Michael Foods Inc/MN – ‘PRE 14A’ for 6/4/96

As of:  Monday, 3/25/96   ·   For:  6/4/96   ·   Accession #:  950124-96-1261   ·   File #:  1-10134   ·   Correction:  This Filing was Corrected by the SEC on 9/22/97. ®

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Preliminary Proxy Solicitation Material   —   Schedule 14A
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Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary Proxy Solicitation Material              185    973K 

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) 
OF THE SECURITIES EXCHANGE ACT OF 1934

(AMENDMENT NO.   )

Filed by the Registrant                      [X]                
Filed by a Party other than the Registrant   [ ]                

Check the appropriate box:

[X] Preliminary Proxy Statement                                 
[ ] Confidential, for Use of the Commission Only (as permitted  
by Rule 14a-6(e)(2))                                    
[ ] Definitive Proxy Statement                                  
[ ] Definitive Additional Materials                             
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or    
Section 240.14a-12                                      

North Star Universal, Inc.  
------------------------------------------------------- 
(Name of Registrant as Specified in its Charter)

N/A 
--------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant) 

Payment of Filing Fee (Check the appropriate box):                              

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)     
or Item 22(a)(2) of Schedule 14A.                                       
[ ] $500 per each party to the controversy pursuant to Exchange Act             
Rule 14a-6(i)(3).                                                       
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.    

(1) Title of each class of securities to which transaction applies:     

------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:        

------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed    
     pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):      

------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:                    

------------------------------------------------------------------------

(5) Total fee paid:                                                     

------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.                     
  [ ] Check box if any part of the fee is offset as provided by Exchange Act
    Rule 0-11(a)(2) and identify the filing for which the offsetting fee
 was paid previously. Identify the previous filing by registration
     statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:                                             

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(2) Form, Schedule or Registration Statement No.:                       

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(3) Filing Party:                                                       

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(4) Date Filed:                                                         

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NORTH STAR UNIVERSAL, INC.
[LETTERHEAD]

                                                          5353 WAYZATA BOULEVARD
                                                 610 PARK NATIONAL BANK BUILDING
                                                    MINNEAPOLIS, MINNESOTA 55416
                                                                  (612) 546-7500
                                                                  APRIL   , 1996

Dear Shareholders:                                                              

     You are cordially invited to attend the 1996 Annual Meeting of Shareholders
of North Star Universal, Inc. ("NSU") to be held at 4:00 p.m. local time on June
4, 1996, at the Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota.   

As you are aware, on December 21, 1995, NSU and Michael Foods, Inc.   
("Michael") entered into an Agreement and Plan of Reorganization (the           
"Reorganization Agreement") pursuant to which (i) NSU Merger Co., a Delaware    
corporation and wholly-owned subsidiary of NSU ("Merger Co."), will be merged   
with and into Michael and Michael will become a wholly-owned subsidiary of NSU  
(the "Merger"), (ii) each stockholder of Michael (other than NSU) will receive, 
in exchange for each share of common stock, par value $.01 per share, of Michael
("Michael Common Stock"), held by such stockholder, one share of the common     
stock, par value $.01 per share, of NSU ("NSU Common Stock"), (iii) NSU will    
change its name to Michael Foods, Inc. (NSU after the consummation of the Merger
is referred to hereinafter as "New Michael") and will continue the business     
previously conducted by Michael, (iv) prior to the consummation of the Merger,  
NSU will transfer all of its assets and liabilities other than certain          
indebtedness and other agreed upon assets and liabilities to another            
wholly-owned subsidiary of NSU, ENStar Inc. ("ENStar"), (v) the outstanding     
common stock of ENStar will be distributed pro rata by NSU to the shareholders  
of NSU of record as of a record date just prior to the effective date of the    
Merger (the "Distribution"), and (vi) immediately prior to the effective time of
the Merger, NSU will effectuate a reverse stock split (the "Reverse Stock       
Split"), the ratio of the Reverse Stock Split to be determined pursuant to the  
terms of the Reorganization Agreement, as described in the accompanying Proxy   
Statement/Prospectus under "THE REORGANIZATION -- Effects of the                
Reorganization." The above-referenced transactions are herein collectively      
referred to as the "Reorganization."                                            

   In addition to the election of six directors to the Board of Directors of
NSU, at the Annual Meeting you will be asked to consider and vote upon the      
following proposals in connection with the Reorganization:                      

   (i)  a proposal to approve the Reorganization Agreement and the Merger;

(ii) a proposal to approve the Reverse Stock Split;                 

(iii) a proposal to approve the Distribution; and                     

(iv)  a proposal to approve an amendment to the Restated Articles of  
Incorporation of NSU (collectively, the "NSU Proposals"). 

At the same time, Michael shareholders will be meeting to approve the           
Reorganization Agreement and the Merger. Your board of directors believes that  
the Reorganization is in the best interest of NSU and its shareholders and has  
unanimously approved the NSU Proposals. THE BOARD UNANIMOUSLY RECOMMENDS THAT   
YOU VOTE "FOR" THE NSU PROPOSALS.                                               

Pursuant to an Orderly Disposition and Registration Rights Agreement  
between NSU and James H. Michael and Jeffrey J. Michael, each a member of the   
Board of Directors of NSU, and two limited partnerships controlled by them (the 
"Michael Family Shareholders"), the Michael Family Shareholders, which own an   
aggregate of 5,685,100 shares of the outstanding NSU Common Stock (approximately
60.17% of the outstanding shares of NSU Common Stock as of the date hereof) have
agreed to vote in favor of the NSU Proposals. IF THE MICHAEL FAMILY SHAREHOLDERS
VOTE IN ACCORDANCE WITH THAT AGREEMENT, THE APPROVAL OF THE NSU PROPOSALS IS    
ASSURED.                                                                        

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Consummation of the Reorganization is subject to certain conditions,  
including approval and adoption of the Reorganization Agreement and the Merger  
by the affirmative vote of the holders of a majority of the outstanding shares  
of Michael Common Stock, the approval of the NSU Proposals by the affirmative   
vote of the holders of a majority of the NSU Common Stock, a favorable tax      
ruling from the Internal Revenue Service and the receipt of certain approvals   
from regulatory authorities.                                                    

   The accompanying Proxy Statement/Prospectus provides detailed information
concerning the Reorganization, the NSU Proposals, and certain additional        
information, which you are urged to read carefully. It is important that your   
shares be represented at the annual meeting regardless of the number you hold.  
Whether or not you plan to attend the annual meeting, you are requested to      
complete, date, sign and return the proxy card in the enclosed postage paid     
envelope. You may revoke your proxy at any time prior to its exercise at the    
annual meeting by written notice of revocation to the secretary of Michael, by  
signing and returning a later dated proxy or by voting in person at the annual  
meeting.                                                                        

  Please do not send in your stock certificates at this time. In the event
the Reorganization is consummated, you will be sent a letter of transmittal for 
that purpose.                                                                   

              Sincerely,

                      Jeffrey J. Michael
                                         President and Chief Executive Officer

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NORTH STAR UNIVERSAL, INC.
ANNUAL SHAREHOLDERS MEETING 
JUNE 4, 1996
4:00 P.M. - 6:00 P.M. 

MARRIOTT SOUTHWEST
5801 OPUS PARKWAY 
MINNETONKA, MINNESOTA 55343 

DIRECTIONS

FROM THE SOUTH                                                                  
- 35W North to 494 West                                                         
- 494 West to Highway 169 North                                                 
- Highway 169 North to Londonderry/Bren Road Exit                               
- Left on Bren Road                                                             
- Left to Minneapolis Marriott Southwest                                        

FROM THE WEST                                                                   
- Highway 5 East to Highway 169 North                                           
- Highway 169 North to Londonderry/Bren Road Exit                               
- Left on Bren Road                                                             
- Left to Minneapolis Marriott Southwest                                        

FROM THE NORTH                                                                  
- Highway 169 to Bren Road/Londonderry Exit                                     
- Right on Bren Road                                                            
- Left on Opus Parkway                                                          
- Left to Minneapolis Marriott Southwest                                        

FROM THE AIRPORT                                                                
- 494 West to Highway 169 North                                                 
- Highway 169 North to Londonderry/Bren Road Exit                               
- Left on Bren Road                                                             
- Left to Minneapolis Marriott Southwest                                        

FROM MINNEAPOLIS                                                                
- 35W South to Crosstown 62 West                                                
- Highway 169 North to Londonderry/Bren Road Exit                               
- Left on Bren Road                                                             
- Left to Minneapolis Marriott Southwest                                        

[Map]                                                                           

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NORTH STAR UNIVERSAL, INC.
5353 WAYZATA BOULEVARD
610 PARK NATIONAL BANK BUILDING 
MINNEAPOLIS, MINNESOTA 55416
------------------------- 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 4, 1996 
------------------------- 

To the Shareholders of North Star Universal, Inc.                               

  The 1996 Annual Meeting of Shareholders of North Star Universal, Inc., a
Minnesota corporation ("NSU"), will be held at 4:00 p.m. local time on June 4,  
1996 at the Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota for the
following purposes:                                                             

       1. To consider and vote upon a proposal to approve an Agreement and
Plan of Reorganization, dated December 21, 1995 (the "Reorganization  
     Agreement"), between and among NSU, Michael Foods, Inc. ("Michael") and NSU
 Merger Co., a wholly owned subsidiary of NSU and a Delaware corporation
   ("Merger Co."), and the "Merger," as hereinafter defined. Pursuant to the
Reorganization Agreement, (i) Merger Co. will be merged with and into 
Michael and Michael will become a wholly-owned subsidiary of NSU (the 
    "Merger"), (ii) each stockholder of Michael (other than NSU) will receive,
   in exchange for each share of the common stock, par value $.01 per share,
    of Michael ("Michael Common Stock") held by such stockholder, one share of
    common stock, par value $.01 per share, of NSU ("NSU Common Stock"), (iii)
     NSU will change its name to Michael Foods, Inc. (NSU after the consummation
of the Merger is referred to hereinafter as "New Michael") and will   
  continue the business previously conducted by Michael, (iv) prior to the
consummation of the Merger, NSU will transfer all of its assets and   
  liabilities other than certain indebtedness and other agreed upon assets
and liabilities to another wholly-owned subsidiary of NSU, ENStar Inc.
    ("ENStar"), (v) the outstanding common stock of ENStar will be distributed
  pro rata by NSU to the shareholders of NSU of record as of a record date
  prior to the effective date of the Merger (the "Distribution"), and (vi)
    immediately prior to the effective time of the Merger, NSU will effectuate
     a reverse stock split (the "Reverse Stock Split"), the ratio of the Reverse
  Stock Split to be determined pursuant to the terms of the Reorganization
     Agreement as described in the accompanying Proxy Statement/Prospectus under
"THE REORGANIZATION -- Effects of the Reorganization."                

 2. To consider a proposal to approve the Reverse Stock Split;

3. To consider a proposal to approve the Distribution;      

     4. To consider a proposal to approve an amendment to the Restated
Articles of Incorporation of NSU;                                     

         5. To elect six persons to serve as directors during the ensuing year
and until their successors are elected and qualified; and             

      6. To transact such other business as may properly come before the
meeting.                                                              

     The Board of Directors has fixed the close of business on April 15, 1996 as
the record date for the determination of the holders of NSU Common Stock        
entitled to notice of, and to vote at, the meeting. The Reorganization          
Agreement, the Merger and the other transactions contemplated in the            
Reorganization Agreement are more fully described in the accompanying Proxy     
Statement/Prospectus, and the appendices thereto, which form a part of this     
notice.                                                                         

  Shareholders of NSU Common Stock may assert dissenters' rights under the
Minnesota Business Corporation Act in connection with the Distribution. The     
procedures for asserting such dissenters' rights are described in the           
accompanying Proxy Statement/Prospectus under the heading "THE REORGANIZATION --
Dissenters' Rights." A copy of the relevant sections of the Minnesota Business  
Corporations Act                                                                

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relating to dissenters' rights is attached to the enclosed Proxy                
Statement/Prospectus as Appendix IV. If holders of more than 1% of the          
outstanding shares of NSU Common Stock exercise dissenters' rights, NSU has the 
right under the Reorganization Agreement not to consummate the transactions     
described above.                                                                

 ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO COMPLETE, DATE, SIGN AND   
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE PRE-PAID ENVELOPE  
IS ENCLOSED FOR THAT PURPOSE. ANY SHAREHOLDER ATTENDING THE MEETING MAY VOTE IN 
PERSON EVEN IF THAT SHAREHOLDER HAS RETURNED A PROXY.                           

                                          By Order of the Board of Directors

                      Peter E. Flynn
                 Secretary
April   , 1996.                                                                 

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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A 
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
  SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
    MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
  THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
    SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
   UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.                                                    

Subject to completion, dated March 22, 1996 

NORTH STAR UNIVERSAL, INC.

PROXY STATEMENT 
------------------------- 

ENSTAR INC. 

PROSPECTUS
COMMON STOCK

     This Proxy Statement and Prospectus ("Proxy Statement/Prospectus") is being
furnished to the holders of common stock, par value $.25 per share (the "NSU    
Common Stock"), of North Star Universal, Inc., a Minnesota corporation ("NSU"), 
in connection with the solicitation of proxies by the Board of Directors of NSU 
for use at the annual meeting of the shareholders of NSU to be held at the      
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, on Tuesday, June  
4, 1996 at 4:00 p.m. local time and at any and all adjournments or postponements
thereof (the "NSU Annual Meeting"). Certain information in this Proxy Statement 
and Prospectus, together with other additional information, is also being       
furnished to the holders of common stock, par value $.01 per share (the "Michael
Common Stock"), of Michael Foods, Inc., a Delaware corporation ("Michael"), in  
connection with the solicitation of proxies by the Board of Directors of Michael
for use at the 1996 annual meeting of stockholders of Michael to be held at the 
Lutheran Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis, Minnesota
on Tuesday, June 4, 1996 at 4:00 p.m. local time, and at any and all            
adjournments or postponements thereof (the "Michael Annual Meeting").           

     On December 21, 1996, NSU and Michael entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") pursuant to which (i) NSU Merger
Co., a Delaware corporation and a wholly-owned subsidiary of NSU ("Merger Co."),
will be merged with and into Michael and Michael will become a wholly-owned     
subsidiary of NSU (the "Merger"); (ii) in the Merger, each stockholder of       
Michael (other than NSU) will receive, in exchange for each share of Michael    
Common Stock held by such stockholder, one share of NSU Common Stock; (iii) NSU 
will change its name to Michael Foods, Inc. (NSU after the consummation of the  
Merger is referred to hereinafter as "New Michael") and will continue the       
business previously conducted by Michael; (iv) prior to the consummation of the 
Merger, NSU will transfer all of its assets and liabilities other than certain  
indebtedness and other agreed upon assets and liabilities to another            
wholly-owned subsidiary of NSU, ENStar Inc. ("ENStar"); (v) the outstanding     
common stock, $.01 par value per share, of ENStar ("ENStar Common Stock") will  
be distributed pro rata by NSU to the shareholders of NSU of record as of a     
record date prior to the effective date of the Merger (the "Distribution"); and 
(vi) immediately prior to the effective time of the Merger, NSU will effectuate 
a reverse stock split (the "Reverse Stock Split"), the ratio of the Reverse     
Stock Split to be determined pursuant to the terms of the Reorganization        
Agreement as described below under "THE REORGANIZATION -- Effects of the        
Reorganization." The date on which the Merger is consummated is hereinafter     
referred to as the "Effective Date," and the time on the Effective Date at which
the Merger is effective is hereinafter referred to as the "Effective Time." The 
above transactions are collectively referred to herein as the "Reorganization"  
and are discussed in detail herein.                                             

   This Proxy Statement/Prospectus also constitutes the prospectus of ENStar
with respect to the issuance of a certain number of shares of ENStar Common     
Stock to be issued to the shareholders of NSU in connection with the            
Distribution as more fully described herein.                                    

   Consummation of the Merger and the other transactions contemplated in the
Reorganization Agreement is subject to various conditions, including the        
approval and adoption of the Reorganization Agreement and the Merger by the     
holders of a majority of the outstanding shares of Michael Common Stock at the  
Michael Annual Meeting and the approval of the NSU Proposals (as defined below) 
at the NSU Annual Meeting by the affirmative vote at the NSU Annual Meeting of  
the holders of a majority of the outstanding shares of NSU Common Stock. NSU is 
the owner of 7,354,950 shares of the Michael Common Stock outstanding or        
approximately 38% of the outstanding shares as of the date hereof and has       
agreed, subject to certain terms and conditions, to vote in favor of the        
Reorganization Agreement and the Merger. Pursuant to an Orderly Disposition and 
Registration Rights Agreement between NSU and James H. Michael and Jeffrey J.   
Michael, each a member of the Board of Directors of NSU, and two limited        
partnerships controlled by them (the "Michael Family Shareholders"), the Michael
Family Shareholders, which own an aggregate of 5,685,100 shares of the          
outstanding NSU Common Stock (approximately 60.17% of the outstanding shares of 
NSU Common Stock as of the date hereof) have agreed to vote in favor of the NSU 
Proposals. IF THE MICHAEL FAMILY SHAREHOLDERS VOTE IN ACCORDANCE WITH THAT      
AGREEMENT, THE APPROVAL OF THE NSU PROPOSALS IS ASSURED. SEE "THE               
REORGANIZATION."                                                                

   All information contained in this Proxy Statement/Prospectus with respect
to Michael has been provided by Michael. All information contained in this Proxy
Statement/Prospectus with respect to NSU, Merger Co. and ENStar has been        
provided by NSU. This Proxy Statement/Prospectus sent to NSU shareholders is    
accompanied by the NSU Annual Report on Form 10-K for the year ended December   
31, 1995, which is incorporated herein by reference. See "INCORPORATION OF      
DOCUMENTS BY REFERENCE." Michael will provide upon request a copy of its Annual 
Report on Form 10-K filed with the Securities and Exchange Commission for its   
most recent fiscal year. Such request should be made to the Secretary of Michael
at the address shown below.                                                     

 This Proxy Statement/Prospectus and the accompanying forms of proxy are
first being mailed to stockholders of Michael and shareholders of NSU on or     
about April   , 1996. A stockholder/shareholder who has given a proxy may revoke
it at any time prior to its exercise. See "THE ANNUAL MEETINGS."                
------------------------- 

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE          
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED    
UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY           
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                           

THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS APRIL   , 1996.

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY  
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY      
STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION 
NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS    
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE         
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS     
PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION 
TO OR FROM ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR      
SOLICITATION OF AN OFFER, OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER   
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR THE ISSUANCE OR SALE OF ANY 
SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT  
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR INCORPORATED BY 
REFERENCE SINCE THE DATE HEREOF.                                                

AVAILABLE INFORMATION 

Michael and NSU are subject to the information requirements of the    
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in        
accordance therewith file reports, proxy statements and other information with  
the Securities and Exchange Commission (the "Commission"). Such reports, proxy  
statements and other information filed may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549 and may be available at the Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, 
Illinois 60661 and at the New York Regional Office at Seven World Trade Center, 
13th Floor, New York, New York 10048. Copies of such materials can be obtained  
at prescribed rates from the Public Reference Section of the Commission at      
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549.                  

  This Proxy Statement/Prospectus does not contain all the information set
forth in the Registration Statement on Form S-4 and exhibits thereto, including 
any amendments (the "Registration Statement"), of which this Proxy              
Statement/Prospectus is a part, and which ENStar has filed with the Commission  
under the Securities Act of 1933, as amended (the "Securities Act"). Reference  
is made to such Registration Statement for further information with respect to  
ENStar and the securities of ENStar offered hereby. Statements contained herein 
concerning the provisions of documents are necessarily summaries of such        
documents, and each statement is qualified in its entirety by reference to the  
copy of the applicable document filed with the Commission or attached as an     
appendix hereto.                                                                

INCORPORATION OF DOCUMENTS BY REFERENCE 

Michael and NSU hereby incorporate by reference into this Proxy       
Statement/Prospectus the following documents previously filed with the          
Commission pursuant to the Exchange Act:                                        

       1. Michael's Annual Report on Form 10-K for the year ended December
31, 1995; and                                                         

       2. NSU's Annual Report on Form 10-K for the year ended December 31,
1995.                                                                 

   In addition, all reports and other documents filed by Michael pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date    
hereof and prior to the NSU and Michael Annual Meetings shall be deemed to be   
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents. Any statement contained in a document            
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Proxy Statement/Prospectus to the
extent that a statement contained herein, or in any other subsequently filed    
document that also is incorporated or deemed to be incorporated by reference    
herein, modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to         
constitute a part of this Proxy Statement/Prospectus.                           

   THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN     
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE HEREIN) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST    
FROM ANY PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, INCLUDING 
ANY BENEFICIAL OWNER, TO, IN THE CASE OF DOCUMENTS RELATING TO MICHAEL, SUITE   
324 PARK NATIONAL BANK BUILDING, 5353 WAYZATA BOULEVARD, MINNEAPOLIS, MINNESOTA,
55416; ATTENTION: SECRETARY (TELEPHONE NO. (612) 546-1500) OR IN THE CASE OF    
DOCUMENTS RELATING TO NSU, SUITE 610 PARK NATIONAL BANK BUILDING, 5353 WAYZATA  
BOULEVARD, MINNEAPOLIS, MINNESOTA, 55416; ATTENTION: SECRETARY, (TELEPHONE NO.  
(612) 546-7500). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY       
REQUEST SHOULD BE MADE BY MAY   , 1996.                                         

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]
                                                                                                   
AVAILABLE INFORMATION...........................................................................  2
INCORPORATION OF DOCUMENTS BY REFERENCE.........................................................  2
SUMMARY.........................................................................................  7
  The Companies.................................................................................  7
  The Annual Meetings...........................................................................  7
  The Reorganization............................................................................  8
  Effect of the Reorganization on Michael Stockholders..........................................  8
  Effect of the Reorganization on NSU Shareholders..............................................  9
  Exchange of Certificates; Distribution of ENStar Common Stock.................................  9
  Ownership of New Michael After the Reorganization............................................. 10
  Recommendation of Michael Board; Michael's Reasons for the Reorganization..................... 10
  Recommendation of NSU Board; NSU's Reasons for the Reorganization............................. 10
  Opinions of Financial Advisors................................................................ 10
  The Reorganization Agreement.................................................................. 11
  The Distribution Agreement.................................................................... 11
  The Orderly Disposition Agreement............................................................. 12
  Treatment of Michael Stock Options............................................................ 12
  Accounting Treatment.......................................................................... 12
  Certain Federal Income Tax Considerations..................................................... 13
  Regulatory Approvals.......................................................................... 13
  Dissenters' Rights............................................................................ 13
  Comparative Market Prices And Dividends....................................................... 13
  Selected Historical And Unaudited Pro Forma Condensed Combined Financial Information.......... 14
  Comparative Per Share Data.................................................................... 16
RISK FACTORS RELATING TO ENSTAR COMMON STOCK.................................................... 18
  Limited History of Profitability; Uncertainty of Future Results............................... 18
  Product and Service Development Risks......................................................... 18
  Expansion Strategy............................................................................ 19
  Fluctuations in Quarterly Results............................................................. 19
  Dependence on and Need to Recruit and Retain Key Personnel.................................... 20
  Concentration of Revenues..................................................................... 20
  Dependence on Key Suppliers and Product Supply................................................ 20
  Inventory Management.......................................................................... 21
  Competition................................................................................... 21
  Shares Eligible for Future Sale............................................................... 21
  Absence of Prior Public Market and Possible Volatility of Stock Price......................... 21
  Possible Volatility of CorVel Stock Price..................................................... 22
  Certain Risks Pertaining to the CorVel Common Stock........................................... 22
THE ANNUAL MEETINGS............................................................................. 22
  Times and Places; Purposes of Meetings........................................................ 22
  Voting Rights; Votes Required for Approval.................................................... 23
  Proxies....................................................................................... 24
PROPOSAL NUMBER ONE:                                                                               
APPROVAL OF THE REORGANIZATION AGREEMENT AND THE MERGER......................................... 26
PROPOSAL NUMBER TWO:                                                                               
APPROVAL OF THE REVERSE STOCK SPLIT............................................................. 26
PROPOSAL NUMBER THREE:                                                                             
APPROVAL OF THE DISTRIBUTION.................................................................... 26

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                                                        [Enlarge/Download Table]
                                                                                                   
THE REORGANIZATION.............................................................................. 26
  Effects of the Reorganization................................................................. 26
  Effective Time................................................................................ 27
  Background of the Reorganization.............................................................. 28
  Recommendation of Michael Board; Michael's Reasons for the Reorganization..................... 29
  Recommendation of NSU Board; NSU's Reasons for the Reorganization............................. 30
  Fairness Opinions............................................................................. 31
  Procedure for Exchange of Certificates........................................................ 36
  Distribution of ENStar Common Stock........................................................... 37
  Lost, Stolen or Destroyed Certificates........................................................ 38
  Escheat and Withholding....................................................................... 38
  Interest of Certain Persons in the Reorganization............................................. 38
  Accounting Treatment.......................................................................... 39
  Certain Federal Income Tax Consequences....................................................... 40
  Regulatory Approvals.......................................................................... 41
  Listing of New Michael Common Stock; Dividends................................................ 41
  Listing of ENStar Common Stock; Dividends..................................................... 41
  Effect on Stock Option Plans.................................................................. 41
  Federal Securities Laws Consequences.......................................................... 42
  Dissenters' Rights............................................................................ 42
THE REORGANIZATION AGREEMENT.................................................................... 44
  General....................................................................................... 44
  Effects of the Reorganization on the Stockholders of Michael and the Shareholders of NSU...... 45
  New Michael Management Following the Reorganization........................................... 46
  Conditions.................................................................................... 46
  Representations and Warranties................................................................ 47
  Certain Covenants............................................................................. 48
  Termination................................................................................... 48
  Expenses...................................................................................... 49
THE DISTRIBUTION AGREEMENT...................................................................... 49
  General....................................................................................... 50
  Conditions.................................................................................... 50
  The Distribution.............................................................................. 50
  Certain Covenants............................................................................. 50
  Indemnification............................................................................... 51
COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION..................................... 53
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS..................................... 54
  Unaudited Pro Forma Condensed Combined Balance Sheet.......................................... 55
  Unaudited Pro Forma Condensed Combined Statement of Earnings.................................. 56
  Notes to the Unaudited Pro Forma Condensed Combined Financial Statements...................... 57
DESCRIPTION OF NEW MICHAEL CAPITAL STOCK........................................................ 58
  Common Stock.................................................................................. 58
  Undesignated Stock............................................................................ 58
  Transfer Agent and Registrar.................................................................. 58
  Business Combination Statute and Control Share Acquisition Act................................ 58
  Takeover Offers............................................................................... 59
BUSINESS OF ENSTAR.............................................................................. 59
  Unconsolidated Subsidiary..................................................................... 60
  Operating Subsidiaries........................................................................ 60
  General....................................................................................... 60
  Industry...................................................................................... 61

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                                                        [Enlarge/Download Table]
                                                                                                    
  Business Strategy.............................................................................  62
  Products and Services.........................................................................  63
  Marketing and Customers.......................................................................  65
  Research and Development......................................................................  66
  Manufacturing.................................................................................  66
  Competition...................................................................................  66
  Properties....................................................................................  67
  Legal Proceedings.............................................................................  67
  Net Assets Held For Sale......................................................................  67
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF            
  ENSTAR........................................................................................  68
  General.......................................................................................  68
  Results of Operations.........................................................................  68
  Capital Resources and Liquidity...............................................................  70
COMPARISON OF RIGHTS OF NSU SHAREHOLDERS BEFORE AND AFTER THE REORGANIZATION....................  71
EXECUTIVE OFFICERS AND DIRECTORS OF ENSTAR......................................................  72
  Executive Officers and Directors of ENStar....................................................  72
  Compensation of Executive Officers of ENStar..................................................  72
  Compensation of Directors of ENStar...........................................................  73
  Committees of the Board of ENStar.............................................................  73
  1996 Stock Incentive Plan.....................................................................  74
  Eizenga Agreement.............................................................................  77
  Doan Agreement................................................................................  78
PROPOSAL NUMBER FOUR:                                                                               
PROPOSAL TO ADOPT AN AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF NSU.................  78
PROPOSAL NUMBER FIVE:                                                                               
ELECTION OF NSU DIRECTORS.......................................................................  79
  Nominees......................................................................................  80
  Certain Information Regarding the Board of Directors..........................................  81
  Director Compensation.........................................................................  82
  Report of the Executive Committee of the Board of Directors on Executive Compensation.........  82
  Compensation Committee Interlocks and Insider Participation...................................  83
  Summary of Cash and Certain Other Compensation................................................  84
  Stock Options, Awards, Exercises and Holdings.................................................  84
  Option Exercises and Holdings.................................................................  84
  Employment Contracts and Termination of Employment Arrangements...............................  85
  Stock Price Performance Graph and Table.......................................................  86
  Compliance with Section 16(a) of the Exchange Act.............................................  86
PRINCIPAL SHAREHOLDERS..........................................................................  87
AUDITORS........................................................................................  87
LEGAL MATTERS...................................................................................  87
EXPERTS.........................................................................................  88
SHAREHOLDER PROPOSALS FOR 1997 MEETING OF SHAREHOLDERS..........................................  88
OTHER MATTERS...................................................................................  88
INDEX TO FINANCIAL STATEMENTS................................................................... F-1

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                                                        [Enlarge/Download Table]
                                                                                                  
APPENDIX I    Agreement and Plan of Reorganization and Exhibits.............................   I-1
 Exhibit A    Discount Factor                                                                     
 Exhibit B    Form of Certificate of Merger                                                       
 Exhibit C    Form of Distribution Agreement                                                      
 Exhibit D    Form of New Articles                                                                
 Exhibit E    Form of Orderly Disposition and Registration Rights Agreement                       

APPENDIX II   Opinion of Piper Jaffray Inc..................................................  II-1
APPENDIX III  Opinion of Goldsmith, Agio, Helms Securities Inc.............................. III-1
APPENDIX IV   Excerpt from the Minnesota Business Corporation Act regarding Dissenters'           
              Rights........................................................................  IV-1

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SUMMARY 

The following brief summary is intended only to highlight certain     
information contained elsewhere in this Proxy Statement/Prospectus. This summary
is not intended to be complete and is qualified in its entirety by the more     
detailed information contained elsewhere in this Proxy Statement/Prospectus, the
appendices hereto and the documents incorporated by reference or otherwise      
referred to herein. Stockholders of Michael and shareholders of NSU are urged to
review this entire Proxy Statement/Prospectus carefully, including the          
appendices hereto and such other documents.                                     

THE COMPANIES                                                                   

   Michael. Michael, a Delaware corporation, together with its subsidiaries,
is a diversified food processor and distributor. Michael's principal products   
include egg products, refrigerated grocery products, frozen and refrigerated    
potato products and specialty dairy products. Its principal subsidiaries include
M.G. Waldbaum Company, a producer and processor of egg products; Crystal Farms  
Refrigerated Distribution Company, a distributor of refrigerated grocery        
products; Northern Star Co., a processor of frozen and refrigerated potato      
products; and Kohler Mix Specialties, Inc., a processor of specialty dairy      
products. The mailing address of Michael's principal executive office is 324    
Park National Bank Building, 5353 Wayzata Boulevard, Minneapolis, Minnesota,    
55416; its telephone number is (612) 546-1500.                                  

NSU. NSU, a Minnesota corporation, is a holding company. Its principal
subsidiaries are Americable, Inc., ("Americable"), a provider of connectivity   
and networking products and services; and Transition Networks, Inc.,            
("Transition"), a designer and manufacturer of connectivity devices used in     
local area network ("LAN") applications. NSU also owns 7,354,950 shares of      
Michael Common Stock, or an approximate 38% interest in Michael, and 1,225,000  
shares of common stock of CorVel Corporation ("CorVel"), or an approximate 27%  
interest in CorVel, a provider of cost containment and managed care services    
designed to address the medical costs of workers' compensation. The mailing     
address of NSU's principal executive office is 610 Park National Bank Building, 
5353 Wayzata Boulevard, Minneapolis, Minnesota, 55416; its telephone number is  
(612) 546-7500.                                                                 

   Merger Co. Merger Co. is a wholly-owned subsidiary of NSU incorporated in
1995 for the sole purpose of consummating the Merger. Merger Co. has not        
conducted and will not conduct any substantial business activity. As a result of
the Merger, Merger Co. will cease to exist.                                     

  ENStar. ENStar is a wholly-owned subsidiary of NSU incorporated in 1995.
Pursuant to the Distribution Agreement, as hereafter defined, all of the assets 
and liabilities other than the Michael Common Stock owned by NSU, all of the    
outstanding common stock of Merger Co., cash in an amount determined by NSU, and
a certain amount of NSU indebtedness, will be transferred to ENStar prior to the
Effective Date of the Merger. Immediately after the Effective Time of the       
Merger, all of the outstanding ENStar Common Stock will be distributed by NSU   
ratably to the shareholders of record of NSU as of a record date prior to the   
Effective Date in a tax-free distribution. The mailing address of ENStar's      
principal executive office is 6475 City West Parkway, Eden Prairie, Minnesota   
55344; its telephone number is (612) 941-7600.                                  

THE ANNUAL MEETINGS                                                             

     Michael Meeting and Purpose. The Michael Annual Meeting will be held in the
Auditorium of the Lutheran Brotherhood Building, 625 Fourth Avenue South,       
Minneapolis, Minnesota, on Tuesday, June 4, 1996 at 4:00 p.m., local time. See  
"THE ANNUAL MEETINGS." At the Michael Annual Meeting, holders of Michael Common 
Stock will be asked to approve and adopt the Reorganization Agreement and the   
Merger. The Reorganization Agreement is attached hereto as Appendix I. In       
addition, the stockholders will elect directors and ratify the appointment of   
Michael's independent auditors. It is not expected that other matters will be   
presented at the meeting.                                                       

     Holders of record of Michael Common Stock at the close of business on April
15, 1996 (the "Michael Record Date"), have the right to receive notice of and to
vote at the Michael Annual Meeting. On April 15, 1996, there were 19,379,274    
shares of Michael Common Stock outstanding and entitled to vote. Each share of  

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Michael Common Stock is entitled to one vote on each matter that is properly    
presented to stockholders for a vote at the Michael Annual Meeting. The         
affirmative vote of the holders of a majority of the outstanding shares of      
Michael Common Stock is required to approve and adopt the Reorganization        
Agreement and Merger. The nine board nominees who receive the highest number of 
votes will be elected directors of Michael, and a plurality of votes cast on all
other matters will be required to approve such matters. As of April 15, 1996,   
directors, nominees and executive officers of Michael as a group (18 persons)   
beneficially owned 8,178,958 shares of Michael Common Stock or approximately    
42.2% of the shares outstanding as of such date. Included in this number are    
7,354,950 shares of Michael Common Stock, or approximately 38% of the shares    
outstanding as of such date, beneficially owned by NSU. See "SECURITY OWNERSHIP 
OF MICHAEL AND NEW MICHAEL."                                                    

NSU Meeting and Purpose. The NSU Annual Meeting will be held at the   
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, on Tuesday, June  
4, 1996 at 4:00 p.m., local time. See "THE ANNUAL MEETINGS." At the NSU Annual  
Meeting, holders of NSU Common Stock will be asked to approve the NSU Proposals 
and to elect six persons as directors. It is not expected that other matters    
will be presented at the meeting.                                               

     Holders of record of NSU Common Stock at the close of business on April 15,
1996 (the "NSU Record Date") have the right to receive notice of and to vote at 
the NSU Annual Meeting. On April 15, 1996, there were         shares of NSU     
Common Stock outstanding and entitled to vote. Each share of NSU Common Stock is
entitled to one vote on each matter that is properly presented to shareholders  
for a vote at the NSU Annual Meeting. The affirmative vote of holders of a      
majority of the outstanding shares of NSU Common Stock is required to approve   
and adopt each of the NSU Proposals. The affirmative vote of a majority of the  
shares of NSU Common Stock present (or represented by proxy) and entitled to    
vote at the NSU Annual Meeting is required to elect each of the nominees as     
directors of NSU for the ensuing year or until the consummation of the          
Reorganization. See "THE DISTRIBUTION AGREEMENT". James H. Michael and Jeffrey  
J. Michael and two partnerships controlled by them (the "Michael Family         
Shareholders") beneficially own approximately 60% of the outstanding shares of  
NSU Common Stock and have agreed in the "Orderly Disposition Agreement" as      
hereinafter defined, to vote such shares to approve the Reorganization          
Agreement, the Merger, the Reverse Stock Split and the Distribution. If the     
Michael Family Shareholders vote in accordance with the Orderly Disposition     
Agreement, the approval of such matters is assured. See "THE REORGANIZATION --  
Interest of Certain Persons in the Reorganization."                             

  As of April 15, 1996, directors and executive officers of NSU as a group
beneficially owned        shares of NSU Common Stock, or approximately    % of  
the shares outstanding as of the NSU Record Date.                               

THE REORGANIZATION                                                              

On December 21, 1995, NSU and Michael entered into the Reorganization 
Agreement pursuant to which: (i) Merger Co. will be merged with and into Michael
and Michael will become a wholly-owned subsidiary of NSU; (ii) in the Merger,   
each stockholder of Michael (other than NSU) will receive, in exchange for each 
share of Michael Common Stock held by such stockholder, one share of NSU Common 
Stock; (iii) NSU will change its name to Michael Foods, Inc. and will continue  
the business previously conducted by Michael; (iv) prior to the consummation of 
the Merger, NSU will transfer all of its assets and liabilities other than      
certain indebtedness and other agreed upon assets and liabilities to ENStar; (v)
the outstanding common stock of ENStar will, conditioned on the consummation of 
the Merger, be distributed pro rata to the shareholders of NSU of record as of a
record date prior to the Effective Date of the Merger; and (vi) immediately     
prior to the Effective Time of the Merger, NSU will effectuate the Reverse Stock
Split, the ratio of the Reverse Stock Split to be determined pursuant to the    
terms of the Reorganization Agreement, as described below under "THE            
REORGANIZATION -- Effects of the Reorganization."                               

EFFECT OF THE REORGANIZATION ON MICHAEL STOCKHOLDERS                            

Upon the consummation of the Merger, each outstanding share of Michael
Common Stock, other than the Michael Common Stock owned by NSU, will be         
converted into the right to receive one share of NSU                            

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Common Stock, which, after the Reorganization, is also referred to herein as New
Michael Common Stock. See "THE REORGANIZATION -- Effects of the Reorganization" 
and "THE REORGANIZATION AGREEMENT -- Effects of the Reorganization on the       
Stockholders of Michael and the Shareholders of NSU." For a description of the  
New Michael Common Stock, see "DESCRIPTION OF NEW MICHAEL CAPITAL STOCK." For a 
summary of the principal differences between the rights of holders of NSU Common
Stock before and after the Reorganization, see "COMPARISON OF RIGHTS OF NSU     
SHAREHOLDERS BEFORE AND AFTER THE REORGANIZATION."                              

EFFECT OF THE REORGANIZATION ON NSU SHAREHOLDERS.                               

Reverse Stock Split. Immediately prior to the Effective Time, NSU will
effect the Reverse Stock Split whereby each outstanding share of NSU Common     
Stock will be combined into a fraction of one share of NSU Common Stock         
determined by multiplying each such share by a fraction where the denominator is
the number of outstanding shares of NSU Common Stock immediately prior to the   
Effective Date, and the numerator is the number of shares of Michael Common     
Stock owned by NSU at such date less the number of shares of Michael Common     
Stock owned by NSU which are retired in consideration for the assumption of the 
"Net Indebtedness," as hereinafter defined, of NSU by New Michael. The amount of
the Net Indebtedness of NSU to be retained by New Michael is equal to the sum of
the subordinated debentures, subordinated fixed-term time certificates,         
subordinated extendible time certificates and bank debt of NSU outstanding      
immediately prior to the Effective Time plus the "Dissenting Shares Holdback,"  
as hereinafter defined, less any cash retained by NSU at the Effective Time of  
the Merger. Pursuant to the terms of the Reorganization Agreement, the amount of
the Net Indebtedness may not be less than $25 million or more than $38 million. 
The Dissenting Shares Holdback is the amount mutually agreed by Michael and NSU 
as a reserve to pay for the shares of NSU Common Stock as to which dissenters'  
rights properly have been exercised. See "THE REORGANIZATION -- Effects of the  
Reorganization" and "THE REORGANIZATION AGREEMENT -- Effects of the             
Reorganization on the Stockholders of Michael and the Shareholders of NSU."     

 Distribution. Prior to the Effective Date, NSU will transfer all of its
assets and liabilities other than the Michael Common Stock owned by NSU, all of 
the outstanding common stock of Merger Co., cash in an amount to be determined  
by NSU and a certain amount of NSU indebtedness to ENStar and declare a         
contingent dividend of all of its ENStar Common Stock, payment of which will be 
subject to the prior consummation of the Merger. Immediately after the Effective
Time, the ENStar Common Stock will be distributed by NSU as a tax-free dividend 
to NSU shareholders of record as of a record date prior to the Effective Date.  
See "THE DISTRIBUTION AGREEMENT." Holders of Michael Common Stock will not      
receive any ENStar Common Stock as a result of the Reorganization.              

EXCHANGE OF CERTIFICATES; DISTRIBUTION OF ENSTAR COMMON STOCK                   

     As soon as practicable after the Effective Date, The First National Bank of
Boston, or another person mutually designated by Michael and NSU, in its        
capacity as exchange agent for the Merger and the Reverse Stock Split (the      
"Exchange Agent"), will send a transmittal letter to each holder of Michael     
Common Stock and each holder of NSU Common Stock as of the Effective Date. The  
transmittal letter will contain instructions with respect to the surrender of   
certificates representing the Michael Common Stock and NSU Common Stock to be   
exchanged for certificates evidencing the New Michael Common Stock in the       
Merger. On or prior to the Effective Date, NSU will deliver to its Exchange     
Agent certificates representing all of the outstanding shares of ENStar Common  
Stock. Immediately after the Effective Time, NSU will deliver to such Exchange  
Agent instructions to distribute, as promptly as practicable following the      
Effective Date, to each holder of record of NSU Common Stock on the record date 
for the Distribution, stock certificates evidencing one share of ENStar Common  
Stock for every three shares of NSU Common Stock held of record by such holder  
on such record date and cash in lieu of any fractional shares of ENStar Common  
Stock. See "THE REORGANIZATION -- Procedure for Exchange of Certificates."      

