the financial condition of
IPP on a consolidated basis (post merger) between TDR and IPP, which meet the
accounting and disclosure standard of Securities and Exchange Regulation SX,
applied on a consistent basis, which will present fairly the financial
position of TDR at the date of the financial consolidation.
Activities Since Balance Sheet Date
Section 2.0.3..
Except as previously disclosed to TDR, IPP has not:
a) Sold, exchanged, or otherwise disposed of any of its assets,
contract rights, or any interest therein except as disclosed in the
Letter of Intent between the parties.
b) Except in the ordinary course of business, entered into any
agreement or arrangement selling, exchanging, or otherwise
disposing of any of its assets or granting any preferential or
other right to purchase any of its assets or rights or requiring
the consent of any party to the transfer and assignment of such
assets and rights.
c) Discharged or satisfied any lien or encumbrance or paid any
obligation of liability, absolute or contingent, other than current
liabilities to be shown on its balance sheet, including non-current
liabilities so shown, which have become current by the passage of
time, and current liabilities incurred since that date in the
ordinary course of business.
d) Except current liabilities incurred or obligations under contracts
entered in the ordinary course of business, incurred or agreed to
incur any contractual obligation or liability, absolute or
contingent.
e) Issued any stock, bonds, or other corporate securities, or any
options with respect thereto.
<PAGE>
d) Except in the ordinary course of business, waived any right of
claim having value.
e) Except to the extent consistent with past practice, granted any
increase in the compensation of, or paid any bonus to, any
employee, partner or principle.
f) Declared or paid any dividends, or made, or agreed to make, any
other distribution to any officer or shareholder.
g) Mortgaged or pledged or, except in the ordinary course of
business, subjected to lien, charge, or any other encumbrance or
its assets, tangible or intangible.
h) Entered into any transaction or transactions the effect of which,
considered as a whole, would be to cause its net ownership in any
of its properties to be materially less than it was at the date of
its Financial Statement, as previously disclosed.
i) Sold, assigned, or transferred any patents, copyrights or other
intangible assets.
j) Had any labour troubles other than routine grievance matters, none
of which is material.
k) Enter in any transaction other than in the ordinary course of
business.
Compliance with Laws and Regulations
Section 2.0.5.
The execution and carrying out of this Agreement and compliance with the
provisions thereof by IPP will not violate, with or without the giving of
notice or passage of time, any provision of law applicable to the TDR, and
will not conflict with, or result in the breach or termination of any
provision of, or constitute of default under, or result in the creation of any
lien, charge, or encumbrance upon any of the properties, pursuant to any
corporate charter. By-Laws, Indenture, mortgage, deed or trust, or other
agreements or instrument to which IPP is a party of by which IPP or any of its
properties may be bound.
Taxes
Section 2.0.6.
IPP hereby warrants that all federal, state, county and local taxes, other
than current "ad valorem" taxes if any, have been paid, and IPP has filed all
federal, state, county, and other local tax returns, which are required to be
filed.
Not in Default
Section 2.0.7.
IPP has not received any notice of default and, to the knowledge of any of its
shareholders or principles, is not in default under:
a) Any order, writ, injunction, or decree of any court or of any
commission or other administrative agency.
Litigation
Section 2.0.8.
There is no litigation, proceeding, or governmental investigation pending, or,
to the knowledge of any of the officers or directors of TDR, threatened,
affecting TDR or any of its properties, or its rights to execute this
Agreement or to perform its obligations hereunder, nor do any of such officers
or directors know of any ground for which litigation, proceeding, or
investigation.
<PAGE>
Insurance
Section 2.0.9.
IPP now has in force liability and other insurance with respect to its
business, properties, products, the reinsurance of mortgages, etc., and expect
in accordance with written approval of TDR pending the closeing date, will not
change, increase or decrease any such insurance.
Character of Statements
Section 2.10.
The Information provided by IPP and its officers and directors to TDR pursuant
to this Agreement for use in any financial statement, proxy statement or
listing or rating application, does not and will not contain any statement,
which at the time and in the light of the circumstances under which it is
made, is false or misleading with respect to any material fact, and does not
and will not omit to state any material fact in order to make the statements
therein not false and misleading.
ARTICLE III
Reserved
ARTICLE IV
COVENANTS, REPRESENTATIONS AND WARRANTIES OF TDR
Legal Status
Section 4.0.1.
TDR is a corporation duly organized under the laws of the State of Nevada with
corporate power to own property and carry on its business as it is now being
conducted. TDR represents that it is in good standing in its State of domicile
and that TDR will be responsible for any tax liabilities or penalties due or
incurred by TDR prior to the closing of this transaction on or before February
16,1996 (the effective date, subject to shareholder ratification) and as a
result will warrant to IPP that it will be in compliance with the laws
applicable to its business:
a) FEDERAL TAXES.
TDR has not filed any federal Income tax returns for a number of
years inasmuch as TDR has either had no activity or income to
report, and has incurred losses from time to time. If it is
determined that it is necessary for TDR to file such returns then
it will
do so.
(b) STATE TAXES AND FRANCHISE FEES.
TDR has paid all corporate franchise fees due to the State of
Nevada through 1996 in order to remain in good standing.
Capitalization and Outstanding Shares
Section 4.0.2.
TDR currently has an authorized capital stock of 50,000,000 shares of single
class common stock of S.01 par value. As of the date of this Agreement
2.000,000 shares of common stock are validly issued and outstanding, fully
paid and non-assessable. The shareholders of TDR are not entitled to
cumulative voting in the election of directors.
Financial Statements
Section 4.0.3.
TDR has supplied to IPP. a certified financial statement. which was completed
in accordance with GAAP reflecting no assets and no known or asserted
liabilities, encompassing the periods December 31,1993, 1994 and through
September 25, 1995 and represents that there have been no substantial changes
to its financial statements since that date inasmuch as IPP board of directors
<PAGE>
will be in control of TDR subsequent to the acquisition, it will be TDR's
board as now constituted who will have the responsibility to provide a
consolidated audited financial statement post merger of TDR and IPP in
accordance with GAAP within 90 days after closing.
Activities Since Balance Sheet Date
Section 4.0.4.
Except as previously disclosed to IPP, TDR has not:
(a) Suffered any change In the operations of its business.
(b) Except in the ordinary course of business, sold, exchanged, or
otherwise disposed of, or enter any agreement or arrangement to
sell, exchange, or otherwise dispose of, any asset, rights or any
interest therein, and TDR is not a party to or bound by any
outstanding option, warrant, right, call, commitment or other
agreement or obligation to sell, issue, buy or otherwise dispose
of or acquire any shares of its capital stock or other securities.
Litigation and Indemnification
Section 4.0.5.
There are no actions or proceedings pending, or to the knowledge of TDR,
threatened against, by, or affecting the TDR in any court or before any
governmental agency, domestic or foreign, which, if decided adversely to the
TDR, would materially and adversely affect the condition or operations,
financial or otherwise of TDR, and TDR's current Board of Directors as now
constituted will agree by this agreement, to indemnify IPP and IPP's
shareholders against any litigation or asserted or contingent liability, which
may arise as a result of TDR's corporate activities prior to July 25, 1995.
Status of Shares Deliverable
Section 4.0.6.
The shams of stock of TDR deliverable to IPP or IPP's assignees pursuant to
this Agreement, when issued and delivered as provided in this Agreement, will
be validly issued and outstanding shares of TDR, fully paid and non-
assessable, according to class, series and issue and privilege relating to the
same. Such shares if unregistered when deliverable will be restricted shares
under rule 144 of the Securities Act of 1933. and bear a restrictive legend
reflecting the same.
Approval Of Board
Section 4.0.7.
(a) The Board of Directors of TDR, has duly approved the transactions
contemplated hereby and has authorized the execution and delivery
of this Agreement by TDR, and the performance by TDR subject to
ratification of a majority of shareholders, by written consent.
(b) TDR has no knowledge that either the execution or delivery of this
Agreement or the consummation of the transactions contemplated
hereby or compliance with any of the provision hereof will
conflict with, result in a breach of any provision of, or
constitute a default (or an event, which with notice or lapse of
time or both, would constitute a default) under, or result in the
creation of any lien, security interest, charge or encumbrance
upon any terms, conditions or provisions of TDR's Articles of
Incorporation, or under any agreement, other instrument or
obligation.
(c) Except as disclosed in this Agreement and the Exhibit thereto, TDR
does not know of any
i) default (or event, which with notice or lapse of time or
both, would constitute a default) under any contract, note,
<PAGE>
mortgage, loan agreement, lease, instrument or commitment,
whether written or oral, to which TDR is a party to or, which
it is subject or under any governmental license or permit or
ii) breach of any provisions of its Articles of Incorporation.
ARTICLE V.
CONDUCT OF BUSINESS OF IPP PENDING CLOSING
Preservation of and Access to
Information and Documents
Section 5.0.1. IPP will:
(a) Use its best efforts to perform all its obligations under
contracts relating to or affecting its assets and shareholder
equity.
(b) Exercise all due diligence in safeguarding and maintaining its
assets, reports and data, in its possession and relating to
contracts, rights and current negotiations pertaining to the same.
(c) Confer with TDR regarding all significant developments and
transactions relating to its business and give to TDR full access
at any time to all properties, books, tax returns, partnership
agreements, contracts, and documents of TDR
(d) Permit TDR and its representatives to examine such agreements and
records as they relate to the TDR's business as TDR may request.
Submission to Shareholders and Principles
Section 5.0.2.
IPP will submit to its stockholders, partners or principles, for their
approval, this Agreement and the assignment and plan of distribution
contemplated by Section 1.0.1 hereof. IPP shall use its best efforts to cause
the approval of the same and to adopt this Agreement and said plan of
distribution.
Satisfy Conditions Precedent
Section 5.0.3.
IPP will use its best efforts to cause the satisfaction of all conditions
precedent contained in this Agreement.
ARTICLE VI.
CONDUCT OF BUSINESS OF TDR PENDING CLOSlNG
Carry On Business As Usual
Section 6.0.1.
TDR will carry on business as usual until such time as this agreement is
executed, then upon the consummation of the Plan of Exchange and ratification
by a majority of shareholders of TDR, TDR will operate the business of IPP as
described Article II, Section 2.0.2., herein.
Satisfy Conditions Precedent
Section 6.0.2.
Except with the prior written consent of IPP, TDR will not declare or
pay any dividend, or declare or make any other distribution to tis
shareholders.
<PAGE>
ARTICLE VII.
CONSUMMATION OF TRANSACTION
Consideration of IPP & TDR
Section 7.0.1.
The consideration between IPP and TDR, TDR as described herein, will be
delivered by an exchange of stock between the parties as described in Article
I, Section 1.0.1. in exchange for TDRs interests upon such conveyance. the
execution of this agreement. and completions of the exchange as herein
contemplated.
(a) TDR shall not assume nor be responsible for any of the following
items:
i) Fees, costs and expenses incurred by IPP In carrying out the
Plan of Exchange and Acquisition Agreement.
ii) Any liability of IPP to its shareholiders or principles
whether or not arising from this Plan of Exchange and
Acquisition Agreement.
iii) Any taxes imposed upon IPP by reason of the Plan Of Exchange
and Acquisition Agreement.
iv) Any liability or obligation of IPP with respect to taxes,
assessments, or other governmental charge for periods prior
to February 16, 1996, or any other liability not agreed to be
assumed by TDR by previous written agreement.
Delivery of Shares to TDR
Section 7.0.3.
(a) Promptly after the closing date, TDR shall proceed with due
diligence to deliver the shares of common stock of TDR to IPP or
assignees:
(b) IPP shall proceed promptly after the closing date to prepare and
file all Income tax returns and reports required under applicable
law, state or federal, if not already completed, covering all
periods prior to the closing date for which tax returns and
reports have not previously been filed, if required.
ARTICLE VIII.
INTERPRETATION AND ENFORCEMENT
Indemnification
Section 8.0.1.
(a) Each party hereto agrees to protect, defend, indemnity and hold
harmless the other party, its successors and assigns, against and
in respect of an loss, damage, or expense by any breach by such
indemnifying party of any of its representations, warranties,
covenants, or agreements contained herein.
(b) IPP expressly agrees to indemnify and hold harmless the TDR from
any loss, damage, or expenses, including reasonable counsel fees
sustained or incurred by TDR by reason of any claim asserted
against TDR to discharge any liability or obligation of IPP not
expressly assumed by TDR under the terms hereof.
(c) Each party hereto will indemnify and hold harmless the other party
against and in respect of any claim for any constituting fee,
stock or stock option relative to this Agreement or to
transactions contemplated hereby, based in any way on agreements,
arrangements, or understanding claimed to have been made by such
party with any third party as described in Article III, Section
3.0.2.
<PAGE>
Specific Performance
Section 6.0.2.
The Board of Directors as nominated by TDR, which shall become TDR's newly
elected Board of Directors shall be responsible to maintain and keep current
financial statements of TDR on an annual or quarterly basis in order to
maintain listing or other blue sky trading exemptions with Moody's Investors
Service and Standard and Poor's and as required by applicable reporting
requirements of the Securities and Exchange Commission Rule 15-C-211 or such
other filing requirements of each individual state wherein the securities of
TDR may trade.
Survival of Covenants, Representations end Warranties
Section 6.0.3.
All covenants agreements, representations and warranties made hereunder and in
any documents or certificates delivered at the closing shall be deemed to be
material and to have been rolled upon by TDR and TDR, notwithstanding any
investigation made by TDR or IPP or on their respective behalf, and shall
survive the closing.
Assignment
Section 8.0.4.
Except with the written consent of the other party, the rights and obligations
under this Agreement shall not be assignable by either party. Nothing herein
expressed or implied is intended to confer upon any Person. other than the
parties hereto or their respective successors, assigns, heirs and legal
representatives, any rights, remedies, or liabilities under or by reason of
this Agreement.
Notices
Section 8.0.5.
Any notice or other communication required or permitted hereunder shall be
deemed to be properly given when deposited in the United States mails for
transmittal by certified or registered mail, postage prepaid, or when
deposited with public telegraph company for transmittal, charges prepaid, if
such communication is addressed:
(a) In the case of TDR: Industria Portuguese de Producac de
Lareiras, S.A.
President or to such other address as IPP
may tram time to time furnish to TDR for
that purpose.
(b) In the case of TDR: Top Dollar Realty, Inc., 4056 Elkridge
Drive, Las Vegas, NV 69129, or to such
other address as TDR may from time to time
furnish to PP for that purpose.
Entire Agreement Counterparts
Section 6.0.6.
This instrument between the Parties, and the exhibits attached hereto contain
the entire Agreement between the parties with respect to the transaction
contemplated hereby. It may be executed in any number of counterparts, each of
which shall be deemed an original, but such counterparts together constitute
only one and the same instrument.
Controlling Law
Section 8.0.7.
The validity, interpretation, and performance of this Agreement shall be
controlled by and construed under the laws of the State of Nevada. within the
venue and jurisdiction of Clark County, Nevada.
<PAGE>
In accordance with the Uniform Commercial Code a fax copy of this instrument
shall be the same as an original.
This Plan of Reorganization and Acquisition Agreement is agreed and Executed
by and between the parties on February 2, 1996
TOP DOLLAR REALTY, INC.
By/s/Andrew W. Berney
- ------------------------------
Andrew W. Berney
Its President
INDUSTRIA PORTUGUESE de PRODUCAO
de LAREIRAS, S.A
By/s/Daniel P. Kesonen
- ------------------------------
Daniel P. Kesonen
ARTICLES OF INCORPORATION
OF
TOP DOLLAR REALTY, INC.
We, the undersigned, having associated ourselves together for the purpose
of forming a corporation under the general corporation laws of the State of
Nevada, do hereby certify:
I
The name of the corporation is: TOP DOLLAR REALTY, INC.
II
The principal office or place of business of this corporation is: 3631
Seneca Lane, Las Vegas, Nevada 89104
This corporation may have other offices at other places as the Board of
Directors shall designate and as the business of the corporation may require.
III
This corporation is organized for the object and purposes of engaging in
every lawful activity, subject to expressed limitations.
IV
The amount of the total authorized capital stock of this corporation is
Twenty-five Thousand (25,000) shares of common stock having a par value of One
Dollar ($1.00) per share, said stock being non-assessable.
Holders of this stock shall be entitled to vote at all corporate
elections and may cast one vote for each share held in their name.
V
The members of the governing board of this corporation are styled
Directed and there are One (1) in number and the names and post office
addresses of the first Board of Directors are as follows:
NAME ADDRESS
Michael Haynes 3631 Seneca Lane, Las Vegas, Nevada 89104
The number of members of the Board of Directors may, from time to time,
be increased (but never less than One (1), in the manner provided for by
Section 33 of the General Corporation Law.
VI
The Board of Directors shall have the power and authority to issue
capital stock in payment for or in exchange for money, services or other
assets.
<PAGE>
VII
The names and post office address of each of the incorporators signing
these Articles of Incorporation are as follows:
NAME ADDRESS
Michael Haynes 3631 Seneca Lane, Las Vegas, Nevada 89104
VIII
The duration of the existence of this corporation is perpetual.
IX
As fully as possible under the laws of the State of Nevada as they now
exist and as they may from time to time be revised, the corporation intends
that its Directors be protected from legal action by stockholders or other
persons (natural or otherwise) on account of service as Directors of the
corporation. A Director shall not be liable for damages for actions of the
corporation to stockholders or to any other person (natural or otherwise)
unless such Director engaged in personal fraud directly affecting such action
or actions of the corporation.
IN WITNESS WHEREOF, we have hereunto subscribed our names this 22nd day
of March, 1989.
/s/ Michael Haynes
--------------------------------
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
TOP DOLLAR REALTY, INC.
We the undersigned, Michael D. Haynes, President and Andrew W. Berney,
Secretary of Top Dollar Realty, Inc. do hereby certify:
That the board of Directors of said corporation at a meeting duly
convened and held on the 10th day of November, 1993, adopted a resolution to
amend the original articles as follows:
Article IV is hereby amended to read as follows:
The amount of total authorized capital stock of this corporation is
50,000,000 shares of common stock having a par value of $0.001 per share, said
stock being non-assessable.
The number of shares of the corporation outstanding and entitled to vote
on an amendment to the Articles of Incorporation are 100%; that the said
change(s) and amendment has been consented to and approved by a majority of
each class of stock outstanding and entitled to vote thereon.
/S/ Michael D. Haynes, President
-----------------------------
President or Vice President
/S/ Andrew W. Berney, Secretary
----------------------------
Secretary or Assistant Secretary
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
TOP DOLLAR REALTY, INC.
We the undersigned Andrew W. Berney, President, and Bruce M. Barton, Secretary
of Top Dollar Realty, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened and
held on the 12th day of February, 1996, adopted a resolution to amend the
original articles as follows:
Article I is hereby amended to read as follows:
The name of the corporation shall be Northstar Industries, Inc. The
number os shares of the corporation outstanding and entitled to vote on
amendment to the Articles of Incorporation are Two Million; that the said
change(s) and amendment has been consented to and approved by a majority vote
of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/S/ Andrew W. Berney
-------------------------
Andrew W. Berney, President
/S/ Bruce M. Barton
--------------------------
Bruce M. Barton, Secretary
BY-LAWS
OF
NORTHSTAR INDUSTRIES, INC.
ARTICLE I
MEETING OF STOCKHOLDERS
SECTION 1
The annual meeting of the stockholders of the Company shall be held at its
office in the City of Las Vegas, County of Clark, or at such other place as
the Board of Directors may decide, on or before, the 1st Friday of November
in each year, if not a local holiday, and if a legal holiday, then on the next
succeeding day not a legal holiday, for the purpose of electing directors of
the company to serve during the ensuing year and for the transaction of such
other business as may be brought before the meeting. At least five days'
written notice specifying the time and place, when and where, the annual
meeting shall be convened, shall be mailed in a United States Post Office
addressed to each of the stockholders of record at the time of issuing the
notice at his or her, or its address last known, as the same appears on the
books of the company.
SECTION 2
Special meetings of the stockholders may be held at the office of the company
in the State of Nevada or elsewhere, whenever called by the President, or by
the Board of Directors, or by vote of, or by an instrument in writing signed
by the holders of 51% of the issued and outstanding capital stock of the
company. At least five days' written notice of such meeting, specifying the
day and hour and place, when and where such meeting shall be convened, and
objects for calling the same, shall be mailed in a United States Post Office,
addressed to each of the stockholders of record at the time of issuing the
notice, at his or her or its address lost known, as the some appears on the
books of the company.
SECTION 3
If all the stockholders of the company shall waive notice of a meeting, no
notice of such meeting shall be required, and whenever all of the stockholders
shall meet in person or by proxy, such meeting shall he valid for all purposes
without call or notice, and at such meeting any corporate action may be taken.
The written certificate of the officer or officers calling any meeting setting
forth the substance of the notice and the time and place of the mailing of the
same to the several stockholders, and the respective addresses to which the
same were mailed, shall be prima facie evidence of the manner and fact of the
calling and giving such notice. If the address of any stockholder does not
appear upon the books of the company, it will be sufficient to address any
notice to such stockholder at the principal office of the corporation.