MICHAEL STOCKHOLDERS AND NSU SHAREHOLDERS SHOULD NOT FORWARD CERTIFICATES TO THE
EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. MICHAEL            
STOCKHOLDERS AND NSU SHAREHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE 
ENCLOSED PROXY.                                                                 

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OWNERSHIP OF NEW MICHAEL AFTER THE REORGANIZATION                               

    Following the Reorganization, NSU's only assets will consist of all of the
outstanding capital stock of Michael, certain contractual rights and retained   
cash. In order to avoid confusion, on the Effective Date, NSU will change its   
name to Michael Foods, Inc. and transactions in New Michael Common Stock will   
continue to be reported on the Nasdaq National Market under the symbol MIKL.    
Michael will change its name to Michael Foods of Delaware, Inc. At the date of  
this Proxy Statement/Prospectus, NSU owns, directly and beneficially, 7,354,950 
shares of the outstanding common stock of Michael, or approximately 38% of such 
securities. Holders of Michael Common Stock immediately prior to the Merger,    
excluding NSU, will own directly and beneficially approximately 77.4% to 67.6%  
of New Michael Common Stock outstanding immediately after the Merger depending  
upon the amount of the Net Indebtedness retained by New Michael.                
Correspondingly, NSU shareholders immediately prior to the Merger will own,     
directly and beneficially, approximately 22.6% to 32.4% of the outstanding New  
Michael Common Stock immediately after the Merger.                              

RECOMMENDATION OF MICHAEL BOARD; MICHAEL'S REASONS FOR THE REORGANIZATION       

The Board of Directors of Michael (the "Michael Board") (with James H.
Michael, Jeffrey J. Michael and Miles E. Efron, each of whom is also a director 
of NSU, having recused themselves from any discussions of and vote on the       
proposed transaction), has determined that the Reorganization is in the best    
interest of Michael and recommends that the holders of Michael Common Stock vote
in favor of the Reorganization Agreement and the Merger. The decision of the    
Michael Board to enter into the Reorganization and to recommend that its        
stockholders vote in favor of the Reorganization Agreement and the Merger is    
based upon its evaluation of a number of factors, including, among others, the  
opinion of Piper Jaffray Inc. ("Piper Jaffray") that the consideration given up 
by Michael in the form of the Net Indebtedness retained by New Michael after the
Merger, in exchange for the shares of Michael Common Stock held by NSU that will
be retired in the Merger, and the exchange of Michael Common Stock for NSU      
Common Stock, is fair to Michael from a financial point of view. See "THE       
REORGANIZATION -- Recommendation of Michael Board; Michael's Reasons for the    
Reorganization;" and "THE REORGANIZATION -- Fairness Opinions."                 

RECOMMENDATION OF NSU BOARD; NSU'S REASONS FOR THE REORGANIZATION               

The Board of Directors of NSU (the "NSU Board"), by unanimous vote,   
determined that the consummation of the Reorganization, including the Merger,   
the Reverse Stock Split and the Distribution, is in the best interest of the    
holders of NSU Common Stock and recommends that the holders of NSU Common Stock 
vote in favor of the NSU Proposals. The decision of the NSU Board to enter into 
the Reorganization Agreement and to make the foregoing recommendations is based 
upon its evaluation of a number of factors including, among others, the opinion 
of Goldsmith, Agio, Helms Securities Inc. ("GAHS"), that the Reorganization is  
fair to the Shareholders of NSU from a financial point of view. See "THE        
REORGANIZATION -- Recommendation of NSU Board; NSU's Reasons for the            
Reorganization;" and "THE REORGANIZATION -- Fairness Opinions."                 

OPINIONS OF FINANCIAL ADVISORS                                                  

    Michael. On December 21, 1995, Piper Jaffray rendered to the Michael Board
its oral and written opinion to the effect that, based upon and subject to the  
matters set forth in its written opinion, as of such date, that the             
consideration given up by Michael in exchange for the shares of Michael Common  
Stock held by NSU that will be retired in the Merger, and the exchange of       
Michael Common Stock for NSU Common Stock is fair to Michael from a financial   
point of view. The full text of the written opinion of Piper Jaffray dated as of
the date of this Proxy Statement/Prospectus, which sets forth the assumptions   
made, factors considered and scope of the review undertaken by Piper Jaffray, is
included as Appendix II to this Proxy Statement/Prospectus. Michael stockholders
are urged to read such opinion carefully in its entirety. See "THE              
REORGANIZATION -- Fairness Opinions."                                           

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NSU. On December 21, 1995, GAHS rendered to the NSU Board its oral and
written opinion to the effect that the Reorganization is fair to NSU's          
shareholders from a financial point of view. The full text of the written       
opinion of GAHS, dated as of the date of this Proxy Statement/Prospectus, which 
sets forth the assumptions made, factors considered and limitations on the      
review undertaken by GAHS is included as Appendix III to this Proxy             
Statement/Prospectus. NSU shareholders are urged to read such opinion carefully 
in its entirety. See "THE REORGANIZATION -- Fairness Opinions."                 

THE REORGANIZATION AGREEMENT                                                    

 Representations, Warranties and Covenants. The Reorganization Agreement
contains various representations and warranties of NSU and Michael relating to  
the organization and operations of such entities. See "THE REORGANIZATION       
AGREEMENT -- Representations and Warranties." In the Reorganization Agreement,  
NSU and Michael have made certain covenants with respect to the conduct of their
respective businesses and certain actions to be taken between the date of the   
Reorganization Agreement and the Effective Date. See "THE REORGANIZATION        
AGREEMENT -- Certain Covenants."                                                

 Conditions to the Reorganization. The obligations of Michael and NSU to
consummate the transactions contemplated under the Reorganization Agreement are 
subject to various conditions including, but not limited to: (i) the accuracy of
representations and warranties of the other party; (ii) the receipt of a        
favorable ruling from the Internal Revenue Service (the "IRS") that the Merger, 
the Reverse Stock Split and the Distribution will not result in taxable gain or 
loss; (iii) the effectiveness of the registration statement filed with the      
Commission under the Securities Act with regard to the shares of NSU Common     
Stock to be exchanged for Michael Common Stock (the "NSU Registration           
Statement") and of a registration statement filed with the Commission under the 
Securities Act with regard to the shares of ENStar Common Stock to be           
distributed in the Distribution (the "ENStar Registration Statement"); (iv)     
obtaining requisite stockholder and shareholder approvals; (v) the absence of   
any injunction or other order that would prohibit or make illegal the           
consummation of the Reorganization Agreement; (vi) the approval of Nasdaq for   
the trading of New Michael Common Stock and the ENStar Common Stock on the      
Nasdaq National Market; (vii) holders of fewer than 1% of the issued and        
outstanding NSU Common Stock effectively electing statutory dissenters' rights; 
and (viii) obtaining requisite governmental and third party consents. See "THE  
REORGANIZATION AGREEMENT -- Conditions."                                        

 Termination. The Reorganization Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters    
presented to the stockholders of Michael or the shareholders of NSU at their    
respective Annual Meetings: (i) by mutual written consent of the Boards of      
Directors of Michael and NSU; (ii) by either party, if any of the conditions to 
such party's obligation to complete the transactions become impossible to       
satisfy; (iii) by either party if the requisite stockholder vote or shareholder 
vote has not been obtained; (iv) by either party if the transactions have not   
been completed on or before September 30, 1996; (v) by NSU if the "Average Price
of Michael Common Stock," as hereinafter defined, is less than $11.00 per share;
(vi) by Michael if the Average Price of Michael Common Stock is more than $17.00
per share; and (vii) by either party if any representation or warranty of the   
other party becomes untrue, subject to certain exceptions. Under certain        
circumstances, Michael or NSU may recover from the other party out-of-pocket    
costs, including fees and expenses of attorneys, accountants and investment     
bankers, up to an aggregate of $500,000 if the Reorganization Agreement is      
terminated by the other party. Entitlement to such reimbursement is the sole and
exclusive remedy of a party for any termination of the Reorganization Agreement.
See "THE REORGANIZATION AGREEMENT -- Termination," and "THE REORGANIZATION      
AGREEMENT -- Expenses."                                                         

THE DISTRIBUTION AGREEMENT                                                      

   The Distribution Agreement is attached to the Reorganization Agreement as
Exhibit C and included as a part of Appendix I of this Proxy                    
Statement/Prospectus. The Reorganization Agreement provides that NSU will, and  
will cause ENStar to, execute and deliver the Distribution Agreement prior to   
the Effective Date. The Distribution Agreement requires NSU to contribute and   
transfer to ENStar or an ENStar subsidiary all of NSU's right, title and        
interest in and to all of NSU's assets except for certain assets to be retained 
by New                                                                          

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Michael. In addition, ENStar will assume and has agreed to pay, perform and     
discharge all liabilities of NSU arising at any time prior to the Effective     
Time, other than certain liabilities retained by New Michael. The Distribution  
is expressly conditioned on the prior consummation of the Merger and the        
satisfaction of certain other conditions set forth in the Distribution          
Agreement. In the Distribution, each NSU shareholder of record on the record    
date for the Distribution will receive one share of ENStar Common Stock for     
every three shares of NSU Common Stock held by such holder on such date, which  
date will be prior to the Effective Date and prior to the Reverse Stock Split.  
The Distribution Agreement also requires ENStar and New Michael to indemnify    
each other for certain losses and liabilities arising before or after the       
Effective Time. See "THE DISTRIBUTION AGREEMENT."                               

THE ORDERLY DISPOSITION AGREEMENT                                               

Concurrently with the execution of the Reorganization Agreement, the  
Michael Family Shareholders, which own an aggregate of 5,685,100 shares of the  
outstanding NSU Common Stock (approximately 60% of the outstanding shares of NSU
Common Stock as of the date hereof), and NSU entered into that certain Orderly  
Disposition and Registration Rights Agreement, dated December 21, 1995 (the     
"Orderly Disposition Agreement"). The Orderly Disposition Agreement is attached 
as Exhibit E to the Reorganization Agreement and included as part of Appendix I 
of this Proxy Statement/Prospectus. Under the Orderly Disposition Agreement, the
Michael Family Shareholders have agreed, among other things, to vote the shares 
of NSU Common Stock owned by them in favor of the NSU Proposals. The Michael    
Family Shareholders have also agreed to refrain for a period of two years after 
the Merger from selling, pledging or otherwise disposing of any of the shares of
New Michael Common Stock owned by them if the purchaser of such shares owns or  
would own more than five percent of the outstanding New Michael Common Stock,   
unless New Michael is first given an opportunity to purchase such shares. The   
disposition restrictions do not apply if a tender offer is made for all of the  
outstanding New Michael Common Stock. In addition, the Michael Family           
Shareholders are entitled during such two year period to certain registration   
rights under the Securities Act with respect to the New Michael Common Stock    
owned by them. Finally, during such two year period, the Michael Family         
Shareholders will be entitled to designate two nominees for the Board of New    
Michael (the "New Michael Board") if they collectively own ten percent or more  
of the outstanding New Michael Common Stock and one nominee for director if     
their ownership is below ten percent. The Michael Family Shareholders' initial  
designees to the New Michael Board are Jeffrey J. Michael and Miles E. Efron.   
See "THE REORGANIZATION -- Interest of Certain Persons in the Reorganization."  

TREATMENT OF MICHAEL STOCK OPTIONS                                              

   The Reorganization Agreement obligates New Michael to assume all existing
stock option plans of Michael and the stock award portion of Michael's Executive
Incentive Plan. Outstanding Michael stock options will be converted into options
to purchase New Michael Common Stock and, to the extent exercisable, may be     
exercised at the stated exercise price and for an equal number of shares of New 
Michael Common Stock. At April 15, 1996, Michael had granted options under these
Plans to purchase 2,054,331 shares, of which options for 1,643,904 shares were  
currently exercisable. See "THE REORGANIZATION -- Effect on Stock Option Plans."
All outstanding stock options for NSU Common Stock will be exercised or canceled
prior to the Effective Time.                                                    

ACCOUNTING TREATMENT                                                            

  The Merger will be accounted for as a business combination utilizing the
reverse acquisition method with Michael being the accounting acquiror under     
generally accepted accounting principles. As such, the Merger will be treated as
an acquisition using the purchase method of accounting with no change in the    
recorded amount of Michael's assets and liabilities. The assets and liabilities 
of NSU that are acquired as a result of the Merger will be recorded at their    
fair market values. The ENStar assets and liabilities, following the            
Distribution, will be recorded at their historic amounts as recorded in the     
books and records of NSU. See "THE REORGANIZATION -- Accounting Treatment."     

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS                                       

 The obligations of Michael and NSU to consummate the Reorganization are
subject to the receipt of the following favorable rulings from the IRS:         

  (i) The Merger will be treated as a tax-free reorganization within the
   meaning of Section 368 of the Internal Revenue Code of 1986, as
        amended (the "Code"), and that no gain or loss will be recognized by
    any Michael stockholder upon receipt of New Michael Common Stock
pursuant to the Merger.                                     

     (ii) The Reverse Stock Split will not be treated as a stock distribution,
           or a transaction that has the effect of such a distribution, to which
       Sections 301, 305(b) or 305(c) of the Code apply. Accordingly, no
         taxable income will be recognized under such Sections by any of the
     shareholders of NSU, except for cash paid in lieu of fractional
shares.                                                   

(iii) The Distribution will qualify as a tax-free distribution under  
         Sections 355 and 368(a)(1)(D) of the Code, and that no gain or loss
          will be recognized by any NSU shareholder upon the receipt of ENStar
           Common Stock pursuant to the Distribution (except upon the receipt of
       cash by an NSU shareholder in lieu of fractional shares of ENStar
Common Stock).                                            

See "THE REORGANIZATION -- Certain Federal Income Tax Consequences."  

REGULATORY APPROVALS                                                            

The Merger is subject to the requirements of the Hart-Scott-Rodino    
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the rules   
and regulations thereunder, which provide that certain transactions may not be  
consummated until required information and materials are furnished to the       
Antitrust Division of the Department of Justice and the Federal Trade Commission
("FTC") and the requisite waiting period has expired or is terminated. NSU and  
Michael intend to file the required information and materials with the antitrust
division and the FTC effective prior to the end of April 1996, and the requisite
waiting period will expire prior to the end of May 1996, unless earlier         
terminated. See "THE REORGANIZATION -- Regulatory Approvals."                   

DISSENTERS' RIGHTS                                                              

Holders of Michael Common Stock are not entitled to dissenters' or    
appraisal rights in connection with the Reorganization. Holders of NSU Common   
Stock who do not vote in favor of the Distribution and who file a written       
objection thereto with NSU prior to the NSU Annual Meeting or at such meeting,  
but before the vote is taken, and who have otherwise complied with Section      
302A.473 of the Minnesota Business Corporations Act (the "MBCA") will be        
entitled to certain dissenters' rights. See "THE REORGANIZATION -- Dissenters'  
Rights." If holders of more than 1% of the outstanding shares of NSU Common     
Stock exercise dissenters' rights, NSU has the right under the Reorganization   
Agreement not to consummate the Reorganization.                                 

COMPARATIVE MARKET PRICES AND DIVIDENDS                                         

Michael Common Stock is traded on the Nasdaq National Market under the
symbol MIKL. NSU Common Stock is traded on the Nasdaq National Market under the 
symbol NSRU and the Pacific Stock Exchange under the symbol NSU. On December 20,
1995, the last full trading day preceding public announcement of the proposed   
transactions, the closing price per share of Michael Common Stock reported by   
the Nasdaq National Market was $10.88 and the closing price per share of NSU    
Common Stock reported by the Nasdaq National Market was $6.00. On April   ,     
1996, the most recent practical date prior to the printing of this Proxy        
Statement/Prospectus, the closing price per share of Michael Common Stock       
reported by the Nasdaq National Market was $     and the closing price per share
of NSU Common Stock reported by Nasdaq National Market was $     .              

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The payment of future dividends on New Michael Common Stock will be a 
business decision to be made by the New Michael Board from time to time based   
upon the results of operations and the financial condition of New Michael and   
such other factors as the New Michael Board considers relevant. See "COMPARATIVE
PER SHARE MARKET PRICE AND DIVIDEND INFORMATION."                               

    No market currently exists for the ENStar Common Stock. ENStar has applied
to have the ENStar Common Stock approved for quotation on the Nasdaq National   
Market under the symbol "ENSR." No assurance can be given that an active market 
will develop or continue for the ENStar Common Stock. Management of ENStar      
currently intends to retain any earnings for use in its operations and does not 
anticipate paying any cash dividends in the foreseeable future.                 

   New Michael expects to continue the Nasdaq National Market listing of NSU
Common Stock, but will use the symbol MIKL, rather than NSRU, and will          
discontinue the listing of the New Michael Common Stock on the Pacific Stock    
Exchange.                                                                       

SELECTED HISTORICAL AND UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL        
INFORMATION                                                                     

Selected Michael Historical Consolidated Financial Information. The   
following table sets forth certain selected historical consolidated financial   
information of Michael that has been derived from and should be read in         
conjunction with Michael's consolidated financial statements, including the     
notes thereto, which are incorporated by reference in this Proxy                
Statement/Prospectus:                                                           

                                                        [Enlarge/Download Table]

                                                           YEAR ENDED DECEMBER 31,                 
                                           --------------------------------------------------------
                                             1995        1994        1993        1992        1991  
                                           --------    --------    --------    --------    --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)        
                                                                                                   
STATEMENT OF EARNINGS DATA                                                                         
Net sales................................. $536,627    $505,965    $474,783    $442,734    $454,735
Cost of sales.............................  454,652     430,917     414,965     390,185     380,270
                                           --------    --------    --------    --------    --------
Gross profit..............................   81,975      75,048      59,818      52,549      74,465
Selling, general and administrative                                                                
  expenses................................   45,729      41,851      39,122      36,936      34,217
Disposal of product line..................       --          --      22,769          --          --
Restructuring charges.....................       --          --      11,164          --          --
                                           --------    --------    --------    --------    --------
                                             45,729      41,851      73,055      36,936      34,217
                                           --------    --------    --------    --------    --------
Operating profit (loss)...................   36,246      33,197     (13,237)     15,613      40,248
Interest expense, net.....................    7,635       8,498       8,363       9,588       9,511
                                           --------    --------    --------    --------    --------
Earnings (loss) before income taxes.......   28,611      24,699     (21,600)      6,025      30,737
Income tax expense (benefit)..............   11,020       9,510      (5,280)      2,175      11,070
                                           --------    --------    --------    --------    --------
Net earnings (loss)....................... $ 17,591    $ 15,189    $(16,320)   $  3,850    $ 19,667
                                           ========    ========    ========    ========    ========
Net earnings (loss) per share............. $   0.91    $   0.79    $  (0.84)   $   0.20    $   1.07
                                           ========    ========    ========    ========    ========
Weighted average shares outstanding.......   19,328      19,315      19,416      19,516      18,400
Dividends per common share................ $   0.20    $   0.20    $   0.20    $   0.20    $   0.20
BALANCE SHEET DATA (END OF PERIOD)                                                                 
Working capital........................... $ 42,095    $ 33,589    $ 22,267    $ 54,826    $ 58,988
Total assets..............................  359,227     336,645     329,087     370,218     357,171
Long-term debt, including current                                                                  
  maturities..............................  101,421     100,604     104,008     135,798     120,645
Stockholders' equity......................  180,095     166,029     155,003     177,037     176,321

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   Selected NSU Historical Consolidated Financial Information. The following
table sets forth certain selected historical consolidated financial information 
of NSU that has been derived from and should be read in conjunction with NSU's  
consolidated financial statements, including the notes thereto, which are       
incorporated by reference in this Proxy Statement/Prospectus:                   

                                                        [Enlarge/Download Table]

                                                           YEAR ENDED DECEMBER 31,                  
                                           -------------------------------------------------------- 
                                             1995        1994        1993        1992        1991   
                                           --------    --------    --------    --------    -------- 
                                                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)         
                                                                                                    
STATEMENT OF OPERATIONS DATA                                                                        
Revenues.................................. $ 54,891    $ 47,193    $ 46,756    $ 42,025    $ 37,007 
Operating income (loss)...................      484        (784)     (2,143)     (1,610)     (1,475)
Interest expense, net.....................   (4,120)     (4,194)     (4,223)     (4,175)     (4,351)
Income (loss) from continuing operations                                                            
  before income taxes, and equity in                                                                
  earnings (loss) of unconsolidated                                                                 
  subsidiaries............................   (3,636)     (4,978)     (6,366)     (5,785)      2,738 
Income (loss) from continuing                                                                       
  operations..............................    3,090       1,410     (13,563)     (2,070)     11,261 
Income (loss) from discontinued                                                                     
  operations..............................   (3,025)     (2,084)      1,691         433        (960)
                                           --------    --------    --------    --------    -------- 
Net income (loss)......................... $     65    $   (674)   $(11,872)   $ (1,637)   $ 10,301 
                                           ========    ========    ========    ========    ======== 
Income (loss) per common and common                                                                 
  equivalent share:                                                                                 
Income (loss) from continuing                                                                       
  operations.............................. $   0.32    $   0.15    $  (1.44)   $  (0.22)   $   1.11 
Discontinued operations...................    (0.31)      (0.22)       0.18        0.05       (0.10)
                                           --------    --------    --------    --------    -------- 
Net income (loss)......................... $   0.01    $  (0.07)   $  (1.26)   $  (0.17)   $   1.01 
                                           ========    ========    ========    ========    ======== 
BALANCE SHEET DATA (END OF PERIOD)                                                                  
Total assets.............................. $110,234    $111,093    $108,607    $115,873    $116,355 
Long-term debt, including current                                                                   
  maturities..............................   42,480      45,061      43,194      41,849      41,451 
Shareholders' equity......................   34,481      34,196      34,675      61,083      63,246 

  Selected Enstar Historical Combined Financial Information. The following
table sets forth certain selected historical combined financial information of  
ENStar, currently an operating unit of NSU, that has been derived from and      
should be read in conjunction with ENStar's combined financial statements,      
including the notes thereto, which are incorporated by reference in this Proxy  
Statement/Prospectus:                                                           

                                                        [Enlarge/Download Table]

                                                           YEAR ENDED DECEMBER 31,                 
                                           ------------------------------------------------------- 
                                            1995        1994        1993        1992        1991   
                                           -------     -------     -------     -------     ------- 
                                                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)         
                                                                                                   
STATEMENT OF OPERATIONS DATA                                                                       
Revenues.................................. $54,891     $47,193     $46,756     $42,025     $37,007 
Operating income (loss)...................   1,033        (702)     (1,978)     (1,151)       (666)
Interest expense, net.....................    (247)       (348)       (361)       (373)       (415)
Income (loss) before income taxes and                                                              
  equity in earnings of unconsolidated                                                             
  subsidiary..............................     786      (1,050)     (2,339)     (1,524)     (1,081)
                                           --------    --------    --------    --------    --------
Net income (loss)......................... $ 1,572     $   286     $(1,524)    $  (550)    $  (302)
                                           ========    ========    ========    ========    ========
Pro forma net income (loss) per                                                                    
  share(1)................................ $  0.49     $  0.09     $ (0.48)    $ (0.17)    $ (0.10)
                                           ========    ========    ========    ========    ========
BALANCE SHEET DATA (END OF PERIOD)                                                                 
Total assets.............................. $35,251     $32,243     $30,222     $30,318     $29,497 
Long-term debt, including current                                                                  
  maturities..............................   1,246       3,607       3,443       3,898       3,323 
Operating unit equity.....................  19,694      18,176      17,035      17,262      16,737 

-------------------------                                                       
(1) Pro forma income (loss) per share was computed using the weighted average   
number of outstanding shares of NSU Common Stock during each period     
    presented and assuming that, in the Distribution, one share of ENStar Common
Stock was distributed for every three shares of the weighted average    
outstanding NSU Common Stock, without taking into account any fractional
shares.                                                                 

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  Selected Unaudited Pro Forma Condensed Combined Financial Information of
New Michael. The following table sets forth certain selected unaudited pro forma
condensed combined financial information of New Michael and has been derived    
from, or prepared on a basis consistent with, the unaudited pro forma condensed 
combined financial statements included elsewhere in this Proxy                  
Statement/Prospectus. The unaudited pro forma condensed combined balance sheet  
information and the unaudited pro forma condensed combined statement of earnings
information set forth below has been prepared as if the Reorganization was      
consummated on December 31, 1995 and January 1, 1995, respectively. See         
"UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS." This data is     
presented for illustrative purposes only and is not indicative of the combined  
results of operations or financial position that would have occurred if the     
Reorganization had been consummated at the beginning of the period presented or 
on the date indicated, nor is it necessarily indicative of future operating     
results or financial position of New Michael.                                   

                                                        [Enlarge/Download Table]

                                                      YEAR ENDED DECEMBER 31, 1995     
                                                  -------------------------------------
                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                       
PRO FORMA STATEMENT OF EARNINGS DATA                                                   
Revenues.........................................               $ 536,627              
Operating profit.................................                  36,146              
Net earnings.....................................               $  16,277              
                                                                 ========              
Net earnings per share...........................               $    0.97              
                                                                 ========              
PRO FORMA BALANCE SHEET DATA (END OF PERIOD)                                           
Working capital..................................               $  42,095              
Total assets.....................................                 358,427              
Long-term debt, including current maturities.....                 128,882              
Stockholders' equity.............................                 151,834              

COMPARATIVE PER SHARE DATA                                                      

     The unaudited pro forma per share data set forth in the following tables is
derived from, and should be read in conjunction with, the historical            
consolidated or combined financial statements of Michael, NSU and ENStar        
(currently an operating unit of NSU), the respective notes thereto, which are   
incorporated by reference into this Proxy Statement/Prospectus and the pro forma
condensed combined financial information, including the notes thereto, appearing
elsewhere in this Proxy Statement/Prospectus. See "UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS." The per share data set forth below is presented 
for informational purposes only, and is not necessarily indicative of the       
results of the future operations of New Michael or ENStar.                      

  Michael Per Share Data. The following table presents selected historical
and pro forma per share data for Michael Common Stock before and after          
consummation of the Reorganization.                                             

                                                        [Enlarge/Download Table]

                                                                        MICHAEL    NEW MICHAEL 
                                                                       HISTORICAL  PRO FORMA(1)
                                                                       ----------  ------------
                                                                                               
Book value at December 31, 1995.......................................   $ 9.32       $ 9.05   
Dividends paid for the year ended December 31, 1995...................   $  .20       $  .20(2)
Net earnings for the year ended December 31, 1995.....................   $  .91       $  .97   

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  NSU Per Share Data. The following table presents selected historical and
pro forma per share data for NSU Common Stock before and after consummation of  
the Reorganization. The ENStar pro forma per share data assumes NSU shareholders
are issued one share of ENStar for each three shares of NSU Common Stock they   
own. The New Michael pro forma per share data assumes that, in the Reverse Stock
Split, each NSU shareholder will receive .51 shares of New Michael Common Stock 
for each share of NSU Common Stock held by such shareholder at the Effective    
Time. See "THE REORGANIZATION -- Effects of the Reorganization."                

                                                        [Enlarge/Download Table]

                                                  NSU         ENSTAR     NEW MICHAEL    PRO FORMA 
                                               HISTORICAL  PRO FORMA(3)  PRO FORMA(4)  COMBINED(5)
                                               ----------  ------------  ------------  -----------
                                                                                                  
Book value at December 31, 1995...............   $ 3.65       $ 2.08        $ 4.62        $6.70   
Net income from continuing operations for the                                                     
  year ended December 31, 1995................   $ 0.32       $ 0.16        $ 0.49        $0.65   

-------------------------                                                       
(1) These pro forma per share amounts represent the interest of a holder of a   
    share of Michael Common Stock in New Michael after the Merger. The pro forma
    book value computation utilizes the book value of New Michael divided by the
number of outstanding shares of New Michael Common Stock reduced by     
    2,560,594 Retired Michael Shares. The pro forma net earnings computation for
  the year ended December 31, 1995, utilizes the net earnings of New Michael
   and the weighed average shares of Michael Common Stock reduced by 2,560,594
Retired Michael Shares. See "THE REORGANIZATION -- Effects of the       
Reorganization" for a hypothetical calculation of such number of Retired
Michael Shares.                                                         

(2) The calculation of pro forma dividends paid per share assumes the same per  
share dividend was paid.                                                

(3) These pro forma per share amounts represent the interest of a holder of a   
share of NSU Common Stock in ENStar's per share book value and the net  
    income from continuing operations after the Distribution. The book value per
   share and net income from continuing operations per share amounts represent
  the book value and net income from continuing operations, respectively, of
 ENStar divided by the number of outstanding shares of NSU Common Stock at
    December 31, 1995 for the book value computation and weighted average number
 of outstanding shares of NSU Common Stock for the year ended December 31,
1995 for the net income from continuing operations computation.         

(4) These pro forma per share amounts represent the interest of a holder of a   
    share of NSU Common Stock in New Michael per share book value and net income
from continuing operations after the Merger. The pro forma book value   
    computation is computed by dividing New Michael pro forma stockholder equity
by the number of shares of outstanding New Michael Common Stock after   
reduction for the Retired Michael Shares (19,332,001, the historical    
  outstanding shares of Michael at December 31, 1995, less 2,560,594 Retired
   Michael Shares), this product is then adjusted for an assumed Reverse Stock
   Split ratio of .51 shares of New Michael Common Stock for every outstanding
  share of NSU Common Stock. The pro forma income from continuing operations
  computation is computed by dividing the New Michael pro forma net earnings
by the New Michael weighted average shares outstanding (19,328,000, the 
 historical weighted average shares of Michael Common Stock as of December
31, 1995, less 2,560,594 Retired Michael Shares), this product is then  
adjusted for an assumed Reverse Stock Split ratio of .50 shares of New  
 Michael Common Stock for every outstanding share of NSU Common Stock. The
 Reverse Stock Split ratios differ in these computations due to the use of
  the actual number of shares outstanding for the book value computation and
  the weighted average shares outstanding for the net income from continuing
operations computation.                                                 

(5) The pro forma combined amounts are the total of the ENStar and the New      
Michael pro forma per share amounts.                                    

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RISK FACTORS RELATING TO ENSTAR COMMON STOCK

In addition to the other information contained in or incorporated by  
reference into this Proxy Statement/Prospectus, NSU's shareholders should       
consider the following risk factors regarding ENStar and the ENStar Common Stock
that such shareholders will receive in the Distribution. All references herein  
to ENStar are intended to include the operating unit of NSU that will be        
transferred to ENStar in connection with the Distribution.                      

LIMITED HISTORY OF PROFITABILITY; UNCERTAINTY OF FUTURE RESULTS                 

     ENStar has a limited history of profitability. ENStar experienced operating
losses during 1991, 1992, 1993 and 1994. During 1995, ENStar generated operating
income of approximately $1 million. Americable derives its revenues from three  
primary lines of business: networking products and services, cable and          
connectivity products and cable assemblies. Americable has recently increased   
the focus of its business on network services and its cable assembly business,  
which are generally more profitable. No assurance can be made, however, that    
Americable will be successful in increasing revenues from its network services  
and its cable assemblies. In addition, Americable continues to make significant 
investments in new sales, engineering and technical personnel.                  

Transition's ability to maintain its present level of sales and its   
historical sales growth is highly dependent upon its ability to offer new       
products that meet customer's demands in a rapidly changing market, particularly
in light of the relatively short life cycle of its products. In order to achieve
market acceptance of new products, Transition plans to continue its investment  
in research and development expenses. Transition had research and development   
expenses of approximately $1,440,000 in 1995. There can be no assurance,        
however, that its research and development efforts will result in commercially  
successful new products in the future. In addition, Transition believes that    
sales and marketing expenses will continue to increase in terms of absolute     
dollars in an effort to differentiate its products and enhance its competitive  
position.                                                                       

  These anticipated increases in operating expenses at both Americable and
Transition may result in lower operating profit at ENStar, if the companies are 
unable to maintain their respective current gross profit margins and continued  
sales growth. Further, if Americable is not successful in generating higher     
volumes of service revenues, its operating margins will decline and its ability 
to maintain its current operating profitability could be materially adversely   
affected. Based on the above factors, there can be no assurance that ENStar will
be able to increase or sustain its profitability on a quarterly or annual basis 
in the future.                                                                  

PRODUCT AND SERVICE DEVELOPMENT RISKS                                           

   With respect to Transition, the market for networking products is subject
to rapid technological change, evolving industry standards and frequent new     
product introductions and, therefore, requires a high level of expenditures for 
research and development. Transition may be required to incur significant       
expenditures to develop such product offerings. There can be no assurance that  
Transition will be successful in identifying, sourcing, developing and marketing
product enhancements or new products that respond to this rapidly changing      
market. Also, there can be no assurance that its product enhancements and new   
products will adequately meet the requirements of the marketplace and achieve   
market acceptance. A critical factor in market acceptance of product            
enhancements and new products is the timely introduction of such products and   
enhancements in order to take advantage of existing market opportunities.       
Transition has, in the past, experienced delays in the introduction of certain  
of its new products and enhancements.                                           

   The markets for Americable's products and services are also characterized
by rapidly changing technology and frequent new product and service offerings by
its competitors. The introduction of new technologies can render existing       
products and services obsolete or unmarketable. Americable's continued success  
will depend on its ability to enhance existing products and services and to     
develop and introduce, on a timely and cost-effective basis, new products and   
services that keep pace with technological developments and address increasingly
sophisticated customer requirements.                                            

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   ENStar's business, financial condition and results of operations could be
materially adversely affected if Transition were to incur delays in developing  
or introducing new products or product enhancements or if such new products or  
product enhancements did not gain market acceptance or in the event that        
Americable were to incur delays in sourcing and developing new products and     
services or that these products and services would achieve market acceptance.   

EXPANSION STRATEGY                                                              

ENStar's expansion strategy includes both internal growth and the     
identification and pursuit of acquisition opportunities at Americable.          
Americable currently operates in six locations and the success and the rate of  
Americable's expansion into new geographical markets will depend on a number of 
factors, including general economic and business conditions affecting the       
industries of Americable's customers in such markets, competition, the          
availability of sufficient capital, the availability of sufficient inventory to 
meet customer demand, and the ability to attract and retain qualified personnel 
and operate effectively in geographic areas in which Americable has no prior    
experience. As a result, there can be no assurance that Americable will be able 
to achieve its planned expansion on a timely or profitable basis.               

With respect to Americable's identification and pursuit of acquisition
opportunities, viable acquisition candidates may not be available or not        
available on terms acceptable to Americable. Furthermore, Americable has not    
engaged in any significant acquisitions recently, and no assurance can be made  
that Americable will be able to successfully acquire or integrate the operations
of another business into the operations and business of Americable. Americable  
has no present commitments, agreements or understandings with respect to any    
acquisitions.                                                                   

If Americable continues to grow, it may be required to make further   
investments in personnel and information technology systems. Failure to         
successfully hire or retain such personnel or implement such systems could have 
a material adverse effect on ENStar's results of operations and financial       
condition. There can be no assurance that Americable will be able to manage its 
expanding operations effectively, that it will be able to maintain or accelerate
its recent growth or that Americable will be able to continue to operate        
profitably.                                                                     

FLUCTUATIONS IN QUARTERLY RESULTS                                               

     ENStar's quarterly revenues and operating results have varied significantly
in the past and will likely continue to do so in the future. Quarterly revenues 
and operating results may fluctuate as a result of the demand for Americable's  
and Transition's products and services, the introduction of new hardware and    
software technologies offering improved features, the introduction of new       
products and services by competitors, changes in the level of operating         
expenses, competitive conditions and economic conditions generally.             

     At Americable, the purchase of its products and services generally involves
a significant commitment of capital, with the delays frequently associated with 
large capital expenditures and required authorization procedures within an      
organization. For these and other reasons, Americable's operating risks are     
subject to a number of risks over which it has little or no control, including  
customers' technology life cycle needs, budgetary constraints and internal      
authorization reviews. Further, Americable is increasing its operating expenses,
including an increase in personnel, based on anticipated revenue growth in its  
networking line of business.                                                    

A variety of factors may cause period-to-period fluctuations in the   
operating results of Transition. Such factors include, but are not limited to,  
product mix, competitive pricing pressures, material costs and timely           
availability, revenue and expenses related to new product introductions, as well
as delays in customer purchases in anticipation of new products or enhancements 
by Transition or its competitors. Further, Transition plans to continue to      
invest in research and development, sales and marketing and technical support   
staff.                                                                          

   ENStar's operating results could be adversely affected if it is unable to
adjust spending sufficiently in a timely manner to compensate for any unexpected
revenue shortfall. Accordingly, ENStar believes that period-to-period           
comparisons of its operating results should not be relied upon as an indication 
of future performance.                                                          

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In addition, the results of any quarterly period are not indicative of results  
to be expected for a full fiscal year. It is possible that in certain future    
quarters, ENStar's operating results may be below the expectations of public    
market analysts and investors. In such event, the price of ENStar's Common Stock
would likely be materially adversely affected.                                  

DEPENDENCE ON AND NEED TO RECRUIT AND RETAIN KEY PERSONNEL                      

    ENStar's success depends to a significant extent on its ability to attract
and retain key personnel. In particular, Americable and Transition are dependent
on their respective engineering and technical personnel. Competition for such   
technical personnel is intense and no assurance can be given that ENStar will be
able to recruit and to retain such personnel. The failure to recruit and to     
retain management and technical personnel could have a material adverse effect  
on ENStar's anticipated growth, revenues and results of operations.             

CONCENTRATION OF REVENUES                                                       

   During 1995, one customer accounted for approximately 11% of Americable's
net sales, and in 1994, a different customer accounted for approximately 11% of 
net sales. No other customers accounted for more than 10% of Americable's       
revenues. In addition, Americable derived approximately 61% of its revenues from
its 100 largest customers. While Americable seeks to build long-term customer   
relationships, revenues from any particular customer can fluctuate from period  
to period due to such customer's purchasing patterns.                           

Transition distributes its products through an expanding network of   
reseller channels, which include a number of regionally based domestic and      
international volume distributors and, to a lesser extent, value added          
resellers. In 1995, Americable was Transition's largest domestic customer       
accounting for approximately 14% of domestic net sales (9% overall).            
Transition's largest international customer accounted for approximately 11% of  
international net sales (4% overall). Moreover, the ten distributors that sold  
the largest amount of Transition's products accounted for approximately 39% of  
Transition's net sales for 1995.                                                

   Any termination or significant disruption of the companies' relationships
with a number of its principal customers could have a material adverse effect on
ENStar's business, financial condition and results of operations. In addition, a
deterioration in the financial condition of any of its principal customers could
expose ENStar to the possibility of large accounts receivable write-offs, which 
would adversely affect ENStar's financial condition and results of operations.  

DEPENDENCE ON KEY SUPPLIERS AND PRODUCT SUPPLY                                  

The networking industry has experienced product supply shortages and  
customer order backlogs due to the inability of certain manufacturers to supply 
certain products on a timely basis. In addition, certain suppliers have         
initiated new channels of distribution that increase competition for the        
available product supply. There can be no assurance that suppliers will be able 
to maintain an adequate supply of products to fulfill Americable's and          
Transition's customer orders on a timely basis. Both Americable and Transition  
have experienced product supply shortages in the past and expect to experience  
such shortages from time to time in the future. Failure to obtain adequate      
product supplies or fulfill customer orders on a timely basis could have a      
material adverse effect on ENStar's business, financial condition, and results  
of operations.                                                                  

 A significant portion of Americable's revenues is derived from sales of
network hardware, including products of various major suppliers. During 1995    
approximately 19% of the Americable's sales represented products manufactured by
Bay Networks, Inc. ("Bay Networks"). Americable's agreements with those         
suppliers from which it purchases products directly generally contain provisions
for periodic renewals and for termination by the supplier without cause,        
generally upon relatively short notice. Although Americable believes its        
supplier relationships are good, there can be no assurance that Americable's    
relationships will continue as presently in effect. The loss of a major         
supplier, the deterioration of Americable's relationship with a major supplier  
or the failure of Americable to establish good relationships with major new     
suppliers as they develop could have a material adverse effect on ENStar's      
business.                                                                       

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INVENTORY MANAGEMENT                                                            

   The networking industry is characterized by rapid product improvement and
technological change resulting in relatively short product life cycles and rapid
product obsolescence, which can place inventory at considerable valuation risk. 
Some of Transition's products include components that are currently available   
from limited sources and require long order lead times. Because of the long lead
times along with Transition's desire to be responsive to customer demand,       
Transition has maintained higher inventory levels compared to other networking  
manufacturers. Due to the ongoing risk of product obsolescence and changes in   
customer demand, there can be no assurances that Transition will be able to     
successfully manage its existing and future inventories.                        

Although it is industry practice for Americable's suppliers to provide
price protection to Americable intended to reduce the risk of inventory         
devaluation, such policies are subject to change. Americable also has the option
of returning, subject to certain limitations, a percentage of its current       
product inventories each quarter to certain manufacturers as it assesses each   
product's current and forecasted demand. The amount of inventory that can be    
returned to suppliers varies under Americable's agreements and such return      
policies may provide only limited protection against excess inventory. There can
be no assurance that suppliers will continue such policies, that unforeseen new 
product developments will not affect Americable adversely or that Americable can
successfully manage its existing and future inventories. Any inventory          
adjustments could adversely affect ENStar's financial condition and results of  
operations.                                                                     

COMPETITION                                                                     

Each of ENStar's businesses face substantial competition from a large 
number of companies, some of which are larger, have greater financial resources,
broader name recognition and, in many cases, lower product and operating costs  
than ENStar.                                                                    

The industry in which Transition operates is highly competitive, and  
Transition believes that such competition will continue to intensify. The       
industry is characterized by rapid technological change, short product          
life-cycles, frequent product introductions and evolving industry standards.    
Transition competes with a number of independent companies focused on the LAN   
market, including companies with significantly greater financial resources, more
extensive business experience, and greater market and service capabilities than 
Transition. There can be no assurance that ENStar will be able to compete       
successfully.                                                                   

 ENStar expects to face further competition from new market entrants and
possible alliances between competitors in the future. Certain of ENStar's       
current and potential competitors have greater financial, technical, marketing  
and other resources than ENStar. As a result, they may be able to respond more  
quickly to new or emerging technologies and changes in customer requirements or 
to devote greater resources to the development, promotion and sale of their     
products and services than ENStar. No assurance can be given that ENStar will be
able to compete successfully against current and future competitors. See        
"BUSINESS OF ENStar -- Competition."                                            

SHARES ELIGIBLE FOR FUTURE SALE                                                 

Sales of a substantial number of shares of ENStar Common Stock in the 
public market following the Distribution could adversely affect the market price
for the ENStar Common Stock. Upon consummation of the Reorganization the Michael
Family Shareholders, in the aggregate, will beneficially own approximately      
1,895,000 shares, or approximately 60%, of the outstanding ENStar Common Stock. 