SECTION 4
All business lawful to be transacted by the stockholders of the company may be
transacted at any special meeting or at any adjournment thereof. Only such
business, however, shall be acted upon at special meeting of the stockholders
as shall have been referred to in the notice calling such meetings, but at any
stockholders' meeting at which all of the outstanding capital stock of the
company is represented, either in person or by proxy, any lawful business may
be transacted, and such meeting shall be valid for all purposes.
SECTION 5
At the stockholders' meeting the holders of fifty-one percent (51%) in amount
of the entire issued and outstanding capital stock of the company, shall
constitute a quorum for all purposes of such meetings. If the holders of the
amount of stock necessary to constitute a quorum shall fail to attend, in
person or by proxy, at the time and place fixed by these By-Laws for any
annual meeting, or fixed by a notice as above provided for a special meeting,
a majority in interest of the stockholders present in person or by proxy may
adjourn from time to time without notice other than by announcement at the
meeting, until holders of the amount of stock requisite to constitute a quorum
shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted as
originally called.
SECTION 6
At each meeting of the stockholders every stockholder shall be entitled to
vote in person or by his duly authorized proxy appointed by instrument in
writing subscribed by such stockholder or by his duly authorized attorney.
Each stockholder shall have one vote for each share of stock standing
registered in his or her or its name on the books of the corporation, ten days
preceding the day of such meeting. The votes for directors, and upon demand by
any stockholder; the votes upon any question before the meeting, shall be viva
voce. At each meeting of the stockholders, a full. true and complete list in
alphabetical order of all the stockholders entitled to vote at such meeting,
and indicating the number of shares held by each, certified by the Secretary
of the Company, shall be furnished, which list shall be prepared at least ten
days before such meeting and shall be open to the inspection of the
stockholders, or their agents or proxies, at the place where such meeting is
to be held, and for ten days prior thereto. Only the persons in whose names
shares of stock are registered on the books of the company for ten days
preceding the date of such meeting, as evidenced by the list of stockholders,
shall be entitled to vote at such meeting. Proxies and powers of Attorney to
vote must be filed with the Secretary of the Company before an election
or a meeting of the stockholders, or they cannot be used at such election or
meeting.
SECTION 7
At each meeting of the stockholders the polls shall be opened and closed, the
proxies and ballots issued, received and be taken in charge of for the purpose
of the meeting, and all questions touching the qualifications of voters and
the validity of proxies, and the acceptance or rejection of votes, shall be
decided by two inspectors. Such inspectors shall be appointed at the meeting
by the presiding officer of the meeting.
SECTION 8
At the stockholders' meetings, the regular order of business shall be as
follows:
1. Reading and approval of the Minutes of previous meeting or meetings.
2. Reports of the Board of Directors, the President, Treasurer and
Secretary of the Company in the order named.
4. Reports of Committee.
5. Election of Directors.
6. Unfinished Business.
7. New Business.
8. Adjournment.
ARTICLE II
DIRECTORS AND THEIR MEETINGS
SECTION 1
The Board of Directors of the Company shall consist of no less than one person
who shall be chosen by the stockholders annually, at the annual meeting of the
Company, and who shall hold office for one year, and until their successors
are elected and qualify.
SECTION 2
When any vacancy occurs among the Directors by death, resignation,
disqualification or other cause, the stockholders, at any regular or special
meeting, or at an adjourned meeting thereof, or the remaining Directors, by
the affirmative vote of a majority thereof, shall elect a successor to hold
office for the unexpired portion of the term of the Director whose place shall
have become vacant and until his successor shall have been elected and shall
qualify.
SECTION 3
Meetings of the Directors may be held at the principal office of the company
in the state of Nevada or elsewhere, at such place or places as the Board of
Directors may, from time to time, determine.
SECTION 4
Without notice or call, the Board of Directors shall hold its first annual
meeting for the year immediately after the annual meeting of the stockholders
or immediately after the election of Directors at such annual meeting.
Meetings of the Board of Directors may be held on the call of the President or
Secretary, on at least three days notice by mail, telefax or telegraph.
Any meeting of the Board, no matter where held, at which all of the members
shall be present, even though without or of which notice shall have been
waived by all absentees, provided a quorum shall be present, shall be valid
for all purposes unless otherwise indicated in the notice calling the meeting
or in the waiver of notice. Any and all business may be transacted by any
meeting of the Board or Directors, either regular or special.
SECTION 5
A majority of the Board of Directors in office shall constitute a quorum for
the transaction of business, but if at any meeting of the Board there be less
than a quorum present, a majority of those present may adjourn from tine to
time, until a quorum shall be present, and no notice of such adjournment shall
be required. The Board of Directors may prescribe rules not in conflict with
these By-Laws for the conduct of its business: provided, however, that in the
fixing of salaries of the officers of the corporation, the unanimous action of
all of the Directors shall be required.
SECTION 6
A Director need not be a stockholder of the corporation.
SECTION 7
The Directors shall be allowed and paid all necessary expenses incurred in
attending any meeting of the Board.
SECTION 8
The Board of Directors shall make a report to the stockholders at annual
meetings of the stockholders of the condition of the company, and shall, at
request, furnish each of the stockholders with a true copy thereof.
The Board of Directors in its discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders called for
the purpose of considering any such contract or act, which, if approved or
ratified by the vote of the holders of a majority of the capital stock of the
company represented in person or by proxy at such meeting, provided that a
lawful quorum of stockholders be there represented in person or by proxy,
shall be valid and binding upon the corporation and upon all the stockholders
thereof as if it had been approved or ratified by every stockholder of the
corporation.
SECTION 9
The Board of Directors shall have the power from time to time to provide for
the management of the offices of the company in such manner as they see fit,
and in particular from time to time to delegate any of the powers of the Board
in the course of the current business of the company to any standing or
special committee or to any officer or agent and to appoint any persons to be
agents of the company with such powers (including the power to subdelegate),
and upon such terms as may be deemed fit.
SECTION 10
The Board of Directors is vested with full, complete and unrestrained
authority in the management of all the affairs of the company, and is
authorized to exercise for such purpose as the General Agent of the Company,
its entire corporate authority.
SECTION 11
The regular order of business at meetings of the Board of Directors shall be
as follows:
1. Reading and approval of the minutes of any previous meeting or
meetings.
2. Reports of officers and committeemen.
3. Election of officers.
4. Unfinished business.
5. New business:
6. Adjournment.
ARTICLE III
OFFICERS AND THEIR DUTIES
SECTION 1
The Board of Directors, at its first and after each meeting after the annual
meeting of stockholders, shall elect a President, a Chairman of the Board, a
Secretary and a Treasurer, to hold office for one year next coming and until
their successors are elected and qualified. The offices of the Secretary and
Treasurer may be held by one person. Any vacancy in any of said offices may be
filled by the Board of Directors.
The Board of Directors may, from time to time, by resolution, appoint a Vice
President, and such additional Vice Presidents and additional Assistant
Secretaries, Assistant Treasurer and Transfer Agents of the company as it may
deem advisable, prescribe their duties and fix their compensation, and all
such appointed officers shall be subject to removal at any time by the Board
of Directors. All officers, agents, and factors of the company shall be chosen
and appointed in such manner and shall hold their office for such terms as the
Board of Directors may by resolution prescribe.
SECTION 2
The Board of Directors may appoint an Executive Committee, and may vest such
powers and authority to the Executive Committee as it may deem advisable.
SECTION 2
The President shall be the executive officer of the company and shall have the
supervision and, subject to the control of the Board of Directors, the
direction of the Company's affairs with full power to execute all resolutions
and orders of the Board of Directors not especially entrusted to some other
officer of the company. He shall be a member of the Executive Committee.
The Chairman of the Board shall preside at all meetings of the Board of
Directors, and at all meetings of the stockholders. The President shall sign
the Certificates of Stock issued by the company and shall perform such other
duties as shall be prescribed by the Board of Directors.
SECTION 3
The Vice-President, if appointed, shall be vested with all the powers and
perform all the duties of the President in his absence or inability to act,
including the signing of the Certificates of Stock issued by the company, and
he shall so perform such other duties as shall be prescribed by the Board of
Directors.
SECTION 4
The Treasurer shall have the custody of all the funds and securities of the
company. When necessary or proper he shall endorse on behalf of the company
for collection checks, notes and other obligations, he shall deposit all
monies to the credit of the company in such bank or banks or other depositor
as the Board of Directors may designate: he shall sign all receipts and
vouchers for payments made by the company, except as herein otherwise
provided. He shall sign with the President all bills of' exchange and
promissory notes of the company; he shall also have the care and custody of
the stocks, bonds, certificates, vouchers, evidence of debts, securities and
such other property belonging to the company as the Board of Directors shall
designate; he shall sign all papers required by law or by those by-laws or the
Board or Directors to be signed by the Treasurer. Whenever required by the
Board of Directors, he shall render a statement of his cash account, he shall
enter regularly in the books of the company to be kept by him for the purpose,
full and accurate accounts of all monies received and paid by him on account
of the company. He shall at all reasonable times exhibit the books
of account to any Directors of the company during business hours, and he shall
perform all acts incident to the position of Treasurer subject to the control
of the Board of Directors. The Treasurer shall, if required by the Board of
Directors, give bond to the company conditioned for the faithful performance
of all his duties as Treasurer in such sum, and with such surety as shall be
approved by the Board of Directors, with expense of such bond to be borne by
the company.
SECTION 5
The Board of Directors may appoint an Assistant Treasurer who shall have such
powers and perform such duties as may be prescribed for him by the Treasurer
of the company or by the Board of Directors, and the Board of Directors shall
require the Assistant Treasurer to give a bond to the company in such sum and
with such security as it shall approve, as conditioned for the faithful
performance of his duties as Assistant Treasurer, the expense of such bond to
be borne by the company.
SECTION 6
The Secretary shall keep the Minutes of all meetings of the Board of Directors
and the Minutes of all meetings of the stockholders and of the Executive
Committee in books provided for that purpose. He shall attend to the giving
and serving of all notices of the company; he may sign with the President or
Vice-President in the name of the Company, all contracts authorized by the
Board of Directors or Executive Committee; he shall affix the corporate seal
of the company thereto when so authorized by the Board of Directors or
Executive Committee; he shall have the custody of the corporate seal of the
company, he shall affix the corporate seal to all certificates of stock duly
issued by the company; he shall have charge of Stock Certificate Books,
Transfer books and Stock Ledgers and such other books and papers as the Board
of Directors or the Executive Committee may direct, all of which shall
at all reasonable times be open to the examination of any Director upon
application at the office of the company during business hours and he shall in
general. perform all duties incident to the office of Secretary.
SECTION 7
The Board of Directors may appoint an Assistant Secretary who shall have such
powers and perform such duties as may be prescribed for him by the Secretary
of the company or by the Board of Directors.
SECTION 8
Unless otherwise ordered by the Board of Directors, the President shall have
full power and authority on behalf of the company to attend and to act and to
vote at any meetings of the stockholders of any corporation in which the
company may hold stock, and at any such meetings shall possess and may
exercise any and all rights and powers incident to the ownership of such
stock, and which as the new owner thereof the company might have possessed and
exercised if present. The Board of Directors, by resolution, from time to time
may confer like powers on any person or persons in place of the President to
represent the company for the purposes in this section mentioned.
ARTICLE IV
CAPITAL STOCK
SECTION 1
The capital stock of the company shall be issued in such manner and at such
nines and upon such conditions as shall be prescribed by the Board of
Directors.
SECTION 2
Ownership of stock in the company shall be evidenced by certificates of stock
in such forms as shall be prescribed by the Board of Directors, and shall be
under the seal of the company and signed by the President or the Vice-
President and also by the Secretary or by an Assistant Secretary. All
certificates shall be consecutively numbered: the name of the person owning
the shares represented thereby with the number of such shares and the date of
issue shall be entered on the company's books. No certificates shall be valid
unless it is signed by the President or Vice-President and by the Secretary or
Assistant Secretary. All certificates surrendered to the company shall be
canceled and no new certificate shall be issued until the former certificate
for the same number of shares shall have been surrendered or canceled.
SECTION 3
No transfer of stock shall be valid as against the company except on surrender
and cancellation of the certificate therefor, accompanied by an assignment or
transfer by the owner therefor, made either in person or under assignment a
new certificate shall be issued therefor. Whenever any transfer shall be
expressed as made for collateral security and not absolutely the same shall be
so expressed in the entry of said transfer on the books of the company.
SECTION 4
The Board of Directors shall have power and authority to make all such rules
and regulations not inconsistent herewith as it may deem expedient concerning
the issue, transfer and registration of certificates for shares of the capital
stock of the company. The Board of Directors may appoint a transfer agent and
a registrar of transfers and may require all stock certificates to bear the
signature of such transfer agent and such registrar of transfer.
SECTION 5
The Stock Transfer Books shall be closed for all meetings of the stockholders
for the period of ten days prior to such meetings and shall be closed for the
payment of dividends during such periods as from time to time may be fixed by
the Board of Directors, and during such periods no stock shall be
transferable.
SECTION 6
The corporation may issue a new certificate for shares of the corporation in
place of any certificate theretofore issued by it, alleged to have been lost
or destroyed, and the Board of Directors may, in its discretion, require the
owner of the lost or destroyed certificate or his or her legal
representatives, to give the corporation a bond in such form and amounts as
the Board of Directors may direct, and with such surety or securities as may
be satisfactory to the board, to indemnify the corporation and its transfer
agents and registrars, if any, against any claims that may be made against it
or any such transfer agent or registrar on account of the issuance of such new
certificate. A new certificate may be issued without requiring any bond when,
in the judgment of the Board of Directors, it is proper to do so.
ARTICLE V
OFFICES AND BOOKS
SECTION 1
The principal office of the corporation shall be at such place, within or
without the State of Nevada, as the Board of Directors may designate.
SECTION 2
The Stock and Transfer Books and a copy of the By-Laws and Articles of
Incorporation of the company shall be kept at the offices of the company's
transfer agent, Alpha Tech Stock Transfer, 929 East Spires Lane, Draper, Utah
84020, USA, or the offices of any successor transfer agent, for the inspection
of all who are authorized or have the right to see the same and for the
transfer of stock. All other books of the company shall be kept at such places
as may be prescribed by the Board of Directors.
ARTICLE VI
MISCELLANEOUS
SECTION 1
The Board of Directors shall have power to reduce over and above the capital
stock paid in, such an amount in its discretion as it may deem advisable to
fix as a reserve fluid and may, from time to time declare dividends from (the
accumulated profits of the company in excess of the amounts so reduced and pay
the same to the stockholders of the company, and may also, if it deems the
same advisable, declare stock dividends of the unissued capital stock of the
company.
SECTION 2
Unless otherwise ordered by the Board of Directors, all agreements and
contracts shall be signed by the President and the Secretary in the name and
on behalf of the company.
SECTION 3
All monies of the corporation shall be deposited when and as received by the
Treasurer in such bank or banks or other depository as may from time to time
be designated by the Board of Directors, and such deposits shall be made in
the name of the company.
SECTION 4
No note, draft acceptance, endorsement or other evidence of indebtedness shall
be valid or against the company unless the same shall be signed by the
President or a Vice-President and attested by the Secretary or an Assistant
Secretary, or signed by the Treasurer or an Assistant Treasurer and
countersigned by the President, Vice-President or Secretary, except that the
Treasurer or an Assistant Treasurer may, without countersignature make
endorsements for deposit to the credit of the company- in all its duly
authorized depositories.
SECTION 5
No loan or advance of money shall be made by the company to any stockholder or
officer therein, unless the Board of Directors shall otherwise authorize.
SECTION 6
No director or executive officer of the company shall be entitled to any
salary or compensation for any services performed for the company, unless such
salary or compensation shall be fixed by resolution of the Board of Directors,
adopted by the unanimous vote of all the Directors voting in favor thereof.
SECTION 7
The company may take, acquire, hold, mortgage, sell, or otherwise deal in
stocks or bonds or securities of any other corporation, if and as often as the
Board of Directors shall so elect.
SECTION 8
The Directors shall have power to authorize and cause to he executed,
mortgages, and liens without limit as to amount upon the property and
franchise of this corporation, and pursuant to the affirmative vote, either in
person or by proxy, of the holders of a majority of the capital stock issued
and outstanding: the Directors shall have the authority to dispose in any
manner of the whole property of this corporation.
ARTICLE VII
AMENDMENT OF BY-LAWS
SECTION 1
Amendments and changes of these By-Laws may be made at any regular or special
meeting of the Board of Directors, or may be made by a vote of, or a consent
in writing signed by holders of fifty-one percent (51%) of the issued and
outstanding capital stock.
KNOW ALL MEN BY THESE PRESENTS, That we, the undersigned, being the directors
of the above named corporation, do hereby consent to the foregoing By-Laws and
adopt the same as and for the By-Laws of said corporation.
IN WITNESS WHEREOF, we have hereunto set our hands this 17th day of February,
1996.
/s/Bjarne H. Varre
___________________________________
Bjarne H. Varre
President
/s/Joern H. Eriksen
___________________________________
Joern H. Eriksen
Director
/s/Finn V. Borgersen
___________________________________
Finn V. Borgersen
Director
AGREEMENT FOR ACQUISITION OF ALL SHARES OF
NORD-INTERI R AS, NORWAY
This agreement (the "Agreement") is made as of the 4th day of April, 1997
between
Northstar Industries, Inc.,
c/o Northstar I.P.P. SA,
Rua da Estacao, Apart 15,
Sabugo,
2715 Pero Pinheiro,
Portugal
(hereinafter referred to as "Northstar")
and
Stian F. Varre,
Trulsebakken 13,
N-1350 Lommedalen,
Norway
(hereinafter referred to as "Varre")
WHEREAS
C) Northstar is desirous of acquiring from Varre all of the issued and
outstanding shares of Nord-Interi r AS, Norway, Northstar's Norwegian
distributor,
NOW THEREFORE IN CONSIDERATION of the promises and the mutual covenants herein
the parties hereto agree as follows:
1. Subject of Agreement
Northstar shall buy, and Varre shall sell, all of the issued and
outstanding shares of Nord-Interi r AS.
2. Payment
Payment will be made to Varre by a combination of shares of common stock
of Northstar, restricted according to Rule 144, as specified below:
i) Northstar shall issue 585,000 shares of common stock of the
Company, restricted according to Rule 144, at par value of USD
0.001 per share, in the name of Stian Varre. The shares are
restricted from sale for 12 months from the date of issue.
ii) A cash payment of USD 140,000.00.
iii) The parties have agreed that payment as in ii) and iii) above will
be completed on or before April 1, 1998.
3. Release from Existing Financial Guarantees
Varre has made guarantees to financial institutions, for the purpose of
securing operating credits for Nord-Interi r AS. Northstar guarantees to
release Varre from any such guarantees (currently NOK 300,000).
4. Conditions Precedent for Transfer of Shares of Nord-Interi r AS
All shares of Nord-Interi r AS shall be transferred from Varre to
Northstar upon fulfilment of Sections 2 and 3 above.
5. Obligation for Continued Employment
Varre hereby, as part of the Agreement, commits to continue to work for
Nord-Interi r AS in the capacity as Managing Director for a minimum
period of 36 months, calculated from the date of the Agreement. If Varre
should decide to leave Nord-Interi r AS before such time, the parties
have agreed that Varre shall pay a penalty of USD 3,500.00 per month, or
part thereof, for any remaining period. Such payment shall be made to
Northstar.
6. Severance Payment
If Northstar or the Board of Directors of Nord-Interi r AS cause the
employment agreement with Varre in accordance with Section 5 above to be
terminated, Northstar shall pay Varre's full agreed salary and benefits
at the time of such termination, throughout the agreed period of 36
months, ending on April 4, 2000.
7. Remuneration
As part of this Agreement, Varre has accepted to continue to work for
Nord-Interi r AS on his current terms of employment. Varre's future
remuneration will be determined by the Board of Directors of
Nord-Interi r AS.
8. Cancellation
If Northstar does not fulfill the obligations according to Sections 1
through 3 above, then Varre can choose to declare this Agreement null
and void.
9. Severability of Provisions
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of the prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of that provision in any other jurisdiction.
10. No Partnership
Nothing herein shall be deemed to create a partnership between the
parties, and neither party shall have the authority to act on behalf of
the other party in any way.
11. Remedies and Waivers
No failure or delay in exercising any right hereunder shall operate as a
waiver of, or impair, any such right. No single or partial exercise of
any such right shall preclude any other or further exercise thereof or
the exercise of any other right. No waiver of any such right shall be
effective unless given in writing. No waiver of any such right shall be
deemed a waiver of any other right hereunder.
12. Binding agreement
This Agreement shall be binding upon, and shall enure to the benefit of
the legal successors of the parties hereto, or any assignees approved.
This Agreement and any rights granted shall not be assigned by either
party except with the approval of the other.