ABSENCE OF PRIOR PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE           

Prior to this offering, there has been no public market for the ENStar
Common Stock. There can be no assurance that, following this offering, an active
trading market for the ENStar Common Stock will develop or be sustained,        
particularly in light of the limited number of shares being distributed in the  
Distribution. The market price of the ENStar Common Stock could be subject to   
significant fluctuations in response to variations in quarterly operating       
results, changes in the market value of its CorVel investment, changes in       

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earnings estimates by analysts, general conditions in the industries in which   
ENStar's customers compete and other events or factors. In addition, the stock  
market, from time to time, has experienced extreme price and volume fluctuations
which have particularly affected the market price for companies in ENStar's and 
CorVel's industries, and which have often been unrelated to the operating       
performance of such companies. These broad fluctuations may adversely affect the
market price of the ENStar Common Stock.                                        

POSSIBLE VOLATILITY OF CORVEL STOCK PRICE                                       

    CorVel, in its reports and other information prepared and filed by it with
the Commission, has indicated that the market price of the CorVel Common Stock  
may be highly volatile. CorVel has also indicated that factors such as          
variations in CorVel's revenues, earnings and cash flow, general market trends  
in the workers' compensation managed care market, and announcements of          
innovations by CorVel or its competitors could cause the market price of the    
CorVel Common Stock to fluctuate substantially. Specifically, CorVel has        
reported that the quarter to quarter percentage growth in operating results for 
CorVel's two most recently completed fiscal quarters was lower than the growth  
rates historically experienced by CorVel. CorVel's slower growth rate in those  
two fiscal quarters was partially attributable to a reduction in the growth rate
of health care expenditures nationally, contributing to a reduction in claims   
processed by CorVel. There can be no assurance that CorVel's growth rate in the 
future, if any, will be at or near historical levels. In addition, the stock    
market has in the past experienced price and volume fluctuations that have      
particularly affected companies in the health care and managed care markets     
resulting in changes in the market price of the stock of many companies which   
may not have been directly related to the operating performance of those        
companies. Such broad market fluctuations may adversely affect the market price 
of the CorVel Common Stock, which in turn may adversely affect the market price 
of the ENStar Common Stock.                                                     

CERTAIN RISKS PERTAINING TO THE CORVEL COMMON STOCK                             

    CorVel, in its reports and other information prepared and filed by it with
the Commission, has indicated that an investment in the CorVel Common Stock     
involves a high degree of risk, including the potential adverse impact of       
government regulations, possible litigation and legal liability, competition,   
changes in market dynamics, dependence on key personnel and risks related to    
CorVel's growth strategy. These risks are described in more detail in the       
reports and other information prepared and filed by CorVel with the Commission. 

THE ANNUAL MEETINGS 

This Proxy Statement/Prospectus is furnished in connection with the   
solicitation of proxies (i) from the holders of Michael Common Stock by the     
Michael Board for use at the Michael Annual Meeting and (ii) from the holders of
NSU Common Stock by the NSU Board for use at the NSU Annual Meeting. All        
information contained in this Proxy Statement/Prospectus relating to Michael has
been furnished by Michael. All information contained in this Proxy              
Statement/Prospectus relating to NSU, Merger Co. or ENStar has been supplied by 
NSU.                                                                            

TIMES AND PLACES; PURPOSES OF MEETINGS                                          

Michael. The Michael Annual Meeting will be held at The Lutheran      
Brotherhood Auditorium, 625 Fourth Avenue South, Minneapolis, Minnesota on      
Tuesday, June 4, 1996 at 4:00 p.m. local time. At the Michael Annual Meeting,   
the stockholders of Michael will be asked to consider and vote upon the         
following items: (i) a proposal to approve the Reorganization Agreement and the 
Merger (the "Michael Proposal"), (ii) a proposal to elect nine directors to the 
Michael Board, (iii) the ratification of the selection of auditors, and (iv)    
such other business as may properly come before the Michael Annual Meeting. The 
Reorganization Agreement is included as Appendix I to this Proxy                
Statement/Prospectus.                                                           

  NSU. The NSU Annual Meeting will be held at the Marriott Southwest, 5801
Opus Parkway, Minnetonka, Minnesota on Tuesday, June 4, 1996 at 4:00 p.m. local 
time. At the NSU Annual Meeting, the shareholders of NSU will be asked to       
consider and vote upon the following items: (i) a proposal to approve the       

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Reorganization Agreement and the Merger; (ii) a proposal to approve the Reverse 
Stock Split; (iii) a proposal to approve the Distribution; (iv) a proposal to   
approve the New Articles; (v) a proposal to elect six directors to the NSU      
Board; and (vi) such other business as may properly come before the NSU Annual  
Meeting (proposals (i) through (iv) above are collectively referred to herein as
the "NSU Proposals").                                                           

VOTING RIGHTS; VOTES REQUIRED FOR APPROVAL                                      

 Michael. The Michael Board has fixed the close of business on April 15,
1996, as the Michael Record Date. Only holders of record of shares of Michael   
Common Stock on the Michael Record Date are entitled to notice of and to vote at
the Michael Annual Meeting. As of April 15, 1996, there were 19,379,274 shares  
of Michael Common Stock outstanding and entitled to vote held by approximately  
stockholders of record.                                           

 Each holder of record, as of the Michael Record Date, of Michael Common
Stock is entitled to cast one vote per share. The presence, in person or by     
proxy, of the holders of a majority of the outstanding shares of Michael Common 
Stock entitled to vote is necessary to constitute a quorum at the Michael Annual
Meeting.                                                                        

 Under Delaware law, the affirmative vote, in person or by proxy, of the
holders of a majority of the shares of Michael Common Stock outstanding on the  
Michael Record Date is required to approve and adopt the Michael Proposal. The  
nine board nominees who receive the highest number of votes will be elected     
directors of Michael and a plurality of votes cast on all other matters will be 
required to approve such matters.                                               

     As of April 15, 1996, directors, nominees and executive officers of Michael
as a group (18 persons) beneficially owned 8,178,958 shares of Michael Common   
Stock, or approximately 42.2% of those shares of Michael Common Stock           
outstanding as of such date. As of April 15, 1996, NSU beneficially owned       
7,354,950 shares of Michael Common Stock or approximately 38% of the shares of  
Michael Common Stock outstanding as of such date. The Michael shares            
beneficially owned by NSU are included in the shares beneficially owned by      
directors and executive officers.                                               

     THE BOARD OF DIRECTORS OF MICHAEL RECOMMENDS THAT HOLDERS OF MICHAEL COMMON
STOCK VOTE FOR THE MICHAEL PROPOSAL AND FOR EACH OF THE NOMINEES FOR ELECTION TO
THE BOARD OF DIRECTORS OF MICHAEL.                                              

     NSU. The NSU Board has fixed the close of business on April 15, 1996 as the
NSU Record Date. Only holders of record of shares of NSU Common Stock on the NSU
Record Date are entitled to notice of and to vote at the NSU Annual Meeting. On 
April 15, 1996, there were        shares of NSU Common Stock outstanding and    
entitled to vote at the NSU Meeting held by approximately        shareholders of
record.                                                                         

  Each holder of record, as of the NSU Record Date, of NSU Common Stock is
entitled to cast one vote per share. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of NSU Common Stock entitled to 
vote is necessary to constitute a quorum at the NSU Annual Meeting.             

  Under Minnesota law, the affirmative vote, in person or by proxy, of the
holders of a majority of the shares of NSU Common Stock outstanding on the NSU  
Record Date and entitled to vote is required to approve and adopt the NSU       
Proposals. The affirmative vote of a majority of the shares of NSU Common Stock 
present or represented by proxy and entitled to vote at the NSU Annual Meeting  
is required to elect each of the nominees as Directors of NSU for the ensuing   
year or until the consummation of the Reorganization.                           

  As of April 15, 1996, directors and executive officers of NSU as a group
beneficially owned approximately        shares of NSU Common Stock or           
approximately    % of NSU Common Stock outstanding as of the NSU Record Date.   
The Michael Family Shareholders beneficially owned 5,685,100 shares of NSU      
Common Stock, or approximately 60% of the NSU Common Stock outstanding as of the
NSU Record Date, and have agreed in the Orderly Disposition Agreement to vote   
such shares in favor of each of the Merger, the Reverse Stock Split and the     
Distribution. See "THE REORGANIZATION -- Interest of Certain Persons in the     
Reorganization."                                                                

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  THE BOARD OF DIRECTORS OF NSU UNANIMOUSLY RECOMMENDS THAT HOLDERS OF NSU
COMMON STOCK VOTE FOR EACH OF THE NSU PROPOSALS AND FOR EACH OF THE NOMINEES FOR
ELECTION TO THE BOARD OF DIRECTORS OF NSU.                                      

PROXIES                                                                         

 Michael. Votes cast by proxy or in person at the Michael Annual Meeting
will be tabulated by the election inspector appointed for the meeting. All      
shares of Michael Common Stock represented by properly executed proxies received
prior to or at the Michael Meeting and not revoked will be voted in accordance  
with the instructions indicated in such proxies. If no instructions are         
indicated on a properly executed returned proxy, such proxy will be voted FOR   
the Michael Proposal. A properly executed proxy marked "ABSTAIN" (or a proxy    
marked "withhold vote for" as to the election of directors), although counted   
for purposes of determining whether there is a quorum, will not be voted.       
Accordingly, since the affirmative vote of a majority of the shares of Michael  
Common Stock on the Michael Record Date represented in person or by proxy and   
entitled to vote is required for approval of the Michael Proposal, a properly   
executed proxy marked "ABSTAIN" will have the effect of a vote against the      
Michael Proposal. If a broker indicates on a proxy that it does not have        
discretionary authority as to certain shares to vote on a particular matter,    
those shares will not be considered as present and entitled to vote with respect
to that matter.                                                                 

 NSU. Votes cast by proxy or in person at the NSU Annual Meeting will be
tabulated by the election inspector appointed for the meeting. All shares of NSU
Common Stock represented by properly executed proxies received prior to or at   
the NSU Meeting and not revoked will be voted in accordance with the            
instructions indicated in such proxies. If no instructions are indicated on a   
properly executed returned proxy, such proxy will be voted FOR the NSU          
Proposals. A properly executed proxy marked "ABSTAIN" (or a proxy marked        
"withhold vote for" as to the election of directors), although counted for      
purposes of determining whether there is a quorum, will not be voted.           
Accordingly, since the affirmative vote of a majority of the shares of NSU      
Common Stock outstanding on the NSU Record Date, represented in person or by    
proxy and entitled to vote, is required for approval of each of the NSU         
Proposals, a properly executed proxy marked "ABSTAIN" with respect to any such  
proposal will have the effect of a vote against such proposal. If a broker      
indicates on the proxy that it does not have discretionary authority as to      
certain shares to vote on a particular matter, those shares will not be         
considered as present and entitled to vote with respect that matter.            

     It is not expected that any matter not referred to herein will be presented
for action at the Michael and NSU Annual Meetings. If any other matters are     
properly brought before the Michael Annual Meeting or the NSU Annual Meeting,   
the persons named in the proxies will have discretion to vote on such matters in
accordance with their best judgment. However, shares represented by proxies that
have been voted "AGAINST" the Michael Proposal, or any of the NSU Proposals, as 
the case may be, will not be used to vote "FOR" postponement or adjournment of  
the Michael Annual Meeting or the NSU Annual Meeting, as the case may be, for   
the purpose of allowing additional time for soliciting additional votes "FOR"   
the Michael Proposal or the NSU Proposals, as the case may be. The grant of a   
proxy will also confer discretionary authority on the persons named in the proxy
as proxy appointees to vote in accordance with their best judgment on matters   
incident to the conduct of the Annual Meetings, including (except as stated in  
the preceding sentence) adjournment for the purpose of soliciting additional    
votes.                                                                          

Revocation of Proxies. A stockholder or shareholder giving a proxy may
revoke it at any time prior to the voting of the proxy by filing with the       
secretary of Michael or NSU, as the case may be, a written notice of revocation 
or another proxy bearing a later date. Unless otherwise noted on the proxy, the 
proxies will vote FOR the proposals set forth herein. Any written notice of     
revocation or subsequently dated Michael proxy should be mailed or delivered to 
Michael Foods, Inc., 324 Park National Bank Building, 5353 Wayzata Boulevard,   
Minneapolis, Minnesota 55416; Attention: Secretary. Any written notice of       
revocation or subsequently dated NSU proxy should be mailed or delivered to     
North Star Universal, Inc., 610 Park National Bank Building, 5353 Wayzata Blvd.,
Minneapolis, MN 55416, Attention: Secretary. A stockholder or shareholder may   
also revoke his or her proxy by attending the Michael Annual Meeting or the NSU 
Annual Meeting and voting in person. Attendance at the Michael Annual Meeting or
the NSU Annual Meeting will not in itself constitute the revocation of a proxy. 

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     Solicitation of Proxies. Each party will bear its own costs with respect to
the Annual Meetings including the cost of preparing, assembling and mailing the 
Notice of Annual Meeting, this Proxy Statement/ Prospectus and the form of      
proxy, including the reimbursement of banks, brokers and other nominees for     
forwarding proxy materials to beneficial owners. Proxies may also be solicited  
personally or by telephone by directors, officers and regular employees of      
Michael or NSU who will receive no additional compensation.                     

    THE MATTERS TO BE CONSIDERED AT THE MICHAEL AND NSU ANNUAL MEETINGS ARE OF
IMPORTANCE TO THE MICHAEL STOCKHOLDERS AND THE NSU SHAREHOLDERS. ACCORDINGLY,   
MICHAEL STOCKHOLDERS AND NSU SHAREHOLDERS ARE URGED TO READ AND CAREFULLY       
CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT/PROSPECTUS, AND TO   
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED     
POSTAGE-PAID ENVELOPE.                                                          

  HOLDERS OF MICHAEL AND NSU COMMON STOCK SHOULD NOT SEND ANY CERTIFICATES
REPRESENTING MICHAEL OR NSU COMMON STOCK WITH THE ENCLOSED PROXY CARD. IF THE   
TRANSACTIONS ARE APPROVED, A LETTER OF TRANSMITTAL WILL BE MAILED AFTER THE     
EFFECTIVE TIME TO EACH PERSON WHO WAS A HOLDER OF OUTSTANDING SHARES IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME. STOCKHOLDERS AND SHAREHOLDERS SHOULD SEND          
CERTIFICATES REPRESENTING COMMON STOCK TO THE EXCHANGE AGENT ONLY AFTER THEY    
RECEIVE, AND IN ACCORDANCE WITH, THE INSTRUCTIONS CONTAINED IN THE LETTER OF    
TRANSMITTAL.                                                                    

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PROPOSAL NUMBER ONE: APPROVAL OF THE REORGANIZATION 
AGREEMENT AND THE MERGER
PROPOSAL NUMBER TWO: APPROVAL OF THE REVERSE STOCK SPLIT
PROPOSAL NUMBER THREE: APPROVAL OF THE DISTRIBUTION 

THE REORGANIZATION

    The following information describes certain aspects of the Reorganization.
This description does not purport to be complete and is qualified in its        
entirety by reference to the Appendices hereto, including the Reorganization    
Agreement and the exhibits thereto, which are attached to this Proxy            
Statement/Prospectus as Appendix I and are incorporated herein by reference. All
shareholders are urged to read Appendix I in its entirety. See also "THE        
REORGANIZATION AGREEMENT."                                                      

EFFECTS OF THE REORGANIZATION                                                   

 Prior to the consummation of the Merger, NSU will contribute all of its
assets and liabilities other than certain indebtedness and other agreed upon    
assets and liabilities to ENStar. See "THE REORGANIZATION AGREEMENT -- Effects  
of the Reorganization on the Stockholders of Michael and the Shareholders of    
NSU." Upon consummation of the Reorganization on the Effective Date of the      
Merger: (i) Merger Co. will be merged with and into Michael and Michael will    
become a wholly-owned subsidiary of NSU; (ii) each stockholder of Michael (other
than NSU) will receive, in exchange for each share of Michael Common Stock held 
by such stockholder, one share of New Michael Common Stock; (iii) NSU will      
change its name to Michael Foods, Inc. and will continue the business previously
conducted by Michael; (iv) NSU will effectuate the Reverse Stock Split; and (v) 
NSU will effectuate the Distribution, whereby all of the outstanding ENStar     
Common Stock will be distributed pro rata to the shareholders of NSU of record  
as of a record date just prior to the Effective Date of the Merger.             

As part of the negotiations with respect to the structure of the      
Reorganization, Michael requested that, in order to avoid confusion on the part 
of holders of Michael Common Stock, in the Merger each holder of Michael Common 
Stock would receive one share of NSU Common Stock in exchange for each share of 
Michael Common Stock held by such stockholder. In order to accommodate this     
request, the Reorganization was structured so that the number of outstanding    
shares of NSU Common Stock would be reduced through the Reverse Stock Split. In 
the Reverse Stock Split, each outstanding share of NSU Common Stock will be     
converted into a fraction of one share of New Michael Common Stock determined by
multiplying each such share by a fraction where the denominator is the number of
outstanding shares of NSU Common Stock immediately prior to the Effective Date  
and the numerator is the number of shares of Michael Common Stock owned by NSU  
at such date less the number of shares of Michael Common Stock owned by NSU     
which are retired in consideration for the Net Indebtedness retained by New     
Michael. For purposes of the Reorganization Agreement, Net Indebtedness is      
defined to be the amount of outstanding NSU subordinated debentures and         
subordinated fixed-term or extendible time certificates and the Dissenting      
Shares Holdback, less any cash retained by NSU at the time of the Merger. Under 
the terms of the Reorganization Agreement, the Net Indebtedness retained by NSU 
may not be less than $25,000,000 nor more than $38,000,000. The number of shares
of Michael Common Stock to be retired (the "Retired Michael Shares") in         
consideration for the Net Indebtedness will be determined by dividing the amount
of Net Indebtedness by the average market price of the Michael Common Stock for 
the twenty trading days ending on the third trading day prior to the Effective  
Date of the Merger (the "Average Price of Michael Common Stock") after applying 
a certain percentage discount to the Average Price of Michael Common Stock (the 
"Discount Factor"). The Discount Factor will be based upon the amount of Net    
Indebtedness, ranging from .92 at $25,000,000 to .90 beginning at $33,750,000,  
resulting in an effective discount of 8% to 10%, respectively. See "THE         
REORGANIZATION AGREEMENT -- Effects of the Reorganization on the Stockholders of
Michael and the Shareholders of NSU."                                           

     THE FOLLOWING EXAMPLE IS PRESENTED FOR INFORMATIONAL PURPOSES TO ILLUSTRATE
THE PROCEDURE FOR DETERMINING THE REVERSE STOCK SPLIT RATIO UTILIZING ACTUAL OR 
PRO FORMA INFORMATION AS OF DECEMBER 31, 1995. THE INFORMATION PRESENTED BELOW  
IS NOT INTENDED AS AN ESTIMATE OR PROJECTION OF ANY OF THE DATA THAT WILL BE    

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USED TO DETERMINE THE ACTUAL REVERSE STOCK SPLIT, NET INDEBTEDNESS OR ANY OTHER 
AMOUNTS THAT WILL BE USED IN DETERMINING THE CONSIDERATION RECEIVED BY SUCH     
SHAREHOLDERS OR STOCKHOLDERS IN THE REORGANIZATION. THE ACTUAL REVERSE STOCK    
SPLIT, NET INDEBTEDNESS, DISCOUNT FACTOR AND OTHER ASSUMED AMOUNTS MAY BE HIGHER
OR LOWER THAN THE AMOUNTS PRESENTED BELOW. THE PRO FORMA ASSUMPTIONS USED BELOW 
ARE DERIVED FROM THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
AND THE NOTES THERETO:                                                          

Pro Forma Assumptions:                                                

        The Average Price of Michael Common Stock: $11.55 per share (the average
        of the closing prices of a share of Michael Common Stock for each of the
     20 trading days ending on the third trading day prior to December 31,
1995)                                                           

Net Indebtedness: $27,061,000                                   

Discount Factor: .915 (a discount of 8.5%)                      

     Aggregate number of outstanding shares of NSU Common Stock: 9,448,000

      Aggregate number of outstanding shares of Michael Common Stock held by
NSU: 7,354,950                                                  

Pro Forma Calculation of the Retired Michael Shares:                  

a.   Aggregate number of Retired                                
     Michael Shares                =            Net Indebtedness
                                              --------------------------------
                                             Average Price of Michael Common
                                             Stock X Discount Factor
b.   Aggregate number of Retired                                
Michael Shares                =    $27,061,000        
                            --------------
                           $11.55 X .915
c.   Aggregate number of Retired                                
Michael Shares                =   2,560,594           

Pro Forma Calculation of the Reverse Stock Split Ratio:               

   a.   Ratio   =   (Aggregate number of outstanding shares of Michael
                     Common Stock held by NSU less Aggregate number of
                   Retired Michael Shares)
                       -----------------------------------------------------
                     Aggregate number of outstanding shares of NSU
              Common Stock
b.   Ratio   =   (7,354,950 - 2,560,594)                        
------------------------      
9,448,000       
c.   Ratio   =   .51                                            

   Under the hypothetical example provided above, in the Reverse Stock Split
each share of NSU Common Stock issued and outstanding immediately prior to the  
Effective Time would be combined into .51 shares of New Michael Common Stock.   

   All shares of Michael Common Stock held by NSU will not be converted into
shares of New Michael Common Stock in the Merger and will automatically be      
canceled and retired. Each certificate previously representing shares of NSU    
Common Stock or Michael Common Stock not held by NSU will thereafter represent  
the right to receive a certificate representing shares of New Michael Common    
Stock.                                                                          

For a description of the procedures for exchanging NSU Common Stock or
Michael Common Stock for New Michael Common Stock and, in the case of NSU Common
Stock, for payment of cash in lieu of the issuance of fractional shares, see "--
Procedure for Exchange of Certificates."                                        

EFFECTIVE TIME                                                                  

  If the Michael Proposal is approved and adopted by the requisite vote of
the stockholders of Michael, the NSU Proposals are approved and adopted by the  
requisite vote of the shareholders of NSU and the other conditions to the       
Reorganization are satisfied (or waived to the extent permitted), the Merger    
will be                                                                         

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consummated and effected at the time a Certificate of Merger is filed with the  
Secretary of State of the State of Delaware.                                    

   The Reorganization Agreement provides that NSU and Michael will cause the
Effective Date to occur as promptly as practicable, but in no event later than  
ten business days after the approval and adoption of the Michael Proposal by the
requisite vote of the stockholders of Michael, the approval and adoption of the 
NSU Proposals by the requisite vote of the shareholders of NSU and satisfaction 
(or waiver, to the extent permitted) of the other conditions contained in the   
Reorganization Agreement. The Reorganization Agreement may be terminated by     
either NSU or Michael in certain circumstances, notwithstanding the prior       
approval and adoption of the Reorganization Agreement by their respective       
shareholders and stockholders. See "THE REORGANIZATION AGREEMENT --             
Termination."                                                                   

BACKGROUND OF THE REORGANIZATION                                                

   In March 1987, NSU formed Michael to consolidate and focus development of
NSU's food businesses, and shortly thereafter Michael completed an initial      
public offering of approximately 36% of its outstanding common stock. Since that
time, NSU's ownership of Michael has been reduced from approximately 64% to     
approximately 38% of the outstanding Michael Common Stock through sales by NSU  
of Michael Common Stock and additional issuances of Michael Common Stock.       

For many years, both before and after the initial public offering of  
Michael's Common Stock, NSU raised funds to finance acquisitions and support its
operations by offering and selling subordinated debentures and subordinated     
fixed-term and extendible time certificates to the public. Debt service for this
indebtedness was provided through the reinvestment of maturing obligations by   
investors, sales of assets and cash flow generated from NSU's operating         
subsidiaries. Since the initial public offering of Michael in 1987, however, NSU
has not had the use of cash flow generated by Michael's operations other than   
quarterly Michael dividends. Also, in June 1991, CorVel, formerly a wholly owned
subsidiary of NSU, completed an initial public offering of its common stock.    
After the CorVel initial public offering, NSU ceased to have the use of cash    
flow generated by CorVel. CorVel has not paid dividends on its common stock in  
the past.                                                                       

   As a result of these transactions, NSU has experienced cash flow deficits
from operations, which has resulted in greater reliance by NSU on the sale of   
subordinated fixed-term and extendible time certificates to finance continuing  
operations and service its indebtedness. In response to this situation, NSU's   
senior management has, for many years, considered various alternative strategies
and transactions to substantially reduce the amount of NSU's indebtedness and to
permit its shareholders to realize the substantial value of NSU's interest in   
Michael. One obvious strategic alternative has always been to participate in a  
tax-advantaged transaction involving Michael.                                   

  From time to time since 1990, NSU and Michael senior management have had
discussions concerning various possible tax-advantaged transactions that would  
result in all or a portion of NSU's substantial ownership interest in Michael   
being held directly by NSU's shareholders. Also, certain of the transactions    
discussed involved the assumption of some or all of NSU's outstanding           
indebtedness in consideration of the retirement of some of the Michael Common   
Stock held by NSU. Although a number of alternative transactions and transaction
structures were discussed, agreement was never reached on any particular        
transaction, transaction structure or related financial terms and none of these 
discussions progressed beyond the preliminary discussion stage.                 

  In the summer of 1994, Jeffrey J. Michael, President and Chief Executive
Officer of NSU, contacted Gregg A. Ostrander, President and Chief Executive     
Officer of Michael, to request that Michael and NSU hold discussions again in an
effort to structure a mutually acceptable transaction that would provide for the
assumption by Michael of some or all of NSU's outstanding indebtedness and      
permit NSU's shareholders to directly own NSU's interest in Michael. A number of
meetings between senior management of both companies followed in the fall of    
1994, and continued off and on through the spring of 1995. During this time the 
fundamental elements required by each of NSU and Michael in any such transaction
between them were discussed. These elements included the following: (i) any such
transaction could not result in federal income tax to the parties or their      
respective shareholders or stockholders; (ii) the amount of NSU indebtedness    

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assumed by Michael in any such transaction had to be within parameters to be    
agreed upon; (iii) the Michael Common Stock to be retained in consideration for 
the debt assumed in any such transaction had to be valued at a discount to the  
market; and (iv) Michael had to be protected from the liabilities of NSU        
relating to the operations of NSU (other than its investment in Michael Common  
Stock). Michael and its financial advisors also concluded that the transfer of  
all other assets and liabilities of NSU to a separate company to be spun-off to 
the NSU shareholders or some other disposition of such assets and satisfaction  
of such liabilities was necessary in order to avoid higher costs of capital that
would otherwise occur if such assets and liabilities were retained after the    
Reorganization and to avoid the adverse impact on the value of Michael Common   
Stock if New Michael were engaged in businesses unrelated to its core food      
processing and distribution businesses. As a result of these discussions, senior
management of both companies, with the assistance of their respective tax and   
legal advisors, developed a general transaction structure proposal that         
satisfied the parties' fundamental requirements. No agreement was reached,      
however, on the financial terms, or on certain of the other terms of this       
proposal.                                                                       

Once a potentially acceptable transaction structure proposal had been 
developed, advisors of both companies were directed to obtain a preliminary     
indication from the IRS as to the tax treatment of the proposal. Discussions    
with the IRS occurred during the spring and summer of 1995, which led senior    
management of both companies to conclude that there were reasonable prospects   
for receipt of a favorable ruling concerning the tax-free nature of the         
transaction structure proposal.                                                 

Beginning in September 1995, NSU and Michael began meetings involving 
senior management and their respective legal, tax and financial advisors to     
discuss the financial and other terms relating to the transaction structure     
proposal that had been developed and discussed with the IRS. These discussions  
continued in October, during which tentative agreement was reached between the  
senior managements of NSU and Michael as to certain of the principal terms of   
the transaction proposal. On October 27, 1995, immediately following Michael's  
regular quarterly board meeting, Michael's management informed the Michael Board
of the status of negotiations with NSU and the principal terms of the           
transaction proposal that was currently under consideration by Michael senior   
management. Messrs. Jeffrey J. Michael, James H. Michael and Miles E. Efron,    
each a member of the board of directors of both NSU and Michael, at the request 
of Michael, did not participate in this discussion. At the NSU Board meeting    
held on November 7, 1995, NSU's management and its financial advisor discussed  
with the NSU Board the principal terms of the transaction proposal that was     
currently under consideration by NSU senior management. The NSU Board, after    
such discussion, directed and authorized certain officers of NSU to negotiate   
the terms of a definitive agreement with respect to the transaction proposed,   
subject to final board review and approval.                                     

 Over the next several weeks, the terms of the definitive agreement were
negotiated and a definitive agreement was presented to each of the NSU and      
Michael Boards at separate meetings held on December 21, 1995. Messrs. Michael, 
Michael and Efron recused themselves from participation in the meeting of the   
Michael Board. The Boards of Directors of NSU and Michael approved the          
Reorganization Agreement at their respective meetings held on that date. The    
Reorganization Agreement was executed by NSU and Michael later that same day.   

RECOMMENDATION OF MICHAEL BOARD; MICHAEL'S REASONS FOR THE REORGANIZATION       

 THE MICHAEL BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF MICHAEL COMMON
STOCK VOTE FOR THE MICHAEL PROPOSAL.                                            

   Michael's Reasons for the Transactions. On December 21, 1995, the Michael
Board met to consider the Merger and the transactions contemplated thereby.     
Michael's senior management, Michael's legal and accounting advisors and Piper  
Jaffray, its investment banker, made presentations to the Michael Board and     
discussed with the Michael Board their views and analyses of various aspects of 
the proposed transactions. The Michael Board reviewed and considered, among     
other things, the background of the proposed transaction, Michael's strategic   
alternatives, financial and valuation analyses of the transaction, the terms of 
the Reorganization and the other matters described herein. Piper Jaffray gave an
opinion that, based upon the matters presented to the Michael Board and as set  
forth in its opinion, as of such date, the consideration paid                   

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by Michael in the form of Net Indebtedness retained by New Michael for the      
Retired Michael Shares and the exchange of Michael Common Stock for New Michael 
Common Stock is fair to Michael from a financial point of view. See "-- Fairness
Opinions."                                                                      

In view of the variety of factors considered in connection with its   
evaluation of the Reorganization, the Michael Board did not quantify or         
otherwise attempt to assign relative weights to the specific factors considered 
in reaching its determination. In reaching its determination to recommend       
approval of the transactions, the Michael Board consulted with Michael          
management, as well as legal counsel, accounting and tax advisors, and its      
investment banker. The Michael Board concluded that the Reorganization will     
allow Michael to acquire a large block of its stock at a discount from the      
market price of such stock which Michael believes will be accretive to earnings 
per share in 1996 and 1997. The effective redemption of Michael shares owned by 
NSU should also remove the market's perceived adverse effect of NSU holding such
a large position in Michael and should increase the liquidity of Michael Common 
Stock. The Michael Board concluded that the amount of indebtedness to be assumed
in the Reorganization would not have a material adverse affect on Michael.      
Finally, the Michael Board authorized the Reorganization, in part, based on     
NSU's willingness to complete the Distribution.                                 

 The Michael Board believes that the terms of the Reorganization and the
transactions contemplated thereby are in the best interests of Michael and its  
stockholders. Accordingly, the Michael Board has approved the Reorganization    
Agreement and the Merger and recommends approval thereof by the stockholders of 
Michael.                                                                        

RECOMMENDATION OF NSU BOARD; NSU'S REASONS FOR THE REORGANIZATION               

    THE NSU BOARD UNANIMOUSLY RECOMMENDS THAT HOLDERS OF NSU COMMON STOCK VOTE
FOR THE NSU PROPOSALS.                                                          

   NSU's Reasons for the Reorganization. On December 21, 1995, the NSU Board
met to consider the Reorganization, the terms of the Reorganization Agreement   
and Distribution Agreement and the transactions contemplated thereby. NSU's     
senior management and representatives of NSU's legal advisor and GAHS, its      
independent financial advisor, made presentations to the NSU Board and discussed
with the NSU Board their views and analyses of various aspects of the proposed  
transaction. The NSU Board reviewed and considered, among other things, the     
background of the proposed transaction, NSU's strategic alternatives, financial 
and valuation analyses of the transaction, the terms of the Reorganization      
Agreement and the Distribution Agreement, the Merger, the Distribution, the New 
Articles and the other matters described herein. GAHS provided an opinion that, 
based upon the matters presented to the NSU Board and as set forth in its       
opinion, as of such date, that the Reorganization was fair to the shareholders  
of NSU from a financial point of view. See "-- Fairness Opinions."              

In view of the variety of factors considered in connection with its   
evaluation of the Reorganization, the NSU Board did not quantify or otherwise   
attempt to assign relative weights to the specific factors considered in        
reaching its determination. In reaching its determination, the NSU Board        
consulted with NSU management, as well as its legal counsel and financial       
advisor, and considered a number of factors. The NSU Board considered that the  
Reorganization will relieve NSU's operating businesses of significant debt      
service obligations with respect to the Net Indebtedness of NSU to be assumed by
New Michael. The NSU Board also considered the advantages of avoiding income    
taxation at the corporate level on NSU's holdings of Michael Common Stock while 
providing its shareholders with a direct financial interest in Michael. Further,
the NSU Board considered that the Distribution would allow NSU's shareholders to
continue to hold an interest in NSU's other assets and that the Distribution was
required by Michael in order to avoid higher costs of capital to Michael.       

The NSU Board believes that the consummation of the Reorganization,   
including the execution of the Reorganization Agreement, the Merger, the Reverse
Stock Split, the Distribution and the New Articles are in the best interests of 
NSU and its shareholders. Based on these considerations, the NSU Board has      
unanimously approved the Merger, the Reverse Stock Split, the Distribution and  
the New Articles and                                                            

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authorized the execution of the Reorganization Agreement and Distribution       
Agreement and recommended approval thereof by the shareholders of NSU.          

FAIRNESS OPINIONS                                                               

   Opinion of Michael's Financial Advisor. Michael retained Piper Jaffray as
its investment banker in connection with the Reorganization. Piper Jaffray is an
investment banking firm engaged, among other things, in the valuation of        
businesses and their securities in connection with mergers and acquisitions,    
underwriting and secondary distributions of securities, private placements and  
valuations for estate, corporate and other purposes. Piper Jaffray was selected 
by Michael because of its reputation as a recognized investment banking firm and
its familiarity with Michael and its respective component businesses. Piper     
Jaffray makes a market in Michael's Common Stock, provides research coverage for
Michael, and acted as co-manager of public offerings of Michael Common Stock in 
1987, 1988 and 1991 and as placement agent for an offering of senior notes in   
1989.                                                                           

   Piper Jaffray delivered written opinions to the Michael Board dated as of
December 21, 1995 and on or about the date of this Proxy Statement/Prospectus,  
that, based upon and subject to the matters set forth in its written opinion as 
of such dates, the effective price per share Michael is paying NSU, in the form 
of the Net Indebtedness retained by New Michael, for the Retired Michael Shares 
and the exchange of Michael Common Stock for New Michael Common Stock is fair,  
from a financial point of view, to Michael. The full text of the written opinion
of Piper Jaffray, dated as of the date of this Proxy Statement/Prospectus, is   
set forth as Appendix II to this Proxy Statement/Prospectus and describes the   
assumptions made, matters considered and limits on the review undertaken. The   
following summary of the opinion is qualified in its entirety by reference to   
the full text of the opinion attached hereto as Appendix II. Michael            
stockholders are urged to read the opinion in its entirety. The assumptions     
made, matters considered and limits on the review undertaken in the opinion     
dated the date of this Proxy Statement/Prospectus are substantially the same as 
those contained in the opinion dated December 21, 1995.                         

   Piper Jaffray's opinion addresses only the fairness of the Reorganization
from a financial point of view to Michael and does not constitute a             
recommendation to any stockholder of Michael as to how such stockholder should  
vote with respect to the approval of the Reorganization. In connection with its 
opinion, Piper Jaffray was not requested to opine as to, and their opinion does 
not address, the merits of the basic business decision to proceed with or effect
the Reorganization. Piper Jaffray does not admit that it is an expert within the
meaning of the term "expert" as used in the Securities Act and the rules and    
regulations promulgated thereunder, or that its opinions constitute a report or 
valuation within the meaning of Section 11 of the Securities Act and the rules  
and regulations promulgated thereunder.                                         

   In connection with rendering its opinion, Piper Jaffray: (i) reviewed the
Reorganization Agreement; (ii) reviewed the annual reports, Forms 10-K and      
audited financial statements for Michael for the three years ended December 31, 
1994; (iii) reviewed the Forms 10-Q for Michael for the quarters ended March 31,
June 30 and September 30, 1995; (iv) reviewed the annual reports, Forms 10-K and
audited financial statements for NSU for the three years ended December 31,     
1994; (v) reviewed the Forms 10-Q for NSU for the quarters ended March 31, June 
30 and September 30, 1995; (vi) reviewed two year financial forecasts for       
Michael furnished by Michael management; (vii) conducted discussions with       
members of senior management of Michael; (viii) conducted discussions with      
members of senior management of NSU; (ix) reviewed the historical prices and    
trading activity for Michael Common Stock and NSU Common Stock; (x) reviewed the
financial terms, to the extent publicly available, of certain comparable        
transactions it deemed relevant; (xi) considered the proforma effect of the     
proposed Merger on Michael earnings per share for the two fiscal years ending   
December 31, 1997; (xii) compared certain financial and securities data of      
Michael with certain financial and securities data of companies deemed similar  
to Michael or representative of the business sector in which Michael operates;  
and (xiii) reviewed other financial data, performed other analyses and          
considered other information as it deemed necessary and appropriate under the   
circumstances.                                                                  

In the course of its review, Piper Jaffray relied upon and assumed the
accuracy and completeness of the financial statements and other information     
provided by Michael, NSU or otherwise made available to Piper                   

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Jaffray and did not attempt independently to verify such information. Piper     
Jaffray further relied upon the assurances of Michael's management that the     
information provided pertaining to Michael was prepared on a reasonable basis   
and, with respect to financial planning data, reflected the best currently      
available estimates. In that regard, Piper Jaffray assumed, with Michael's      
consent, that any projections or forecasts reflected the best currently         
available estimates and judgments of the Michael management. Furthermore, Piper 
Jaffray assumed that neither Michael nor NSU was a party to any pending         
transaction, including external financings, recapitalizations, acquisitions or  
merger discussions, other than the Merger or otherwise not in the ordinary      
course of business. Piper Jaffray also assumed, with Michael's consent, that the
Merger, the Reverse Stock Split and the Distribution will not result in the     
recognition of income or loss for federal income tax purposes.                  

     In arriving at its opinion, Piper Jaffray did not perform any appraisals or
valuations of specific assets of Michael or NSU and expressed no opinion        
regarding the liquidation value of Michael or NSU. Its opinion is necessarily   
based upon information available to it, existing facts and circumstances and    
economic, market and other conditions as they exist and are subject to          
evaluation on the date of the opinion. Events occurring after the date of the   
opinion could materially affect the assumptions used in preparing its opinion.  
Piper Jaffray expressed no opinion as to the prices at which shares of Michael  
Common Stock may trade at any future time.                                      

     The following is a summary of the three primary analyses performed by Piper
Jaffray in connection with its opinion.                                         

  Dilution Analysis. A dilution analysis was done to determine whether the
transaction is dilutive to Michael's earnings per share. The Reorganization     
Agreement contemplates that Michael will assume between $25 million and $38     
million in Net Indebtedness from NSU in exchange for the retirement of a portion
of the Michael Common Stock held by NSU. The income statement effects from the  
transaction are an increased level of interest expense due to the assumption of 
debt and a decreased number of shares of Michael Common Stock outstanding due to
the retirement of a portion of the Michael Common Stock held by NSU. Michael's  
pre-transaction earnings per share were compared to the post-transaction        
earnings per share to see if and when the Reorganization was dilutive to        
Michael's earnings. Piper Jaffray's analysis of those figures currently supports
the conclusion that the transaction will be accretive to New Michael earnings   
per share in both fiscal 1996 and 1997.                                         

  Comparable Transactions. Piper Jaffray prepared a comparable transaction
analysis to compare the discount to market to be received by Michael for the    
retirement of Michael Common Stock in the Reorganization. The comparable        
transaction analysis involves a review of transactions deemed comparable to the 
Reorganization. Piper Jaffray focused on the following criteria to obtain a     
group of such comparables: (i) privately negotiated transactions in which a     
public company acquired a minority block of stock from a shareholder, excluding 
open market transactions; (ii) the market capitalization of the acquiring       
company exceeded $100 million; (iii) the percentage of shares repurchased was   
greater than or equal to 10% but less than 50%; and (iv) the transactions       
occurred between January 1, 1992, and December 21, 1995. These criteria yielded 
37 transactions.                                                                

   Piper Jaffray then reviewed the premium or discount paid for the block of
stock at three different points: one day prior to the announcement date, one    
week prior to the announcement date and four weeks prior to the announcement    
date. Piper Jaffray concluded that the discount factor for the Michael Common   
Stock to be retired in consideration for the retention of the Net Indebtedness  
compared favorably to the mean and median discounts for the transactions it     
reviewed.                                                                       

Cost Analysis. Piper Jaffray prepared a cost analysis that involved a 
review of the costs of the Reorganization to Michael in order to determine a    
range of discounts deemed appropriate for the transaction to cover such costs.  
The costs Piper Jaffray analyzed included: (i) fixed costs, including all       
professional fees (accountants, lawyers and financial advisors) and the costs   
associated with the Michael stockholder approval process; and (ii) variable     
costs, including (a) interest expense on NSU Indebtedness retained by New       
Michael, after taxes; (b) incremental interest expense expected to be incurred  
on Michael's current line of credit; and (c) underwriting expense for           
potentially reselling the repurchased stock in a public equity underwriting. The
aggregate of these costs is dependent on the amount of debt assumed by Michael  
and the                                                                         

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Michael Common Stock average per share price assumed in the redemption of       
Michael Retired Shares and is currently estimated to be in the range of $2.5    
million to $3.8 million.                                                        

The appropriate discount to apply to the Michael Common Stock price in
order to determine the amount of shares to be repurchased in consideration for  
assuming the Net Indebtedness was calculated by dividing the gross amount of the
costs (fixed plus variable) by the sum of the gross amount of the costs plus the
amount of Net Indebtedness. Based on Piper Jaffray's current analysis, the range
of implied appropriate discounts compared favorably to the discount factor      
range.                                                                          

    In addition to these primary analyses, Piper Jaffray also reviewed certain
stock market information on Michael and NSU as well as on comparable companies  
to Michael. While Piper Jaffray considered these reviews to be relevant and     
prudent, they did not play a major role in their determination of the fairness  
of the consideration exchanged.                                                 

    The foregoing is a summary of the financial analyses used by Piper Jaffray
in connection with rendering its opinion. The preparation of a fairness opinion 
is a complex process and is not necessarily susceptible to partial analysis or  
summary description. Selecting portions of the analyses or the summary set forth
above, without considering the analyses as a whole, could create an incomplete  
view of the processes underlying Piper Jaffray's opinion. In arriving at its    
opinion, Piper Jaffray considered the results of all such analyses. The analyses
were prepared solely for the purposes of Piper Jaffray providing its opinion as 
to the fairness of the repurchase and share exchange, from a financial point of 
view, to Michael and do not purport to be appraisals or necessarily reflect the 
prices at which businesses or securities actually may be sold. No company used  
in the comparable company analysis summarized above is identical to Michael and 
no transaction used in the comparable transaction analysis summarized above is  
identical to the transactions described herein. Any analysis of the fairness of 
the Merger, from a financial point of view, to Michael involves complex         
considerations and judgments concerning differences in the potential financial  
and operating characteristics of the comparable companies and transactions and  
other factors in relation to the trading and acquisition values of the          
comparable companies. Analyses based upon forecasts of future results are not   
necessarily indicative of actual future results, which may be significantly more
or less favorable than those suggested by such analyses. As described above,    
Piper Jaffray's opinion was one of many factors taken into consideration by the 
Michael Board in making its determination to approve the Reorganization         
Agreement.                                                                      

     Michael has agreed to pay Piper Jaffray a fee of $220,000 for rendering its
financial advisory services, including its opinion. This fee was not conditioned
upon the ability of Piper Jaffray to render its opinion. Michael also agreed to 
reimburse Piper Jaffray for its reasonable out-of-pocket expenses, including the
fees and disbursements of its counsel, and to indemnify Piper Jaffray against   
certain liabilities, including liabilities under the federal securities laws.   

Opinion of NSU's Financial Advisor. NSU retained GAHS as its financial
advisor in connection with the Reorganization. As a customary part of its       
investment banking business, GAHS is engaged in the valuation of businesses and 
securities in connection with mergers and acquisitions, private placements, and 
valuations for estate, corporate, and other purposes. GAHS does not make a      
market in the NSU Common Stock or Michael Common Stock.                         

   GAHS delivered its written opinion to the NSU Board, dated as of December
21, 1995, and as of the date of this Proxy Statement/Prospectus that, based upon
and subject to the matters set forth in its written opinions, as of each such   
date, the Reorganization is fair to NSU's shareholders from a financial point of
view. The full text of the written opinion of GAHS, dated as of the date of this
Proxy Statement/Prospectus, is set forth as Appendix III to this Proxy          
Statement/Prospectus and describes the assumptions made, matters considered, and
limits on the review undertaken. NSU shareholders are urged to read the opinion 
in its entirety. The following summary of the opinion is qualified in its       
entirety by reference to the full text of the opinion attached as Appendix III  
to this Proxy Statement/Prospectus. GAHS does not admit that it is an expert    
within the meaning of the term "expert" as used in the Securities Act and the   
rules and regulations promulgated thereunder, or that its opinions constitute a 
report or valuation within the meaning of Section 11 of the Securities Act and  
the rules and regulations promulgated thereunder.                               

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  GAHS's opinion addresses only the fairness of the Reorganization, from a
financial point of view, to NSU's shareholders, and does not constitute a       
recommendation to any NSU shareholder as to how such shareholder should vote    
with respect to any of the NSU Proposals. In connection with its opinion, GAHS  
was not requested to opine as to, and its opinion does not address the merits of
the basic business decision to proceed with or effect the Reorganization.       

In arriving at its opinion, GAHS undertook such reviews, analyses, and
inquiries as it deemed necessary and appropriate under the circumstances. Among 
other things, GAHS reviewed the Reorganization Agreement, the Distribution      
Agreement, and financial and other information relating to NSU and Michael. GAHS
reviewed the reported price and trading activity of NSU and Michael Common      
Stock. GAHS compared certain financial and stock market information with respect
to NSU and Michael with similar information for certain other companies,        
securities of which are publicly traded. GAHS made inquiries of NSU's management
as to NSU's financial condition, operating results, business outlook plans and  
opportunities. GAHS also conducted discussions with members of senior management
of Michael, and reviewed all publicly available information relative to NSU and 
Michael.                                                                        

  GAHS relied upon and assumed the accuracy, completeness, and fairness of
the financial statements and other information of NSU and Michael, and did not  
attempt independently to verify such information. GAHS further relied upon      
assurances by NSU that the information provided to GAHS had a reasonable basis, 
and with respect to projections and other business outlook information,         
reflected the best currently available estimates, and that NSU was not aware of 
any information or fact that would make such information provided to GAHS       
incomplete or misleading.                                                       

  GAHS's opinion is not based on any specific appraisal of the liquidation
value of NSU or Michael or any of their respective assets, or of ENStar or any  
of its assets. GAHS did not actively solicit indications of interest or value   
from any third parties for NSU or any of its assets; nor did GAHS solicit       
indications of interest or value from any third parties for Michael. GAHS is not
expressing any opinion as to the price at which shares of Common Stock of ENStar
or New Michael will trade subsequent to the Effective Date, and GAHS expressly  
disclaims any opinion as to prices at which shares of NSU or Michael Common     
Stock have traded prior to the date of the Reorganization. GAHS's opinion is    
based on the information made available to it and the facts and circumstances as
they exist as of the date of such opinion, and is subject to evaluation on the  
date thereof. Events occurring after the date of such opinion could materially  
affect the assumptions used in preparing such opinion. GAHS was not requested to
opine, and is not opining, in any way concerning other transactions or          
agreements entered into in conjunction with the Reorganization.                 

GAHS assumed that neither NSU nor Michael was a party to any pending  
transaction, including external financings, recapitalizations, acquisitions, or 
merger discussions, other than the Reorganization, or in the ordinary course of 
business. GAHS also assumed, based on NSU's instructions, that the              
Reorganization including the Merger and the Distribution, will not result in    
recognition of income or loss for federal income tax purposes.                  

 The following is a summary of the primary analysis performed by GAHS in
connection with its opinion.                                                    

Economic Comparison of NSU's Alternatives for its Michael Common      
Stock. Because ENStar will be configured so as to represent primarily the same  
assets and liabilities currently held by NSU, with the exception of the Michael 
Common Stock and the Net Indebtedness of NSU, ENStar will have the same         
intrinsic value as NSU prior to the Reorganization, modified by the economic    
impact of these two exceptions. Therefore, the net economic impact of the       
Reorganization on NSU shareholders is measured by the financial terms of the    
exchange by NSU of the Retired Michael Shares for Michael's assumption of NSU's 
Net Indebtedness. GAHS's first analysis focused on a comparison of the economic 
impact of this defacto sale by NSU to Michael of the Retired Michael Shares, to 
other alternatives open to NSU for disposition of the Michael Shares held by    
NSU.                                                                            

      - Public Sale by NSU. GAHS analyzed and evaluated the alternatives
available to NSU for registration of its Michael Common Stock under   
  applicable federal and state securities laws, and selling such shares to
  the public through a secondary offering or in an unregistered, piecemeal
fashion as                                                            

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     permitted under applicable laws. GAHS concluded that such alternative would
   result in lesser after-tax proceeds and inferior intrinsic value to NSU's
shareholders as compared to the Reorganization, due to the costs and  
    expenses of such an option, including without limitation, the income taxes
   payable by NSU in conjunction with such a sale or sales, as well as other
 market issues relating to the impact of such transaction on the trading
value of the Michael Common Stock.                                    

   - Private Sale by NSU of its Michael Shares. After analysis and
evaluation, GAHS concluded that a private sale by NSU of its Michael  
    shares, without registration under applicable federal and state securities
   laws, was not practical or appropriate. Moreover, GAHS concluded that, in
light of the tax impact of such an alternative, the intrinsic value to
NSU's shareholders of such a private sale would be inferior to the    
Reorganization.                                                       

        - The Sale of Michael in its Entirety. After analysis and evaluation
  and discussions with the management of Michael and the management of NSU
    and the NSU Board, GAHS concluded that the possible sale of Michael in its
   entirety was unlikely and impractical. Such a sale, however, might result
in a control premium and, if properly structured as a tax-free        
  reorganization with respect to NSU, could result in greater value to the
  NSU shareholders than that which they may receive in the Reorganization.
  Management of Michael confirmed to GAHS, however, that it had no present
  intention to pursue such a transaction based on its belief that it would
     not be in the best interests of Michael's shareholders. Moreover, after due
   consideration and discussions with management of NSU, GAHS concluded that
NSU was not in a position to unilaterally take action that would bring
   about a sale of Michael in its entirety without the support or initiation
  of Michael's management. A relevant consideration in GAHS's analysis was
the requirement that any such sale of Michael in its entirety would be
    required to be structured as a tax-free reorganization with respect to NSU
     also, in order to avoid recognition of substantial taxable income by NSU so
  as to achieve an intrinsic value to NSU shareholders equal to or greater
than the Reorganization.                                              

     Comparable Transactions. GAHS prepared a comparable transaction analysis to
compare the discount to market used in determining the number of Retired Michael
Shares in the Reorganization. The comparable transaction analysis involved a    
review of transactions deemed comparable to the Merger. GAHS focused on the     
following criteria to determine a group of comparables: (i) privately negotiated
transactions in which a public company acquired a minority block of stock from a
shareholder, excluding open market transactions; (ii) the market capitalizations
of the acquiring company exceeded $100 million; (iii) the percentage of shares  
repurchased was greater than 10% but less than 50%; and (iv) the transactions   
occurred between January 1, 1992 and December 21, 1995.                         

In addition, GAHS considered and evaluated the unique objectives and  
requirements confronting buyer and seller in such comparable transactions,      
including without limitation, the alternative opportunities for the seller to   
dispose of the stock and the relevance of tax-free or tax-advantaged transaction
structures.                                                                     

   GAHS then reviewed the premium or discount paid for the block of stock at
various points in time prior to and at the effective date of such transactions. 
While actual discounts ranged from nominal to 40% or greater, the most          
comparable transactions involved discounts in the 5% to 15% range. Key factors  
in determining the appropriate discount level in such transactions include the  
strength of the public market for the shares, the seller's alternatives for     
divesting such shares, the redeeming company's cost of capital and financial    
capability, its expenses incurred in conjunction with the stock repurchase, the 
impact of the stock repurchase on the company's balance sheet and future cost of
borrowing, as well as requirements for prospective secondary offerings by the   
redeeming company, and other special circumstances, including without           
limitation, tax advantages and/or costs to the selling shareholder and/or the   
redeeming company. Of particular relevance in GAHS's opinion, was the redemption
by E.I. DuPont de Nemours and Company of a substantial number of its shares held
by The Seagram Company Ltd. in April, 1995. The transaction highlights the      
market precedence for focusing on the after-tax attributes of a redemption to   
the selling company's shareholders.                                             

ENStar Strategic Considerations. GAHS considered that strategic       
considerations with respect to the prospects of ENStar were not meaningfully    
relevant to the issue of fairness of the Reorganization, due in large           

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measure to the fact that ENStar represents the same assets and liabilities as   
NSU prior to the effective date of the Reorganization, with the exception of the
elimination of the Retired Michael Shares and the Net Indebtedness.             
Nevertheless, GAHS considered that, in general, the Reorganization would have a 
favorable impact on ENStar's strategic prospects for numerous reasons, including
ENStar's increased focus and decreased leverage vis-a-vis NSU.                  

    The foregoing is a summary of the analyses used by GAHS in connection with
rendering its opinion. The preparation of a fairness opinion is a complex       
process and is not necessarily susceptible to partial analysis or summary       
description. Selecting portions of the analyses or of the summary set forth     
above, without considering the analyses as a whole, could create an incomplete  
view of the processes underlying GAHS's opinion. In arriving at its opinion,    
GAHS considered the results of all such analyses. The analyses were prepared    
solely for the purposes of GAHS providing its opinion as to the fairness of the 
Reorganization to NSU shareholders, from a financial point of view, and do not  
purport to be appraisals or necessarily reflect the prices at which businesses  
or securities actually may be sold. No company used in the comparable company   
analyses summarized above is identical to NSU and no transaction used in the    
comparable transaction analysis summarized above is identical to the            
Reorganization. Any analysis of the fairness of the Reorganization to NSU       
shareholders, from a financial point of view, involves complex considerations   
and judgments concerning differences in the potential financial and operating   
characteristics of the comparable companies and transactions and other factors  
in relation to the trading and acquisition values of the comparable companies.  
Analyses based upon forecasts of future results are not necessarily indicative  
of actual future results, which may be significantly more or less favorable than
those suggested by such analyses. As described above, GAHS's opinion was one of 
many factors taken into consideration by the NSU Board in making its            
determination to approve the Reorganization.                                    

 GAHS has been paid $77,500 for its financial advisory services to date,
including $25,000 in connection with the delivery of its fairness opinion on    
December 21, 1995. If the Reorganization is consummated, GAHS will receive an   
additional $175,000 to $225,000, depending upon the amount of the Discount      
Factor, for its financial advisory services and $75,000 for the issuance of its 
fairness opinion. Reasonable out-of-pocket expenses of GAHS will also be        
reimbursed by NSU, and NSU has agreed to indemnify GAHS against certain         
liabilities.                                                                    

PROCEDURE FOR EXCHANGE OF CERTIFICATES                                          

General. As soon as practicable after the Effective Time, The First   
National Bank of Boston, or another person mutually designated by Michael and   
NSU, in its capacity as the Exchange Agent, will send a transmittal letter to   
each Michael stockholder and NSU shareholder. The transmittal letter will       
contain instructions with respect to the surrender of certificates representing 
Michael Common Stock and NSU Common Stock in exchange for certificates          
evidencing New Michael Common Stock.                                            

    Michael. Upon receipt of stock certificates representing shares of Michael
Common Stock ("Michael Certificates"), the Exchange Agent will deliver shares of
New Michael Common Stock to the surrendering stockholder in accordance with the 
terms of the Reorganization Agreement.                                          

If any issuance of shares of New Michael Common Stock in exchange for 
shares of Michael Common Stock is to be made to a person other than the Michael 
stockholder in whose name the Michael Certificate is registered at the Effective
Time, it will be a condition of such exchange that the certificate so           
surrendered be properly endorsed or otherwise in proper form for transfer and   
that the Michael stockholder requesting such issuance either pay any transfer or
other tax required or establish to the satisfaction of New Michael that such tax
has been paid or is not payable.                                                

 After the Effective Time, there will be no further transfers of Michael
Common Stock on the stock transfer books of Michael. If a Michael Certificate   
representing Michael Common Stock is presented for transfer, it will be canceled
and a certificate representing the same number of shares of New Michael Common  
Stock will be issued in exchange therefor.                                      

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  After the Effective Time and until surrendered, shares of Michael Common
Stock will be deemed for all corporate purposes to evidence ownership of an     
equal number of shares of New Michael Common Stock. New Michael will not be     
obligated to deliver certificates evidencing shares of New Michael Common Stock 
to former shareholders of Michael until the Michael Certificates relating to    
such shares are surrendered. All declared dividends and distributions which     
shall have become payable with respect to such New Michael Common Stock in      
respect of a record date after the Effective Time will be paid to the holder of 
record of the full shares of New Michael Common Stock regardless of whether such
holder has surrendered for exchange his or her certificates evidencing Michael  
Common Stock.                                                                   

 NSU. Upon receipt of stock certificates evidencing shares of NSU Common
Stock ("NSU Certificates"), the Exchange Agent will deliver such number of full 
shares of New Michael Common Stock and cash in lieu of fractional shares of New 
Michael Common Stock, if any, as such shareholder is entitled to receive after  
the Reverse Stock Split, together with any dividends or other distributions of  
New Michael to which such shareholder is entitled. No fractional shares of New  
Michael Common Stock will be issued to NSU shareholders in connection with the  
Reverse Stock Split. In lieu of issuing fractional shares, NSU shareholders will
receive cash (without interest) determined by multiplying (a) the Average Price 
of Michael Common Stock times (b) the fractional share interest which such      
shareholders would otherwise be entitled to receive.                            

If any issuance of shares of New Michael Common Stock in exchange for 
shares of NSU Common Stock is to be made to a person other than the NSU         
shareholder in whose name the certificate is registered at the Effective Time,  
it will be a condition of such exchange that the certificate so surrendered be  
properly endorsed or otherwise in proper form for transfer and that the NSU     
shareholder requesting such issuance either pay any transfer or other tax       
required or establish to the satisfaction of New Michael that such tax has been 
paid or is not payable.                                                         

     After the Effective Time, there will be no further transfers of pre-Reverse
Stock Split NSU Common Stock on the stock transfer books of New Michael. If a   
certificate representing pre-Reverse Stock Split NSU Common Stock is presented  
for transfer, it will be canceled and a certificate representing the appropriate
number of full shares of New Michael Common Stock and cash in lieu of fractional
shares and any dividends and distributions will be issued in exchange therefor. 

     After the Effective Time and until surrendered, shares of pre-Reverse Stock
Split NSU Common Stock will be deemed for all corporate purposes, other than the
payment of dividends and distributions, to evidence ownership of the number of  
full shares of New Michael Common Stock into which such NSU Common Stock was    
combined in the Reverse Stock Split. No dividends or other distributions, if    
any, payable to holders of NSU Common Stock will be paid to the holders of any  
NSU Certificates until such certificates are surrendered. Upon surrender of such
NSU Certificates, all such declared dividends and distributions which shall have
become payable with respect to such NSU Common Stock in respect of a record date
after the Effective Time will be paid to the holder of record of the full shares
of New Michael Common Stock represented by the certificate issued in exchange   
therefor, without interest.                                                     

DISTRIBUTION OF ENSTAR COMMON STOCK                                             

  On or prior to the Effective Date of the Merger, NSU will deliver to its
transfer agent certificates representing all of the outstanding shares of ENStar
Common Stock. On the Effective Date, immediately after the Effective Time, NSU  
will deliver to such transfer agent an instruction to distribute as promptly as 
practicable following the Effective Date to each holder of record of NSU Common 
Stock on the record date for the Distribution stock certificates evidencing one 
share of ENStar Common Stock for every three shares of NSU Common Stock held of 
record by such shareholder on such record date for the Distribution and cash in 
lieu of any fractional shares of ENStar Common Stock. No certificate or scrip   
representing fractional shares of ENStar Common Stock will be issued as part of 
the Distribution, and in lieu of receiving fractional shares each holder of NSU 
Common Stock who would otherwise be entitled to receive a fractional share of   
ENStar Common Stock pursuant to the Distribution will receive cash for such     
fractional share. NSU will instruct its transfer agent to determine the number  
of whole shares and fractional shares of ENStar Common Stock                    

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allocable to each holder of record of NSU Common Stock as of the record date for
Distribution, to aggregate all such fractional shares into whole shares and sell
the whole shares obtained thereby in the open market, if possible, at then      
prevailing prices on behalf of the holders who otherwise would be entitled to   
receive fractional share interests and to distribute to each such holder such   
holder's ratable share of the total proceeds of such sale. ENStar will bear the 
costs and commissions incurred in connection with such sale. If the transfer    
agent is unable to sell such shares in the open market, ENStar will pay to such 
holders, in lieu of any fractional share, an amount of cash determined by       
multiplying (a) the average closing price per share of ENStar Common Stock on   
the Nasdaq National Market during the five days following the Effective Date    
times (b) the fractional share interest to which such holder would otherwise be 
entitled.                                                                       

LOST, STOLEN OR DESTROYED CERTIFICATES                                          

   In the event any Michael Certificates or NSU Certificates have been lost,
stolen or destroyed, the Exchange Agent will issue shares of New Michael Common 
Stock, in exchange for such lost, stolen or destroyed certificates upon the     
making of an affidavit of that fact by the owner of such certificates, provided 
that New Michael may, in its discretion require the holder of such lost, stolen 
or destroyed certificates to deliver a bond in a reasonable sum as indemnity    
against any claim that may be made against New Michael or the Exchange Agent    
with respect to the certificates alleged to have been lost, stolen or destroyed.

DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO MICHAEL
STOCKHOLDERS AND NSU SHAREHOLDERS PROMPTLY FOLLOWING THE EFFECTIVE TIME AS TO   
THE METHOD OF EXCHANGING CERTIFICATES FORMERLY REPRESENTING SHARES OF MICHAEL   
AND NSU COMMON STOCK. MICHAEL STOCKHOLDERS AND NSU SHAREHOLDERS SHOULD NOT SEND 
CERTIFICATES REPRESENTING THEIR SHARES TO THE EXCHANGE AGENT PRIOR TO RECEIPT OF
THE TRANSMITTAL LETTER.                                                         

ESCHEAT AND WITHHOLDING                                                         

     NSU, Merger Co., New Michael and ENStar will not be liable to any holder of
NSU Common Stock or Michael Common Stock for any consideration due such holder  
as a part of the Reorganization delivered to a public official pursuant to any  
applicable abandoned property, escheat or similar law. New Michael or the       
Exchange Agent will be entitled to deduct and withhold from such consideration  
to any NSU shareholder such amounts as New Michael or the Exchange Agent is     
required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign tax law.                      

INTEREST OF CERTAIN PERSONS IN THE REORGANIZATION                               

    In considering the respective recommendations of the Michael Board and the
NSU Board regarding the Reorganization Agreement and the transactions           
contemplated thereby, stockholders of Michael and shareholders of NSU should be 
aware that certain members of the management of Michael and NSU and the Michael 
and the NSU Boards have certain interests in the Reorganization that may be     
different from, or in addition to, the interests of stockholders of Michael and 
shareholders of NSU generally.                                                  

   Michael. All of the current directors of Michael, except James H. Michael
and Orville L. Freeman, will become directors of New Michael. In addition, the  
executive officers of Michael will become executive officers of New Michael. See
"THE REORGANIZATION AGREEMENT -- New Michael Management Following the           
Reorganization."                                                                

Pursuant to the Reorganization Agreement, New Michael will assume all 
existing Michael stock option plans and the stock award portion of Michael's    
Executive Incentive Plan. At the Effective Time, each outstanding right to      
purchase shares of Michael Common Stock (a "Michael Option"), will be assumed by
New Michael in such manner that it is converted into an option to purchase the  
same number of shares of New Michael Common Stock at the same exercise price.   
Each Michael Option assumed by New Michael will have the same terms and         
conditions as then are applicable to such Michael Option. As of April 15, 1996, 
directors and executive officers of Michael held outstanding Michael Options to 
purchase             shares of Michael Common Stock at exercise prices ranging  
from             .                                                              

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NSU. At or prior to the Effective Time, all of the NSU stock options  
outstanding under the NSU stock option plans will be canceled or exercised and  
all NSU stock option plans will terminate.                                      

Concurrently with the execution of the Reorganization Agreement, the  
Michael Family Shareholders, who own an aggregate of 5,685,100 shares (or       
approximately 60%) of the outstanding Common Stock of NSU, entered into the     
Orderly Disposition Agreement. Under the Orderly Disposition Agreement, the     
Michael Family Shareholders have agreed until the Effective Time (i) not to     
sell, offer to sell, hypothecate or transfer any shares of NSU, unless sold     
pursuant to Rule 144 of the Securities and Exchange Commission, pledged to      
secure certain surety bonds or transferred among the Michael Family             
Shareholders, (ii) to cause NSU to vote in favor of the Merger, the Reverse     
Stock Split, the Distribution and the election of directors nominated by the New
Michael Board of Directors at any meeting of New Michael shareholders called for
such purpose, and (iii) prepare any necessary pre-merger notifications as       
required under the HSR Act. The Michael Family Shareholders have also agreed to 
refrain for a period of two years following the Effective Date from selling,    
pledging or otherwise disposing of (i) shares of New Michael Common Stock       
exceeding 5% of the outstanding shares of New Michael Common Stock, or (ii) any 
of their shares to a purchaser who owns or would own more than 5% of the        
outstanding New Michael Common Stock without giving an option to New Michael to 
purchase such shares, except that they may pledge shares to secure certain      
surety bonds. New Michael must exercise its option by completing the purchase of
the shares within twenty days of notification by the Michael Family Shareholders
of an intent to sell. The restrictions do not apply if a tender offer is made   
for all of the outstanding New Michael Common Stock unless management of New    
Michael announces opposition to the tender offer. In addition, the Michael      
Family Shareholders are entitled during such two year period to certain         
piggyback registration rights under the Act with respect to the New Michael     
Common Stock if New Michael proposes to register common stock under the Act. The
Michael Family Shareholders also are entitled up to two times, during such two  
year period, to request registration of a minimum of 500,000 shares for sale in 
a public offering. However, New Michael would not be obligated to register      
shares if registration required a special audit and New Michael may delay the   
registration for 120 days under certain circumstances. Each selling Michael     
Family Shareholder will pay New Michael a pro rata share of the registration    
expenses, the aggregate fees and disbursements of underwriters, underwriting    
discounts and commissions and transfer taxes, if any, and fees and disbursements
of counsel to the Michael Family Shareholders in connection with any            
registration.                                                                   

Finally, for a period of two years following the Effective Time, the  
Michael Family Shareholders will be entitled to nominate two directors to the   
New Michael Board if they collectively own ten percent or more of the           
outstanding common stock of New Michael and one director to the Board if their  
ownership is below ten percent. The initial designees of the Michael Family     
Shareholders to the New Michael Board are Jeffrey J. Michael and Miles E. Efron,
both of whom currently are Michael directors. A copy of the Orderly Disposition 
Agreement is attached hereto as Exhibit E to the Reorganization Agreement       
included in Appendix I.                                                         

Peter E. Flynn, Executive Vice President, Chief Financial Officer and 
Secretary of NSU, is a party to an employment agreement with NSU and Transition 
which terminates December 31, 1997. Pursuant to that agreement, if Mr. Flynn's  
employment is terminated due to a "change in control" of NSU, Mr. Flynn is      
entitled to receive a single lump sum payment of $297,000. Also, if Mr. Flynn is
terminated by NSU, all of his then outstanding options immediately become       
vested. The consummation of the Reorganization will result in such a change in  
control under the terms of that agreement and Mr. Flynn's employment with NSU   
will be terminated.                                                             

ACCOUNTING TREATMENT                                                            

  The Merger will be accounted for as a business combination utilizing the
reverse acquisition method with Michael being the acquiror for accounting       
purposes under generally accepted accounting principles. As such, the Merger    
will be treated as an acquisition using the purchase method of accounting with  
no change in the recorded amount of Michael's assets and liabilities. The assets
and liabilities of NSU that are acquired as a result of the Merger will be      
recorded at their fair market values. The ENStar assets and liabilities will be 
recorded at their historic amounts, as recorded in the books and records of NSU,
following the Distribution.                                                     

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES                                         

Consummation of the Reorganization is conditional upon receiving the  
following rulings from the IRS:                                                 

      The Merger. The Merger will qualify as a reorganization within the
   meaning of Section 368(a)(1)(B) of the Code and NSU and Michael will each
  be a party to the reorganization within the meaning of Section 368(b) of
  the Code. Accordingly: (i) no income, gain or loss will be recognized by
    NSU or Michael as a result of the consummation of the Merger; (ii) no gain
    or loss will be recognized by the holders of Michael Common Stock upon the
exchange of Michael Common Stock solely for New Michael Common Stock  
 pursuant to the Merger; (iii) the basis of the New Michael Common Stock
 received by a stockholder of Michael pursuant to the Merger will be the
same as the basis of the Michael Common Stock surrendered in exchange 
therefor; and (iv) the holding period of the New Michael Common Stock 
  received by a stockholder of Michael pursuant to the Merger will include
   the period during which the Michael Common Stock surrendered therefor was
    held, provided the Michael Common Stock is a capital asset in the hands of
the stockholder of Michael at the time of the Merger.                 

        The Reverse Stock Split. The Reverse Stock Split will not be treated
 as a stock distribution, or a transaction that has the effect of such a
  distribution, to which Sections 301, 305(b) or 305(c) of the Code apply.
  Accordingly, no taxable income will be recognized under such Sections by
   any of the shareholders of NSU except for cash paid in lieu of fractional
  shares, which cash payment shall be treated as received by the holder of
  NSU Common Stock as a distribution in redemption of the fractional share
   interest and such shareholder will recognize gain or loss, subject to the
provisions and limitations of Section 302 of the Code.                

 The Distribution. The Distribution will qualify as a tax-free
    distribution under Sections 355 and 368(a)(1)(D) of the Code. Accordingly:
(i) NSU shareholders will not recognize income, gain or loss upon the 
    receipt of ENStar Common Stock; (ii) the tax basis of the shares of ENStar
   Common Stock and New Michael Common Stock (including any fractional share
interests to which an NSU shareholder is entitled) held by an NSU     
     shareholder after the Distribution will be the same as the tax basis of the
    shares of NSU Common Stock held by such shareholder immediately before the
Distribution, allocated in proportion to the fair market values of the
shares of ENStar Common Stock and New Michael Common Stock on the     
     Distribution Date; (iii) the holding period for the shares of ENStar Common
   Stock received by the NSU shareholders will include the holding period of
   the shares of NSU Common Stock with respect to which the Distribution was
  made, provided that the shares of NSU Common Stock are held as a capital
     asset on the Distribution Date; and (iv) where cash is received by a holder
of NSU Common Stock pursuant to the Distribution in lieu of fractional
  share interests in NSU Common Stock, the cash payment will be treated as
    received by the holder of NSU Common Stock as a distribution in redemption
   of the fractional share interest and such shareholder will recognize gain
  or loss, subject to the provisions and limitations of Section 302 of the
Code.                                                                 

  Treasury regulations governing Section 355 of the Code require that each
NSU shareholder who receives shares of ENStar Common Stock pursuant to the      
Distribution attach a statement to the federal income tax return that will be   
filed by the shareholder for the taxable year in which such shareholder received
the shares of ENStar Common Stock, which statement shows the applicability of   
Section 355 of the Code to the Distribution. ENStar has represented that it will
provide each ENStar shareholder with information necessary to comply with this  
requirement.                                                                    

 The rulings described above will be based upon certain representations,
including representations that (i) the holders of Michael Common Stock do not   
have any plan or intention to sell, exchange or otherwise dispose of a number of
shares of New Michael Common Stock received pursuant to the Merger that would   
reduce the ownership of New Michael Common Stock by all of the pre-Merger       
holders of Michael Common Stock to a number of shares having a value, as of the 
date of the Merger, of less than 50% of the value of all of the formerly        
outstanding Michael Common Stock as of the same date and (ii) the holders of    
ENStar Common Stock do not have any plan or intention to sell, exchange or      
otherwise dispose of any of their ENStar or New Michael Common Stock following  
and as part of the Distribution.                                                

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Where cash is received by a holder of NSU Common Stock who exercises  
dissenters' rights in connection with the Distribution, the cash payment will be
treated as received by the holder of NSU Common Stock as a distribution in      
redemption of such shareholder's NSU Common Stock and such shareholder will     
recognize gain or loss, subject to the provisions and limitations of Section 302
of the Code.                                                                    

    The foregoing is only a general description of certain anticipated federal
income tax consequences of the Merger, Reverse Stock Split, and Distribution    
without regard to the particular facts and circumstances of the tax situation of
each stockholder of Michael or shareholder of NSU. It does not discuss all of   
the consequences that may be relevant to Michael's stockholders or NSU's        
shareholders entitled to special treatment under the Code (such as insurance    
companies, dealers in securities, exempt organizations or foreign persons) or to
shareholders of NSU or stockholders of Michael who acquired their NSU Common    
Stock or Michael Common Stock pursuant to the exercise of employee stock options
or otherwise as compensation. The summary set forth above does not purport to be
a complete analysis of all potential tax effects of the transactions            
contemplated by the Reorganization Agreement or the Merger itself or the        
Distribution Agreement or the Distribution itself. No information is provided   
herein with respect to the tax consequences, if any, of the Merger, Reverse     
Stock Split or Distribution under state, local or foreign tax laws.             

THIS FEDERAL INCOME TAX DISCUSSION IS FOR GENERAL INFORMATION ONLY AND MAY NOT  
APPLY TO ALL HOLDERS OF NSU COMMON STOCK OR TO ALL HOLDERS OF MICHAEL COMMON    
STOCK. SUCH HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE       
SPECIFIC TAX CONSEQUENCES OF THE REORGANIZATION.                                

REGULATORY APPROVALS                                                            

    Antitrust. Under the HSR Act and the rules and regulations thereunder, the
Reorganization may not be consummated until notifications have been given and   
certain information has been furnished to the Antitrust Division of the United  
States Department of Justice (the "Antitrust Division") and the FTC and         
specified waiting period requirements have been satisfied. NSU and Michael each 
filed with the Antitrust Division and the FTC a Notification and Report Form    
(the "Notification and Report Form") with respect to the Merger on              
       . The initial waiting period for each of these filings is
scheduled to expire at 11:59 p.m. on                , unless Michael's and NSU's
request for early termination is granted.                                       

LISTING OF NEW MICHAEL COMMON STOCK; DIVIDENDS                                  

   New Michael expects to continue the Nasdaq National Market listing of NSU
Common Stock, but will use the symbol MIKL, rather than NSRU, and will          
discontinue the listing of New Michael Common Stock on the Pacific Stock        
Exchange. The payment of future dividends on New Michael Common Stock will be a 
business decision to be made by the New Michael Board from time to time based   
upon the results of operations and financial condition of New Michael and such  
other factors as the New Michael Board considers relevant.                      

LISTING OF ENSTAR COMMON STOCK; DIVIDENDS                                       

   ENStar has applied to have the ENStar Common Stock approved for quotation
on the Nasdaq National Market under the symbol "ENSR." Since ENStar will not    
have been publicly traded prior to the Distribution, there can be no assurance  
that an active market will develop or be sustained after the Distribution,      
although NSU has been advised that certain market makers in NSU Common Stock    
expect to make a market in ENStar Common Stock. Management of ENStar currently  
intends to retain any earnings for use in its operations and does not anticipate
paying any cash dividends in the foreseeable future.                            

EFFECT ON STOCK OPTION PLANS                                                    

 The 1987 Incentive Stock Option Plan of Michael, the 1987 Non-Qualified
Stock Option Plan of Michael, the 1992 Stock Option Plan for Non-Employee       
Directors of Michael, the 1994 Executive Incentive Plan, and the 1994 Executive 
Performance Share Award Plan (the "Michael Stock Plans") and the Michael Options
will be assumed and adopted by New Michael in accordance with the terms of the  
Michael Stock                                                                   

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Plans and the Michael Options, and will have the rights provided in such plans, 
which will remain unaffected by the Merger. New Michael will reserve a          
sufficient number of authorized but unissued shares of New Michael Common Stock 
for issuance under the Michael Stock Plans. As required pursuant to the terms of
the Reorganization Agreement, all outstanding NSU stock options will be         
exercised or canceled by the Effective Date and all NSU stock option plans will 
be terminated.                                                                  

FEDERAL SECURITIES LAWS CONSEQUENCES                                            

     All shares of New Michael Common Stock received by Michael stockholders and
NSU shareholders in the Merger, and all shares of ENStar Common Stock received  
by NSU shareholders in the Distribution, will be freely transferable, except    
that shares of New Michael Common Stock received by persons who are deemed to be
"affiliates" (as such term is defined under the Securities Act), of Michael or  
NSU prior to the Merger and shares of ENStar Common Stock received by persons   
who are deemed to be "affiliates" of NSU or ENStar may be resold by them only in
transactions permitted by the resale provisions of Rule 145 promulgated under   
the Securities Act (or Rule 144 in the case of such persons who become          
affiliates of New Michael or ENStar) or as otherwise permitted under the        
Securities Act. Persons who may be deemed to be affiliates of Michael, NSU,     
ENStar or New Michael generally include individuals or entities that control,   
are controlled by, or are under common control with, such party and may include 
certain officers and directors of such party as well as principal stockholders  
of such party.                                                                  

DISSENTERS' RIGHTS                                                              

     Under the Delaware General Corporation Law (the "DGCL"), holders of Michael
Common Stock are not entitled to dissenters' rights in connection with the      
Merger because the Michael Common Stock is designated as a national market      
system security on an interdealer quotation system by Nasdaq, Inc., and the     
consideration which such holders will receive in the Merger consists solely of  
New Michael Common Stock, which will also be designated as a national market    
system security on an interdealer quotation system by Nasdaq, Inc.              

  Holders of NSU Common Stock who do not vote in favor of the Distribution
and who have properly complied with Sections 302A.471 and 302A.473 of the MBCA  
will be entitled to dissenters' rights. Under the Reorganization Agreement, NSU 
is not required to complete the Merger if holders of 1% or more of the          
outstanding NSU Common Stock effectively elect dissenters' rights.              

Shareholders of NSU that follow the procedures set forth in Section   
302A.473 will be entitled to have their shares of NSU Common Stock appraised by 
a Minnesota court and to receive payment of the "fair value" of such shares as  
determined by that court. The shares of NSU Common Stock with respect to which  
the holder has perfected a demand for dissenters' rights in accordance with     
Section 302A.473 and has not effectively withdrawn or lost his rights to such   
appraisal are referred to in this Proxy Statement/Prospectus as the "Dissenting 
Shares."                                                                        

     Section 302A.473 entitles any holder of the NSU Common Stock who objects to
the Distribution, in lieu of receiving securities to which he or she would be   
entitled to under the Reorganization Agreement and the Distribution Agreement,  
to dissent therefrom and obtain payment for the "fair value" of his or her      
shares of NSU Common Stock. Any shareholder of NSU contemplating the exercise of
these dissenters' rights should carefully review the provisions of Sections     
302A.473 of the MBCA which has been provided as Appendix IV to this Proxy       
Statement/Prospectus, particularly the specific procedural steps to perfect such
rights. SUCH RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTION      
302A.473 ARE NOT FULLY AND PRECISELY SATISFIED.                                 

  Set forth below (to be read in conjunction with the full text of Section
302A.473 included with this Proxy Statement/Prospectus) is a brief description  
of the procedures relating to the exercise of dissenters' rights. The following 
description does not purport to be a complete statement of the provisions of    
Section 302A.473 and is qualified in its entirety by reference thereto.         

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Under Section 302A.473, Subd. 3, a shareholder of NSU who wishes to   
exercise dissenters' rights (a "Dissenter") must file with NSU at Suite 610,    
Park National Bank Building, 5353 Wayzata Blvd., Minneapolis, Minnesota 55416   
before the vote on the NSU Proposals, a written notice of intent to demand the  
"fair value" of NSU Common Stock owned by such shareholder. A shareholder of NSU
may not assert dissenters' rights as to less than all of the shares registered  
in the name of such shareholder unless that shareholder dissents with respect to
all the shares that are beneficially owned by another person but registered in  
the name of such shareholder and discloses the name and address of each         
beneficial owner on whose behalf such shareholder dissents. In that event, the  
rights of the Dissenter shall be determined as if the shares as to which such   
shareholder dissented and the other shares were registered in the names of      
different shareholders. A beneficial owner of shares of NSU Common Stock who is 
not the record holder may assert dissenters' rights with respect to shares held 
on behalf of the beneficial owner, and shall be treated as a Dissenter, if the  
beneficial owner submits to NSU a written consent of the record holder of such  
shares. IN ADDITION, THE SHAREHOLDER MUST NOT VOTE HIS OR HER SHARES IN FAVOR OF
THE DISTRIBUTION. A VOTE AGAINST SUCH PROPOSAL WILL NOT IN ITSELF CONSTITUTE    
SUCH A WRITTEN NOTICE AND A FAILURE TO VOTE WILL NOT AFFECT THE VALIDITY OF A   
TIMELY WRITTEN NOTICE. HOWEVER, THE SUBMISSION OF A BLANK PROXY WILL CONSTITUTE 
A VOTE IN FAVOR OF SUCH PROPOSAL AND A WAIVER OF STATUTORY DISSENTERS' RIGHTS.  

 If the Distribution is approved by the shareholders of NSU, New Michael
will send to all Dissenters who file the necessary notice of intent to demand   
the fair value of their shares and who did not vote their shares in favor of    
such proposals, a notice containing certain information required by Section     
302A.473, Subd. 4, including without limitation the address to which a Dissenter
must send a demand for payment and certificates representing shares in order to 
obtain payment for such shares and the date by which they must be received. In  
order to receive the fair value of the shares under Section 302A.473, a         
Dissenter must demand payment and deposit certificates representing shares of   
NSU Common Stock within 30 days after such notice from New Michael is given.    
Under Minnesota law, notice by mail is given by New Michael when deposited in   
the United States mail. A SHAREHOLDER WHO FAILS TO MAKE DEMAND FOR PAYMENT AND  
TO DEPOSIT CERTIFICATES AS REQUIRED BY SECTION 302A.473, SUBD. 4, WILL LOSE THE 
RIGHT TO RECEIVE THE FAIR VALUE OF HIS OR HER SHARES UNDER SUCH SECTION         
NOTWITHSTANDING THE TIMELY FILING OF NOTICE OF INTENT TO DEMAND PAYMENT UNDER   
SECTION 302A.473, SUBD. 3.                                                      

Except as provided below, if demand for payment and deposit of stock  
certificates is duly made by a Dissenter with New Michael as required by the    
notice, then after the Effective Time or the receipt of the demand, whichever is
later, New Michael will pay the Dissenter an amount that New Michael estimates  
to be the fair value of the Dissenter's shares of NSU Common Stock, with        
interest, if any. Under Sections 302A.471 and 302A.473, "fair value" means the  
value of the shares of NSU Common Stock immediately before the Effective Time   
and "interest" means interest commencing five days after the Effective Date     
until the time of payment, calculated at the rate provided in Minnesota Statutes
Section 549.09. If the Dissenter believes the payment received from New Michael 
is less than the fair value of the shares of NSU Common Stock, with interest, if
any, such Dissenter must give written notice to New Michael of his or her own   
estimate of the fair value of the shares of NSU Common Stock, with interest, if 
any, within 30 days after the date of New Michael's remittance, and must demand 
payment of the difference between his or her estimate and New Michael's         
remittance. If the Dissenter fails to give written notice of such estimate to   
New Michael within the 30-day time period, such Dissenter will be entitled only 
to the amount remitted by New Michael.                                          

New Michael may withhold such remittance with respect to shares of NSU
Common Stock for which the Dissenter demanding payment (or persons on whose     
behalf such Dissenter acts) was not the beneficial owner as of December 21,     
1995, the first public announcement date of the Merger (the "Public Announcement
Date"). As to each Dissenter who has validly demanded payment, following the    
Effective Time or the receipt of demand, whichever is later, New Michael will   
mail its estimate of the fair market value of such Dissenter's shares of NSU    
Common Stock and offer to pay this amount with interest, if any, to the         
Dissenter upon receipt of such Dissenter's agreement to accept this amount in   
full satisfaction. If such Dissenter believes                                   

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that New Michael's offer is less than the fair value of the shares of NSU Common
Stock, with interest, if any, such Dissenter must give written notice to New    
Michael of his or her own estimate of the fair value of the shares of NSU Common
Stock with interest, if any, and demand payment of this amount. This demand must
be mailed to New Michael within 30 days after the mailing of New Michael's      
offer. If the Dissenter fails to make this demand within such 30 day time       
period, such Dissenter shall be entitled only to the amount offered by New      
Michael.                                                                        

   If New Michael and the Dissenter cannot reach a settlement within 60 days
after New Michael receives the Dissenter's estimate of the fair value of his or 
her shares of NSU Common Stock, then New Michael must file a petition in the    
district court of Hennepin County, Minnesota, requesting that the court         
determine the statutory fair value of the NSU Common Stock, with interest, if   
any. All Dissenters whose demands are not settled within the applicable 60-day  
settlement period will be made parties to this proceeding.                      