13. Choice of Law
This Agreement shall be governed by, construed and interpreted according
to the laws of Norway.
14. Jurisdiction
Any controversy, claim, action or proceeding relating in any way to this
Agreement may be brought and enforced in the courts Norway, and the
parties hereto irrevocably submit to the jurisdiction of each such court
in respect of any such action or proceeding.
15. Arbitration
Any controversy or claim arising out of or relating to this Agreement,
any defined legal relationship associated therewith or derived
therefrom, may be settled by arbitration.
16. Full Understanding
The making, execution and delivery of this Agreement have been induced
by no representations, statements, warrants or agreement other than
those expressed in this Agreement. This Agreement embodies the entire
agreement of the parties, and supersedes any previous agreements between
the parties and/or any of its affiliates, subsidiaries, holding
companies or other, and there are no further or other agreements or
understandings, written or oral, in effect between the parties, relating
to the subject matter of this Agreement.
17. Form of Notices
Any notices, direction or other instrument required or permitted to be
given under this Agreement shall be in writing and may be given by
delivery of the same, by hand, mail, telex, facsimile or similar form of
communication, to the following addresses and recipients:
To Northstar: Northstar Industries, Inc.
c/o Northstar I.P.P. SA,
Rua da Estacao, Apart 15,
Sabugo,
2715 Pero Pinheiro,
Portugal
Att.: Bjarne H. Varre
Fax.: +351-1-9623495
To Varre: Stian F. Varre,
Trulsebakken 13,
N-1350 Lommedalen,
Norway
Att.: Stian F. Varre
Fax.: +47-67545663
18. Delivery of Notices
Any notice, direction or other instrument will, if delivered, be deemed
to have been given or served and received on the day on which it was
delivered, or if sent by telex, facsimile or other similar form of
communication, the next business day.
19. Change of Address for Notices
Any party may at any time give to the other party a notice in writing of
any change of contact person, address or facsimile numbers specified in
Subsection 17 above, and upon receipt of such notice the other party
shall then deem such new address or other to be the address to which
notices are to be given hereunder.
<PAGE>
20. Signature
This Agreement shall be signed in two (2) copies, one (1) for Northstar
and one (1) for Varre, shall be legally binding upon and enure to the
benefit of the parties from the date of execution.
April 4, 1997
for and on behalf of Northstar Industries, Inc.
/s/Bjarne H. Varre
Bjarne H. Varre
President
for and on behalf of Stian F. Varre
/s/Stian F. Varre
Stian F. Varre
AGREEMENT FOR ACQUISITION OF ALL SHARES OF
NORD-MUR AS, NORWAY
This agreement (the "Agreement") is made as of the 4th day of April, 1997
between
Northstar Industries, Inc.,
c/o Northstar I.P.P. SA,
Rua da Estacao, Apart 15,
Sabugo,
2715 Pero Pinheiro,
Portugal
(hereinafter referred to as "Northstar")
and
Stian F. Varre, Morten M. Henriksen, Gerti Varre,
Trulsebakken 13, Varstigen 14, Avenida Afonso Henriques 538,
N-1350 Lommedalen, N-1440 Dr bak 2765 Estoril,
Norway Norway Portugal
(hereinafter referred (hereinafter referred to (hereinafter
referred to
to as "Varre") as "Henriksen") as "G.Varre")
(Henriksen, Varre and G.Varre hereinafter jointly referred to as "the
Sellers")
jointly referred as "the Sellers"
WHEREAS
A) Northstar is desirous of acquiring from the Sellers all of the issued
and outstanding shares of Nord-Mur AS, Norway, as Nord-Mur AS holds the
rights for a patented Heat Protection Wall Panel; and
B) Henriksen, Varre and G.Varre hold one third of the shares of Nord-Mur AS
each,
NOW THEREFORE IN CONSIDERATION of the promises and the mutual covenants herein
the parties hereto agree as follows:
1. Subject of Agreement
Northstar shall buy, and the Sellers shall sell, all of the issued and
outstanding shares of Nord-Mur AS.
2. Payment
Payment will be made to the Sellers by a combination of cash and shares
of common stock of Northstar, restricted according to Rule 144, as
specified below:
i) Northstar shall issue 1,179,000 shares of common stock of the
Company, 393,000 shares each to Henriksen, Varre and G.Varre,
restricted according to Rule 144, at par value of USD 0.001 per
share, in the name of Stian Varre. The shares are restricted from
sale for 12 months from the date of issue. Should the shares of
Northstar become quoted on NASDAQ's Small Cap Market, or a similar
exchange requiring registration of the shares with the SEC, then
such restriction shall be 40 days from such listing or
registration date.
ii) A cash payment of USD 420,000.00, USD 140,000.00 each to
Henriksen, Varre and G.Varre.
iii) The parties have agreed that payment as in ii) and iii) above will
be completed on or before April 1, 1998.
3. Release from Existing Financial Guarantees
Varre has made guarantees to financial institutions, for the purpose of
securing operating credits for Nord-Mur AS. Northstar guarantees to
release Varre from any such guarantees (currently NOK 300,000).
4. Conditions Precedent for Transfer of Shares of Nord-Mur AS
All shares of Nord-Mur AS belonging to Henriksen and G.Varre shall be
transferred to Northstar upon fulfilment of Section 2 above. All shares
of Nord-Mur AS belonging to Varre shall be transferred to Northstar upon
fulfilment of Sections 2 and 3 above.
5. Transfer of Rights and Patents
The Sellers guarantee that all rights, patents etc. relating to the Heat
Protection Wall Panels belong and will remain as part of the assets of
Nord-Mur AS, and the Sellers shall, if requested by Northstar, cause the
rights and patents to be transferred into the name of Northstar.
6. Cancellation
If Northstar does not fulfill the obligations according to Sections 2
through 3 above, then the Sellers can choose to declare this Agreement
null and void.
7. Severability of Provisions
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to that jurisdiction, be ineffective to the
extent of the prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability
of that provision in any other jurisdiction.
8. No Partnership
Nothing herein shall be deemed to create a partnership between the
parties, and neither party shall have the authority to act on behalf of
the other party in any way.
9. Remedies and Waivers
No failure or delay in exercising any right hereunder shall operate as a
waiver of, or impair, any such right. No single or partial exercise of
any such right shall preclude any other or further exercise thereof or
the exercise of any other right. No waiver of any such right shall be
effective unless given in writing. No waiver of any such right shall be
deemed a waiver of any other right hereunder.
10. Binding agreement
This Agreement shall be binding upon, and shall enure to the benefit of
the legal successors of the parties hereto, or any assignees approved.
This Agreement and any rights granted shall not be assigned by either
party except with the approval of the other.
11. Choice of Law
This Agreement shall be governed by, construed and interpreted according
to the laws of Norway.
12. Jurisdiction
Any controversy, claim, action or proceeding relating in any way to this
Agreement may be brought and enforced in the courts Norway, and the
parties hereto irrevocably submit to the jurisdiction of each such court
in respect of any such action or proceeding.
13. Arbitration
Any controversy or claim arising out of or relating to this Agreement,
any defined legal relationship associated therewith or derived
therefrom, may be settled by arbitration.
14. Full Understanding
The making, execution and delivery of this Agreement have been induced
by no representations, statements, warrants or agreement other than
those expressed in this Agreement. This Agreement embodies the entire
agreement of the parties, and supersedes any previous agreements between
the parties and/or any of its affiliates, subsidiaries, holding
companies or other, and there are no further or other agreements or
understandings, written or oral, in effect between the parties, relating
to the subject matter of this Agreement.
15. Form of Notices
Any notices, direction or other instrument required or permitted to be
given under this Agreement shall be in writing and may be given by
delivery of the same, by hand, mail, telex, facsimile or similar form of
communication, to the following addresses and recipients:
To Northstar: Northstar Industries, Inc.
c/o Northstar I.P.P. SA,
Rua da Estacao, Apart 15,
Sabugo,
2715 Pero Pinheiro,
Portugal
Att.: Bjarne H. Varre
Fax.: +351-1-9623495
To Henriksen: Morten M. Henriksen,
Varstigen 14,
Norway
Att.: Morten M. Henriksen
Fax.: +47-64930025
To Varre: Stian F. Varre,
Trulsebakken 13,
N-1350 Lommedalen,
Norway
Att.: Stian F. Varre
Fax.: +47-67545663
To G.Varre: Gerti Varre,
Avenida Afonso Henriques 538,
2765 Estoril,
Portugal
Att.: Gerti Varre
Fax.: +351-1-4660913
16. Delivery of Notices
Any notice, direction or other instrument will, if delivered, be deemed
to have been given or served and received on the day on which it was
delivered, or if sent by telex, facsimile or other similar form of
communication, the next business day.
17. Change of Address for Notices
Any party may at any time give to the other party a notice in writing of
any change of contact person, address or facsimile numbers specified in
Subsection 15 above, and upon receipt of such notice the other party
shall then deem such new address or other to be the address to which
notices are to be given hereunder.
18. Signature
This Agreement shall be signed in four (4) copies, one (1) for
Northstar, one (1) for Henriksen, one (1) for Varre and one from
G.Varre, and shall be legally binding upon and enure to the benefit of
the parties from the date of execution.
April 4, 1997
for and on behalf of Northstar Industries, Inc.
/s/Bjarne H. Varre
___________________________________
Bjarne H. Varre
President
for and on behalf of Morten M. Henriksen
/s/Morten M. Henriksen
___________________________________
Morten M. Henriksen
for and on behalf of Stian F. Varre
/s/Stian F. Varre
___________________________________
Stian F. Varre
for and on behalf of Gerti Varre
/s/Gerti Varre
___________________________________
Gerti Varre
AGREEMENT
ON THE PURCHASE OF
A BUSINESS CONCERN
BETWEEN
PEISMAKER'N AS (The Seller)
AND
NORDINTERIOER AS (The Buyer)
CONTENTS
Page
SALES OBJECT 1
PURCHASE PRICE 1
DATE OF CONVEYANCE 1
SETTLEMENT 2
TAKING OVER OF EMPLOYEES 2
GUARANTEES FROM THE SELLER 2
DEFECTS/DEFICIENCIES OF THE PROPERTY 3
COMPETITIVE QUARANTINE AND CONFIDENTIALITY 3
PREMISES FOR THE PURCHASE 4
DUE DILIGENCE 4
MISCELLANEOUS 4
<PAGE>
1. Sales object
The Seller shall sell and the Buyer shall purchase the whole of the Seller's
business activities. The sales object includes all the Sellers current assets,
fixed assets and liabilities, rights and obligations on the date of
conveyance. Hereunder the right to the name PEISMAKER'N and logo.
2. Purchase price
The net purchase price for the sales object is NOK 9,000,000 of which
NOK 6,000,000 in cash and NOK 3,000,000 in Northstar shares. The settlement in
shares shall represent a total of NOK 3,000,000. In connection with a private
placement towards Norges Investor of total of NOK 20,000,000 the share price
is agreed to be NOK 3.21 per share.
The Seller will have issued 934,600 shares of which 467,300 shares are
released 12 months after the date of conveyance and a further 467,300 shares
are released 18 months after the date of conveyance.
The parties have, as basis for the fixing of the purchase price examined the
audited accounts for 1997 together with information on operations and
activities that are shown in further detail in this agreement.
Should the agreement result in an obligation to pay VAT, registration fees,
document fees or other public fees or levies these shall be paid in whole by
the Buyer.
If any claims for guarantee liabilities concerning previously delivered
products or services against the share company PEISMAKER'N ELEMENTPEISER AS
are raised, these shall be covered wholly and solely by the Buyer.
The Seller is not aware that any such claims are currently lodged.
3. Date of conveyance
The Buyer takes over the Sales object against full settlement of the cash part
as owner from and including 05 06 1998 (Date of Conveyance).
The Buyer takes over the business on the basis of the balance at 31.12.1997.
The result of activities from 01.011998 and up to the date of conveyance shall
be the property of the Buyer. As soon as possible after the date of
conveyance, a period accounts shall be presented per the day of conveyance.
4. Settlement
The cash part of the purchase price shall be paid with NOK 6,000,000 on the
date of conveyance to the Seller's account 5138 10 07883 DnB Asker.
Concurrent with the payment of the purchase price the Seller shall present the
following documents.
Documentation that confirms that the Buyer has right of disposal over all
accounts in PEISMAKER'N AS documentation that confirms that the Buyer can
utilise the lease contracts for the production premises at Ticon (Lier)
together with the office premises.
If payment is delayed, interest of 12% per annum will be levied.
5. Taking over of employees
All who are on the day of conveyance employed by the Seller shall be
transferred to the Buyer and the Buyer assumes all responsibility for the
employees and shall keep the Seller indemnified against all and any claims
from employees.
<PAGE>
Employees who have received notice of termination of employment but
nonetheless have the right to raise claim or claims for nullification shall be
considered as transferred to the Buyer.
The Buyer shall without delay inform the Seller if claims are put forward in
connection with disputes. The Buyer shall not negotiate/enter into discussions
without first having conferred with the Seller.
6. Guarantees from the Seller
The Seller guarantees to the Buyer:
That annual accounts per 31.12.1997 are presented that form the basis for
the fixing of the purchase price are correct and completed in accordance
with the requirements of the Companies Act and give a true and fair view of
the annual result and financial standing of the company in accordance with
generally accepted accounting principles.
That the Seller is not aware that guarantees or sureties have been lodged
for third parties' obligations.
That the Seller has the right of ownership to all property that is included
in the balance per 31.12.1997 and that these properties will be in the
company's possession in accordance with the period accounts at the date
of conveyance, with the exception of articles that after the last balance
date have been sold or leased out and the desk, chair and fireproof cabinet
which is currently disposed of by John Kaare Vik (home office).
That the seller is not aware that any agreements exist that may incur the
obligation to sell property or services under market prices or to purchase
such over market prices. The Seller is not aware that any such transactions
have been executed since 31.12.1997.
That the Seller is not aware of any damage that has after 31.12.1997
occurred to the Seller's property or of any compensatory liabilities to third
parties that are not fully covered by insurance.
That the Seller is not party to any court case or other legal proceedings with
suppliers, customers, employees, previous employees or others in connection
with the business: Neither have any claims been lodged against the Seller
that in the Sellers opinion will lead to legal action.
That the Seller is not aware of any serious faults or defects in the
Sellers
goods, business assets, other property and premises in excess of allocations
for redundancy.
That the Seller is not aware of the existence of any obligations that are
not commented on or appear in the accounts dated 31.12.1997 that are or may
become of special importance to the company.
7. Defects/deficiencies of the property
The Buyer has inspected the premises, machines, inventory, technical
equipment, other business/operating equipment and goods. He accepts these in
the condition in which they were at the time of inspection. Defects, hidden
or visible do not therefore provide a basis for price reductions or other
claims against the Seller, except for substantial deviations in conditions
that are guaranteed under section 6 and then in accordance with section 10.
8. Competitive quarantine and confidentiality
The sole shareholder, John K re Vik shall not, for a period of 65 months run,
participate in, take employment in or be financially engaged in activities in
competition to the Buyer.
The Seller shall keep fully confidential all information concerning the sold
business that may be damaging to the company if they were to reach the public
domain.
<PAGE>
9. Premises for the purchase
From the Buyer's side it is a pre-condition that the Company's leasing
contracts can be utilised by the Buyer without substantial changes to the
terms and conditions therein.
The Seller shall, within the date of conveyance, put forward documentation
which confirms that the buyer can utilise the leasing contracts, alternatively
through subleasing.
The Seller commits to working for a period of minimum 3 years from the date
of conveyance for the Buyer. The terms and conditions governing this are
contained in a separate agreement.
10. Due diligence
The Buyer shall, prior to the date of conveyance, have the opportunity to
examine the basic material for the company's accounts at 31.12.1997 in order
to verify the basis for valuation assessment. The Buyer has already carried
out an inspection of the Company's stocks.
Due diligence can commence by agreement with the Buyer and shall cease
prior to the date of conveyance. The Buyer shall sign a non-disclosure
agreement prior to the commencement of due diligence investigations.
If during the investigation the Buyer uncovers faults and defects that are
not shown in the annual accounts per 31.12.1997 and that have not been
previously mentioned and which are of significance for the completion of the
transaction, the Buyer shall immediately inform the Seller of this and at the
latest one week after due diligence shall be completed. The Buyer cannot put
forward claims for price reductions unless faults and defects together with
any added-value in the balance amount to more than NOK 250,000.-. The Buyer
cannot claim any other faults or defects grounds.
If the Buyer puts forward a demand for a reduction in the price,
PEISMAKER'N AS or John Kaare Vik may cancel the agreement without any
financial liability.
11. Miscellaneous
11.1 Disputes on the validity or interpretation of this agreement and any
other dispute that may arise in connection with this agreement shall
be solved by normal court proceedings with the legal venue in Oslo.
11.2 The Buyer must himself obtain all the necessary public and private
law and legislative permits/concessions etc. that result from the
purchase with the exception of section 9.
11.3 The Seller shall ensure that the name change is entered into the
National Business Register as soon as the agreement is completed. The
Seller's new company shall not include the word PEISMAKER'N or other
wordings/formulations that can be mistaken for this. The same applies
to other companies controlled by John Kaare Vik.
11.4 The present agreement replaces the agreement of 20.04.1998
The agreement is signed in two original copies of which each party keeps one.
<PAGE>
Oslo, May 9th 1998
As Seller As Buyer
John Kaare Vik Stian Varre
By authority By authority
The undersigned John Kaare Vik acknowledges herewith section 8 as binding for
him.
/s/John K. Vik /s/Stian Varre)
ACQUISITION OF POLISH PROPERTY
PUBLIC NOTARY`S OFFICE IN PILA
ELZBIETA WADOWSKA - PUBLIC NOTARY
UL. 14 LUTEGO NR. 16
TEL.FAX. 212-26-08
COPY
Repertorium "A" number
10256/1999
NOTARY'S DEED
On the twenty ninth of September of nineteen ninety nine (29.09.1999) year, in
front of me Elzbieta Wadowska, BA in Law, was present in my office in Pila, 14
Luty Street nr.16 following party:-----------------------------
1) Mr. PIOTR FORSZPANIAK, son of Jan and Anna, resident in Trzcianka,
Mickiewicza Street nr.62/4 appointed in this document as a legal executor of
bankruptcy of a company Zaklad Produkcji Drzewnej "Las" in Trzcianka owned by
Jerzy Rawczynski. An appointment was proved by revealing a sentence of
Regional Court in Pila dated 6th of January 1998 ( act VU 22/97) decreeing a
bankruptcy of a company from the very same date.----------------------------
2) Mr. BJARNE HASTRUP VARRE, Norwegian citizen, born 20th of August 1949,
declared residence in 2765 Estoril, Afonso Henriques Av. 538, Portugal.------
3) Mr. ERWIN ZAJKOWSKI, Swedish citizen, born 18th of July 1960, declared
residence in 2780 Oeiras, Quinta da Fonte Casa de Quinta, Portugal.--------
Mr. Bjarne Hastrup Varre and Mr. Erwin Zajkowski are members of the Board of
"NORTHSTAR POLAND LTD." with office in Trzciamka, 27 Stycznia Street nr.47/48
which was proved by valid copy of Commercial Registration Section B Nr. 1519
dated 17th of May 1999 issued by Commercial Section of Reginal Court Pila.--
4) Mrs. ALICJA KLOCKOWSKA, legal translator of German Language, recognised
by me as one from previous business contacts.-------
Identity was confirmed by: ad 1) identity card AB 5216916, ad 2) passport
nr.J0011004 valid to 05th of March 2003, ad 3) passport nr.54589667 valid to
20th of September 2004.--------------------------------------------------
SALE DEED and CONDICIONED SALE DEED
1. Mr. Piotr Forszpaniak appointed as a legal executor of bankruptcy of
company Zaklad Produkcji Drzewnej "Las" owned by Jerzy Rawczynski declared
that rights of life-long interest valid to 5th of December 2089 upon a
property in Trzcianka, 27 Stycznia and Koszykowa Streets and designed on geo
maps as nrs.486/1, 486/2, 486/4, 486/5, 486/6, 486/7, 486/8, 486/9 486/10,
486/11, 486/12, 486/13, 486/14, 486/15, 486/16, 486/17, 486/18 with total
surface of 4,0462 hectare ( four hectares, four ares and sixty two square
meters) and owner s rights upon all buildings: production mill "D"- 945m2,
trucks stand "B"- 360m2, central-heating building- 227m2, polishes store-
41,5m2, warden s room-22,5m2, wooden containers store- 936m2, social building-
325m2, social building - 191,4m2, production mill "C"- 209,9m2, warden s room-
12m2, control room-30m2, administration building- 486m2, wooden containers
store- 1229m2, warehouse-40m2, trucks stand "A"- 700m2, covered steel
construction- 240m2, are written in Kw number 9866 of Regional Court in
Trzcianka, Section of Property Books on behalf of Jerzy Rawczynski, son of
Wojciech and Maria.----------------------------------
Owner rights upon land are written on behalf of National Treasury.---------
Due to a petition of 23rd of February 1998 and a sentence of Regional Court-