    The court will then determine whether each Dissenter in question has fully
complied with the provisions of Section 302A.473, and for all Dissenters who    
have fully complied and not forfeited statutory dissenters' rights, will        
determine the fair value of the Dissenters' shares, taking into account any and 
all factors the court finds relevant (including, without limitation, the        
recommendation of any appraisers that may have been appointed by the court),    
computed by any method that the court, in its discretion, sees fit to use,      
whether or not used by New Michael or a Dissenter. The fair value of the        
Dissenters' shares as determined by the court is binding on all shareholders and
may be less than, equal to or greater than the consideration to the holders if  
the Reorganization is completed. However, under the statute, Dissenters are not 
liable to New Michael for the amount, if any, by which payments remitted to the 
Dissenters exceed the fair value of such shares determined by the court, with   
interest. The costs and expenses of this court proceeding will be assessed      
against New Michael, except that the court may assess part or all of such costs 
and expenses against a Dissenter whose action in demanding payment is found to  
be arbitrary, vexatious or not in good faith.                                   

   Under Section 302A.471, Subd. 4, a shareholder of NSU has no right at law
or equity to set aside the consummation of the Merger, the Reverse Stock Split, 
the Distribution or the New Articles, unless the adoption thereof is fraudulent 
with respect to such shareholder or NSU.                                        

 FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 302A.473 FOR PERFECTING
DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS. IN VIEW OF THE        
COMPLEXITY OF THE PROVISIONS OF SECTION 302A.473, SHAREHOLDERS OF NSU WHO ARE   
CONSIDERING DISSENTING FROM THE DISTRIBUTION SHOULD CONSULT THEIR OWN LEGAL     
ADVISORS.                                                                       

   NSU shareholders considering exercising dissenters' rights should bear in
mind that the fair value of their NSU Common Stock determined under Section     
302A.473 could be more than, the same as or less than the value of the          
consideration they will receive pursuant to the Reorganization Agreement if they
do not exercise dissenters' rights. In addition, in most cases, NSU shareholders
who receive cash for the fair value of their shares of NSU Common Stock upon the
exercise of dissenters' rights will realize taxable gain or loss for federal    
income tax purposes. EACH SHAREHOLDER OF NSU IS URGED TO CONSULT WITH HIS OR HER
OWN PERSONAL TAX AND FINANCIAL ADVISORS CONCERNING FEDERAL INCOME TAX           
CONSEQUENCES OF THE EXERCISE OF DISSENTERS' RIGHTS, AS WELL AS ANY APPLICABLE   
STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES, BASED UPON SUCH SHAREHOLDER'S  
OWN PARTICULAR FACTS AND CIRCUMSTANCES.                                         

THE REORGANIZATION AGREEMENT

   The following information describes certain aspects of the Reorganization
Agreement. This description does not purport to be complete and is qualified in 
its entirety by reference to the Appendices hereto, including the Reorganization
Agreement and exhibits thereto, which are attached to this Proxy                
Statement/Prospectus as Appendix I and are incorporated herein by reference. All
stockholders are urged to read Appendix I in its entirety. See also "THE        
DISTRIBUTION AGREEMENT."                                                        

GENERAL                                                                         

   The Reorganization Agreement provides that: (i) Merger Co. will be merged
with and into Michael and Michael will become a wholly-owned subsidiary of NSU; 
(ii) in the Merger, each stockholder of Michael                                 

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(other than NSU) will receive, in exchange for each share of Michael Common     
Stock held by such stockholder, one share of New Michael Common Stock; (iii) NSU
will change its name to Michael Foods, Inc. and will continue the business      
previously conducted by Michael (Michael will change its name to Michael Foods  
of Delaware, Inc.); (iv) prior to the consummation of the Merger, NSU will      
transfer to ENStar all of its assets and liabilities other than certain         
indebtedness and cash, as determined by NSU and other agreed upon assets and    
liabilities; (v) the outstanding common stock of ENStar will, conditioned upon  
the consummation of the Merger, be distributed pro rata to the shareholders of  
NSU of record as of a record date just prior to the Effective Date; and (vi)    
immediately prior to the Effective Time, NSU will effectuate the Reverse Stock  
Split. The ratio of the Reverse Stock Split will be determined pursuant to the  
terms of the Reorganization Agreement in the manner described below. See also   
"THE REORGANIZATION -- Effects of the Reorganization."                          

EFFECTS OF THE REORGANIZATION ON THE STOCKHOLDERS OF MICHAEL AND THE            
SHAREHOLDERS OF NSU                                                             

 Michael Stockholders. Upon consummation of the Merger, each outstanding
share of Michael Common Stock, other than the Michael Common Stock owned by NSU,
will be converted into the right to receive one share of New Michael Common     
Stock.                                                                          

   On and after the Effective Date, and until surrendered for exchange, each
outstanding stock certificate which immediately prior to the Effective Time     
represented shares of Michael Common Stock will be deemed for all purposes to   
evidence ownership of and to represent the same number of whole shares of New   
Michael Common Stock and the record holder of such outstanding certificate will,
after the Effective Date, be entitled to vote the shares of New Michael Common  
Stock into which such shares of Michael Common Stock will have been converted on
any matters on which the holders of record of the New Michael Common Stock, as  
of any date subsequent to the Effective Date, are entitled to vote. In any      
matters relating to such certificates of Michael Common Stock, New Michael may  
rely conclusively upon the record of stockholders maintained by Michael or its  
agent containing the names and addresses of the holders of record of Michael    
Common Stock on the Effective Time.                                             

     NSU Shareholders. On the Effective Date, immediately prior to the Effective
Time, but in any event subject to the consummation of the Merger, NSU will      
effectuate the Reverse Stock Split. In the Reverse Stock Split, each outstanding
share of NSU Common Stock will be converted into a fraction of one share of New 
Michael Common Stock determined by multiplying each such share by a fraction    
where the denominator is the number of outstanding shares of NSU Common Stock   
immediately prior to the Effective Date and the numerator is the number of      
shares of Michael Common Stock owned by NSU at such date less the Retired       
Michael Shares. For purposes of the Reorganization Agreement, Net Indebtedness  
is defined to be the amount of outstanding NSU subordinated debentures and fixed
or extendible time certificates and the Dissenting Shares Holdback less cash    
retained by New Michael. The Dissenting Shares Holdback is an amount to be      
mutually agreed upon by NSU and Michael based on the number of Dissenting       
Shares. Under the terms of the Reorganization Agreement, the Net Indebtedness   
retained by New Michael may not be less than $25,000,000 nor more than          
$38,000,000. The number of shares of Michael Common Stock to be retired in      
consideration for the Net Indebtedness will be determined by dividing the amount
of Net Indebtedness by the Average Price of Michael Common Stock after applying 
a certain percentage discount to the Average Price of Michael Common Stock. The 
Discount Factor will be based upon the amount of Net Indebtedness, ranging from 
92% at $25,000,000 to 90% beginning at $33,750,000, resulting in an effective   
discount of between 8% and 10%. The Discount Factor is determined pursuant to   
Exhibit A to the Reorganization Agreement, a copy of which is included in       
Appendix I to this Proxy Statement/Prospectus.                                  

     Pursuant to the Distribution Agreement between NSU and ENStar, prior to the
Merger, NSU will contribute and transfer to ENStar, all of NSU's assets, other  
than: (i) such amount of cash as NSU may, in its sole discretion, determine to  
retain at the Effective Date; (ii) 7,354,950 shares of Michael Common Stock     
owned by NSU; (iii) the capital stock of Merger Co.; (iv) the rights of NSU     
under the Reorganization Agreement, the Distribution Agreement and the Orderly  
Disposition Agreement; and (v) all net operating loss carryforwards and other   
tax attributes properly allocable to NSU following the Effective Date in        
accordance with the relevant provisions of the Code (the "NSU Retained Assets").
ENStar also will assume                                                         

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all NSU liabilities other than: (i) liabilities arising from assertion of       
dissenters' rights by NSU shareholders, (ii) liabilities under the              
Reorganization Agreement, the Distribution Agreement or the Orderly Disposition 
Agreement; and (iii) NSU's indebtedness (including principal and accrued        
interest, the "NSU Indebtedness") represented by NSU's outstanding subordinated 
debentures, subordinated extendible time certificates, subordinated fixed time  
certificates and bank debt (collectively, the "NSU Assumed Liabilities"). In    
addition, with certain limited exceptions, all intercompany receivables,        
payables and loans in existence as of the Effective Time between NSU and any NSU
subsidiary, will be eliminated, without the transfer of cash, by dividend or    
capital contributions, as appropriate.                                          

   On or prior to the Effective Date, NSU will deliver to its transfer agent
certificates representing all of the outstanding shares of ENStar Common Stock. 
On the Effective Date, immediately after the Effective Time, NSU will deliver to
such transfer agent an instruction to distribute as promptly as practicable     
following the Effective Date to each holder of record of NSU Common Stock on the
record date for the Distribution stock certificates evidencing one share of     
ENStar Common Stock for every three shares of NSU Common Stock held of record by
such shareholder on such record date for the Distribution and cash in lieu of   
any fractional shares of ENStar Common Stock. No certificate or scrip           
representing fractional shares of ENStar Common Stock will be issued as part of 
the Distribution, and in lieu of receiving fractional shares each holder of NSU 
Common Stock who would otherwise be entitled to receive a fractional share of   
ENStar Common Stock pursuant to the Distribution will receive cash for such     
fractional share.                                                               

NEW MICHAEL MANAGEMENT FOLLOWING THE REORGANIZATION                             

   The Board of Directors of New Michael (the "New Michael Board") after the
Merger will consist of nine members, seven of whom will be designated by the    
Michael Board. These designees are expected to include Gregg A. Ostrander,      
Richard A. Coonrod, Arvid C. Knudtson, Joseph D. Marshburn, Richard G. Olson,   
and             . There will initially be one vacancy on the New Michael Board. 
An additional director is expected to be appointed by the New Michael Board     
after the Effective Date. See "ELECTION OF MICHAEL DIRECTORS -- Nominees" for   
further information on the named individuals. Two additional directors are      
expected to be Jeffrey J. Michael and Miles E. Efron or other substitute        
nominees of the Michael Family Shareholders, if either Mr. Michael or Mr. Efron 
are unable to serve. Messrs. Michael and Efron currently are directors of       
Michael. NSU and Michael currently contemplate that the members of the NSU Board
other than Mr. Efron and Mr. Michael will resign as of the Effective Time and   
Mr. Efron and Mr. Michael will name the above-referenced individuals to the New 
Michael Board. The New Michael Board will elect the officers of Michael as the  
officers of New Michael. The officers of New Michael will be the officers of    
Michael on the Effective Date.                                                  

CONDITIONS                                                                      

    The obligations of NSU and Michael to effect the transactions contemplated
by the Reorganization Agreement are subject to the fulfillment or waiver on or  
prior to the Effective Date of the following conditions: (i) no injunction or   
other order entered by a state or federal court of competent jurisdiction has   
been issued and remain in effect which would prohibit or make illegal the       
consummation of the transactions contemplated in the Reorganization Agreement;  
(ii) no law, statute, rule or regulation, domestic or foreign, has been enacted 
or promulgated which would prohibit or make illegal the consummation of the     
transactions contemplated in the Reorganization Agreement; (iii) the NSU        
Registration Statement and the ENStar Registration Statement have been declared 
effective and is not subject to a stop order of the Commission or any state     
securities commission, and ENStar Common Stock has been registered pursuant to  
the Exchange Act; (iv) Michael and NSU have received a private letter ruling    
from the IRS or a tax opinion addressed to both Michael and NSU by counsel or   
independent certified accountants mutually acceptable to Michael and NSU as to  
certain tax issues (see "THE REORGANIZATION -- Certain Federal Income Tax       
Consequences"); (v) New Michael Common Stock to be issued to holders of Michael 
Common Stock as a result of the Merger and to the holders of NSU Common Stock as
a result of the Reverse Stock Split has been approved for listing on the Nasdaq 
National Market; (vi) all material consents and approvals necessary to          
consummate the transactions contemplated in the Reorganization Agreement have   
been received; (vii) there                                                      

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are no threatened, instituted or pending actions or proceedings before any court
or governmental authority or agency, domestic or foreign, challenging or seeking
to make illegal, or to delay or otherwise directly or indirectly to restrain or 
prohibit, the consummation of the Reorganization or seeking to obtain material  
damages; (viii) no action has been taken, or any statute, rule, regulation,     
judgment, order or injunction proposed, enacted, entered, enforced, promulgated,
issued or deemed applicable to the transactions contemplated hereby by any      
federal, state or other court, government or governmental authority or agency,  
which could reasonably be expected to result, directly or indirectly, in any of 
the consequences referred to in (vii) above; (ix) the conditions precedent to   
the Distribution have been satisfied or waived; (x) the representations and     
warranties of Michael and NSU in the Reorganization Agreement are true and      
correct as of the Effective Date, except to the extent such representations and 
warranties are made as of a specified date and, except where the failure to be  
true and correct would not have, or would not reasonably be expected to have, a 
material adverse effect on Michael or NSU; (xi) Michael and NSU have performed  
each obligation and agreement and complied with each covenant to be performed   
and complied with by them under the Reorganization Agreement at or prior to the 
Effective Time; and (xii) the parties have exchanged confirming certification   
and other evidence of satisfaction of all conditions.                           

The obligations of NSU to effect the transactions contemplated by the 
Reorganization Agreement are subject to fulfillment or waiver prior to the      
Effective Time of the following conditions: (i) the NSU Proposals have been     
approved by the requisite NSU shareholder vote; and (ii) the number of shares of
NSU Common Stock with respect to which the holders thereof have effectively     
dissented do not exceed one percent of the issued and outstanding shares of NSU 
Common Stock as of the record date for the NSU Annual Meeting.                  

   The obligations of Michael to effect the transactions contemplated by the
Reorganization Agreement are subject to fulfillment or waiver prior to the      
Effective Time of the following conditions: (i) the Reorganization Agreement and
the Merger have been approved by the requisite Michael stockholder vote; (ii) no
event has occurred which, in the reasonable opinion of Michael and concurred in 
by Grant Thornton LLP, would prevent the Merger, the Reverse Stock Split and the
Distribution from being accounted for as a business combination utilizing the   
reverse acquisition method with Michael being the accounting acquiror for       
accounting purposes under generally accepted accounting principles; (iii) NSU   
has furnished Michael a certificate of the Chief Financial Officer of NSU       
certifying the amounts of the NSU Assumed Liabilities, the NSU Indebtedness, the
Dissenting Shares Holdback and the cash held by NSU as a retained asset; (iv)   
Michael has received the executed Orderly Disposition and Registration Rights   
Agreement and Distribution Agreement; and (v) each of the officers of NSU have  
tendered resignations, effective immediately after the Effective Time.          

REPRESENTATIONS AND WARRANTIES                                                  

The Reorganization Agreement contains various representations and     
warranties of Michael, in respect of itself and its subsidiaries, and NSU in    
respect of NSU and its subsidiaries, relating, among other things, to the       
following matters (which representations and warranties are subject, in certain 
cases, to specified exceptions): (i) corporate organization, standing,          
qualification and similar corporate matters; (ii) the absence of violation of   
provisions of charter documents; (iii) capitalization; (iv) the authorization,  
execution, delivery and enforceability of the Reorganization Agreement; (v) the 
absence of conflict of the Reorganization Agreement with charter documents, laws
or agreements and required consents for the execution and delivery of the       
Reorganization Agreement; (vi) the absence of conflict with, default under or   
violation of agreements and laws, and the holding of permits necessary for the  
conduct of business, except as could not reasonably be expected to have a       
material adverse effect on the business, assets or financial condition of       
Michael or NSU, as the case may be; (vii) reports and other documents filed with
the Commission, the absence of material misstatements in the information        
contained therein, and the fair presentation of the financial statements        
contained therein in accordance with generally accepted accounting principles;  
(viii) conduct of business in the ordinary course; (ix) the absence of          
litigation to prevent the Reorganization; and (x) the absence of any material   
untrue statements in the Registration Statement and this Proxy                  
Statement/Prospectus.                                                           

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CERTAIN COVENANTS                                                               

Conduct of Business by NSU. The Reorganization Agreement provides that
until the Effective Date, unless Michael otherwise agrees in writing or as      
otherwise expressly contemplated or permitted by other provisions of the        
Reorganization Agreement, NSU will not, directly or indirectly: (i) amend or    
propose to amend its Articles or Bylaws except for the New Articles; (ii) issue,
sell or grant any of its equity securities other than NSU Common Stock,         
securities convertible into or exchangeable for its equity securities other than
NSU Common Stock, warrants, options or other rights to acquire its equity       
securities other than NSU Common Stock; (iii) reclassify any outstanding shares 
of capital stock of NSU; (iv) acquire (by merger, exchange, consolidation,      
acquisition of stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or assets thereof, except by 
a NSU subsidiary and in a transaction in which NSU shall not have any           
liabilities with respect thereto after the Effective Time; (v) sell, transfer,  
pledge or otherwise encumber the Michael Common Stock owned by NSU other than as
collateral for indebtedness under a certain credit agreement; (vi) purchase or  
otherwise acquire any additional shares of Michael Common Stock; (vii) default  
in its obligations under any material debt, contract or commitment which default
results in the acceleration of obligations due thereunder; or (viii) enter into 
or propose to enter into, or modify or propose to modify, any agreement,        
arrangement, or understanding with respect to any of the foregoing matters.     

    Conduct of Business by Michael. The Reorganization Agreement provides that
until the Effective Date, unless NSU otherwise agrees in writing or as otherwise
expressly contemplated or permitted by other provisions of the Reorganization   
Agreement, Michael will not, directly or indirectly: (i) amend its charter or   
bylaws; (ii) split, combine or reclassify any outstanding shares of capital     
stock of Michael; (iii) declare, set aside, make or pay any dividend or         
distribution in cash, stock, property or otherwise with respect to the capital  
stock of Michael, except for regular quarterly dividends which are not in excess
of $.05 per share per quarter on the Michael Common Stock, or (iv) default in   
its obligations under any material debt, contract or commitment which default   
results in the acceleration of obligations due thereunder, except for such      
defaults arising out of the Reorganization Agreement for which consent, waivers 
or modifications are required to be obtained.                                   

     Conditions and Undertakings. The Reorganization Agreement contains a number
of undertakings that must be completed by the parties prior to the Effective    
Date and other agreements. The parties agreed to cooperate in the filing of a   
ruling request with the IRS and an HSR notification. NSU also agreed to enter   
into the Distribution Agreement. NSU is required to notify Michael of the       
anticipated Net Indebtedness within a range of plus or minus $2,000,000 prior to
the effectiveness of the Registration Statement. In addition, the parties agreed
to retain certain information in confidence and to take appropriate action to   
complete the Reorganization.                                                    

TERMINATION                                                                     

    The Reorganization Agreement may be terminated prior to the Effective Date
under the following conditions: (i) by mutual consent of Michael and NSU, by    
majority vote of the entire board of directors of each; (ii) by either Michael  
or NSU, if any of the conditions to its obligation to consummate the            
transactions contemplated by the Reorganization Agreement have become impossible
to satisfy; (iii) by either Michael or NSU, if (a) the Merger is not duly       
approved by the stockholders of Michael; or (b) any one of the NSU Proposals is 
not approved by the shareholders of NSU; (iv) by either Michael or NSU if the   
Effective Date is not on or before September 30, 1996 or such later date as     
Michael and NSU may mutually agree (unless the failure to consummate the Merger 
by such date shall be due to the action or failure to act of the party seeking  
to terminate the Merger in breach of such party's obligations); (v) by NSU if   
the Average Price of Michael Common Stock is less than $11.00 per share; (vi) by
Michael if the Average Price of Michael Common Stock is more than $17.00 per    
share; or (vii) by Michael or NSU after notice and an opportunity to cure if a  
representation or warranty given by the other is updated in such a way to       
indicate that the party making such update will suffer a material adverse effect
or material liability.                                                          

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EXPENSES                                                                        

 Except as provided below, all costs and expenses incurred in connection
with the Merger will be paid by the party incurring the cost or expense. NSU and
Michael will each pay one-half of (i) all filing fees required to be paid under 
the HSR Act in connection with the Merger (but excluding any HSR filing in      
connection with the Distribution), (ii) all cost of filing fees with respect to 
the NSU Registration Statement, and (iii) all costs of qualifying New Michael   
Common Stock to be issued in the Reorganization under state blue sky laws to the
extent such qualification is necessary.                                         

  In the event the Reorganization Agreement is properly terminated: (i) by
Michael or NSU due to the failure of NSU to obtain the requisite shareholder    
approval for the NSU Proposals; (ii) by Michael due to the failure by NSU to    
satisfy certain conditions or if any of NSU's warranties and representations are
not true and correct and the failure to be true and correct would have a        
material adverse effect on NSU; (iii) by NSU if the Average Price of Michael    
Common Stock is less than $11.00 per share; (iv) by Michael if a representation 
or warranty given by NSU in the Reorganization Agreement is updated in such a   
way that the information indicates that NSU has suffered or will suffer a       
material adverse effect, or in the case of NSU's representation in the          
Reorganization Agreement regarding NSU's liabilities as of the Effective Time,  
Michael determines that NSU has suffered or will suffer a material liability,   
which has not been cured within 15 days after notice to NSU of Michael's intent 
to terminate because of the updated information; or (v) by NSU if holders of in 
excess of 1% of the outstanding NSU Common Stock effectively exercise           
dissenters' rights, then, within ten days after written demand from Michael, NSU
will pay to Michael an amount equal to the out of pocket expenses incurred by   
Michael in connection with the transactions contemplated by the Reorganization  
Agreement, up to an aggregate of $500,000, payable either, at the option of NSU,
in cash or in shares of Michael Common Stock having a fair market value         
(determined on the basis of the average closing sales price of Michael Common   
Stock during the twenty trading days immediately preceding such termination)    
equal to such amount.                                                           

   In the event the Reorganization Agreement is terminated (i) by Michael or
NSU due to the failure of Michael to obtain the requisite stockholder approval  
for the Reorganization Agreement and the Merger; (ii) by NSU due to the failure 
of Michael to satisfy certain conditions or, if any of Michael's warranties and 
representations are not true and correct, and the failure to be true and correct
would have a material adverse effect on Michael; (iii) by Michael if the Average
Price of Michael Common Stock is more than $17.00 per share; (iv) by NSU after  
notice to Michael and an opportunity to cure if a representation or warranty    
given by Michael in the Reorganization Agreement is updated in such a way that  
the information indicates that Michael has suffered or will suffer a material   
adverse effect or material liability; or (v) the transactions contemplated by   
this Agreement are not consummated solely because Michael has not obtained the  
necessary modifications to its material debt instruments or prepaid such debt   
instruments, then, within ten days after written demand from NSU, Michael must  
pay to NSU an amount equal to the out of pocket expenses incurred by NSU in     
connection with the transactions contemplated by this Agreement, up to an       
aggregate of $500,000, payable either in cash, or in shares of Michael Common   
Stock having a fair market value (determined on the basis of the average closing
sales price of Michael Common Stock during the twenty trading days immediately  
preceding such termination) equal to such amount.                               

  The expense reimbursement provisions in the Reorganization Agreement are
the sole and exclusive remedies of Michael and NSU for any termination of the   
Reorganization Agreement.                                                       

THE DISTRIBUTION AGREEMENT

 The following information describes certain aspects of the Distribution
Agreement. This description does not purport to be complete and is qualified in 
its entirety by reference to the Appendices hereto, including the Reorganization
Agreement and the exhibits thereto, which is attached to this Proxy             
Statement/Prospectus as Appendix I and is incorporated herein by reference and  
the Distribution Agreement, which is attached to the Reorganization Agreement as
Exhibit C. All Michael stockholders and NSU shareholders are urged to read      
Appendix I in its entirety. See also "THE REORGANIZATION AGREEMENT."            

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GENERAL                                                                         

    The Reorganization Agreement provides that NSU will, and will cause ENStar
to, execute and deliver the Distribution Agreement prior to the Effective Date. 
The Distribution Agreement requires NSU to contribute and transfer to ENStar or 
a ENStar subsidiary, as appropriate, all of NSU's assets (the "NSU Transferred  
Assets"), except for the NSU Retained Assets. In addition, ENStar will assume   
all liabilities of NSU (i) arising at any time prior to the Merger Effective    
Date, other than the NSU Assumed Liabilities, or (ii) arising as a result of the
Distribution other than the NSU Assumed Liabilities (the NSU Transferred        
Liabilities"). With certain limited exceptions, all intercompany receivables,   
payables and loans between NSU and any NSU subsidiary in existence as of the    
Effective Date will be eliminated.                                              

In the Distribution Agreement, ENStar acknowledges that NSU is not    
representing or warranting in any way (i) as to the value or freedom from       
encumbrance of, or any other matter concerning, any NSU Transferred Assets or   
(ii) as to the legal sufficiency to convey title to any such assets or the      
execution and delivery of the Distribution Agreement. All such assets are being 
transferred as is, where is, and ENStar will bear all economic and legal risks  
with respect to the NSU Transferred Assets.                                     

CONDITIONS                                                                      

    The Distribution is expressly conditioned on the prior consummation of the
Merger. The Distribution will not occur (i) if, on the Effective Date, NSU has  
not received an opinion of tax counsel or a private letter ruling from the IRS  
to the effect that the Distribution will qualify as a tax-free spin-off under   
Section 355 of the Code, and (ii) unless prior to such time the following       
conditions have been satisfied or waived: (a) the transfer of the NSU           
Transferred Assets to and the assumption of the NSU Transferred Liabilities by  
ENStar has been completed, (b) the ENStar Common Stock has been approved for    
quotation on the Nasdaq National Market or listing on a national securities     
exchange, (c) the ENStar Board has been elected by NSU, as sole shareholder of  
ENStar; (d) the ENStar Registration Statement has been declared effective by the
Commission and the Form 8-A relating to the shares of ENStar Common Stock to be 
distributed in the Distribution has become effective under the Exchange Act; and
(e) all conditions precedent to the obligations of NSU and Michael under the    
Reorganization Agreement (other than consummation of the Distribution) will have
been satisfied or waived and the Merger has been consummated.                   

THE DISTRIBUTION                                                                

   On or prior to the Effective Date, NSU will deliver to its transfer agent
certificates representing all of the outstanding shares of ENStar Common Stock. 
On the Effective Date, immediately after the Effective Time, NSU will deliver to
such transfer agent an instruction to distribute as promptly as practicable     
following the Effective Date to each holder of record of NSU Common Stock on the
record date for the Distribution stock certificates evidencing one share of     
ENStar Common Stock for every three shares of NSU Common Stock held of record by
such shareholder on such record date for the Distribution and cash in lieu of   
any fractional shares of ENStar Common Stock. No certificate or scrip           
representing fractional shares of ENStar Common Stock will be issued as part of 
the Distribution, and in lieu of receiving fractional shares each such holder of
NSU Common Stock pursuant to the Distribution will receive cash for such        
fractional share. If the number of outstanding shares of ENStar Common Stock    
exceeds the amount to be distributed in the Distribution, then the remaining    
shares will be deemed to have been contributed by NSU to the capital of ENStar  
and retired and canceled. All of the shares of ENStar Common Stock issued in the
Distribution will be fully paid, nonassessable and free of preemptive rights.   

CERTAIN COVENANTS                                                               

    The Distribution Agreement provides that New Michael will not, nor will it
permit Michael to do any of the following during the two year period following  
the Effective Date: (i) liquidate Michael; (ii) merge Michael with or into      
another corporation, unless Michael is the surviving corporation and the merger 
is not treated for tax purposes as a sale or other disposition of Michael Common
Stock; (iii) sell any shares of Michael Common Stock or cause Michael to issue  
any shares of Michael Common Stock to any party other                           

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than NSU; or (iv) sell any assets of New Michael to any third party not         
otherwise an affiliate of the foregoing, except for (a) sales in the ordinary   
course of business or (b) sales of assets if, after giving effect to such sales,
Michael will retain at least 90% of the fair market value of its gross assets in
active trades or businesses within the meaning of Section 355 of the Code;      
provided, however, New Michael or Michael may undertake any of the actions      
listed above if (1) ENStar consents thereto or (2) New Michael obtains either a 
tax opinion or a favorable private letter ruling from the IRS, in each case     
reasonably satisfactory to ENStar, to the effect that the actions to be         
undertaken would not adversely affect the tax free nature of the Merger or the  
Distribution to all of the parties thereto. The shareholders of record of NSU on
the record date for the Distribution are third party beneficiaries of the       
foregoing restrictions.                                                         

    ENStar and NSU have agreed in the Distribution Agreement that, on or prior
to the Distribution Date, to the extent required under any indenture with       
respect to any of the outstanding debentures or any of the outstanding          
subordinated extendible or fixed time certificates of NSU, they will execute and
deliver supplemental indentures or other agreements or instruments evidencing   
ENStar's assumption of NSU's obligations with respect to such outstanding       
debentures and subordinated extendible and fixed time certificates; provided,   
however, that as between NSU and ENStar, the NSU Indebtedness is not considered 
an NSU Transferred Liability and New Michael, after the Effective Time, shall be
responsible for the payment in full, in accordance with the terms thereof of all
of the NSU Indebtedness and shall indemnify ENStar for any and all liabilities  
with respect to the NSU Indebtedness.                                           

INDEMNIFICATION                                                                 

From and after the Effective Date, ENStar will indemnify New Michael, 
Michael and all Michael subsidiaries and Merger Co. against: (i) all liabilities
(other than the NSU Assumed Liabilities) of NSU or any NSU subsidiary (other    
than Michael and its Subsidiaries), including any subsidiary owned by NSU prior 
to the Effective Date but not owned by NSU on the Merger Effective Date, arising
out of: (a) the NSU Transferred Liabilities, and (b) the transactions           
contemplated under the Distribution Agreement, including the Distribution and   
any taxes as a result of the Distribution (other than (X) any liabilities       
resulting from any breach by New Michael, after the Effective Date, of the      
Distribution Agreement, (Y) any liability of NSU for taxes resulting from a     
breach by New Michael of the restrictions set forth above relating to the two   
year period after the Effective Date, and (Z) obligations, after the Effective  
Date, expressly assumed by New Michael under the Distribution Agreement); (ii)  
all liabilities arising from any claim made by any shareholder of ENStar on or  
after the Effective Date or by any shareholder or former shareholder of NSU     
prior to the Effective Date relating to any act or omission of NSU on or prior  
to the Effective Date in connection with the Merger or any of the other         
transactions as contemplated by the Reorganization Agreement; (iii) all         
liabilities assumed by ENStar in the Distribution Agreement relating to the     
employee benefit plans of NSU; (iv) all liabilities of ENStar or any subsidiary 
of ENStar arising out of transactions or events entered into or occurring after 
the Effective Date, or any action or inaction, including but not limited to,    
contracts, commitments and litigation, with respect to, entered into or based   
upon transactions or events occurring after the Effective Date with respect to  
ENStar or any subsidiary of ENStar (other than the NSU Assumed Liabilities); (v)
any breach of the Distribution Agreement by ENStar or any subsidiary of ENStar  
after the Effective Date; and (vi) damages, costs, and expenses including       
attorney's fees incurred in defending and settling claims for such liabilities. 

  From and after the Effective Date, New Michael will indemnify ENStar and
any ENStar subsidiary against: (i) all liabilities of New Michael, Michael or   
any subsidiary of New Michael or Michael arising out of transactions or events  
entered into or occurring after the Effective Date, or any action or inaction,  
including but not limited to, contracts, commitments and litigation, with       
respect to, entered into or based upon transactions or events occurring after   
the Effective Date with respect to New Michael, Michael, any subsidiary of New  
Michael after the Effective Date or any subsidiary of Michael, other than any   
liability arising out of the NSU Transferred Liabilities; (ii) all liabilities  
relating to the NSU Assumed Liabilities; (iii) all liabilities of Michael or any
subsidiary of Michael arising before, on or after the Merger Effective Date;    
(iv) all liabilities arising from any claim made by any current or former       
Michael stockholder or shareholder of New Michael after the Effective Date who  
was a Michael stockholder or NSU shareholder immediately prior to the           

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Effective Date relating to any act or omission of Michael in connection with the
Merger or any of the other transactions contemplated in the Reorganization      
Agreement or the Distribution Agreement; (v) any breach of the Distribution     
Agreement by New Michael after the Merger Effective Date; and (vi) damages,     
costs and expenses including attorney's fees incurred in defending and settling 
claims for such obligations, expenses or liabilities.                           

    The Distribution Agreement provides for certain procedures for the parties
to assert claims for indemnification thereunder, including the mediation and    
arbitration of disputes arising under the Distribution Agreement. In the event  
that New Michael realizes a benefit in the form of a reduction in the federal or
state income taxes which New Michael would otherwise be obligated to pay, as a  
result of the net operating loss carryforwards properly allocable to New Michael
from all tax periods prior to or ending on the Effective Date, ENStar has the   
right to set-off the amount of any such tax savings against any liability of    
ENStar under the Distribution Agreement (including the indemnification          
obligations described above).                                                   

In order to provide for the required payments to be made to satisfy   
Dissenters' claims, New Michael will retain cash in an amount to be agreed upon,
in excess of the cash applied to NSU's indebtedness. Any cash not used for this 
purpose will be delivered to ENStar after payment of all Dissenters' claims.    
ENStar also is required to pay or cause the release of New Michael from certain 
obligations of NSU under certain leases and NSU's guarantee of indebtedness of a
subsidiary of NSU within three years after the Effective Date (the date of the  
release of such obligations, the "Release Date").                               

In order to further provide that ENStar will be able to meet its      
indemnification obligations to New Michael under the Distribution Agreement,    
ENStar has agreed in the Distribution Agreement that it will not: (i) pay any   
dividends, whether in cash or in property, or make any other distribution to its
shareholders, or redeem any of its capital stock for cash or property; (ii)     
sell, transfer or dispose of any material amount of its assets in a single      
transaction or related series of transactions, except in the ordinary course of 
its business or for fair value; or (iii) sell, transfer or dispose of all or    
substantially all of its assets or engage in any merger, consolidation or       
reorganization unless (a) in the case of the sale, transfer or other disposition
of all or substantially all of its assets, the purchaser assumes the obligations
of ENStar (jointly and severally with ENStar) under the Distribution Agreement, 
(b) in the case of a merger, consolidation or reorganization, the surviving     
entity assumes the obligations of ENStar under the Distribution Agreement, or   
(c) the Market Value (as defined below) of ENStar immediately after giving      
effect to such dividend, distribution, redemption or other transaction is at    
least equal to the following amounts during the following periods: (X)          
$9,000,000 during the period beginning on the Effective Date and continuing to  
the later to occur of (a) the Release Date or (b) the third anniversary of the  
Effective Date; (Y) $3,000,000 during the period from the end of the period     
referenced in clause (X) above and continuing to the fifth anniversary of the   
Effective Date. The term "Market Value" is defined in the Distribution Agreement
as the greater of: (a) the market capitalization of ENStar's outstanding equity 
securities, if ENStar is a publicly traded company, or (b) the net book value of
ENStar computed in accordance with generally accepted accounting principles,    
except that securities owned by ENStar which are publicly traded shall be valued
at their market value without any adjustment for lack of liquidity or control   
premium, but reduced for any taxes payable on the disposition of such           
securities, taking into account any and all tax benefits available to ENStar and
using ENStar's then applicable effective tax rate for purposes of such          
calculations.                                                                   

    Under the Distribution Agreement, New Michael is required to repay in full
all of the NSU Indebtedness not later than six months after the Effective Date. 
All such repayments (excluding any payments made with respect to any instruments
that have matured or otherwise become due and payable in accordance with their  
respective terms prior to such repayment date) are to be effected on or about   
the same date.                                                                  

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION 

    The Michael Common Stock is listed on the Nasdaq National Market under the
symbol MIKL. The NSU Common Stock is listed on the Nasdaq National Market under 
the symbol NSRU and the Pacific Stock Exchange under the symbol NSU.            

The table below sets forth for the calendar quarters indicated, the   
reported low and high sales prices of Michael Common Stock and NSU Common Stock 
as reported on the Nasdaq National Market, in each case based on published      
financial sources, and the dividends declared by Michael on such stock. NSU paid
no dividends during 1993, 1994 or 1995.                                         

                                                        [Enlarge/Download Table]

                                                                                          NSU      
                                                          MICHAEL COMMON STOCK        COMMON STOCK 
                                                      -----------------------------  --------------
                                                       LOW       HIGH     DIVIDENDS   LOW     HIGH 
                                                      ------    ------    ---------  -----    -----
                                                                                                   
1993                                                                                               
      First Quarter.................................. $ 8.13    $11.50      $ .05    $4.50    $7.13
      Second Quarter.................................   6.50      9.38        .05     3.88     5.50
      Third Quarter..................................   8.63     10.75        .05     4.75     6.50
      Fourth Quarter.................................   7.50      9.75        .05     4.50     6.88
1994                                                                                               
      First Quarter..................................   7.88     11.25        .05     4.63     5.63
      Second Quarter.................................   9.00     12.38        .05     4.38     6.00
      Third Quarter..................................  10.13     13.25        .05     4.88     6.38
      Fourth Quarter.................................   9.25     13.00        .05     4.38     5.75
1995                                                                                               
      First Quarter..................................   9.00     12.38        .05     4.25     5.63
      Second Quarter.................................  10.25     13.25        .05     5.00     5.50
      Third Quarter..................................  10.63     14.50        .05     5.13     6.13
      Fourth Quarter.................................  10.75     13.75        .05     5.63     8.13

    New Michael expects to continue the Nasdaq National Market listing of NSU,
but will discontinue the Pacific Stock Exchange Listing. It is expected that the
New Michael Common Stock will trade under the symbol MIKL.                      

   ENStar has applied for quotation of the ENStar Common Stock on the Nasdaq
National Market under the symbol ENSR. There currently is no market for the     
ENStar Common Stock.                                                            

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS 

   The following Unaudited Pro Forma Condensed Combined Financial Statements
are prepared to give effect to the consummation of the Reorganization. The      
Reorganization contemplates that prior to the Effective Date, NSU will transfer 
certain of its assets, including its investment in CorVel, and certain of its   
liabilities, other than certain indebtedness, to ENStar. The combined historical
net assets and results of the entities that NSU will contribute to ENStar are   
contained in the columns labeled ENStar Historical.                             

 The pro forma balance sheet and pro forma statements of earnings of NSU
give effect to the Distribution as if the Distribution had occurred at December 
31, 1995 and January 1, 1995, respectively. The unaudited pro forma condensed   
combined balance sheet and unaudited condensed combined pro forma statement of  
earnings of New Michael have been prepared as if the Reorganization was         
consummated on December 31, 1995 and January 1, 1995, respectively.             

Assumptions underlying the pro forma adjustments are described in the 
accompanying notes which should be read in conjunction with these pro forma     
statements. These statements should be read in conjunction with the historical  
financial statements of NSU, Michael, ENStar and CorVel, and the notes thereto, 
which are incorporated by reference herein. The pro forma statements do not     
purport to be indicative of the actual results of operations which would have   
occurred had the Reorganization been consummated at the beginning of the period,
or of the future results of operations which may be obtained by ENStar or New   
Michael.                                                                        

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1995 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]

                                                                                                       NEW   
                                         NSU        ENSTAR       NSU      MICHAEL                    MICHAEL 
                                      HISTORICAL  HISTORICAL  PRO FORMA  HISTORICAL  ADJUSTMENTS    PRO FORMA
                                      ----------  ----------  ---------  ----------  -----------    ---------
                                                                                                             
ASSETS                                                                                                       
Current Assets                                                                                               
  Cash and cash equivalents.........   $  3,369    $    246    $ 3,123    $  1,921    $  11,050  A  $  1,921 
                                                                                        (14,173) A           
  Accounts receivable, net..........      8,784       8,784         --      40,583           --       40,583 
  Inventories.......................      6,631       6,631         --      58,845           --       58,845 
  Prepaid expenses and other........        274         274         --       1,622           --        1,622 
  Net assets held for sale..........      1,032       1,032         --          --           --           -- 
                                       --------    --------    -------    --------    ---------     -------- 
  Total current assets..............     20,090      16,967      3,123     102,971       (3,123)     102,971 
Property and equipment, net.........      1,453       1,453         --     184,141           --      184,141 
Investment in Michael...............     68,526          --     68,526          --      (68,526) B        -- 
Investment in CorVel................     15,016      11,682      3,334          --       (3,334) A        -- 
Goodwill, net.......................      4,960       4,960         --      57,829           --       57,829 
Other assets........................        189         189         --      14,286         (800) D    13,486 
                                       --------    --------    -------    --------    ---------     -------- 
                                       $110,234    $ 35,251    $74,983    $359,227    $ (75,783)    $358,427 
                                       ========    ========    =======    ========    =========     ======== 
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                         
Current Liabilities                                                                                          
  Notes payable.....................   $    937    $    937    $    --    $     --    $      --     $     -- 
  Current portion of long-term                                                                               
    debt............................     13,161       1,088     12,073      11,731      (12,073) A    11,731 
  Accounts payable..................      5,239       5,239         --      27,362           --       27,362 
  Accrued liabilities...............      5,163       5,163         --      21,783           --       21,783 
                                       --------    --------    -------    --------    ---------     -------- 
  Total current liabilities.........     24,500      12,427     12,073      60,876      (12,073)      60,876 
Long-term debt......................     29,319         158     29,161      89,690          400C     117,151 
                                                                                         (2,100) A           
Deferred income taxes...............     21,935       2,972     18,963      28,566       (1,452) A    28,566 
                                                                                        (17,511) B           
Stockholders' equity................     34,480      19,694     14,786     180,095        9,168  A   180,095 
                                                                                         (9,168) B           
                                                                                        (14,786) B           
Retired Michael shares..............         --          --         --          --      (27,061) B   (28,261)
                                                                                           (400) C           
                                                                                           (800) D           
                                       --------    --------    -------    --------    ---------     -------- 
Total stockholders' equity..........     34,480      19,694     14,786     180,095      (43,047)     151,834 
                                       --------    --------    -------    --------    ---------     -------- 
                                       $110,234    $ 35,251    $74,983    $359,227    $ (75,783)    $358,427 
                                       ========    ========    =======    ========    =========     ======== 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        [Enlarge/Download Table]

                                                                                                 NEW    
                                    NSU        ENSTAR     NSU PRO    MICHAEL                   MICHAEL  
                                 HISTORICAL  HISTORICAL    FORMA    HISTORICAL   ADJUSTMENTS  PRO FORMA 
                                 ----------  ----------  ---------  ----------   -----------  --------- 
                                                                                                        
Revenues........................  $ 54,891    $ 54,891    $    --    $ 536,627     $    --    $ 536,627 
Operating and product costs.....    39,525      39,525         --      454,652          --      454,652 
                                   -------     -------    -------     --------     -------     -------- 
  Gross profit..................    15,366      15,366         --       81,975          --       81,975 
Selling, general, and                                                                                   
  administrative expenses.......    14,882      14,333        549       45,729        (449)E     45,829 
                                   -------     -------    -------     --------     -------     -------- 
  Operating income (loss).......       484       1,033       (549)      36,246         449       36,146 
Interest expense, net...........    (4,120)       (247)    (3,873)      (7,635)        400F      (9,531)
                                                                                     1,577G             
                                   -------     -------    -------     --------     -------     -------- 
Income (loss) before income                                                                             
  taxes and equity in earnings                                                                          
  (loss) of unconsolidated                                                                              
  subsidiaries..................    (3,636)        786     (4,422)      28,611       2,426       26,615 
Income tax expense (benefit)....    (1,200)        405     (1,605)      11,020         923H      10,338 
                                   -------     -------    -------     --------     -------     -------- 
Income (loss) before equity in                                                                          
  earnings of unconsolidated                                                                            
  subsidiaries..................    (2,436)        381     (2,817)      17,591       1,503       16,277 
Equity in earnings of                                                                                   
  unconsolidated subsidiaries...     5,526       1,191      4,335           --      (4,335)I         -- 
                                   -------     -------    -------     --------     -------     -------- 
Income (loss) from continuing                                                                           
  operations....................  $  3,090    $  1,572    $ 1,518    $  17,591     $(2,832)   $  16,277 
                                   =======     =======    =======     ========     =======     ======== 
Net earnings per share..........                                     $    0.91                $    0.97 
                                                                      ========                 ======== 
Weighted average shares                                                                                 
  outstanding...................                                        19,328      (2,561)J     16,767 
Pro forma income per share --                                                                           
  continuing operations.........              $    .49K                                                 
                                               =======                                                  
Pro forma weighted average                                                                              
  shares outstanding............                 3,217K                                                 

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NOTES TO THE UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS 

A.  To record the January 1996 sale of 350,000 shares of CorVel common stock by 
NSU for $11,050,000, to recognize the related gain which will be offset 
against existing net operating loss carryforwards and to eliminate the  
related deferred income tax liability. These proceeds ($11,050,000),    
 together with the cash and cash equivalents of NSU ($3,123,000), are then
   applied to eliminate a portion of long-term debt and all current maturities
of NSU.                                                                 

B.  To reflect the reacquisition of 2,560,594 Retired Michael Shares and the    
assumption of Net Indebtedness of $27,061,000. See "THE                 
REORGANIZATION -- Effects of the Reorganization" for an example of such 
    calculation. This entry also eliminates NSU's current equity in Michael, the
related deferred income taxes and the gain recognized on the sale of the
CorVel common stock.                                                    

C.  To apply fair value purchase accounting to the Net Indebtedness acquired by 
  New Michael as a part of the Merger. The Net Indebtedness has an effective
    interest rate of approximately 10% and is assumed to be retired and replaced
   with indebtedness having an effective interest rate of approximately 7% six
months after the Merger. See footnotes F and G below.                   

D.  To reclassify deferred transaction costs of Michael related to the          
Reorganization as additional cost of the Retired Michael Shares.        

E.  To eliminate NSU's nonrecurring corporate general and administrative        
    expenses of $249,000 and to reflect reduced compensation levels at ENStar by
$200,000. NSU's continuing costs are the costs of administering the Net 
Indebtedness retained by New Michael.                                   

F.  To record the amortization of the fair market value adjustment recorded by  
Michael related to the Net Indebtedness retained by New Michael. (See   
footnote C above.)                                                      

G.  To adjust interest expense related to the Net Indebtedness retained by New  
    Michael assuming such indebtedness, net of the cash acquired, is retired and
replaced with indebtedness having an effective interest rate of         
approximately 7% for the last six months of the year.                   

H.  To adjust income tax expense based on the effective income tax rate for     
Michael for the year ended December 31, 1995.                           

I.  To eliminate NSU's equity in earnings in unconsolidated subsidiaries for    
Michael and the portion attributable to the CorVel common stock sold in 
January 1996.                                                           

J.  To reduce the number of shares of Michael Common Stock outstanding to       
    reflect the Retired Michael Shares. The number of Retired Michael Shares was
computed based on the calculations set forth herein under "THE          
REORGANIZATION -- Effect of the Reorganization."                        

K.  To reflect the pro forma income per share of ENStar utilizing the weighted  
   average number of shares of NSU Common Stock outstanding for the year ended
December 31, 1995. The calculation assumes one share of ENStar will be  
distributed for every three shares of NSU Common Stock.                 

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DESCRIPTION OF NEW MICHAEL CAPITAL STOCK

     Upon adoption of the New Articles by the shareholders of NSU, New Michael's
authorized capital stock will consist of 50,000,000 shares: 40,000,000 shares of
Common Stock, par value $.01 per share, and 10,000,000 shares of undesignated   
stock. The following description assumes that the New Articles have been adopted
by the shareholders of NSU.                                                     

COMMON STOCK                                                                    

The holders of the Common Stock of New Michael are entitled to receive
ratably such dividends, if any, as may be declared by the New Michael Board out 
of funds legally available for the payment of dividends, after provision for    
payment of preferred stock dividends, if any. In all matters to come before the 
shareholders, holders of the New Michael Common Stock will be entitled to one   
vote for each share of New Michael Common Stock held and are not entitled to    
cumulate votes, which means that the holders of a majority of the total voting  
power of such shares can elect all of the directors entitled to be elected by   
the holders of New Michael Common Stock. Shareholders will have no preemptive   
rights. In the event of the liquidation, dissolution or winding up of New       
Michael, subject to the preferential rights, if any, of preferred shareholders, 
the holders of New Michael Common Stock are entitled to share ratably in all    
assets of New Michael remaining after provision for payment of liabilities. The 
outstanding shares of NSU Common Stock are, and the shares of New Michael Common
Stock to be issued in the Reorganization, when issued as described herein, will 
be validly issued, fully paid and nonassessable.                                

UNDESIGNATED STOCK                                                              

    Pursuant to the New Articles, the New Michael Board is authorized, without
shareholder approval, to issue one or more classes or series of stock with      
respect to which the New Michael Board may determine voting, conversion and     
other rights which could adversely affect the rights of holders of New Michael  
Common Stock. The rights of the holders of New Michael Common Stock generally   
would be subject to the prior rights of any preferred stock with respect to     
dividends, liquidation preferences and other matters. Among other things,       
preferred stock could be issued by New Michael to raise capital or to finance   
acquisitions. The issuance of preferred stock under certain circumstances could 
have the effect of delaying or preventing a change of control of New Michael.   

TRANSFER AGENT AND REGISTRAR                                                    

 The First National Bank of Boston is the Transfer Agent for the Michael
Common Stock and will be appointed as the transfer agent for the New Michael    
Common Stock.                                                                   

BUSINESS COMBINATION STATUTE AND CONTROL SHARE ACQUISITION ACT                  

 New Michael will be governed by the provisions of Sections 301A.671 and
302A.673 of the MBCA, which may deny shareholders the receipt of a premium for  
their stock in the case of certain unfriendly acquisitions and which may also   
have a depressive effect on the market price of New Michael's Common Stock. In  
general, Section 302A.671 provides that the shares of a corporation acquired in 
a "control share acquisition" have no voting rights unless voting rights are    
approved in a prescribed manner. A "control share acquisition" is an            
acquisition, directly or indirectly, of beneficial ownership of shares that     
would, when added to all other shares beneficially owned by the acquiring       
person, entitle the acquiring person to have voting power of 20% or more in the 
election of directors. In general, Section 302A.673 prohibits a public Minnesota
corporation from engaging in a "business combination" with an "interested       
shareholder" for a period of four years after the date of the transaction in    
which the person became an interested shareholder, unless the business          
combination is approved in a prescribed manner. "Business combination" includes 
mergers, asset sales and other transactions resulting in a financial benefit to 
the interested shareholder. An "interested shareholder" is a person who is the  
beneficial owner, directly or indirectly, of 10% or more of the corporation's   
voting stock or who is an affiliate or associate of the corporation and at any  
time within four years prior to the                                             

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date in question was the beneficial owner, directly or indirectly, of 10% or    
more of the corporation's voting stock.                                         

TAKEOVER OFFERS                                                                 

Minnesota Statute sec. 80B.01 et seq. (the "Takeover Act") requires   
registration of any takeover offer of a company which is an issuer of publicly  
traded equity securities (i) which (a) has its principal place of business or   
its principal executive office located in Minnesota, or (b) owns or controls    
assets located in Minnesota which have a fair market value of at least          
$1,000,000, and (ii) which (a) has more than ten percent of its beneficial or   
record equity security holders resident in Minnesota, (b) has more than ten     
percent of its equity securities owned beneficially or of record by residents in
Minnesota, or (c) has more than 1,000 beneficial or record equity security      
holders resident in Minnesota. A takeover offer is an offer to acquire any      
equity securities of the described companies from a resident of Minnesota       
pursuant to a tender offer or request or invitation for tenders, if after the   
acquisition of all securities acquired pursuant to the offer either (i) the     
offeror would be directly or indirectly a beneficial owner of more than ten     
percent of any class of the outstanding equity securities of the target company 
and was directly or indirectly the beneficial owner of less than ten percent of 
any class of the outstanding equity securities of the target company prior to   
the commencement of the offer; or (ii) the beneficial ownership by the offeror  
of any class of the outstanding equity securities of the target company would be
increased by more than ten percent of that class and the offeror was directly or
indirectly the beneficial owner of ten percent or more of any class of the      
outstanding equity securities of the target company prior to the commencement of
the offer. A takeover offer does not include: (a) An offer in connection with   
the acquisition of a security which, together with all other acquisitions by the
offeror of securities of the same class of equity securities of the issuer,     
would not result in the offeror having acquired more than two percent of such   
class during the preceding 12-month period; (b) an offer by the issuer to       
acquire its own equity securities unless the offer is made during the pendency  
of a takeover offer by a person who is not an associate or affiliate of the     
issuer; or (c) an offer in which the target company is an insurance company     
subject to regulation by the Minnesota Commissioner of Commerce, a financial    
institution regulated by the Minnesota Commissioner of Commerce, or a public    
service utility subject to regulation by the public utilities commission.       
Certain limitations exist which provide that the offer must be made on          
substantially the same terms inside and outside the state. The offeree has      
certain rights to withdraw securities tendered and the Takeover Act provides    
penalties for failure to comply with any provision of the Takeover Act of up to 
$25,000 and/or up to 5 years in prison. Shares acquired in violation of the Act 
are nontransferable and are denied voting rights for one year after acquisition.
New Michael can call the shares for redemption at the price that the shares were
acquired. Any seller who sells to an offeror who violates the Takeover Act can  
sue, subject to the limitations period, in law or in equity, and may sue for    
rescission.                                                                     

BUSINESS OF ENSTAR

 ENStar was formed on December 20, 1995, as a wholly owned subsidiary of
NSU, and has had no operations and held no assets. Prior to the Effective Date, 
pursuant to the terms of the Distribution Agreement, NSU will transfer all of   
its assets and liabilities to ENStar, except the capital stock of Merger Co.,   
all of the shares of Michael Common Stock that it holds, certain of its         
outstanding indebtedness and a certain amount of cash, to be determined in the  
discretion of NSU. The date of such transfer is hereinafter referred to as the  
"Asset Transfer Date."                                                          

  At the time of the Distribution, ENStar's operations will consist of the
operations of its direct and indirect operating companies, which consist of     
Americable, Inc. ("Americable") and Transition Networks, Inc. ("Transition"). In
addition, at April 15, 1996, NSU owned 1,225,000 shares of the common stock,    
$.0001 par value, of CorVel (the "CorVel Common Stock"), which represents       
approximately 27% of the outstanding shares of CorVel Common Stock . The CorVel 
Common Stock is traded on the Nasdaq National Market under the Symbol CRVL. The 
closing price per share of the CorVel Common Stock on April 15, 1996 was        
$       . All of the shares of CorVel Common Stock held by NSU on the Asset     
Transfer Date will be contributed to ENStar. NSU may, prior to the Asset        
Transfer Date, sell from time to time some of its CorVel Common Stock pursuant  
to Rule 144 of the Securities Act; however, it presently does not intend to sell
more                                                                            

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than 50,000 shares. Proceeds from any such sale or sales would be retained by   
NSU to reduce the amount of Net Indebtedness to be assumed by New Michael in the
Reorganization. ENStar contemplates that it will directly employ seven          
management and administrative employees.                                        

UNCONSOLIDATED SUBSIDIARY                                                       

 CorVel. Since its initial public offering in June 1991, CorVel has been
operated as an independent company. As a less-than-majority-owned subsidiary of 
NSU, CorVel's operations have not been consolidated with NSU, and NSU's         
investment in CorVel is accounted for under the equity method of accounting.    
ENStar will account for its investment in CorVel in the same manner. The        
following summary of CorVel's business has been prepared from information       
reported by CorVel. Additional information regarding CorVel is available from   
the reports and other documents prepared and filed by CorVel with the Securities
and Exchange Commission.                                                        

  CorVel is an independent nationwide provider of medical cost containment
and managed care services designed to address escalating medical costs. CorVel's
services include preferred provider organizations, automated medical fee        
auditing, medical case management, independent medical examinations, utilization
review and vocational rehabilitation services. Such services are provided to    
insurance companies, third party administrators and employers to assist them in 
managing the medical costs and monitoring the quality of care associated with   
medical claims.                                                                 

Since its initial public offering in June 1991, Jeffrey J. Michael and
Peter E. Flynn, each directors of NSU, have been members of the Board of        
Directors of CorVel. Notwithstanding the sale by NSU of 350,000 shares of its   
CorVel Common Stock in January 1996, and the corresponding reduction in NSU's   
percentage ownership in CorVel from approximately 35% to 27%, it is expected    
that Messrs. Michael and Flynn will continue to serve as members of the CorVel  
Board of Directors and be nominated for re-election to the CorVel Board at the  
next annual meeting of stockholders of CorVel. There are no agreements, however,
between NSU and CorVel or any of CorVel's stockholders requiring the nomination 
of Messrs. Michael and Flynn or any designees of NSU for election as directors  
of CorVel. NSU also does not have any agreement with CorVel requiring CorVel to 
register the shares of CorVel Common Stock held by NSU. At NSU's request in     
December 1995, CorVel agreed to register the 350,000 shares of CorVel Common    
Stock that were sold in 1996. In the absence of registration of its CorVel      
Common Stock, ENStar's ability to sell the CorVel Common Stock will be limited  
to sales pursuant to Rule 144 of the Securities Act, and the volume limitations 
thereof, and to private negotiated sales, which may adversely affect the ability
of ENStar to sell a large portion of its CorVel Common Stock at a given time.   

OPERATING SUBSIDIARIES                                                          

GENERAL                                                                         

     Americable. Americable was organized as a Minnesota corporation in 1981 and
was acquired by NSU in December 1986. Americable is a provider of networking and
connectivity products and services used in providing solutions for customers    
operating a wide range of data communications systems. Americable has organized 
its business into three operating divisions, the Americable Network Technologies
division, the National Distribution Sales division and the Americable Custom    
Products division, which are described in more detail below.                    

    Americable Network Technologies provides products and services designed to
build and manage local area network ("LAN") and wide area network ("WAN")       
infrastructures for large and medium sized end-users. As a value-added reseller 
("VAR"), Americable offers customized, integrated solutions to meet its         
customers LAN/WAN needs through a combination of a broad range of network       
electronics and software from leading manufacturers and through high-quality    
technical services. Americable plans to expand its product and service offerings
to include personal computers ("PCs"), file servers and other computer          
peripherals as it seeks to be a single-source provider for all of its customers'
PC and networking needs.                                                        

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As a distributor, Americable supplies a wide array of voice and data  
communication related products such as cable (both copper and fiber optic),     
cable assemblies, components (blocks, jacks, connectors, patch cords, patch     
panels) and networking hardware. The principal focus of Americable's            
distribution business, conducted primarily through its National Distribution    
Sales division in Minneapolis, Minnesota, is to provide quality products, prompt
reliable delivery of such products and strong customer service both before and  
after the products are sold. Americable sells to a wide range of customers      
throughout the United States in the voice and data communications aftermarket,  
including resellers, other distributors, systems integrators, installers and    
end-users.                                                                      

    Through Americable Custom Products, Americable manufactures a wide variety
of cable assemblies, sub-assemblies and specialty products for its customers.   
While some of these products are manufactured to standard specifications for    
sale by Americable through its distribution business, most are custom designed  
and manufactured by Americable to customer specifications. These customer       
designed products are manufactured for both end-users and original equipment    
manufacturers ("OEMs").                                                         

     Transition. Transition develops, manufactures, markets and supports a broad
line of data networking hardware products that provide physical connectivity for
LANs and mini- and mainframe networks. Physical connectivity devices enable     
computing and other electronic devices to communicate over a LAN. These devices 
include high-speed switches, managed and unmanaged hubs, transceivers, media    
converters and other related networking devices.                                

  Transition's products include intelligent hubs and switches, passive and
active terminal network products, including baluns, media converters and        
transceivers, unmanaged Ethernet and Token Ring hubs and related host modules,  
multi-port multi-media repeaters, network adapter cards and other passive       
devices. Transition sells its products to a number of volume distributors and   
VAR's throughout the United States and certain countries world-wide. The        
customers that purchase Transition products through its network of distributors 
and VAR's include system integrators, installers and end-users.                 

INDUSTRY                                                                        

  A growing number of organizations are reengineering their businesses and
are using PC-based network technology to enhance productivity. PC networks      
increase speed and flexibility, provide improved functionality to end-users and 
provide greater productivity, often at lower costs. The growth in demand for    
personal computers, along with recent advances in networking technology, have   
led to an increase in demand for interconnected LANs and WANs. Such networks    
facilitate efficient and rapid data communications among connected work groups  
and departments providing for more effective utilization of information and     
computing resources. As LANs have proliferated, demand for multi-vendor         
interoperability has led to industry standard network protocols and access      
methods such as Ethernet and Token-Ring.                                        

    More recently there has been an increasing demand to connect users of LANs
in other geographic areas using WANs. Applications such as on-line services,    
electronic mail, sharing of databases, multi-site product development and       
transaction processing are leading the demand for the inter-networking of LANs  
and WANs. The integration of LANs and WANs requires data communication products 
which efficiently, reliably and quickly transmit data to appropriate locations. 

In the face of this rapidly changing technological environment, the   
decision-making process that organizations face when planning, selecting and    
implementing information technology solutions is growing more complex.          
Organizations must select from numerous product options with shortening life    
cycles. Although networks enhance business productivity, they typically present 
complex management problems and increased administrative costs. Thus, many      
organizations find it increasingly difficult and costly to maintain the internal
infrastructure needed to support their networks. As a result of these trends,   
companies increasingly seek to outsource the management and support of their PC 
network infrastructure.                                                         

  It is estimated that in 1995 the overall market in the United States for
networking products and services was approximately $50 billion.                 

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BUSINESS STRATEGY                                                               

Americable. Americable's objective is to be a leading provider of a   
complete range of network products and services to medium to large sized        
enterprises throughout the United States. To meet this goal, Americable believes
it must seek to maintain its current customer relationships and continually     
expand its customer base in the regions in which it operates, continue to       
develop strong relationships with its key suppliers, look for opportunities to  
expand its branch locations and develop and enhance its value-added service     
offerings.                                                                      

   During 1995, approximately 5,200 customers purchased products or services
from Americable. Management at Americable believes that preserving and enhancing
these relationships is a constant priority. Continuous quality improvement in   
its operations along with expansion and enhancement of its product and service  
offerings are some of the means that Americable utilizes to enhance its customer
relationships.                                                                  

     Management at Americable also believes that developing strong relationships
with the leading manufacturers of networking products allows Americable to offer
its customers name brand products that provide the best value in meeting their  
networking needs. Americable has developed relationships with leading           
manufacturers within each of its principal product lines, such as Bay Networks, 
Inc., AMP Incorporated and Berk-Tek Inc. and seeks to add new relationships to  
expand its value-added service capabilities. Americable believes that utilizing 
a select range of suppliers allows it to provide superior customer service      
because its technical personnel are more familiar with the products sold and    
because such high quality products are generally more reliable. Further, such   
strong relationships result in greater continuity of product supply.            

  From 1991 to 1995, Americable's domestic sales have increased from $27.6
million to $42.2 million. This increase in sales has been generated through     
internal growth at Americable's four principal locations in Atlanta, Chicago,   
Dallas and Minneapolis, primarily as a result of the addition of new sales,     
engineering and technical personnel. Also during 1995, Americable opened smaller
satellite offices in Milwaukee, Wisconsin and Fargo, North Dakota. Americable   
plans to continue its growth strategy through the addition of new sales,        
engineering and technical personnel in both existing locations and new          
geographic markets. Americable also intends to look for opportunities to acquire
businesses in the same or related industries in an effort to expand             
geographically or enhance its value-added service offerings.                    

    Since 1989, Americable has made substantial investments in the development
of its value-added networking capabilities primarily through the addition of    
engineering and technical personnel. During 1995, Americable introduced a number
of service offerings designed to provide its customers with customized          
integrated solutions to meet their unique network computing needs. Revenues from
technical services and installation in 1995 represented 7% of Americable's total
revenues. Americable believes there are opportunities to increase Americable's  
overall gross margins by increasing the volume of services that it currently    
offers to its customers and intends to focus on increasing its service revenues.

    Transition. The market for Transition's products is characterized by rapid
technological change, constantly evolving industry standards and rigorous       
competition with respect to timely product innovation. Because the introduction 
of products embodying new technology and the emergence of new industry standards
can render existing products obsolete and unmarketable, Transition believes that
its future success will depend upon its ability to develop, manufacture and     
market new products and enhancements to existing products on a cost-effective   
and timely basis. Transition seeks to identify niche market opportunities for   
new or enhanced products and quickly respond by offering a new or enhanced      
product that may have greater capabilities, better functionability or           
flexibility, greater ease of use or equivalent capabilities or functionability  
but a lower price point than other competitive products.                        

     As LANs have proliferated, demand for multi-vendor interoperability has led
to industry standard network protocols and access methods such as Ethernet,     
Token-Ring and Fiber Distributed Data Interface ("FDDI"). Transition has        
developed the majority of its LAN products using industry standards, primarily  
Ethernet. Ethernet's cabling media has evolved from coaxial cable to its        
associated 10BaseTL fiber optic cabling. Management at Transition believes that 
the LAN/WAN products market will continue to be driven by the migration of      
end-users to new applications that demand more speed and flexibility.           
Accordingly,                                                                    

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Transition's research and development efforts have been targeted at high speed  
(100Mbs+) LANs and the integration of LANs and WANs into a single platform.     

PRODUCTS AND SERVICES                                                           

   Americable. The following is a summary of Americable's consolidated sales
by principal product group for 1995:                                            

                                                                [Download Table]

                                                 AS A PERCENT OF SALES
                                                 ---------------------
                                                                      
Networking --                                                         
  Products....................................            41%         
  Services/Installation.......................             7%         
Cable Assemblies..............................            18%         
Bulk Cable....................................            18%         
Other Connectivity Products...................            16%         

 In an effort to offer its customers a "One Company, One Call" solution,
each of the above products and service groups is delivered through one or more  
of Americable's operating divisions. Although each division is a separate       
business unit, each division works in concert with the others to leverage       
Americable's product and service offerings across its broad customer base. Set  
forth below is a description of each division's operations and market focus.    

Americable Network Technologies                                       

   Through Americable Network Technologies, Americable provides products and
services designed to build and manage LAN and WAN infrastructures for large and 
medium sized enterprises. As a VAR, Americable offers the following customized, 
integrated LAN/WAN solutions:                                                   

- Network Electronics -- Americable supplies, implements and supports a 
select range of suppliers of electronics and software platforms from
    manufacturers such as Bay Networks Inc., 3Com Corp., Cisco Systems Inc.,
Shiva Corp., Novell Inc., Microsoft Corp., Sun Microsystems Inc. and
      Compaq Computer Corporation. Americable's line of network products include
    concentrators, hubs, switches and routers for both existing and emerging
technologies such as Ethernet, Token Ring, FDDI, Fast Ethernet and  
Asynchronous Transfer Mode ("ATM").                                 

 - Network Integration -- Americable's advanced engineering group utilizes
      network management and routing solutions in providing customers a range of
     options from simple remote access solutions to the largest multi-protocol
inter-networking routers currently available.                       

 - Network Management -- Americable's network management solutions provide
     customers assistance with network troubleshooting, diagnostics, security,
   optimization and proactive network maintenance. Americable installs Bay
     Networks Optivity network management software, one of the leading network
   management software systems in the industry. Americable can also supply
each of the four industry-leading network management system (NMS)   
      platforms including: Hewlett Packard's OpenView/UNIX and OpenView/DOS, Sun
 Microsystems' SunNet Manager, IBM's NetView/6000 and Novell's NetWare
Management System (NMS).                                            

- Network Applications -- Americable offers remote access products and  
    services that allow the end-user to operate outside of his or her office
while still being able to connect to his or her LAN. In addition,   
      Americable is capable of offering solutions for desktop video conferencing
and Internet access and security solutions.                         

- Structured Wiring Systems -- Americable provides project management,  
design and implementation of structured wiring systems for data     
communications.                                                     

- Network Maintenance Services -- Americable provides a broad line of   
maintenance services including fixed fee network support, telephone 
support, guaranteed response times, next business day on-site       

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    response for problem resolution, "spare-in-the-air" hardware replacement
   and cabling system diagnosis and repair. In addition, Americable offers
      several fixed price service offerings for preventative maintenance such as
 CASE (Cable Analysis Service) and EASE (Enterprise Analysis Service).

Americable is committed to providing networking products, services and
systems to customers of all sizes in the geographic areas served by its four    
principal regional offices. Sales from the Americable Network Technologies      
division constituted approximately 74% of Americable's net sales in 1995. In    
addition to supported distribution sales, Americable Network Technologies will  
oversee the design and implementation of projects involving multiple LANs across
a wide area network, consisting of multi-vendor hardware products and several   
thousand nodes. Value-added projects generally range in size from $10,000 to    
$500,000. During 1995, sales derived from value-added projects and services     
consisted of approximately 18% of Americable's net sales. Value-added projects  
and services sales include sales of products such as bulk cable, cable          
assemblies and networking devices and services such as training, installation   
and maintenance.                                                                

The National Distribution Sales Division                              

Through its distribution business, operated principally through the   
National Distribution Sales division, Americable maintains a wide variety of    
high-quality products in its inventory (over 5,000). Product inventory ranges   
from connectivity products such as bulk cable, connectors, patch panels, racks  
and other cable accessories to more complex networking electronic devices such  
as concentrators, hubs, switches and routers. As a distributor, Americable      
generally inventories products from multiple manufacturers. Principal           
manufacturers of connectivity products include Berk-Tek, Inc., Amp Incorporated,
General Cable Corp., The Siemens Company and Leviton Manufacturing, Inc. In     
addition, in an effort to reduce its inventory levels, Americable purchases a   
number of networking products through large distributors such as Tech Data      
Corporation, Gates/Arrow and Ingram Micro, Inc.                                 

  Americable also maintains an integrated, real-time, on-line computerized
system for order entry, fulfillment and inventory control. This on-line computer
system allows sales personnel to advise customers over the phone of product     
specifications, availability and order status. All orders are normally shipped  
within 24 hours of receipt and, when necessary, can be shipped on a "same-day"  
basis.                                                                          

The National Distribution Sales division seeks to add value for its   
customers by providing superior customer service. All of Americable's sales     
representatives and other sales and marketing personnel are trained to assist   
customers in product selection, implementation and system upgrading and         
expansion. The division's sales representatives are supported by the technical  
staff of the Americable Network Technologies division, who have a broad range of
expertise in various networking technologies.                                   

     The National Distribution Sales division services customers of all sizes in
the voice and data communications aftermarket. Customer orders range in size    
from under $50 to several hundred thousand dollars. Average order size of the   
division during 1995 was approximately $600. The distribution business of       
Americable (including sales of cable assemblies) constituted approximately 26%  
of Americable's net sales in 1995.                                              

Americable Custom Products                                            

  As a natural extension of its distribution business, and consistent with
Americable's marketing strategy to be a single-source provider for its          
customers, the Americable Custom Products division provides a manufacturing     
capability to satisfy the individual needs of those customers that may require  
custom or specialty cable assemblies. Americable, working to its customers'     
specifications, can manufacture custom designed products such as copper,        
fiber-optic, small computer system interface (SCSI) and AS/400 cable assemblies 
and sub-assemblies.                                                             

    All Americable manufactured products are subject to strict quality control
standards to insure that they are of the same high quality as other, vendor     
manufactured, distributed products. During 1996, Americable expects to complete 
the process of implementing the quality standards of ISO 9002 for its           
manufacturing and primary distribution operation in Minneapolis. ISO 9002 is an 
international protocol for documenting processes and procedures used in         
establishing a consistent manufacturing quality system.                         

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    Sales from the Americable Custom Products division are generated from both
end-user and OEM customers. During 1996, Americable hopes to expand the market  
for its custom and specialty cable assemblies, utilizing its in-house           
manufacturing expertise of the Americable Custom Products division. For 1995,   
sales to OEM customers constituted approximately 26% of total cable assembly    
sales and approximately 5% of Americable's net sales.                           

Transition. Transition's products encompass three inter-networking and
physical connectivity product families, which include (i) passive and active    
terminal network products, (ii) basic LAN products and (iii) advanced LAN       
products. These products encompass LAN and WAN components, which allow          
Transition to offer work-group and enterprise-wide networking solutions.        

   The terminal products family of products includes both passive and active
connectivity devices such as baluns, media converters, and transceivers that    
attach personal computers to a network, thereby enabling the user to communicate
with other users in the LAN. In addition, Transition's "PowerStar" line of      
active hubs provide cost-effective solutions for converting a S/3X or AS/400    
Twinax daisy chain topology to an unshielded twisted pair star topology, thereby
improving network reliability and flexibility. During 1995, the terminal        
products family comprised approximately 27% of Transition's net sales.          

   Transition's basic LAN product line includes unmanaged Ethernet and Token
Ring hubs and related host modules; multi-port multi-media repeaters that       
regenerate the signal, thereby allowing expansion capabilities and providing    
connectivity and management of the different cabling schemes used throughout a  
LAN; network adapter cards that provide direct connection from the personal     
computer to a LAN; and other passive devices that provide a structured wiring   
system for mini- and mainframe computer environments. Transition has developed  
its Ethernet and Token Ring LAN products using industry standards. During 1995, 
the basic LAN product line comprised approximately 63% of Transition's net      
sales.                                                                          

    The advanced LAN product family of Transition is a potentially high growth
product area with devices that utilize computer processors and sophisticated    
internal software to manage and direct information across complex networks.     
Transition's advanced LAN products are led by a multi-function hybrid           
bridge/router that allows high speed switching across networks. This group of   
products also includes manageable, stackable Ethernet and Token Ring hubs.      
Transition believes that as network centric systems continue to grow in         
sophistication, this product area will provide additional revenue opportunities.
The majority of Transition's research and development has been concentrated in  
advanced LAN products with new offerings planned for 1996. During 1995, the     
advanced LAN product family comprised approximately 10% of Transition's net     
sales. Transition expects a significant portion of its sales growth in the      
future will be derived from the introduction of new advanced LAN products.      

MARKETING AND CUSTOMERS                                                         

   Americable. Americable provides its products and services to a wide range
of customers, including installers, resellers, other distributors, system       
integrators, OEMs and end-users. Customer relationships are developed both      
face-to-face and via the telephone.                                             

Americable's marketing strategy is two-tiered. A national effort is   
centered on telemarketing through the National Distribution Sales division in   
Minneapolis, Minnesota. Additionally, Americable operates each of its operating 
divisions from its four principal regional offices in order to provide its      
customers in each region the full array of value-added networking products and  
services offered by the company.                                                

Americable has 16 outside sales representatives in addition to 43     
telemarketing and sales support representatives. The sales force is supplemented
by 22 regional technical service engineers and technicians and two corporate    
product managers. Americable sales representatives undergo continuous training  
and attend company-sponsored classes in order to enhance their technical        
expertise and marketing techniques. Also, many of Americable's sales and        
technical personnel attend vendor-sponsored training and education programs     
mandated by such vendors in order for Americable to qualify as a licensed       
reseller of their products.                                                     

   Americable also uses direct mailings, brochures and catalogs in marketing
the products that it distributes. Americable's catalog, which generally is      
published every 18 months, is designed to provide end-users with not            

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only product specifications, but additional technical information to assist them
in connection with their system design. Americable's latest catalog is expected 
to be released in March 1996.                                                   

     During 1995, Americable had one customer that constituted approximately 11%
of net sales. In addition, in 1995 Americable derived approximately 61% of its  
sales from its largest 100 customers.                                           

    Transition. Transition distributes its products through a number of volume
distributors and VARs throughout the United States and in over 50 countries     
worldwide. Distributors and VARs purchase Transition's products at standard     
discounts based on certain volume-based incentive programs. Transition's        
international sales have accounted for a substantial portion of its sales       
growth, coming primarily from the United Kingdom, South Africa, Australia and   
Sweden. During 1995, revenues from outside the United States accounted for      
approximately 37% of net sales.                                                 

    Transition's continued growth will be dependent, in part, upon its ability
to expand its domestic and international distributor base with high quality     
VARs. A significant benefit for a distributor or VAR is that Transition does not
sell directly to end users. Transition's distributors and VARs carry other      
products that are complementary to, and compete with those of Transition, and   
these non-exclusive distributors and VARs may choose to give higher priority to 
products of other suppliers or competitors.                                     

Transition has several marketing programs to support the sale and     
distribution of its products. Its marketing programs are designed to generate   
sales leads for its distribution channels, as well as to enhance brandname      
recognition. Transition's marketing activities include frequent participation in
industry trade shows, advertising in major trade publications, public relations 
campaigns, the distribution of sales literature and product specifications, and 
ongoing communications with its distributors. In addition, Transition offers    
comprehensive pre- and post-sales technical support, distributor/VAR product    
training, and a strategic test partner program. Transition utilizes reseller    
incentive programs such as co-op funds to increase localized print advertising  
and name recognition. The marketing budget has been increased for both 1995 and 
1996 to enhance Transition's image and name recognition.                        

RESEARCH AND DEVELOPMENT                                                        

Transition. Transition performs all of its research and development   
activities at its headquarters in Eden Prairie, Minnesota. Transition believes  
that its future success depends on its ability to achieve market acceptance of  
new product offerings, especially in the advanced LAN products area. The        
engineering staff has increased by 36% since the end of 1994, to accelerate     
development in this area. Although there can be no assurance that its           
development efforts will result in commercially successful products, Transition 
intends to continue to make substantial investments in the development of new   
and enhanced products. During 1995, research and development expenses totaled   
approximately $1,440,000, or approximately 10% of net sales.                    

MANUFACTURING                                                                   

Americable. Americable's manufacturing operations consist of the      
manufacture of custom or specialty cable assemblies including copper,           
fiber-optic, small computer system interface (SCSI) and AS/400 cable assemblies 
and sub-assemblies through its Americable Custom Products division.             

    Transition. Transition's manufacturing operations consist primarily of the
final assembly and quality control testing of materials, components and         
subassemblies. Transition uses third parties to perform printed circuit board   
assembly. Transition's products include certain components that are currently   
available from single or limited sources and may require long order lead times. 
Any reduction in supply or substantial change in costs of components could      
affect Transition's ability to deliver its products in a timely and             
cost-effective manner and may adversely impact Transition's operating results.  

COMPETITION                                                                     

 Americable. Americable faces substantial competition within each of its
business segments from a large number of companies, some of which are larger,   
have greater financial resources, broader name recognition and, in many cases,  
lower product and operating costs than Americable. The Americable Network       

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Technologies division faces competition from large system integrators such as   
AmeriData Technologies, Inc., Vanstar Corporation and a significant number of   
smaller regional VAR's and system integrators. Significant competitors in the   
National Distribution Sales division's business include Anixter Bros., Inc., a  
subsidiary of Anixter International, Inc, and Graybar Electric Co., Inc. The    
products of the Americable Custom Products division are not protected from      
competition by virtue of any proprietary rights such as trade secrets or        
patents. Americable Custom Products encounters competition from domestic        
companies such as Kent Electronics Corporation and a number of smaller domestic 
companies, in addition to a number of products manufactured outside the United  
States.                                                                         

Transition. The industry in which Transition operates is highly       
competitive, and Transition believes that such competition will continue to     
intensify. The industry is characterized by rapid technological change, short   
product life-cycles, frequent product introductions and evolving industry       
standards. Transition competes with a number of independent companies focused on
designing and manufacturing products for the LAN market, including, among       
others, 3Com, Bay Networks, Cabletron System, Inc., Allied Telesis, Inc., and   
Digi International. Most of Transition's competitors are established companies  
with significantly greater financial resources, more extensive business         
experience, and greater market and service capabilities than Transition. There  
can be no assurance that Transition will be able to compete successfully.       

  Transition's ability to compete successfully depends upon its ability to
adapt to market changes on a timely basis. There are many networking products   
currently being offered in the market segments in which Transition competes.    
Transition believes that customers evaluate competing products on the basis of  
required product features for a particular installation, performance, price and 
ease of use. In addition, after installation, customers evaluate the suppliers' 
ability to provide readily accessible on-site/remote technical support, if      
required, and its reliability when deciding on future orders for additional     
equipment. Failure to obtain significant customer satisfaction or market share  
could have a material adverse effect on Transition.                             

PROPERTIES                                                                      

   Americable. Americable's headquarters are located in a 20,000 square foot
facility in Itasca, Illinois, a suburb of Chicago. Americable's principal       
distribution and manufacturing operations are located in Minneapolis, Minnesota 
(39,000 square feet). This facility includes office, warehouse and production   
space. Americable also has branch operations in Dallas, Texas (15,000 square    
feet), and Atlanta, Georgia (9,900 square feet) in addition to satellite offices
in Milwaukee, Wisconsin and Fargo, North Dakota. All of Americable's facilities 
are leased.                                                                     

Transition. Transition's headquarters, including its executive and    
corporate administration offices, manufacturing, sales and technical support are
located in Eden Prairie, Minnesota, which consists of approximately 20,500      
square feet of leased space.                                                    

LEGAL PROCEEDINGS                                                               

   Americable and Transition are engaged in routine litigation incidental to
their respective businesses, which management believes will not have a material 
adverse effect upon the business or consolidated financial position of either   
company.                                                                        

NET ASSETS HELD FOR SALE                                                        

NSU announced its intention to sell its wholly-owned subsidiary Eagle 
Engineering & Manufacturing, Inc. ("Eagle") in March 1991. Eagle designs,       
manufactures and installs a variety of environmental control systems for the    
cabins of off-road heavy equipment, including air-conditioning, heating and     
pressurization systems. Eagle is still wholly owned by NSU, although NSU is     
hopeful that it will ultimately be able to sell this subsidiary on terms        
acceptable to management. If Eagle is not sold prior to the consummation of the 
Reorganization, Eagle will become a wholly owned subsidiary of ENStar and ENStar
management will also attempt to sell Eagle on acceptable terms.                 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS 
AND FINANCIAL CONDITION OF ENSTAR 

GENERAL                                                                         

ENStar is currently an operating unit of NSU. ENStar is comprised of  
Americable and Transition along with an equity investment in CorVel and certain 
other assets. At December 31, 1995, NSU owned a 35% ownership interest in CorVel
and following the sale of 350,000 shares in January 1996, its ownership was     
reduced to 27%. The financial statements of ENStar reflect the investment in    
CorVel assuming ENStar owned a 27% ownership interest for all periods presented.
ENStar's investment in CorVel is accounted for as an unconsolidated subsidiary  
using the equity method of accounting. The common stock of CorVel is included on
the NASDAQ National Market System under the symbol CRVL.                        

    As described in Note 2 to the Combined Financial Statements of ENStar, the
Combined Statements of Income of ENStar include an allocation of general and    
administrative costs incurred by NSU in the management of the operating         
companies, investment holding and other assets of ENStar. Management believes   
these allocations are reasonable and present the operations of ENStar as though 
it was operated on a stand alone basis.                                         

The following are summarized operating results for each of ENStar's   
operations for the three years ended December 31, 1995 (in thousands):          

                                                        [Enlarge/Download Table]

                                                                    YEARS ENDED DECEMBER 31,    
                                                                  ----------------------------- 
                                                                   1995       1994       1993   
                                                                  -------    -------    ------- 
                                                                                                
Revenues                                                                                        
  Americable..................................................... $42,160    $36,940    $38,266 
  Transition.....................................................  14,266     11,779     10,025 
  Eliminations...................................................  (1,535)    (1,526)    (1,535)
                                                                  -------    -------    ------- 
                                                                  $54,891    $47,193    $46,756 
                                                                  =======    =======    ======= 
Gross Profit                                                                                    
  Americable..................................................... $ 9,979    $ 8,262    $10,254 
  Transition.....................................................   5,387      4,603      3,903 
                                                                  -------    -------    ------- 
                                                                  $15,366    $12,865    $14,157 
                                                                  =======    =======    ======= 
Selling, General and Administrative Expenses                                                    
  Americable..................................................... $ 8,814    $ 8,220    $10,075 
  Transition.....................................................   4,465      4,252      2,985 
  Restructuring charges..........................................      --         --      1,953 
  Allocable corporate expenses...................................   1,054      1,095      1,122 
                                                                  -------    -------    ------- 
                                                                  $14,333    $13,567    $16,135 
                                                                  =======    =======    ======= 
Operating Income (Loss)                                                                         
  Americable..................................................... $ 1,165    $    42    $   179 
  Transition.....................................................     922        351        918 
  Restructuring charges..........................................      --         --     (1,953)
  Allocable corporate expenses...................................  (1,054)    (1,095)    (1,122)
                                                                  -------    -------    ------- 
                                                                  $ 1,033    $  (702)   $(1,978)
                                                                  =======    =======    ======= 

RESULTS OF OPERATIONS                                                           

1995 VERSUS 1994                                                                

   Revenues at Americable increased approximately $5.2 million, or 14.1%, to
$42.1 million. This includes increased revenues of $4.5 million resulting from  
higher demand for networking products. Of this amount,                          

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approximately $3.1 million of sales were attributable to higher volume of       
networking products with a large end user customer which is not expected to     
continue during 1996. The increase in revenue of Americable also includes       
approximately $650,000 of higher volume of service revenues due to increased    
focus on services and the addition of technical personnel. In addition, sales of
cable assemblies increased by approximately $100,000 primarily a result of      
higher demand of OEM assemblies offset by reduced pricing within modular        
assembly applications due to technological changes.                             

   Revenues at Transition increased approximately $2.5 million, or 21% which
includes increased sales of approximately $1.1 million, or 25%, to international
customers and approximately $1.4 million, or 19% higher sales to domestic       
customers. Sales to international customers consisted of 37% and 35% of         
Transition's revenues in 1995 and 1994, respectively. This growth was due to    
increased unit sales of its terminal products and both its basic and advanced   
LAN product groups. Overall, these increases are primarily a result of new      
product introductions during the end of 1994 and throughout 1995. During 1995,  
new product introductions and enhancements accounted for $1.1 million, or 9% of 
net sales. Transition's ability to maintain its present level of sales and its  
continued sales growth is highly dependent upon its ability to offer new        
products that meet customer's demands in a rapidly changing market, particularly
in light of the relatively short life cycle of its products.                    