Commercial Section in Pila dated 06th of January 1998 (act VU 22/97) in III
section of the same Book was decreed bankruptcy of company Zaklady Produkcji
Drzewnej "Las" in Trzcianka owned by Jerzy Rawczynski.------------------------
In section IV of the same Book are written folowing mortgages:
- - mortgage of 35.000,00 zloty on behalf of PBK S.A. O/Trzcianka----------
- - mortgage of 120.000,00 zloty on behalf of PBK S.A O/Trzcianka---------
- - mortgage of 80.000,00 zloty on behalf of PBK S.A O/Trzcianka-----------
- - mortgage of 200.000,00 zloty on behalf of PBK S.A O/Trzcianka---------
- - cautionary mortgage up to 150.000,00 on behalf of Forest Administration of
Tuczno.-----------------------------------------------------------------------
And Mr. Piotr Forszpaniak, appointed as legal executor of bankruptcy of
company Zaklady Przemyslu Drzewnego "Las" in Trzcianka owned by Jerzy
Rawczynski declared that statement above is equal with a copy from Kw number
9866 issued by Regional Court- Property Books Section in Trzcianka dated 12th
of July 1999.------------------------------------------------
After Mr. Piotr Forszpaniak, appointed as legal executor of bankruptcy of
company Zaklady Przemyslu Drzewnego "Las" in Trzcianka owned by Jerzy
Rawczynski declared:--------------------------------------------------------
- - parcels of land designed on geomaps with nrs. 486/4, 486/9, 486/14, 486/17
are free of construction and the rest of parcels have buildings mentioned in
Property Book Kw nr.9866,----------------------------------------
- - no other mortgages were made upon the property and there ara no debts
on behalf of others,----------------------------------------------------------
- - purchase was made in accordance of purchase of sale dated 28th of May
1993,-----------------------------------------------------------------------
- - the candidat for buyer was selected by written contest of offers and its
offer was accepted by Creditors Council.--------------------------------------
2. Following documents were presented for this deed by the party:----
1) decision of Regional Court in Pila dated 28th of April 1998 to create
Council of Creditors of company Zaklad Produkcji Drzewnej "Las" in Trzcianka
owned by Jerzy Rawczynski,------------------------------------------
2) decision Nr.1 of Creditors Council of company Z P D "Las" in Trzcianka in
state of bankruptcy dated 7th of May 1998 granting an agreement of seling by
the legal executor a property as a whole or in determinated parts. Favorable
opinion was given by Creditors Council about "written contest of offers"
enterprise,-------------------------------------
3) decision Nr.3 of Creditors Council of company Z P D "Las" in Trzcianka in
state of bankruptcy dated 10th of February 1999 accepting purchase of the
very same company by "NORTHSTAR POLAND LTD" with office in Trzcianka for a
price of 620.000,00 zloty,----------------------
4) a business letter dated 11th of February 1999 from the legal executor of
ZPD "Las" to "NORTHSTAR POLAND LTD" informing that offer of purchasing ZPD
"Las" in Trzcianka was accepted by Creditors Council for a price of 620.000,00
zloty in accordance of 113th article of bankruptcy law,-----------------------
5) decision of Minister of Internal Affairs and Administration dated 9th of
September and numbered 2208/99 granting "NORTHSTAR POLAND LTD" with office in
Trzcianka purchase in form of life long interest upon the property in
Trzcianka, 27 Stycznia and Koszykowa Streets, Wielkpolskie County, parcels
numbered:
486/1, 486/2, 486/4, 486/5, 486/6, 486/7, 486/8, 486/9, 486/10, 486/11,
486/12, 486/13, 486/14, 486/15, 486/16, 486/17, 486/18 with total surface of
4,0462 hectares and purchase of owner s rights upon all buildings and other
structures existing on the land.---------------------------------------------
6) decision Nr.1/99 delivered during an Extraordinary Meeting of Partners
of "NORTHSTAR POLAND LTD" with office in Trzcianka on 28th of September 1999
granting an agreement to purchase rights of life long interest upon the
property in Trzcianka, 27 Stycznia 47/48 Street from the legal executor .
Parcels numbered: 486/1, 486/2, 486/4, 486/5, 486/6, 486/7, 486/8, 486/9,
486/10, 486/11, 486/12, 486/13, 486/14, 486/15, 486/16, 486/17, 486/18 with
total surface of 4,0462 hectares and at the same time owner s rights upon all
buildings and other structures existing on the land.-----------------------
Mr.Piotr Forszpaniak appointed as a legal executor of bankruptcy of Zaklad
Produkcji Drzewnej "Las" in Trzcianka owned by Jerzy Rawczynski declared that
present deed was prepared in accordance of 113th article of bankruptcy law
because an object - ZPD"Las" in Trzcianka owned by Jerzy Rawczynski was
purchased as whole.-------
3. Mr. Piotr Forszpaniak appointed as a legal executor of bankruptcy of
Jerzy Rawczynski owner of Zaklad Produkcji Drzewnej "Las" in Trzcianka-------
a r e s e l l i n g t o
"NORTHSTAR POLAND LTD" with office in Trzcianka rights of life long interest
upon parcels of land in Trzcianka, 27 Stycznia and Koszykowa Streets numbered
on goemaps as: 486/1, 486/2, 486/5, 486/6, 486/7, 486/8, 486/10, 486/11,
486/12, 486/13, 486/15, 486/16, 486/18 with total surface of 2,5662 ha (two
hectares, fifty six ares, sixty two square meters) and owner s rights upon
following building: production mill "D"- 945m2, trucks stand "B"- 360m2,
central heating building-227m2, polishes store- 41,5m2, warden s room- 22,5m2,
wooden containers store- 936m2, social building- 325m2, social building-
191,4m2, production mill "C"- 209,9m2, warden s room- 12m2, control room-
30m2, administration building- 486m2, wooden containers store- 1229m2,
warehouse- 40m2, trucks stand "A"- 700m2, covered steel construction-
240m2,-----------------------------------------------
and BJARNE HASTRUP VARRE AND ERWIN ZAJKOWSKI ACTING AS MEMBERS OF THE BOARD OF
"NORTHSTAR POLAND LTD" WITH OFFICE IN TRZCIANKA
a r e p u r c h a s i n g
rights of life long interest upon parcels of land on
behalf of the very same company, numbered on geomaps: 486/1, 486/2, 486/5,
486/6, 486/7, 486/8, 486/10, 486/11, 486/12, 486/13, 486/15, 486/16, 486/18
with total surface of 2,5662 ha (two hectares, fifty six ares, 62 square
meters) and owner s rights upon buildings: production mill "D"- 945m2, trucks
stand "B"- 360m2, central heating building- 227m2, polishes store- 41,5m2,
warden s room- 22,5m2, wooden containers store- 936m2, social building- 325m2,
social building- 191,4m2, production mill "C"- 209,9m2, warden s room- 12m2,
control room- 30m2, administration building- 486m2, wooden containers store-
1229m2, warehouse- 40m2, trucks stand "A"- 700m2, covered steel construction-
240m2.----------------
4. Mr. Piotr Forszpaniak appointed as legal executor of bankruptcy of
Zaklad Produkcji Drzewnej "Las" in Trzcianka owned by Jerzy Rawczynski
i s s e l l i n g
to "NORTHSTAR POLAND LTD" with office in Trzcianka rights of life
long interest upon free of constructions parcels of land in Trzcianka, 27
Stycznia and Koszykowa Streets numbered on geomaps as: 486/4, 486/9, 486/14,
486/17 with total surface of 1,4800 ha (one hectar, forty eight ares) on
condition that rights of priority purchase should be sustained on behalf of
City Council of Trzcianka (Real Estate Legislation dated 21st of August
1997),--------
and BJARNE HASTRUP VARRE AND ERWIN ZAJKOWSKI ACTING AS MEMBERS OF THE BOARD OF
"NORTHSTAR POLAND LTD" with office in Trzcianka
a r e p u r c h a s i n g
for the very same company (on condition of priority purchase on behalf of City
Council of Trzcianka) rigts of life long interest upon free of construction
parcels of land in Trzcianka, 27 Stycznia and Koszykowa Streets numbered on
geomaps as: 486/4, 486/9, 486/14, 486/17 with total surface of 1.4800 ha (one
hectare, forty eight ares).----------------------------
5. Propery is to be hold in buyer s possesion from today. Gains and lost
are to be hold by buyer from today.------------------------------------------
6. The party agreed on price of property as 620.000,00 (six hundred,
twenty thousand) zloty which consist of:-------------------------------------
1) price of land - 120.000,00 (one hundred twenty thousand) zloty:---------
- parcel nr.486/4 - 10.897,00 zloty,----------------------------------
- parcel nr.486/9 - 1.877,00 zloty,-------------------------------
- parcel nr.486/14 - 6.991,00 zloty,---------------------------------
- parcel nr.486/17 - 24.191,00 zloty,--------------------------------
2) price of buildings and structures - 500.000,00 (five hudred thousand) which
was already paid for and confirmed by seller.---------------------------
7. In accordance with the 10th article of 3rd State Treasury Legislation
and and the 94th article of punitive legislation the notary notified the party
that if the State Treasury recive higher value than estabilished, additional
taxes and interests are to be paid counting from today s date.---------------
8. The cost of this deed is hold by buyers.----------------------------
9. Copyies of this deed are to be given to the party in any number
requested.--------------------------------------------------------------------
10.Buyers declared their knowledge about rights and obligations,
especially the one of obligatory annual fee paid in advance to 31st of March
each year on behalf of land s owner.-------------------------------------
11. The copy of this deed will be delivered by notary to City Council of
Trzcianka to grant its pledge of priority purchase. In case of execution of
rights by City Council in Trzcianka buyer is obliged to hand over the property
to seller and seller is obliged to return transaction money to buyer. If
rights of City Council of Trzcianka are not executed in time permitted by law
or by resignation, seller is obliged to replace rights of life long interest
on behalf of buyer.---------------------------------------------
12. The party requested to insert a note in Kw number 9866, section of
Property Books of Regional Court in Trzcianka on behalf of "NORHSTAR
POLAND LTD" with office in Trzcianka rights of life long interest upon
parcels of land numbered on geomaps as: 486/1, 486/2, 486/5, 486/6,
486/7, 486/8, 486/10, 486/11, 486/12, 486/13, 486/15, 486/16, 486/18
with surface of 2,5662 ha (two hectares, fifty six ares, sixty two
square meters) and owner s rigts upon buildings:
production mill "D"- 945m2, trucks stand "B"- 369m2, central heating
building-227m2, polishes store- 41,5m2, warden s room- 22,5m2, wooden
containers store-936m2, social building- 325m2, social building-
191,4m2, production mill"C"-209,9m2, warden s room- 12m2, control room-
30m2, administration building-486m2, wooden containers store- 1229m2,
warehouse- 40m2, trucks stand"A"- 700m2, covered steel constuction-
240m2; free of any debts in accordance with 113rth article of
bankruptcy law.--------------------------------------------------------
13. Fees :------------------------------------------------ 3.650,00
zloty - notarial fees ( 2, Min.Justice dated 12.04.1991 and
modified dated 19.11.1994, 7.05.1997),------------------------------
100,00 zloty ( 16 as above),----------------------------------------
- 3.803,00 zloty - treasure taxes ( 58, Min.Finance dated
9.12.1994-land taxes),----------------------------------------------
- 280,00 zloty - 8 copies of this deed---------------------------
- 7.833,00 zloty - total amount (seven thousand, eight hundred,
thirty three)-------------------------------------------------------
VAT 22% of---------------------------------------3.650,00 zloty
-------------------------------------------------- 803,00 zloty
Total--------------------------------------------8.636,00 zloty
Court s fee for note in property book should be paid to Regional Court in
Trzcianka, section of Property Books.