 Combined gross profit, as a percentage of revenues, increased to 28% in
1995 as compared to 27.3% in 1994. Increased margins at Americable are primarily
attributable to a higher mix of value-added service revenue and, to a lesser    
extent, improved pricing and improved manufacturing efficiencies within its     
cable assembly operations. Decreased margins at Transition were a result of     
lower pricing on certain product lines due to increased competition. For 1996,  
ENStar expects its gross profit margins to decline due to expected competitive  
pricing pressures on products sold by both Americable and Transition.           

   ENStar's selling, general and administrative expenses increased $766,000,
or 5.6% to $14.3 million from $13.6 million in 1994. Operating expenses at      
Americable increased approximately $600,000, or 7% which reflects higher selling
expenses of approximately $700,000 which is primarily a result of higher sales  
commissions and the addition of technical and engineering personnel, along with 
additional expense for amounts earned under its incentive compensation program  
of approximately $200,000. These increases were offset by the impact of         
approximately $300,000 of annualized savings realized through reorganizations   
effected within its U.S. operations in the third quarter of 1994 and the first  
quarter of 1995. Americable expects that its selling expenses, as a percentage  
of revenues, may increase during 1996 through the addition of sales and         
technical personnel in new geographic locations in addition to costs associated 
with a new catalog expected for release in the first quarter of 1996. These     
anticipated increases in operating expenses may result in lower operating       
profits at Americable, if the company is unable to maintain current gross profit
margins and continued sales growth.                                             

    Transition increased operating expenses approximately $213,000 or 5%. This
includes approximately $125,000 of increased sales and marketing expenses due to
higher promotional and advertising expenses associated with new product         
introductions and the company's name change, and approximately $220,000 of      
increased engineering expenses associated with the additional personnel to      
support new product development. In addition, this increase reflects higher     
expenses of approximately $175,000 related to moving to a new facility and the  
addition of administrative personnel and related facility expenses needed to    
support its overall growth. These increases were offset by a decrease in        
engineering expenses of approximately $300,000 due to lower spending on parts,  
equipment, and other costs related to hardware development projects. This       
reflects a shift towards higher software development associated with its        
advanced LAN products. Transition expects that its research and development     
expenses will increase in 1996 based on the planned addition of engineering     
personnel for new product development. There can be no assurances, however, that
its research and development efforts will result in commercially successful new 
products in the future. In addition, Transition believes that sales and         
marketing expenses may continue to increase in terms of absolute dollars in an  
effort to differentiate its products and enhance its competitive position. These
anticipated increases in operating expenses are expected to result in lower     
operating profit at Transition, particularly if the company is unable to        
maintain its current gross profit margins and continued sales growth.           

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   Net interest expense decreased by approximately $100,000 due primarily to
lower outstanding borrowings under Americable's revolving credit facility.      

   ENStar's effective combined income tax rate was 51.5% in 1995 and (32.4%)
in 1994. See Note 7 to the Combined Financial Statements of ENStar.             

Equity in earnings of unconsolidated subsidiary increased $195,000 to 
approximately $1.2 million in 1995 from approximately $1 million in 1994, which 
is a result of higher earnings at CorVel. CorVel's net earnings for the twelve  
months ended December 31, 1995 were approximately $7 million, an increase of    
approximately $1.5 million or 27% from the previous year.                       

1994 VERSUS 1993                                                                

    Revenues at Americable, excluding approximately $4.6 million of revenue in
1993 from its Canadian operations, which were closed in December 1993, increased
$3.3 million, or 9.8%, to $36.9 million. This includes increased revenues of $5 
million resulting from higher demand for value-added networking products and    
services offset by decreased sales of bulk cable and other connectivity products
of $1.2 million due primarily to lower volume of sales to contractors and       
resellers. In addition, sales of cable assemblies decreased by approximately    
$500,000 as a result of reduced pricing within modular assembly applications due
to technological changes.                                                       

   Revenues at Transition increased approximately $1.8 million, or 18% which
includes increased sales of approximately $1.1 million, or 33%, to international
customers and approximately $700,000, or 10% higher sales to domestic customers.
Sales to international customers consisted of 35% and 31% of Transition's       
revenues in 1994 and 1993, respectively. Overall, these increases are primarily 
a result of new product introductions during the end of 1993 and throughout     
1994. During 1994, new product introductions and enhancements accounted for $3.3
million, or 28% of net sales.                                                   

   Combined gross profit, as a percentage of revenues, decreased to 27.3% in
1994 as compared to 30.3% in 1993. Margins at Americable decreased due to       
overall lower pricing resulting from increased competition. Margins at          
Transition were unchanged in 1994 from 1993.                                    

ENStar's selling, general and administrative expenses, excluding      
restructuring charges, decreased $615,000, or 4.3% to $13.6 million from $14.2  
million in 1993. Operating expenses at Americable decreased approximately $1.9  
million, which reflects approximately $1.2 million of expenses eliminated       
through the closure of its Canadian facilities effected in December 1993, and   
$700,000 of other savings realized through a reorganization effected within its 
U.S. operations in the third quarter. These decreases were offset by increased  
expenses of $1.3 million at Transition due to the addition of sales and         
engineering personnel and increased research and development expenses related to
new product introductions and additional administrative and support personnel   
needed to support overall growth.                                               

Net interest expense was relatively unchanged between 1994 and 1993.  

   ENStar's effective combined income tax benefit rate was 32.4% in 1994 and
3.0% in 1993. See Note 7 to the Combined Financial Statements.                  

Equity in earnings of unconsolidated subsidiary increased $251,000 to 
approximately $1 million in 1994 from $745,000 in 1993 which is a result of     
higher earnings at CorVel. CorVel's net earnings for 1994 were approximately    
$5.5 million, an increase of approximately $1.7 million or 43% from the previous
year.                                                                           

CAPITAL RESOURCES AND LIQUIDITY                                                 

   ENStar had net cash from operations of approximately $1.5 million in 1995
versus net cash used in operations of approximately $1.1 million in 1994. The   
increase in cash from operations is primarily a result of higher operating      
profits at Americable and Transition. Historically, ENStar has experienced      
fluctuations in its working capital which is primarily attributable to the      
increase receivables and inventories associated with growth in sales and timing 
of payments on accounts payable. For 1995 and 1994 cash provided by investing   
activities primarily represents collections on notes receivable offset by       
capital expenditures.                                                           

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     Since CorVel's initial public offering in July 1991, ENStar has not had the
use of cash generated by CorVel and its subsidiaries. Also, since its initial   
public offering, CorVel has not declared any dividends and has indicated that it
does not anticipate doing so for the foreseeable future. ENStar may from time to
time, depending on market conditions and other factors, sell a portion of its   
CorVel holdings.                                                                

     Americable and Transition maintain a revolving line of credit and term loan
facility which provides borrowings up to $5.5 million due in May 1996.          
Borrowings under the revolving credit facility are based on eligible accounts   
receivable and inventory with interest at prime plus 1.5%, (10% at December 31, 
1995). At December 31, 1995, there were outstanding borrowings of $937,000 under
the revolving credit facility and $1,071,000 under the term note. Management is 
currently in the process of negotiating terms of a new credit facility and      
expects to obtain available borrowing levels and terms that are comparable with 
its existing facility.                                                          

Upon completion of the Reorganization, ENStar intends to initiate a   
program, similar to that historically maintained by NSU, whereby it will sell   
subordinated debentures of various maturities to primarily individual investors.
The debentures are intended to be offered on a continuous basis at interest     
rates that change from time to time depending on market conditions. Proceeds    
from this program are intended to fund the growth of ENStar's operating         
companies along with potential acquisitions and general corporate purposes.     
There can be no assurance, however, that ENStar will implement this program or  
that any attempted implementation of such a program would be successful.        

ENStar expects to be able to fund its working capital and capital     
expenditure requirements for 1996 with cash flow from operations along with the 
amounts available under the credit facilities of its operating companies. During
1996, ENStar's operating plans call for approximately $1 million in capital     
expenditures.                                                                   

COMPARISON OF RIGHTS OF NSU SHAREHOLDERS
BEFORE AND AFTER THE REORGANIZATION 

    If the Reorganization is consummated, then after the Effective Time shares
of Common Stock of NSU will be exchanged for shares of Common Stock of New      
Michael and ENStar. Like NSU and New Michael, ENStar is a Minnesota corporation 
governed by Minnesota law, its Articles of Incorporation and its Bylaws.        
Pursuant to the Reorganization, the existing Amended and Restated Bylaws of NSU 
will become the Bylaws of New Michael. Such Amended and Restated Bylaws are     
substantially the same as the Bylaws of ENStar. The existing Restated Articles  
of Incorporation of NSU are referred to herein as the "NSU Articles." A copy of 
the Amended and Restated Articles of Incorporation of NSU that will be adopted  
if approved by the shareholders of NSU at the NSU Annual Meeting is included as 
Exhibit D to Appendix I hereto. See "PROPOSAL NUMBER FOUR: PROPOSAL TO ADOPT AN 
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION OF NSU." Such Restated      
Articles of Incorporation are referred to herein as the "New Articles." The     
Restated Articles of Incorporation of ENStar are referred to herein as the      
"ENStar Articles." There are certain differences between the NSU Articles, the  
New Articles and the ENStar Articles. The following is a summary of some of the 
significant differences.                                                        

The NSU Articles provide for authorized Capital Stock of 100,035,000  
shares, comprised of 100,000,000 shares of Common Stock with a par value of $.25
per share and 35,000 shares of preferred stock with a par value of $100 per     
share. The New Articles will provide for authorized Capital Stock of 50,000,000 
shares, comprised of 40,000,000 shares of common stock with a par value of $.01 
per share and 10,000,000 undesignated shares. The New Articles will eliminate   
the existing designation of the rights and preferences of NSU Common Stock and  
NSU Preferred Stock. The Board of Directors will be able to establish by        
resolution different classes or series of shares and to fix the rights and      
preferences of any New Michael Preferred Stock to be issued. The rights and     
preferences of New Michael Common Stock will be as provided under Minnesota law.
The ENStar Articles provide for authorized capital stock of 100,000,000,        
comprised of 80,000,000 shares of Common Stock with a par value of $.01 per     
share and 20,000,000 shares of Preferred Stock with a par value of $.01 per     
share. All shares of ENStar Common Stock are voting shares and are entitled to  
one vote per share. The board of directors has the authority to fix the rights  
and preferences of preferred shares.                                            

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  The NSU Articles mandate that the Board of Directors consist of at least
one but not more than 15 directors. The New Articles will set the minimum number
of directors at three but will not fix a maximum number. It will also permit the
board, in its discretion, to elect honorary, non-voting directors. The ENStar   
Articles fix the initial number of directors at five. Thereafter, the number of 
directors may be fixed by the board or by the affirmative vote of voting power  
of outstanding ENStar Common Stock.                                             

     Under the NSU Articles, directors may take written action in lieu of action
at a meeting unless the matter requires shareholder approval. The number of     
directors required to approve a written action is an absolute majority. Under   
the New Articles, a written action on a matter requiring shareholder approval   
must be signed by all directors. Written action on other matters may be taken by
an absolute majority of directors. The ENStar Articles are identical to the New 
Articles in this respect.                                                       

  The NSU Articles do not explicitly require indemnification of directors,
officers or employees. The New Articles require NSU to indemnify any person who 
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, including an action by or in the right 
of NSU to the fullest extent permitted under the Minnesota Business Corporation 
Act. The ENStar Articles also require such indemnification.                     

EXECUTIVE OFFICERS AND DIRECTORS OF ENSTAR

EXECUTIVE OFFICERS AND DIRECTORS OF ENSTAR                                      

  The following table sets forth certain information as to the persons who
are expected to serve as directors and/or executive officers of ENStar following
the consummation of the Reorganization:                                         

                                                                [Download Table]

           NAME              AGE                       POSITION                     
---------------------------  ---  --------------------------------------------------
                                                                                    
James H. Michael...........  75   Chairman of the Board of Directors                
Miles E. Efron.............  69   Director                                          
Richard J. Braun...........  51   Director                                          
Jeffrey J. Michael.........  39   Director, President and Chief Executive Officer   
Peter E. Flynn.............  36   Executive Vice President                          
Thomas S. Wargolet.........  32   Chief Financial Officer and Secretary             
Gary M. Doan...............  44   Chairman and Chief Executive Officer, Transition  
Gary L. Eizenga............  49   President and Chief Executive Officer, Americable 

  See "ELECTION OF NSU DIRECTORS" for biographical information for Messrs.
Miles E. Efron, James H. Michael, Jeffrey J. Michael, Richard J. Braun and Peter
E. Flynn.                                                                       

Mr. Thomas Wargolet joined NSU in September 1989 and has been its     
Controller since that time. Mr. Wargolet was also the Director of Finance of    
Americable from September 1991 until January 1995. Since January 1995, Mr.      
Wargolet has been the Vice President of Finance and Operations of Americable.   
Prior to joining NSU in 1989, Mr. Wargolet was an Audit Senior with Arthur      
Andersen & Co.                                                                  

 Mr. Gary Eizenga joined Americable in September 1989 as Chief Operating
Officer and held that position until January 1991, at which time Mr. Eizenga    
became President and Chief Executive Officer of Americable. Prior to joining    
Americable, Mr. Eizenga held various positions with American Hospital Supply, a 
division of Baxter International.                                               

Mr. Gary Doan founded Transition in 1987 and was its President until  
December 1992, at which time he became Chairman and Chief Executive Officer.    

Officers of ENStar will be elected annually by the Board of Directors.

COMPENSATION OF EXECUTIVE OFFICERS OF ENSTAR                                    

  ENStar will rely on the Compensation Committee of the Board of Directors
(composed of non-employee members) to recommend the form and amount of          
compensation to be paid to ENStar executive officers.                           

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  At the Compensation Committee meeting held on March 5, 1996, base annual
salaries for Messrs. Jeffrey J. Michael, Flynn and Wargolet of $175,000,        
$150,000 and $90,000, respectively, were established by the Compensation        
Committee and approved by the ENStar Board of Directors, subject to consummation
of the Reorganization. The Compensation Committee also discussed a proposed     
bonus program that would provide for the payment of certain cash bonuses to the 
ENStar officers based on ENStar's financial performance. Similar to the cash    
bonus arrangements that NSU has established from time to time in the past, cash 
bonuses for officers of ENStar would be earned based on a structured formula.   
Performance targets would be established based on budgeted annual operating     
results and cash bonuses would be calculated as a percentage of such officers'  
base salary depending on actual financial performance compared to the           
performance targets. It is anticipated that such bonuses will range from 0% to  
75% of the officers' base salaries, depending upon the officer's position with  
the Company. The establishment of the bonus program, the performance targets    
relating thereto and the percentage of an officer's salary subject to such bonus
will be determined subsequent to the consummation of the Reorganization.        

Messrs. Doan and Eizenga will continue to receive the same base       
compensation and participate in the incentive compensation programs at each of  
Transition and Americable, respectively. Mr. Doan was paid a base salary of     
$120,000 in 1995, and received a bonus of $24,000, based on Transition's 1995   
financial performance. Mr. Eizenga was paid a base salary of $162,500 in 1995,  
and received a bonus of $65,000, based on Americable's 1995 financial           
performance.                                                                    

The Compensation Committee also approved the granting of non-qualified
stock options under the ENStar 1996 Stock Incentive Plan to each of Messrs.     
Jeffrey J. Michael, Flynn and Wargolet at its March 5, 1996 meeting. Such       
options provide for the purchase of 28,500, 23,500 and 14,250 shares of ENStar  
Common Stock, respectively, at an exercise price per share of $9.00. The options
granted to Messrs. Jeffrey J. Michael, Flynn and Wargolet vest 25% per year over
four years and have a term of ten years. Such options terminate automatically if
the Reorganization is not consummated prior to the first anniversary of the date
of grant. The Compensation Committee currently does not plan to issue stock     
options to Messrs. Doan and Eizenga.                                            

The Compensation Committee intends to generally adhere to compensation
policies that reflect the belief that ENStar must attract and retain individuals
of outstanding ability and motivate and reward such individuals for sustained   
performance. The Committee also believes the ENStar levels of compensation      
should generally be in line with what the executive officers of ENStar were     
offered in their capacities as executive officers of NSU. On an ongoing basis,  
the type and amount of compensation to be paid by ENStar to its officers will be
entirely discretionary and within the subjective judgment of the Compensation   
Committee. It is currently anticipated that none of the officers of ENStar,     
other than Messrs. Doan and Eizenga, will have employment agreements with       
ENStar.                                                                         

    For information concerning the compensation paid to the executive officers
of NSU for the 1995 fiscal year, see "ELECTION OF NSU DIRECTORS."               

COMPENSATION OF DIRECTORS OF ENSTAR                                             

Directors who are not officers or employees of ENStar will receive an 
annual retainer of $8,000. Such directors will also receive $300 per meeting for
each meeting of a committee of the Board of Directors that they attend.         
Directors incurring travel expenses to attend meetings are reimbursed in full.  
ENStar non-employee directors will also be eligible to receive certain stock    
options pursuant to the ENStar 1996 Stock Incentive Plan discussed below.       

COMMITTEES OF THE BOARD OF ENSTAR                                               

   Audit Committee. ENStar has established a standing Audit Committee, which
consists of Mr. Efron and Mr. Braun with Mr. Braun serving as Chairman. The     
Audit Committee will review and make recommendations and reports to the Board   
with respect to (i) the independent auditors, (ii) the quality and effectiveness
of internal controls, (iii) engagement or discharge of the independent auditors,
(iv) professional services provided by the independent auditors, and (v) the    
review and approval of major changes in NSU's accounting principals and         
practices.                                                                      

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    Compensation Committee. ENStar has a standing Compensation Committee which
consists of Mr. Efron as Chairman and Mr. Braun. The Compensation Committee will
consider and recommend to the Board salary schedules and other remuneration for 
ENStar's executive officers. This committee will also administer the ENStar 1996
Stock Incentive Plan.                                                           

1996 STOCK INCENTIVE PLAN                                                       

  On March 5, 1996, the Board of Directors of ENStar approved and adopted,
and NSU, as sole shareholder of ENStar, approved the ENStar 1996 Stock Incentive
Plan (the "Plan"). The following discussion of the Plan is qualified by         
reference to the full text of the Plan which is available upon request to the   
Secretary of ENStar.                                                            

The purpose of the Plan is to promote the interests of ENStar and its 
shareholders by aiding ENStar in attracting and retaining management personnel  
capable of assuring the future success of, and non-employee directors capable of
providing strategic direction to ENStar, to offer such personnel and directors  
incentives to put forth maximum efforts for the success of ENStar's business, to
afford such personnel and directors an opportunity to acquire a proprietary     
interest in ENStar and to align further the interests of such personnel and     
directors with ENStar's shareholders.                                           

Administration. With the exception of the provisions applicable to    
non-employee directors, which are discussed below, the Plan will be administered
by the Compensation Committee of the Board of Directors of ENStar (the          
"Committee"). The Committee has the authority to select the individuals to whom 
awards are granted, to determine the types of awards to be granted and the      
number of shares of ENStar Common Stock covered by such awards, to set the terms
and conditions of such awards, and to determine whether the payment of any      
amounts received under any award shall or may be deferred. The Committee has the
authority to establish rules for the administration of the Plan, and            
determinations and interpretations with respect to the Plan are at the sole     
discretion of the Committee, whose determinations and interpretations are       
binding on all interested parties. The Committee may delegate its powers and    
duties under the Plan to one or more officers with respect to persons who are   
not subject to Section 16 of the Exchange Act but it may not delegate any of its
powers and duties under the Plan in such a manner as would fail to comply with  
any of the requirements of Section 162(m) of the Code.                          

    Terms of the Plan. The Plan permits the granting of a variety of different
types of awards: (i) stock options, including incentive stock options meeting   
the requirements of Section 422 of the Code, and stock options that do not meet 
such requirements (non-qualified stock options); (ii) stock appreciation rights 
(SARs); (iii) restricted stock and restricted stock units; (iv) performance     
awards; (v) dividend equivalents; and (vi) other awards valued in whole or in   
part by reference to or otherwise based upon ENStar Common Stock ("other        
stock-based awards"). Awards may be granted alone, in addition to, in tandem    
with, or in substitution for any other award granted under the Plan or any other
plan. Awards may be granted for no cash consideration or for such minimal cash  
consideration as may be required by applicable law. Awards may provide that upon
the grant or exercise thereof the holder will receive cash, shares of ENStar    
Common Stock or other securities, awards or property, or any combination        
thereof, as the Committee shall determine. The exercise price per share under   
any stock option, the grant price of any SAR, and the purchase price of any     
security which may be purchased under any other stock-based award under Section 
6(f) of the Plan may not be less than 100 percent of the fair market value of   
ENStar Common Stock on the date of the grant of such option, SAR or right.      
Determinations of fair market value under the Plan are made in accordance with  
methods and procedures established by the Committee.                            

   Options may be exercised by payment in full of the exercise price, either
in cash or, at the discretion of the Committee, in whole or in part by the      
tendering of shares of ENStar Common Stock or other consideration having a fair 
market value on the date the option is exercised equal to the exercise price.   
The Plan provides that the Committee may grant "reload options," separately or  
together with another option, and may establish the terms and conditions of such
reload options. Pursuant to a reload option, the optionee would be granted a new
option when the payment of the exercise price of the option to which such reload
option relates is made by using shares of ENStar Common Stock owned by the      
optionee. The new option granted                                                

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upon such exercise would be an option to purchase the number of shares not      
exceeding the sum of (i) the number of shares of ENStar Common Stock tendered as
payment upon the exercise of the option to which such reload option relates and 
(ii) the number of shares of ENStar Common Stock tendered or withheld as payment
of the amount to be withheld under applicable tax laws in connection with the   
exercise of the option to which such reload option relates. Reload options may  
be granted with respect to options previously granted under the Plan or any     
other stock option plan of ENStar, and may be granted in connection with any    
option granted under the Plan or any other such plan at the time of such grant. 
Such reload options shall have a per share exercise price equal to the fair     
market value as of the date of grant of the new option. Any such reload option  
shall be subject to availability of sufficient shares for grant under the Plan. 
Shares surrendered as part or all of the exercise price of the option to which  
it relates that have been owned by the optionee less than six months will not be
counted for purposes of determining the number of shares that may be purchased  
pursuant to a reload option.                                                    

   The holder of an SAR is entitled to receive the excess of the fair market
value (calculated as of the exercise date or, if the Committee shall so         
determine, as of anytime during a specified period before or after the exercise 
date) of a specified number of shares over the grant price of the SAR.          

  Shares of restricted stock and restricted stock units will be subject to
such restrictions as the Committee may impose (including any limitations on the 
right to vote or the right to receive dividends), which restrictions may lapse  
separately or in combination at such time or times, in such installments or     
otherwise as the Committee may determine. Restricted stock may not be           
transferred by the holder until the restrictions established by the Committee   
lapse. Holders of restricted stock units have the right, subject to any         
restrictions imposed by the Committee, to receive shares of ENStar Common Stock 
at some future date. Upon termination of the holder's employment during the     
restriction period, restricted stock and restricted stock units are forfeited,  
unless the Committee determines otherwise.                                      

Performance awards provide the holder thereof the right to receive    
payments, in whole or in part, upon the achievement of such goals during such   
performance periods as the Committee shall establish. A performance award       
granted under the Plan may be denominated or payable in cash, shares of ENStar  
Common Stock or restricted stock or restricted stock units, or other securities,
awards or property. Dividend equivalents entitle the holder thereof to receive  
payments (in cash, shares or otherwise, as determined by the Committee)         
equivalent to the amount of cash dividends with respect to a specified number of
shares. The Committee is also authorized to establish the terms and conditions  
of other stock-based awards.                                                    

Restrictions on Awards and Transfers. No person who is an employee of 
ENStar at the time of grant may be granted any award or awards under the Plan,  
the value of which awards are based solely on an increase in the value of the   
shares after the date of grant of such awards, of more than 170,000 shares, in  
the aggregate, in any calendar year. The foregoing annual limitation            
specifically includes the grant of any awards representing "qualified           
performance-based compensation" within the meaning of Section 162(m) of the     
Code.                                                                           

  No award granted under the Plan may be assigned, transferred, pledged or
otherwise encumbered by the individual to whom it is granted, otherwise than by 
will or the laws of descent and distribution, except that the Committee may     
permit the designation of a beneficiary. Each award is exercisable, during such 
individual's lifetime, only by such individual or, if permissible under         
applicable law, by such individual's guardian or legal representative.          

  The aggregate number of shares of ENStar Common Stock that may be issued
under all awards granted under the Plan is 300,000 (subject to adjustment as    
described below). If any shares of ENStar Common Stock subject to any award or  
to which an award relates are not purchased or are forfeited, or if any such    
award terminates without the delivery of shares, the shares previously set aside
for such awards will be available for future awards under the Plan.             
Notwithstanding the foregoing, the total number of shares of ENStar Common Stock
that may be purchased upon exercise of incentive stock options granted under the
Plan may not exceed 300,000, subject to adjustment as described below and in    
Section 422 or 424 of the Code or any successor provision. Shares relating to   
awards that allow the holder to receive or purchase shares will be counted      
against the aggregate number of shares available for granting awards under the  
Plan.                                                                           

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If any dividend or other distribution, recapitalization, stock split, 
reverse stock split, reorganization, merger, consolidation, split-up, spin-off, 
combination, repurchase, or exchange of shares of ENStar Common Stock or other  
securities of ENStar, issuance of warrants or other rights to purchase shares of
ENStar Common Stock or other securities of ENStar, or other similar corporate   
transaction or event affects the shares of ENStar Common Stock so that an       
adjustment is appropriate in order to prevent dilution or enlargement of the    
benefits or potential benefits intended to be made available under the Plan, the
Committee shall, in such manner as it deems equitable, adjust any or all of (i) 
the number and type of shares (or other securities or property) which thereafter
may be made the subject of awards, (ii) the number and type of shares (or other 
securities or property) subject to outstanding awards and (iii) the exercise    
price with respect to any award.                                                

 Termination. The Plan terminates on March 5, 2006, and no awards may be
made after that date. Unless otherwise expressly provided in the Plan or an     
applicable award agreement, however, any award granted may extend beyond the end
of such period.                                                                 

    Amendment. The Board of Directors may amend, alter or discontinue the Plan
at any time, provided that shareholder approval must be obtained for any such   
action that, absent such shareholder approval, would (i) cause Rule 16b-3 under 
the Exchange Act to become unavailable with respect to the Plan; (ii) violate   
the rules or regulations of the Nasdaq National Market any other securities     
exchange applicable to ENStar; or (iii) cause ENStar to be unable, under the    
Code, to grant incentive stock options under the Plan. The Committee may correct
any defect, supply any omission, or reconcile any inconsistency in the Plan or  
any award agreement in the manner and to the extent it shall deem desirable to  
carry the Plan into effect. The Committee may waive any condition of, or rights 
of ENStar under any outstanding award, prospectively or retroactively, but the  
Committee may not amend or terminate any outstanding award, prospectively or    
retroactively, without the consent of the holder or beneficiary of the award.   

Federal Tax Consequences. The following is a summary of the principal 
federal income tax consequences generally applicable to awards under the Plan.  

The grant of an option or SAR is not expected to result in any taxable
income to the recipient. The holder of an incentive stock option generally will 
have no taxable income upon exercising the incentive stock option (except that a
liability may arise pursuant to the alternative minimum tax), and ENStar will   
not be entitled to a tax deduction when an incentive stock option is exercised. 
Upon exercising a non-qualified stock option, the optionee must recognize       
ordinary income equal to the excess of the fair market value of the shares of   
ENStar Common Stock acquired on the date of exercise over the exercise price,   
and ENStar will be entitled at that time to a tax deduction in the same amount. 
Upon exercising an SAR, the amount of any cash received and the fair market     
value on the exercise date of any shares of ENStar Common Stock received are    
taxable to the recipient as ordinary income and deductible by ENStar. The tax   
consequence to an optionee upon a disposition of shares acquired through the    
exercise of an option or SAR will depend on how long the shares have been held  
and upon whether such shares were acquired by exercising an incentive stock     
option or by exercising a non-qualified stock option or SAR. Generally, there   
will be no tax consequence to ENStar in connection with disposition of shares   
acquired under an option, except that ENStar may be entitled to a tax deduction 
in the case of a disposition of shares acquired under an incentive stock option 
before the applicable incentive stock option holding periods set forth in the   
Code have been satisfied.                                                       

     With respect to other awards granted under the Plan that are payable either
in cash or shares of ENStar Common Stock that are either transferable or not    
subject to substantial risk of forfeiture, the holder of such an award must     
recognize ordinary income equal to the excess of (i) the cash or the fair market
value of the shares of ENStar Common Stock received (determined as of the date  
of such receipt) over (ii) the amount (if any) paid for such shares of ENStar   
Common Stock by the holder of the award, and ENStar will be entitled at that    
time to a deduction for the same amount. With respect to an award that is       
payable in shares of ENStar Common Stock that are restricted as to              
transferability and subject to substantial risk of forfeiture, unless a special 
election is made pursuant to the Code, the holder of the award must recognize   
ordinary income equal to the excess of (i) the fair market value of the shares  
of ENStar Common Stock received (determined as of the first time the shares     
become transferable or not subject to substantial risk of forfeiture,           

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whichever occurs earlier) over (ii) the amount (if any) paid for such shares of 
ENStar Common Stock by the holder, and ENStar will be entitled at that time to a
tax deduction in the same amount.                                               

     Special rules may apply in the case of individuals subject to Section 16 of
the Exchange Act. In particular, unless a special election is made pursuant to  
the Code, shares received pursuant to the exercise of a stock option or SAR may 
be treated as restricted as to transferability and subject to a substantial risk
of forfeiture for a period up to six months after the date of exercise.         
Accordingly, the amount of any ordinary income recognized, and the amount of    
ENStar's tax deduction, are determined as of the end of such period.            

Under the Plan, the Committee may permit participants (other than     
non-employee directors) receiving or exercising awards, subject to the          
discretion of the Committee and upon such terms and conditions as it may impose,
to surrender shares of ENStar Common Stock (either shares received upon the     
receipt or exercise of the award or shares previously owned by the optionee) or 
other property to ENStar to satisfy federal and state tax obligations. In       
addition, the Committee may grant, subject to its discretion and such rules as  
it may adopt, a bonus to a participant (other than a person subject to Section  
16 of the Exchange Act) in order to provide funds to pay all or a portion of    
federal and state taxes due as a result of the receipt or exercise of (or lapse 
of restrictions relating to) an award. The amount of any such bonus will be     
taxable to the participant as ordinary income, and ENStar will have a           
corresponding deduction equal to such amount (subject to the usual rules        
concerning reasonable compensation).                                            

Eligible Employees. Any employee, officer, consultant or independent  
contractor of ENStar and its affiliates selected by the Committee is eligible to
receive an award under the Plan. Other than as described elsewhere herein, the  
amount, type and recipients of awards under the Plan have not yet been          
determined.                                                                     

   Non-employee Directors. Each non-employee director of ENStar, upon his or
her initial election as a director, shall be granted an option to purchase 4,000
shares of ENStar Common Stock. Commencing with the 1997 Annual Meeting, each    
non-employee director of ENStar also shall be granted an option to purchase     
1,000 shares of ENStar Common Stock on the date of the annual meeting of        
shareholders each year if the director will remain in office immediately        
following such meeting. The exercise price of each option shall be equal to 100 
percent of the fair market value per share on the date of grant. Such options   
shall be non-qualified stock options, shall become exercisable six months after 
the date of grant, and shall terminate on the fifth anniversary of the date of  
grant. Such options shall also terminate three months following the date upon   
which the participant ceases to be a director of ENStar, except that if the     
participant shall cease to be a director by reason of willful and material      
misconduct, the option shall terminate as of the date of such misconduct, and if
the participant shall die while a director of ENStar and he or she shall not    
have fully exercised the option, the option may be exercised at any time within 
twelve months after the participant's death, in accordance with its terms by the
participant's legal representatives, but only to the extent of the full number  
of shares the participant was entitled to purchase under the option on the date 
of death.                                                                       

In connection with their election as directors and the adoption of the
Plan, each of Messrs. James H. Michael, Miles E. Efron and Richard J. Braun were
granted an option to purchase 4,000 shares of ENStar Common Stock. The exercise 
price of such options is at $9.00 per share. The options are expressly subject  
to the consummation of the Reorganization.                                      

EIZENGA AGREEMENT                                                               

     Gary L. Eizenga is a party to a Stock Option Agreement, dated September 27,
1989, pursuant to which he was granted an option to purchase from NSU up to 500 
shares of the common stock of Americable, or approximately 2.5% of the          
outstanding shares of Americable, subject to adjustment in the event of a       
recapitalization, stock-split or stock dividend, at a price per share equal to  
the book value per share as of September 30, 1989, which was $873.12. Such      
option is exercisable through October 1, 1999, except that in the event of      
termination of Mr. Eizenga's employment, the option may be exercised only for a 
period of 90 days after such termination. The option may terminate as of an     
earlier date in the event of dissolution or liquidation of Americable. Mr.      
Eizenga and NSU are currently discussing a possible restructuring of Mr.        
Eizenga's option in connection with the Reorganization.                         

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DOAN AGREEMENT                                                                  

 Gary M. Doan is a party to an employment agreement with Transition, the
original term of which expired December 31, 1994, but which has been            
automatically extended by the parties for successive one-year periods since that
date. As extended, the agreement provides for an annual base salary of $120,000 
in connection with Mr. Doan's services rendered for the benefit of Transition.  
The agreement entitles Mr. Doan to participate in executive compensation        
programs established by Transition's Board of Directors. Mr. Doan is also       
eligible to receive an annual cash bonus to be determined based on Transition's 
financial performance. Mr. Doan received a bonus of $24,000 based on            
Transition's performance during 1995.                                           

    The agreement may be terminated by either party at the end of an extension
period upon at least 60 days written notice. If Transition terminates Mr. Doan's
employment without sufficient notice or without cause, Mr. Doan is entitled to  
be paid the base salary then in effect for a period of six months.              

   In connection with Gary M. Doan's employment with Transition as of May 1,
1992, Mr. Doan was granted an option to purchase up to 4.5% of the Common Stock 
of Transition at a price equal to the fair market value on May 1, 1992.         
Approximately two thirds of the award was exercisable by May 1994. The remainder
is exercisable December 31, 2001. The option expires April 30, 2002, except that
in the event Mr. Doan's employment is earlier terminated for whatever reason,   
the portion of the award that is exercisable or which will become exercisable   
within 90 days may be exercised until the earlier of 90 days after such         
termination or May 31, 2002. Any shares purchased by Mr. Doan are subject to    
repurchase by NSU if Mr. Doan ceases to be employed by Transition.              

PROPOSAL NUMBER FOUR: 
PROPOSAL TO ADOPT AN AMENDMENT TO THE 
RESTATED ARTICLES OF INCORPORATION OF NSU 

On March 5, 1996, the Board of Directors of NSU unanimously adopted a 
resolution approving amendments to and a restatement of NSU's existing Restated 
Articles of Incorporation, subject to the consummation of the Reorganization.   
The Board further resolved that the amendments be submitted to shareholders of  
NSU for their approval, subject to the consummation of the Reorganization. A    
copy of the Amended and Restated Articles of Incorporation is included in       
Appendix I as Exhibit D to the Reorganization Agreement. Such Amended and       
Restated Articles of Incorporation are referred to herein as the "New Articles."
If approved by the shareholders of NSU, the New Articles would be filed with the
Minnesota Secretary of State on the Effective Date.                             

     Michael has requested the changes to the Restated Articles of Incorporation
of NSU as described below, as a condition to the Merger, in order to ensure that
the Articles of New Michael will better conform to the existing Certificate of  
Incorporation of Michael. The Board of Directors of NSU believes that the       
amendments are appropriate in light of the Reorganization.                      

   Under the New Articles, NSU's name will be changed to Michael Foods, Inc.

    Article IV of the existing Restated Articles of Incorporation of NSU would
be amended by decreasing the number of shares of authorized Capital Stock of NSU
from 100,035,000 shares, comprised of 100,000,000 shares of Common Stock with a 
par value of $.25 per share and 35,000 shares of preferred stock with a par     
value of $100 per share, to 50,000,000 shares comprised of 40,000,000 shares of 
common stock with a par value of $.01 per share and 10,000,000 undesignated     
shares. Each share of New Michael Common Stock will be entitled to one vote on  
all matters presented to the shareholders for a vote. Article IV of the New     
Articles would eliminate the current designation of the rights and preferences  
of NSU Common Stock and NSU Preferred Stock. The Board of Directors will be able
to establish by resolution different classes or series of shares and to fix the 
rights and preferences of any New Michael Preferred Stock to be issued. The     
rights and preferences of New Michael Common Stock will be as provided under    
Minnesota law.                                                                  

The current Restated Articles of Incorporation of NSU mandate that the
Board of Directors consist of at least one but not more than 15 directors.      
Article VI of the New Articles will set the minimum number of                   

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directors at three but will not fix a maximum number. It will also permit the   
board, in its discretion, to elect honorary, non-voting directors. In addition, 
Article VI of the New Articles will explicitly state that the Board of Directors
has all the powers conferred upon directors under the Minnesota Business        
Corporation Act.                                                                

   Under the existing Restated Articles of Incorporation of NSU, an absolute
majority of directors may take written action in lieu of action at a meeting,   
except when the matter to be acted on requires shareholder approval. When an    
action taken by the board must be approved by shareholders, however, a written  
action must be approved by an absolute majority of directors. Under the New     
Articles, a written action on a matter requiring shareholder approval must be   
signed by all directors. Other matters may be acted upon by written action      
signed by an absolute majority of the directors.                                

    The New Articles will also require New Michael to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, including an action by or in the right 
of NSU to the fullest extent permitted under the Minnesota Business Corporation 
Act. The existing Restated Articles of Incorporation of NSU do not explicitly   
require such indemnification.                                                   

    If approved, the amendments to and restatement of the Restated Articles of
Incorporation of NSU will, subject to the consummation of the Reorganization,   
become effective upon filing with the Minnesota Secretary of State, which would 
take place on the Effective Date. The Board of Directors recommends a vote FOR  
approval of the New Articles. Under Minnesota law the affirmative vote of a     
majority of the outstanding shares of NSU Common Stock is necessary to approve  
the New Articles.                                                               

PROPOSAL NUMBER FIVE: 
ELECTION OF NSU DIRECTORS 

    The Board of Directors of NSU has recommended that the number of Directors
to be elected for the coming year be set at six. The Board of Directors         
recommends that shareholders elect the nominees named below as Directors of NSU 
for the ensuing year and until their successors are elected and qualified.      
Unless otherwise indicated thereon, the persons named in the enclosed form of   
proxy intend to vote FOR the election of the six nominees listed below. The     
affirmative vote of a majority of the shares of NSU Common Stock present (or    
represented by proxy) and entitled to vote at the 1996 Annual Meeting is        
required to elect each of the nominees as Directors for the ensuing year or     
until their successors are elected and have qualified. All of the nominees are  
members of the present Board of Directors. If for any reason any nominee shall  
be unavailable for election to the Board of Directors, votes will be cast       
pursuant to authority granted by the enclosed proxy for such other candidate or 
candidates as may be nominated by the Board of Directors. The Board of Directors
has no reason to believe that any of the nominees listed below will be unable to
serve if elected to office. If the Reorganization is consummated, NSU and       
Michael currently contemplate that the members of the Board of Directors of NSU 
other than Mr. Efron and Mr. Michael will resign as of the Effective Date and   
Mr. Efron and Mr. Michael will name certain Michael-designated individuals to   
the Board of Directors of New Michael. See "THE REORGANIZATION AGREEMENT -- New 
Michael Management Following the Reorganization."                               

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NOMINEES                                                                        

   The following table sets forth certain information regarding the nominees
for election as Directors, including the amount and percentage of outstanding   
shares of NSU Common Stock beneficially owned by such persons as of February 1, 
1996.                                                                           

                                                        [Enlarge/Download Table]

                                                                               SHARES OF               
                                                                     FIRST       COMMON                
                                                                    BECAME A     STOCK                 
                                                                    DIRECTOR  BENEFICIALLY     PERCENT 
         NAME                    BIOGRAPHICAL INFORMATION            OF NSU      OWNED         OF CLASS
----------------------  ------------------------------------------  --------  ------------     --------
                                                                                                       
Miles E. Efron........  Chairman of the Board since July 1991 and     1968         434,900(2)     4.42%
Age 69                  a senior advisor to NSU. Mr. Efron was                                         
                        President and Chief Executive Officer from                                     
                        October 1988 to December 31, 1990, and was                                     
                        Senior Vice President of NSU from 1985                                         
                        until October of 1988. Mr. Efron also is a                                     
                        director of Michael.                                                           
James H. Michael......  Chairman of the Board until July 1991. Mr.    1968       3,084,400(1)    32.65%
Age 75                  Michael is Chairman of the Board of                                            
                        Michael, and is the father of Jeffrey J.                                       
                        Michael, NSU's President and Chief                                             
                        Executive Officer.                                                             
Jeffrey J. Michael....  President and Chief Executive Officer         1987       2,600,700(1)    27.53%
Age 39                  since December 1990. Mr. Michael served as                                     
                        Vice President-Finance from April 1989 to                                      
                        December 1990. Prior to April 1989, Mr.                                        
                        Michael was employed by NSU in various                                         
                        capacities. Jeffrey J. Michael is the son                                      
                        of James H. Michael. Mr. Michael is also a                                     
                        director of Michael and CorVel.                                                
Fred E. Stout.........  Mr. Stout is the retired President and        1988           5,250(2)     0.06%
Age 75                  Chief Executive Officer of Superior Water,                                     
                        Light and Power Company. Mr. Stout also                                        
                        served as a director of NSU from 1984 to                                       
                        1986.                                                                          
Peter E. Flynn........  Executive Vice President, Chief Financial     1991         134,500(2)     1.40%
Age 36                  Officer and Secretary of NSU since                                             
                        December 1990. In December 1992, he also                                       
                        became the President and Chief Operating                                       
                        Officer of Transition. Mr. Flynn served as                                     
                        Treasurer of NSU from April 1989 to                                            
                        December 1990. Prior to joining NSU in                                         
                        1990, Mr. Flynn was an Audit Manager with                                      
                        Arthur Andersen & Co. Mr. Flynn was                                            
                        elected to the Board of Directors in July                                      
                        1991, and also serves as a director of                                         
                        CorVel.                                                                        

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                                                        [Enlarge/Download Table]

                                                                               SHARES OF            
                                                                     FIRST       COMMON             
                                                                    BECAME A     STOCK              
                                                                    DIRECTOR  BENEFICIALLY  PERCENT 
         NAME                    BIOGRAPHICAL INFORMATION            OF NSU      OWNED      OF CLASS
----------------------  ------------------------------------------  --------  ------------  --------
                                                                                                    
Richard J. Braun......  Mr. Braun currently serves as Chief           1994            None     0.00%
Age 51                  Executive Officer of Silicon Biology,                                       
                        Inc., a technology company specializing in                                  
                        generic classification technology, and as                                   
                        a principal of Excelsior Investment Group                                   
                        Ltd. Mr. Braun was the Managing Director                                    
                        of Headwaters Capital Management L.L.C.                                     
                        during 1995. From 1992-1994, Mr. Braun                                      
                        served as Chief Operating Officer and a                                     
                        Director of Employee Benefit Plans, Inc.,                                   
                        and from 1989-1991 was Executive Vice                                       
                        President, Chief Operating Officer and a                                    
                        Director of Reich and Tang L.P., a                                          
                        publicly held investment advisor and                                        
                        broker-dealer. From 1988-1989, Mr. Braun                                    
                        served as President and Chief Executive                                     
                        Officer of Super Cycle, Inc., a former                                      
                        subsidiary of NSU. Mr. Braun is a director                                  
                        of RSI Systems, Inc.                                                        

-------------------------                                                       
(1) The 4J2R1C Limited Partnership ("4J2R1C", formerly The Michael Partnership) 
owns 2,826,494 shares of NSU Common Stock. Mr. James H. Michael is the  
 managing general partner and a limited partner of 4J2R1C and by reason of
    his status as the managing general partner is deemed to beneficially own all
shares held by 4J2R1C. Mr. James H. Michael exercises sole voting and   
   dispositive power with respect to the shares held by 4J2R1C. Mr. Jeffrey J.
  Michael is the general partner of 3J2R Limited Partnership ("3J2R"), which
    owns 2,597,000 shares of NSU Common Stock. By reason of his status as 3J2R's
 general partner, Mr. Jeffrey J. Michael is deemed to beneficially own the
 shares of NSU Common Stock held by 3J2R. Mr. Jeffrey J. Michael exercises
  sole voting and dispositive power with respect to the shares held by 3J2R.