This deed was read, accepted and signatured.
A notary s stamp: An original deed holds party s signatures.
Repertorium "A" Nr.10258/1999
Copy made for party.
Pila, 29th of September 1999
Pila, twenty nineth of September of nineteen
ninety nine
Signature of public notary
PUBLIC NOTARY S OFFICE IN PILA
ELZBIETA WADOWSKA - PUBLIC NOTARY
14 LUTEGO NR. 16 STREET
TEL., FAX. 212-26-08
COPY
Repertorium "A"
nr.12063/1999
NOTARY S DEED
On the sixteenth of November nineteen ninety nine (16.11.1999), in front of
me, Elzbieta Wadowska, B.A in Law were present in my office in Pila, 14 Lutego
Street following persons:
1) Mr. PIOTR FORSZPANIAK, son of Jan and Anna, resident in Trzcianka,
Mickiewicza 62/4 Street, appointed in this deed as e legal executor of
bankruptcy of Zaklad Produkcji Drzewnej "Las" in Trzcianka owned by Jerzy
Rawczynski. An appointment was proved by revealing the sentence of Regional
Court in Pila dated 6th of January 1998 (VU 22/97) decreeing bankruptcy of
company from the very same date.------------------
2) Mr. ERWIN ZAJKOWSKI, born 18th of July 1960, Swedish citizen, declared
residence in 2780 Oeiras, Quinta da Fonte Casa de Quinta,
Portugal,---------------------------------------------------------------------
acting in this deed in his name as the member of the bard of "NORTHSTAR POLAND
LTD" in Trzcianka, 27 Stycznia 47/48 Street which was proved by valid copy of
Commercial Registration Section B Nr.1519 dated 17th of May 1999 issued by
Regional Court- Commercial Section in Pila,--------------------------------
and acting in name of BJARNE HASTRUP VARRE, Norwegian citizen, declared
residence in 2765 Estoril, Afonso Henriques 538 Av., Portugal, member of the
board of "NORTHSTAR POLAND LTD" in Trzcianka by proxy of 29th of September
1999 nr.rep."A"/1999 issued by Public Notary s Office in Pila giving him a
legal power of signing notary deed - agreement of replacement rights of life
long interest upon parcels of land, free of construction, in Trzcianka, 27
Stycznia and Koszykowa Streets numbered on geomaps as: 486/4, 486/9, 486/14,
486/17 with total surface of 1,4800 ha no behalf of "NORTHSTAR POLAND LTD" in
Trzcianka.--
3) Mrs. ALICJA KLOCKOWSKA, legal translator of German Lenguage, recognized
by me as the one from previous business contacts.--
Identity was confirmed by: ad 1) Identity Card - AB 5216916, ad 2) passport
nr.54589667 valid to 20th of September 2004.-----------------------
AGREEMENT OF REPLACEMENT OF RIGHTS OF LIFE LONG
INTEREST OF LAND
1. Mr. Piotr Forszpaniak, appointed as a legal executor of Zaklady
Produkcji Drzewnej "Las" in Trzcianka owned by Jerzy Rawczynski declared
on 29th of September 1999 in office of public notary Elzbieta Wadowska
(Rep."A" 10256/1999) that he sold to "NORTHSTAR POLAND LTD" in Trzcianka
rights of life long interest free of construction parcels of land in
Trzcianka, 27 Stycznia and Koszykowa Streets numbered on geomaps as:
486/4, 486/9, 486/14, 486/17 with total surface of 1,4800 ha (one
hectare, forty eight ares) written in Kw number 9866 Section of Property
Books, Regional Court in Trzcianka for a price of 43.956,00 zloty (forty
three thousand, nine hundred, fifty six):------------
- price of parcel nr.486/4 - 10.897,00 zloty,-----------------------
- price of parcel nr.486/9 - 1.877,00 zloty,-----------------------
- price of parcel nr.486/14- 6.991,00 zloty,-----------------------
- price of parcel nr,486/17- 24.191,00 zloty,-----------------------
which was totally paid for on condition that City Council in Trzcianka
will not execute its rights of priority of purchase (Real Estate Law -
21st of August 1997).---------------------------------------------------
2. A letter of resignation from City Council was presented by party
declaring that its rights of priority purchase of parcels of land
numbered on geomaps as 486/4, 486/9, 486/14, 486/17 in Trzcianka, 27
Stycznia and Koszykowa Streets, with total surface of 1.4800 ha are not
to be executed.---------------------------------------------------------
3. And because of resignation of City Council in Trzcianka of priority
rights of purchase Mr. Piotr Forszpaniak appointed as a legal executor
of bankruptcy Zaklad Produkcji Drzewnej "Las" in Trzcianka owned by
Jerzy Rawczynski---------------------------------------
a r e r e p l a c i n g o n b e h a l f o f
"NORTHSTAR POLAND LTD" in Trzcianka-----------------------------
rights of life long interest upon parcels of land, free of constuction,
in Trzcianka, 27 Stycznia and Koszykowa Streets numbered on geomaps as:
486/4, 486/9, 486/14, 486/17 with total surface of 1.4800 ha (one
hectare, forty eight ares)----------------------------------------------
and Mr. ERWIN ZAJKOWSKI ACTING AS MEMBER OF THE BOARD OF "NORTHSTAR
POLAND LTD" IN TRZCIANKA AND AS A PROXY OF BJARNE HASTRUP VARRE MEMBER
OF THE BOARD OF "NORTHSTAR POLAND LTD" IN TRZCIANKA--------------------
a g r e e s on replacement of life long interest upon parcels, free of
construction, in Trzcianka, 27 Stycznia and Koszykowa streets numbered
on geomaps as:
486/4, 486/9, 486/14, 486/17 with total surface of 1.4800 ha (one
hectare, forty eight ares) on behalf of the very same company.-----
4. The cost of this deed is hold by buyer. --------------------------------
5. Copies of this deed are to be given to the party in any number
requested.--------------------------------------------------------------
6. The party requested to insert a note in Kw number 9866 Section of
Property Books of Regional Court in Pila of life long interest upon
parcels of land numbered on geomaps as: 486/4, 486/9, 486/14, 486/17
with total surface of 1.4800 ha (one hectare, forty eight ares) on
behalf of:-------------"NORTHSTAR POLAND LTD" IN TRZCIANKA.-------------
7. Fees:-------------------------------------------------------------------
--------- 100,00 zloty - notarial fees ( 7 Min.Justice dated
12.04.1991 and with changes dated 19.11.1997)--------------------------
- 100,00 zloty - notarial fees ( 16 as above)-------------------
---- 2.198,00 zloty - treasure taxes ( 58 Min. Finance dated
26.06.1992 and with changes dated 9.12.1994)---------------------
--- 90,00 zloty - 6 copyies of this deed-----------------------
-------- 2.488,00 zloty - total ( two thousand, four hundred and
eighty eight)
VAT - without charge (Min.Finance dated 15.12.1997/Dz.U.Nr.156,
poz.1024)---------------------------------------------------------------
Court's fee for annotation in property book should be paid to Regional
Court in Trzcianka Section of Property Books.---------------------------
This deed was read, accepted and signatured.----------------------------
A notary s stamp: An original deed holds party s signatures
Repertorium "A" Nr. 12069/1999
Copy for the party.
Pila, 16th of November 1999
Pila, sixteenth of November of nineteen ninety
nine
Public notary signature
Translater JES - RACIONALMENTE
ACQUISITION OF SCANDIA VARME AS
Slependen 20.05.99
ATT. The Board of Directors, Scandia Varme A/S
Ref.: The acquisition of 100% of the shares of Scandia Varme A/S and
subscription of new share capital.
The Board of Nord-Interi r A/S has resolved to offer to take over 100% of the
shares of Scandia Varme A/S. As the share capital in that company is
seen as lost, Nord-Interioer A/S will go in with fresh share capital
together with subordinated loan capital to a total sum of NOK 2 millions
(2,000,000).
The conditions are as follows:
Nord-Interi r A/S have the sole right to conclude this take over of
Scandia Varme
A/S.
This has already been confirmed orally by Herr R v, the Chairman of
the Company's Board.
All shareholders in Scandia Varme A/S renounce their subscription rights
in any
future share capital formation, and agree to sell their existing
shares for NOK 1.-
per share providing that the company's shares are not written down
to NOK 0.00.
The balance (attachment 1) of 19.05.99 is correct. This pre-supposes the
successful
implementation of the proposed debt restructuring.
Sundal Sparebank confirm to Scandia Varme A/S that that the bank will
continue its credit engagement also after the debt restructuring.
As new owners, we are extremely interested in the research project with
Sintef and Norsk Forskningsraad. It is on the other hand too early to
be able to say whether or not it can continue in its present form.
The Board of Directors of Scandia Varme A/S must confirm that the
company is not bound by any obligation to continue this. A possible
re-defining of the project may be an alternative. This is of course
pre-conditioned by full acceptance by all involved parties.
Once we have received written confirmation from the Board of Directors of
Scandia Varme A/S that all the pre-conditions shown above have been complied
with, we will transfer the necessary capital to the Company within 5 days.
Yours faithfully,
Nord-Interioer A/S
/s/Bjarne Varre /s/Stian Varre
Bjarne Varre Stian Varre
Chairman of the Board Managing Director
Northstar I.P.P., Portugal
Nord-Interioer AS, Norway
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