(2) Shares shown as beneficially owned include, in the case of Mr. Efron,       
    395,000 shares of NSU Common Stock not outstanding but which may be acquired
within 60 days through the exercise of stock options, in the case of Mr.
Stout, 2,500 shares not outstanding, but which may be acquired within 60
 days through the exercise of stock options, and in the case of Mr. Flynn,
    134,500 shares of NSU Common Stock not outstanding but which may be acquired
within 60 days through the exercise of stock options.                   

CERTAIN INFORMATION REGARDING THE BOARD OF DIRECTORS                            

     During the year ended December 31, 1995, the Board of Directors of NSU held
ten meetings.                                                                   

During the year ended December 31, 1995, the members of NSU's Audit   
Committee were Messrs. Flynn, Stout and Braun. The Audit Committee reviews and  
makes recommendations to the Board of Directors with respect to designated      
financial and accounting matters. The Audit Committee held one meeting during   
the year ended December 31, 1995.                                               

For the year ended December 31, 1995, the members of NSU's Executive  
Committee were Messrs. Michael, Michael and Efron. The Executive Committee      
reviews and makes recommendations to the Board of Directors regarding certain   
employee benefit matters. The Executive Committee held one meeting during the   
year ended December 31, 1995.                                                   

NSU has no nominating committee.                                      

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DIRECTOR COMPENSATION                                                           

  During 1995, Directors of NSU, other than Messrs. Jeffrey J. Michael and
Flynn, who are also executive officers of NSU, received a monthly retainer of   
$600 for serving as members of NSU's Board of Directors. Directors incurring    
travel expenses to attend meetings are reimbursed in full. Members of the Audit 
Committee, other than Mr. Flynn, each receive an additional $300 for each       
committee meeting held. The total of all such payments for the year ended       
December 31, 1995 was $30,000.                                                  

REPORT OF THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE        
COMPENSATION                                                                    

General. The Executive Committee of the Board of Directors (the       
"Committee") establishes the specific compensation for each of NSU's named      
executive officers. The Committee is made up of three members, James H. Michael,
Miles E. Efron and Jeffrey J. Michael. With respect to compensation matters     
concerning Mr. Jeffrey J. Michael, NSU's President and Chief Executive Officer, 
Mr. Jeffrey J. Michael is excluded from Committee deliberations. After          
consideration of the Committee recommendations, the full Board of Directors     
reviews and approves the salaries of each named executive officer. The Committee
is responsible for administering all other elements of executive compensation,  
including annual incentive awards and stock option grants.                      

  Executive Compensation Philosophy and Goals. During 1991 NSU initiated a
strategic process to strengthen its balance sheet and focus its management      
resources on its key holdings. In connection with this process NSU sold several 
of its smaller businesses and substantially cut corporate overhead. As a result,
NSU has only two executive officers, Jeffrey J. Michael, President and Chief    
Executive Officer, and Peter E. Flynn, Executive Vice President, Chief Financial
Officer and Secretary. The Committee believes that NSU's success depends to a   
significant extent on the continuing efforts and dedication of Messrs. Jeffrey  
J. Michael and Flynn. The executive compensation arrangements are designed to   
motivate and reward these executives for attaining the financial and strategic  
objectives essential to NSU's success and continued growth, while at the same   
time allowing NSU to retain high-caliber executives. The key components of NSU's
compensation program are base salary, cash bonuses and, to a lesser extent,     
stock option awards.                                                            

 Base Salaries. While the Committee has not conducted formal independent
salary comparisons in determining individual executive compensation, the        
Committee believes that base salaries should be moderate, yet competitive in    
relation to salaries commanded by persons in similar positions. The base salary 
for each named executive officer is reviewed annually and is set on the basis of
personal performance, the relative importance of the functions the officer      
performs, the scope of the officer's ongoing responsibilities and the estimated 
salary levels in effect at comparable companies for comparable positions. The   
weight given to each of these factors varies between individuals.               

  Cash Bonuses. Annual cash bonuses are designed to reward executives with
operating responsibility for personal contributions to the success of NSU and   
generally are earned under a structured formula. Historically, individual       
performance targets have been established based on an annual operating budget   
which is submitted for review and approval by the Chief Executive Officer of NSU
after consultation with the Committee. After the end of the calendar year, the  
Chief Executive Officer has evaluated actual financial performance against the  
individual performance targets. In the case of Mr. Flynn, who had day-to-day    
responsibility for the operation of Transition during 1995 (in addition to his  
responsibilities as an executive officer of NSU), the Committee departed from   
this practice in 1995 because of the change in Mr. Flynn's responsibilities on  
April 1, 1995, which are described below in this report. In 1993, the Committee 
discontinued payment of discretionary bonuses for officers without direct       
operating responsibility. Accordingly, Mr. Michael has not received a cash bonus
since 1992.                                                                     

     Stock Options. Incentive stock options are periodically granted to motivate
executives to achieve positive long-term financial results, thereby enhancing   
shareholder value. Due to the limited corporate staff, NSU does not have formal 
policies or formulas for determining the timing, amount or particular vesting   
schedules for stock option awards. Furthermore, NSU's stock performance is      
significantly affected by changes in the value of its equity holdings in Michael
and, to a lesser extent, the value of its CorVel holdings. Although North Star  
has representatives on the boards of directors of both Michael and CorVel, NSU  
does not have direct                                                            

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management control over the operations of either business. Accordingly, the     
Committee believes that NSU's stock performance is often not the best indicator 
of the performance of NSU's management team, and, as a result, has not granted  
significant options to NSU's executives. Further, because of the substantial    
beneficial holdings of Mr. Michael's family in NSU's Common Stock, the Committee
believes Mr. Michael's interests in stock performance already parallel those of 
NSU's other shareholders. As a result, the Committee historically has not       
granted any stock options to Mr. Michael. During 1995, there were no stock      
options granted to any executive officer.                                       

 1995 Executive Compensation. Mr. Jeffrey J. Michael, as Chief Executive
Officer of North Star, has overall responsibility for the strategic direction of
NSU and for the performance of NSU's wholly owned operating companies. Mr.      
Michael was elected to his present position in December 1990 and is not a party 
to an employment agreement. During 1994 and 1995, Mr. Michael was paid a base   
salary of $235,000. In establishing Mr. Michael's base salary, the Committee    
took into account that Mr. Michael does not participate in NSU's incentive cash 
bonus program or employee stock option plan. Mr. Michael's base salary was      
continued at $235,000 in 1996.                                                  

 As described in more detail below, Mr. Flynn entered into an employment
agreement with NSU and Transition effective April 1, 1993, in connection with   
his assumption of the duties of President of Transition, which agreement was    
modified effective as of April 1, 1995. The modification to his agreement with  
NSU and Transition provided that Mr. Flynn devote more of his time to NSU       
matters while continuing to oversee the day-to-day operations of Transition.    
During 1995, approximately 24% of Mr. Flynn's base salary was paid by Transition
and related to his work as President of that company. The remainder of his base 
salary in 1995 was paid by NSU recognizing his greater involvement in NSU       
matters. In 1995, Mr. Flynn's base salary remained relatively unchanged from his
base salary in 1994. Also, for 1995, Mr. Flynn was awarded a bonus of $25,000   
based on the performance of Transition through the first quarter of 1995, and a 
discretionary bonus of $75,000, based on his performance in executing NSU's     
strategic plans.                                                                

    This report of the Committee shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy                  
Statement/Prospectus into any filing under the Securities Act or under the      
Exchange, except to the extent that NSU specifically incorporates this          
information by reference, and shall not otherwise be deemed filed under such    
Acts.                                                                           
                    JAMES H. MICHAEL
                  MILES E. EFRON
                      JEFFREY J. MICHAEL
                                The Members of the Committee

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION                     

Jeffrey J. Michael, James H. Michael and Miles E. Efron served on the 
Executive Committee of NSU for the past fiscal year. The Executive Committee    
determines compensation levels for NSU's executive officers. Each of Messrs.    
James H. Michael and Efron was formerly an executive officer of NSU, and James  
H. Michael has on occasion borrowed funds from NSU. As of February 21, 1996, Mr.
Michael owed NSU approximately $157,872. The maximum amount of such             
indebtedness, including accrued but unpaid interest, owed to NSU by Mr. Michael 
during 1995 was approximately $428,084. The currently outstanding indebtedness  
is evidenced by an unsecured note which provides for quarterly interest payments
and an annual principal payment of $50,000. The unsecured note accrues interest 
at the rate of one percent over the reference rate of First Bank, National      
Association (9.25% at February 21, 1996).                                       

  Effective September 1, 1985, the Board of Directors established a formal
policy governing future loans to officers. The policy permits unsecured loans to
officers of up to $50,000. Loans in excess of $50,000 must be approved in       
advance by the Board of Directors and must be secured by readily marketable     
negotiable securities. Loans to officers will bear interest at one percent over 
the prevailing prime rate of interest and must mature within five years.        
Interest is to be paid quarterly. In addition to the foregoing, an officer may  
borrow annually an amount not exceeding 10 percent of annual compensation. These
loans are without interest and are payable on termination of employment. Mr.    
James H. Michael's loans from NSU predate this policy.                          

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   Although Jeffrey J. Michael, NSU's President and Chief Executive Officer,
served on NSU's Executive Committee during 1993 and 1994, as previously         
indicated, he did not participate in any decisions regarding his own            
compensation as an executive officer.                                           

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION                                  

The following table provides certain summary information concerning   
compensation paid or accrued by NSU to or on behalf of Jeffrey J. Michael, NSU's
President and Chief Executive Officer, and Peter E. Flynn, NSU's only other     
executive officer, for the fiscal years ended December 31, 1993, 1994 and 1995. 

SUMMARY COMPENSATION TABLE

                                                        [Enlarge/Download Table]

                                                                  LONG-TERM                         
                                                                 COMPENSATION                       
                                                                    AWARDS                          
                                                 ANNUAL          ------------                       
                                              COMPENSATION        SECURITIES                        
                                          ---------------------   UNDERLYING         ALL OTHER      
   NAME AND PRINCIPAL POSITION      YEAR  SALARY(1)     BONUS      OPTIONS     COMPENSATION(2)(3)(4)
----------------------------------  ----  ---------    --------  ------------  ---------------------
                                                                                                    
Jeffrey J. Michael................  1995  $ 235,000    $     --       --              $ 6,703       
  President and Chief Executive     1994    235,000          --       --                6,703       
     Officer                        1993    188,200          --       --                6,580       
Peter E. Flynn....................  1995    170,255     100,000       --                5,679       
  Executive Vice President, Chief   1994    173,816      45,000       --                5,679       
  Financial Officer and Secretary   1993    173,011      97,500       --                5,556       

-------------------------                                                       
(1) In 1993, Messrs. Michael and Flynn earned $7,200, and $6,600, respectively, 
in their capacities as Directors of NSU. Such fees are included in each 
    officer's calculation of annual salary amounts. NSU discontinued the payment
of such fees to Messrs. Michael and Flynn commencing January 1, 1994.   

(2) Represents amounts contributed by NSU for the benefit of each of Messrs.    
Michael and Flynn pursuant to NSU's 401(k) Plan.                        

(3) Neither of the named executive officers held or received any awards of      
restricted shares.                                                      

(4) Includes life and disability insurance premiums paid by NSU for the benefit 
of each of Messrs. Michael and Flynn.                                   

STOCK OPTIONS, AWARDS, EXERCISES AND HOLDINGS                                   

  During 1995, there were no stock options for NSU Common Stock granted to
any executive officer.                                                          

OPTION EXERCISES AND HOLDINGS                                                   

     The following table provides information concerning the exercise of options
during the last fiscal year and unexercised options held as of the end of the   
fiscal year.                                                                    

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR 
AND FISCAL YEAR-END OPTION VALUES 

                                                        [Enlarge/Download Table]

                                                         NUMBER OF SECURITIES          VALUE OF UNEXERCISED    
                                                        UNDERLYING UNEXERCISED             IN-THE-MONEY        
                                                          OPTIONS AT FY-END             OPTIONS AT FY-END      
                                    SHARES ACQUIRED  ----------------------------  ----------------------------
               NAME                   ON EXERCISE    EXERCISABLE    UNEXERCISABLE  EXERCISABLE    UNEXERCISABLE
----------------------------------  ---------------  -----------    -------------  -----------    -------------
                                                                                                               
Jeffrey J. Michael................         0                 0            0         $       0          $ 0     
Peter E. Flynn....................         0           134,500            0         $ 166,875          $ 0     

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EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS                 

    Effective December 31, 1990, Mr. Efron's employment agreement with NSU was
terminated, and he resigned as President and Chief Executive Officer of NSU. Mr.
Efron continues as an employee of NSU, providing advisory and consulting        
services. Pursuant to an agreement with NSU, he continues to receive annual     
compensation of $50,000 through December 1996 for his consulting and advisory   
services to NSU and is eligible to participate in other fringe benefits         
established by NSU for its executive officers.                                  

  Mr. Flynn is a party to an employment agreement with NSU and Transition,
which terminates December 31, 1997, subject to annual extensions thereafter at  
the option of the parties. Mr. Flynn's employment agreement was modified        
effective April 1, 1995. As modified, the agreement provides for an annual base 
salary of $136,000 for services rendered for the benefit of NSU, plus annual    
compensation of $42,500 in connection with Mr. Flynn's duties as President and  
Chief Operating Officer of Transition. The agreement entitles Mr. Flynn to      
participate in other fringe benefits established by NSU for its executive       
officers. In addition, Mr. Flynn was awarded a bonus of $25,000 based on the    
performance of Transition through the first quarter of 1995, and Mr. Flynn was  
made eligible for a discretionary bonus in 1996 based upon his performance in   
1995 in executing NSU's strategic plans. Under the terms of the agreement, the  
amount of the discretionary bonus was limited to $75,000, as determined by NSU's
Board of Directors. The Board subsequently determined that Mr. Flynn should be  
awarded the maximum amount of the discretionary bonus.                          

 Upon the voluntary termination of his employment with NSU, Mr. Flynn is
entitled to receive a single lump sum payment equal to his then current base    
salary plus $25,000. If Mr. Flynn dies, he becomes disabled and unable to       
continue his employment, his employment is terminated by NSU for any reason, or 
he voluntarily terminates his employment following certain actions by NSU       
constituting constructive termination, Mr. Flynn is entitled to receive a single
lump sum payment equal to two times his then current base salary plus $25,000.  
If Mr. Flynn's employment is terminated due to a change in control of NSU, Mr.  
Flynn is entitled to receive a single lump sum payment of $297,000. Also, if Mr.
Flynn is terminated by NSU, all of his then outstanding options immediately     
become vested.                                                                  

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STOCK PRICE PERFORMANCE GRAPH AND TABLE                                         

   The following graph and table compare the yearly percentage change in the
cumulative total shareholder return on NSU's Common Stock during the five year  
period ended December 31, 1995, with the cumulative total return on each of the 
S&P 500 Index, the S&P Foods Index, the S&P Healthcare Composite Index and the  
S&P Computer Systems Index. Each of the component S&P indices represent each of 
NSU's separate lines of business. The comparison assumes $100 was invested on   
December 31, 1990 in NSU's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends.                                              

                                                        [Enlarge/Download Table]

      Measurement Period   North Star                           Health Care-   Computer   
    (Fiscal Year Covered)   Universal    S&P 500     Foods        Composite     Systems   
                                                                                          
DEC 90                              100         100        100            100          100
DEC 91                            132.3       130.5      145.9         154.00         88.9
DEC 92                             80.7       140.4      145.5          128.9         65.2
DEC 93                             62.9       154.6      133.6          118.1         67.7
DEC 94                             58.1       156.6      149.3          133.6         87.4
DEC 95                            100.0       215.5      190.4          210.9        116.4

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT                               

 Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors and persons who beneficially own more than ten percent   
(10%) of NSU's Common Stock to file initial reports of ownership and reports of 
changes in ownership with the Commission. Executive officers, directors, and    
greater than ten percent (10%) beneficial owners are required by Commission     
regulations to furnish NSU with copies of all Section 16(a) forms they file.    

   Based solely on a review of the copies of such forms furnished to NSU and
written representations from the executive officers and directors of NSU, NSU   
believes that its executive officers, directors and 10% shareholders complied   
with all Section 16(a) filing requirements applicable to them, except that      
Messrs. James H. Michael and Jeffrey J. Michael each reported one transaction   
late for the year ending December 31, 1995.                                     

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of NSU Common Stock of NSU as of March 1, 1996, by each    
shareholder who is known by NSU to own beneficially more than 5 percent of the  
outstanding Common Stock of NSU, and by all officers and Directors of NSU as a  
group.                                                                          

                                                        [Enlarge/Download Table]

                                                                    AMOUNT AND NATURE OF  PERCENT 
               NAME AND ADDRESS OF BENEFICIAL OWNER                 BENEFICIAL OWNERSHIP  OF CLASS
------------------------------------------------------------------  --------------------  --------
                                                                                                  
James H. Michael..................................................        3,084,400(1)      32.65%
142 North Mississippi River Blvd.                                                                 
St. Paul, MN 55104                                                                                
Jeffrey J. Michael................................................        2,600,700(2)      27.53%
5745 Seven Oaks Court                                                                             
Minnetonka, Minnesota 55345                                                                       
Heartland Advisors, Inc...........................................          994,300(3)      10.52%
790 North Milwaukee Street                                                                        
Milwaukee, Wisconsin 53202                                                                        
All officers and directors as a group (6 persons).................        6,259,750(4)      62.72%

-------------------------                                                       
(1) Includes 2,826,494 shares of Common Stock held by 4J2R1C Limited            
   Partnership, as to which Mr. James H. Michael, as managing general partner,
exercises sole voting and dispositive power.                            

(2) Includes 2,597,000 shares of Common Stock held by 3J2R Limited Partnership  
as to which Mr. Jeffrey J. Michael, as general partner, exercises sole  
voting and dispositive power.                                           

(3) Based on information in a Schedule 13D Report delivered to NSU showing      
  information as of February 9, 1996 and indicating that Heartland Advisors,
    Inc. is an investment adviser registered under Section 203 of the Investment
Advisers Act of 1940, and that Heartland Advisors, Inc. has sole voting 
  power over 872,000 of such shares and sole dispositive power over all such
shares.                                                                 

(4) Shares shown as beneficially owned include 532,000 shares not outstanding,  
but which may be acquired within 60 days through the exercise of stock  
options by all officers and Directors as a group.                       

AUDITORS

The Board of Directors of NSU intends to appoint Grant Thornton LLP as
independent auditors for NSU for the year ending December 31, 1996, if the      
Reorganization is not consummated. Grant Thornton LLP audited the financial     
statements of NSU for the year ended December 31, 1995. Representatives of Grant
Thornton LLP will be present at the annual meeting and will be given an         
opportunity to make a statement if they desire to do so and to respond to       
appropriate questions raised at the meeting.                                    

LEGAL MATTERS 

     The validity of the ENStar Common Stock to be issued in connection with the
Distribution and the validity of the shares of New Michael Common Stock to be   
issued in connection with the Merger will be passed upon for ENStar and NSU,    
respectively, by Dorsey & Whitney LLP.                                          

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EXPERTS 

The consolidated financial statements and schedule of Michael as of   
December 31, 1995 and 1994, and for each of the three years in the period ended 
December 31, 1995 appearing in Michael's Annual Report on Form 10-K have been   
audited by Grant Thornton LLP, independent auditors, as set forth in their      
reports thereon included therein and incorporated herein by reference. Such     
consolidated financial statements are incorporated herein by reference in       
reliance upon such reports given upon the authority of said firm as experts in  
auditing and accounting.                                                        

  The consolidated financial statements and schedule of NSU as of December
31, 1995 and 1994, and for each of the three years in the period ended December 
31, 1995 appearing in NSU's Annual Report on Form 10-K have been audited by     
Grant Thornton LLP, independent auditors, as set forth in their reports thereon 
included therein and incorporated herein by reference. Such consolidated        
financial statements are incorporated herein by reference in reliance upon such 
reports given upon the authority of said firm as experts in auditing and        
accounting.                                                                     

     The combined financial statements and schedule of ENStar (an operating unit
of NSU) as of December 31, 1995 and 1994, and for each of the three years in the
period ended December 31, 1995 appearing herein have been audited by Grant      
Thornton LLP, independent auditors, as set forth in their reports included      
herein and are included in reliance upon such reports given upon the authority  
of said firm as experts in auditing and accounting.                             

  The consolidated financial statements of CorVel as of March 31, 1995 and
1994 and for each of the three years in the period ended March 31, 1995         
appearing in NSU's Annual Report on Form 10-K have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the    
authority of said firm as experts in auditing and accounting.                   

SHAREHOLDER PROPOSALS FOR 1997 MEETING OF SHAREHOLDERS

     In the event that the Reorganization is not consummated and NSU conducts an
annual meeting in 1997, any proposal by a shareholder to be presented at such   
annual meeting must be received at NSU's principal executive offices at 5353    
Wayzata Boulevard, 610 Park National Bank Building, Minneapolis, Minnesota      
55416, not later than December   , 1996. Any such proposal must be in the form  
required under the rules and regulations promulgated by the Securities and      
Exchange Commission.                                                            

OTHER MATTERS 

   The Board of Directors of NSU knows of no other matters that are intended
to be brought before the Annual Meeting. If other matters, of which the Board of
Directors is not aware, are presented for action, it is the intention of the    
persons named in the enclosed form of proxy to vote on such matters in their    
sole discretion.                                                                

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INDEX TO FINANCIAL STATEMENTS 

                                                        [Enlarge/Download Table]

FINANCIAL STATEMENTS OF ENSTAR                                                         PAGE
-------------------------------------------------------------------------------------  ----
                                                                                           
Combined Statements of Operating Unit Income for the                                       
  three years ended December 31, 1995, 1994 and 1993.................................   F-2
Combined Statements of Operating Unit Assets and Liabilities                               
  as of December 31, 1995 and 1994...................................................   F-3
Combined Statements of Operating Unit Equity for the three years                           
  ended December 31, 1995, 1994 and 1993.............................................   F-4
Combined Statements of Operating Unit Cash Flows for the                                   
  three years ended December 31, 1995, 1994 and 1993.................................   F-5
Notes to Combined Financial Statements...............................................   F-6
Report of Independent Certified Public Accountants...................................  F-12

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
COMBINED STATEMENTS OF OPERATING UNIT INCOME
YEARS ENDED DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                   1995       1994       1993   
                                                                  -------    -------    ------- 
                                                                         (IN THOUSANDS,         
                                                                    EXCEPT PER SHARE AMOUNTS)   
                                                                                                
Revenues......................................................... $54,891    $47,193    $46,756 
Operating and product costs......................................  39,525     34,328     32,599 
                                                                  -------    -------    ------- 
  Gross profit...................................................  15,366     12,865     14,157 
Selling, general and administrative expenses.....................  14,333     13,567     14,182 
Restructuring charges............................................      --         --      1,953 
                                                                  -------    -------    ------- 
  Operating income (loss)........................................   1,033       (702)    (1,978)
Interest expense.................................................    (247)      (348)      (361)
                                                                  -------    -------    ------- 
  Income (loss) before taxes and equity in earnings of                                          
     unconsolidated subsidiary...................................     786     (1,050)    (2,339)
Income tax provision (benefit)...................................     405       (340)       (70)
                                                                  -------    -------    ------- 
  Income (loss) before equity in earnings of unconsolidated                                     
     subsidiary..................................................     381       (710)    (2,269)
Equity in earnings of unconsolidated subsidiary..................   1,191        996        745 
                                                                  -------    -------    ------- 
Net income (loss)................................................ $ 1,572    $   286    $(1,524)
                                                                  =======    =======    ======= 
Pro forma income (loss) per share................................ $  0.49    $  0.09    $ (0.48)
                                                                  =======    =======    ======= 

The accompanying notes are an integral part of these combined statements. 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
COMBINED STATEMENTS OF OPERATING UNIT ASSETS AND LIABILITIES
DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                            1995       1994  
                                                                           -------    -------
                                                                             (IN THOUSANDS)  
                                                                                             
ASSETS                                                                                       
Current assets                                                                               
  Cash and cash equivalents............................................... $   246    $    74
  Accounts receivable, net................................................   8,784      7,516
  Inventories.............................................................   6,631      6,083
  Prepaid expenses and other..............................................     274        237
  Net assets held for sale................................................   1,032        714
                                                                           -------    -------
       Total current assets...............................................  16,967     14,624
Property and equipment, net...............................................   1,453      1,586
Goodwill..................................................................   4,960      5,121
Investment in unconsolidated subsidiary...................................  11,682      9,627
Other.....................................................................     189      1,285
                                                                           -------    -------
                                                                           $35,251    $32,243
                                                                           =======    =======
LIABILITIES AND SHAREHOLDERS' EQUITY                                                         
Current liabilities                                                                          
  Notes payable to bank................................................... $   937    $    --
  Current maturities of long-term debt....................................   1,088        428
  Accounts payable........................................................   5,239      4,232
  Accrued expenses                                                                           
     Payroll related......................................................     799        488
     Other................................................................   4,364      3,125
                                                                           -------    -------
       Total current liabilities..........................................  12,427      8,273
Long-term debt, less current maturities...................................     158      3,179
Deferred income taxes.....................................................   2,972      2,615
Commitments...............................................................      --         --
Operating unit equity.....................................................  19,694     18,176
                                                                           -------    -------
                                                                           $35,251    $32,243
                                                                           =======    =======

The accompanying notes are an integral part of these combined statements. 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
COMBINED STATEMENTS OF OPERATING UNIT EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993 
(IN THOUSANDS)

                                                        [Enlarge/Download Table]
                                                                                            
Balance at December 31, 1992....................................................... $17,263 
  Net loss.........................................................................  (1,524)
  Effect of equity transactions of unconsolidated subsidiary.......................     152 
  Effect of restructuring charges..................................................     318 
  Translation adjustment...........................................................    (198)
  Additional capital invested......................................................   1,024 
                                                                                    ------- 
Balance at December 31, 1993.......................................................  17,035 
  Net income.......................................................................     286 
  Effect of equity transactions of unconsolidated subsidiary.......................      73 
  Additional capital invested......................................................     782 
                                                                                    ------- 
Balance at December 31, 1994.......................................................  18,176 
  Net income.......................................................................   1,572 
  Effect of equity transactions of unconsolidated subsidiary.......................      42 
  Constructive dividend............................................................     (96)
                                                                                    ------- 
Balance at December 31, 1995....................................................... $19,694 
                                                                                    ======= 

The accompanying notes are an integral part of these combined statements. 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
COMBINED STATEMENTS OF OPERATING UNIT CASH FLOWS
YEARS ENDED DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                 1995        1994        1993   
                                                               --------    --------    -------- 
                                                                        (IN THOUSANDS)          
                                                                                                
Cash flows from operating activities                                                            
  Net income (loss)........................................... $  1,572    $    286    $ (1,524)
  Adjustments to reconcile net income (loss) to net cash                                        
     provided by (used in) operating activities:                                                
     Equity in earnings of unconsolidated subsidiary..........   (1,191)       (996)       (745)
     Non-cash restructuring charges...........................       --          --       1,567 
     Depreciation and amortization............................      837         848         715 
     Deferred income taxes....................................     (465)       (200)       (460)
     Translation adjustment...................................       --          --        (198)
     Changes in operating assets and liabilities, net of                                        
       effects of restructuring charges                                                         
       Accounts receivable....................................   (1,268)     (1,980)        819 
       Inventories............................................     (548)        420        (406)
       Accounts payable, accrued expenses and other...........    2,520         510         162 
                                                               --------    --------    -------- 
     Net cash provided by (used in) operating activities......    1,457      (1,112)        (70)
                                                               --------    --------    -------- 
Cash flows from investing activities                                                            
     Capital expenditures.....................................     (543)       (541)     (1,089)
     Other....................................................      778         720         532 
                                                               --------    --------    -------- 
     Net cash provided by (used in) investing activities......      235         179        (557)
                                                               --------    --------    -------- 
Cash flows from financing activities                                                            
     Proceeds from long-term debt.............................   56,073      48,868      23,267 
     Payments on long-term debt...............................  (57,497)    (48,704)    (23,693)
     Additional capital invested (constructive dividends).....      (96)        782       1,024 
                                                               --------    --------    -------- 
     Net cash provided by (used in) financing activities......   (1,520)        946         598 
                                                               --------    --------    -------- 
  Net increase (decrease) in cash and cash equivalents........      172          13         (29)
  Cash and cash equivalents at beginning of year..............       74          61          90 
                                                               --------    --------    -------- 
  Cash and cash equivalents at end of year.................... $    246    $     74    $     61 
                                                               ========    ========    ======== 

The accompanying notes are an integral part of these combined statements. 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND BUSINESS                                             

   ENStar (the "Operating Unit" or the "Unit") is an Operating Unit of North
Star Universal, Inc. ("North Star"). The Operating Unit is comprised of         
Americable, Inc. ("Americable"), Transition Networks, Inc., ("Transition") and  
Eagle Engineering and Manufacturing, Inc. ("Eagle," which is included in net    
assets held for sale), along with an equity investment in CorVel Corporation    
("CorVel") and certain other assets. At December 31, 1995, North Star owned a   
35% ownership interest in CorVel and following the sale of 350,000 shares in    
January 1996, its ownership was reduced to 27%. The accompanying financial      
statements reflect a 27% ownership interest for all periods presented. The      
Operating Unit's investment in CorVel is accounted for as an unconsolidated     
subsidiary using the equity method of accounting.                               

Americable is a provider of connectivity and networking products and  
services. Transition designs, manufactures and markets connectivity devices used
in network applications.                                                        

     Pursuant to the terms of an agreement between North Star and Michael Foods,
Inc. ("Michael Foods"), an unconsolidated subsidiary of North Star will be      
merged with and into Michael Foods and the net assets owned by the Unit will be 
transferred to a newly formed corporation ENStar Inc. Under the terms of the    
agreement, the shares of ENStar Inc. will be declared payable in a tax free     
dividend to the North Star shareholders of record prior to the effective date of
such merger and distributed immediately following the merger. The transaction is
subject to the receipt of a favorable ruling from the Internal Revenue Service  
that the transactions are tax free to the shareholders of Michael Foods and     
North Star, the approval of both companies shareholders and other closing       
conditions.                                                                     

NOTE 2 -- SUMMARY OF ACCOUNTING POLICIES                                        

   BASIS OF PRESENTATION The accompanying combined financial statements have
been prepared from the books and records of the entities and investments        
described in Note 1. The combined financial statements include an allocation of 
general and administrative costs incurred by North Star in the management of the
operating companies, investment holding and other assets of the Unit. Management
believes these allocations are reasonable and present the operations of the Unit
as though it was operated on a stand alone basis. Additionally, operating unit  
equity includes the historical equity of each entity, other net assets          
contributed to the Unit and intercompany payables owed to North Star. The annual
net advances between the Unit and North Star are considered additional capital  
invested from, or constructive dividends to, North Star. Accordingly, the       
accompanying combined financial statements may not necessarily be indicative of 
the results that would have been obtained if the Unit had been operated as a    
stand alone entity.                                                             

    PRINCIPLES OF COMBINATION Significant inter-unit balances and transactions
have been eliminated.                                                           

  CASH AND CASH EQUIVALENTS The Unit considers its highly liquid temporary
investments with original maturities of three months or less to be cash         
equivalents. The carrying value of cash and cash equivalents approximate fair   
value because of the short-term maturity of these investments.                  

     INVENTORIES Inventories are stated at the lower of average cost (determined
on a first-in, first-out basis) or market. At December 31, inventories consist  
of the following (in thousands):                                                

                                                                [Download Table]

                                                                 1995      1994 
                                                                ------    ------
                                                                                
Work in process and finished goods...........................   $4,092    $2,864
Purchased parts..............................................    2,539     3,219
                                                                ------    ------
                                                                $6,631    $6,083
                                                                ======    ======

PROPERTY AND EQUIPMENT Property and equipment are recorded at cost.   
Depreciation and amortization for financial reporting purposes are provided on  
the straight-line method over the estimated useful lives of the                 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 

respective assets which are generally three to five years. At December 31,      
property and equipment consist of the following (in thousands):                 

                                                                [Download Table]

                                                                 1995      1994 
                                                                ------    ------
                                                                                
Leasehold improvements.......................................   $  304    $  276
Office and computer equipment................................    3,720     3,262
                                                                ------    ------
                                                                 4,024     3,538
Less -- accumulated depreciation and amortization............    2,571     1,952
                                                                ------    ------
                                                                $1,453    $1,586
                                                                ======    ======

  GOODWILL Goodwill is amortized on a straight-line basis over periods not
exceeding 40 years. Accumulated amortization was $1,584,000 at December 31, 1995
and $1,423,000 at December 31, 1994. The Unit maintains separate financial      
records for each of its acquired entities and evaluates its goodwill annually to
determine potential impairment by comparing the carrying value to the           
undiscounted future cash flows of the related assets. The Unit modifies the life
or adjusts the value of a subsidiary's goodwill if an impairment is identified. 
See Note 3 for an impairment identified during 1993.                            

   REVENUE RECOGNITION The Unit recognizes revenue from product sales at the
time product is shipped to a customer. Service revenue is recognized at the time
service is provided or ratably over the contractual service period.             

 PRO FORMA INCOME (LOSS) PER SHARE Pro forma income (loss) per share was
computed based on the weighted average number of shares of North Star common    
stock outstanding (9,650,000, 9,704,000 and 9,438,000 in 1995, 1994 and 1993)   
after giving effect to the assumed exercise of North Star's outstanding stock   
options for North Star common stock, except when the effects are antidilutive.  
This weighted average number of shares was adjusted to reflect the distribution 
of ENStar Inc. common stock to North Star shareholders whereby one share of     
ENStar Inc. common stock will be issued to each holder of three shares of North 
Star common stock. The adjusted weighted average shares outstanding, used to    
compute pro forma income (loss) per share, was 3,217,000, 3,235,000 and         
3,146,000 in 1995, 1994 and 1993.                                               

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION The Unit increased its
investment in its unconsolidated subsidiary by $70,000, $122,000 and $254,000   
and operating unit equity by $42,000, $73,000 and $152,000 during 1995, 1994 and
1993, respectively, as a result of equity transactions of CorVel. In addition,  
the Unit had cash payments for interest of $247,000 in 1995, $348,000 in 1994,  
and $361,000 in 1993.                                                           

 RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards
Board has issued two accounting standards which the Unit is required to adopt   
January 1, 1996. The first statement establishes guidance on when and how to    
measure impairment of long-lived assets and certain identifiable intangibles and
how to value long-lived assets to be disposed of. The second standard           
establishes accounting and reporting for the impact of the fair value of        
stock-based compensation plans and permits the Unit to select the fair value    
based method of accounting for employee stock options or the intrinsic value    
method. Upon completion of the distribution described in Note 1, management     
intends to adopt the intrinsic value method of accounting and reporting for     
stock-based compensation plans. Management believes the adoption of these new   
accounting standards will not have a material effect on the Unit's combined     
financial statements.                                                           

USE OF ESTIMATES In the preparation of the Unit's combined financial  
statements, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and related revenues and         
expenses. Actual results could differ from the estimates used by management.    

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE 3 -- RESTRUCTURING CHARGES                                                 

     In December 1993, Americable implemented a restructuring plan involving the
closure of its Canadian facilities, operated by Adanac Cable, Ltd., and         
consolidation of its Canadian sales and customer support activities within its  
U.S. operations. This plan was completed in 1994. In connection with this       
consolidation, Americable recorded a restructuring charge of approximately $1.9 
million in 1993. This charge includes approximately $600,000 for the write-off  
of goodwill and other noncurrent assets, $700,000 for the reassessment of the   
carrying value of inventory and receivables, and $600,000 for lease and         
severance obligations and other related expenses.                               

NOTE 4 -- INVESTMENT IN UNCONSOLIDATED SUBSIDIARY                               

    The Unit's unconsolidated subsidiary consists of its investment in CorVel,
a health care services company. CorVel has a fiscal year end of March 31. The   
following is summarized unaudited balance sheet information of CorVel as of     
December 31, 1995. The summarized unaudited income statement information for    
CorVel is for the twelve month period ended December 31, 1995 (in thousands):   

                                                                [Download Table]
                                                                              
Current assets.....................................................   $ 36,739
Noncurrent assets..................................................     15,514
Current liabilities................................................      8,696
Noncurrent liabilities.............................................        765
Revenues...........................................................    106,814
Gross profit.......................................................     19,640
Net income.........................................................      7,038

    At December 31, 1995, the combined Unit equity includes approximately $3.7
million of unremitted earnings related to the Unit's investment in CorVel. At   
December 31, 1995, the fair value of the Operating Unit's investment in CorVel, 
based on the closing market price, was approximately $46.7 million.             

NOTE 5 -- NET ASSETS HELD FOR SALE                                              

In March 1991, the Unit announced its intention to sell its remaining 
non-computer related manufacturing company, Eagle. The Unit has recorded the net
assets related to this subsidiary in the balance sheet under the caption "Net   
Assets Held For Sale." Operating results of this subsidiary are not material.   

NOTE 6 -- NOTES PAYABLE AND LONG-TERM DEBT                                      

     Americable and Transition maintain a revolving line of credit and term loan
facility which provides borrowings up to $5.5 million due in May 1996.          
Borrowings under this facility are based on eligible accounts receivable and    
inventory with interest at prime plus 1.5% (10% at December 31, 1995). Amounts  
outstanding under the revolving line of credit at December 31, 1995 are         
classified within notes payable to the bank. The term loan bears interest at    
10.665% and is payable in monthly principal installments of $36,000 with a final
installment of $893,000 due in May 1996. The credit agreement includes certain  
restrictive covenants including minimum net worth requirements, limitations on  
additional indebtedness and minimum interest coverage. At December 31, 1995,    
Americable and Transition were in compliance with the covenants of this         

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 

agreement. At December 31, the carrying value of long-term debt, which          
approximates fair value, consists of (in thousands):                            

                                                                [Download Table]

                                                                 1995      1994 
                                                                ------    ------
                                                                                
Revolving line of credit.....................................   $   --    $2,107
Term note payable............................................    1,071     1,500
Other........................................................      175        --
                                                                ------    ------
                                                                 1,246     3,607
Less current maturities......................................    1,088       428
                                                                ------    ------
                                                                $  158    $3,179
                                                                ======    ======

   Aggregate minimum annual principal payments of long-term debt at December
31, 1995, are as follows (in thousands):                                        

                                                                [Download Table]

                 YEARS ENDING DECEMBER 31,                           
------------------------------------------------------------         
                                                                     
1996........................................................   $1,088
1997........................................................       18
1998........................................................       20
1999........................................................       22
2000........................................................       25
2001 and thereafter.........................................       73
                                                               ------
                                                               $1,246
                                                               ======

NOTE 7 -- INCOME TAXES                                                          

The activity of the Unit has been included in the income tax return of
North Star. For financial reporting purposes, the Unit has been allocated a     
provision for income taxes in an amount generally equivalent to the provision   
that would have resulted had the Unit filed separate income tax returns. The    
provision for combined income taxes consists of the following (in thousands):   

                                                                [Download Table]

                                                         1995   1994    1993  
                                                         ----   -----   ----- 
                                                                              
Current                                                                       
  Federal............................................... $740   $(120)  $ 330 
  State.................................................  130     (20)     60 
                                                         ----   -----   ----- 
                                                          870    (140)    390 
                                                         ----   -----   ----- 
Deferred:                                                                     
  Federal............................................... (405)   (175)   (400)
  State.................................................  (60)    (25)    (60)
                                                         ----   -----   ----- 
                                                         (465)   (200)   (460)
                                                         ----   -----   ----- 
                                                         $405   $(340)  $ (70)
                                                         ====   =====   ===== 

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 

    The following is a reconciliation of income taxes at the federal statutory
rate to the effective rate:                                                     

                                                                [Download Table]

              YEARS ENDED DECEMBER 31,                 1995   1994     1993   
-----------------------------------------------------  ----   -----    -----  
                                                                              
Federal statutory rate...............................  34.0%  (34.0)%  (34.0)%
State income taxes...................................   8.9    (4.3)      --  
Losses producing no current benefit..................    --      --     28.4  
Goodwill amortization................................   7.0     5.1      2.3  
Other................................................   1.6     0.8      0.3  
                                                       ----   -----    -----  
                                                       51.5%  (32.4)%   (3.0)%
                                                       ====   =====    =====  

 To the extent the Unit's financial reporting basis in its investment in
unconsolidated subsidiaries exceeds its tax basis, and is not expected to be    
realized in a tax-free manner, the Unit records a deferred income tax liability.
At December 31, 1995, the deferred tax liability includes the initial tax effect
of $1.8 million for the difference in the financial reporting and tax basis of  
the Unit's investment in CorVel following its initial public offering along with
income taxes recorded on the equity in earnings of CorVel of $794,000 in 1995,  
$664,000 in 1994, and $497,000 in 1993.                                         

  The tax effects of the cumulative temporary differences resulting in the
net deferred tax liability at December 31, are as follows (in thousands):       

                                                                [Download Table]

                                                             1995      1994   
                                                            -------   ------- 
                                                                              
Investment in CorVel....................................... $(4,339)  $(3,517)
Accrued expenses not deductible until paid.................   1,729     1,338 
Other......................................................    (362)     (436)
                                                            -------   ------- 
                                                            $(2,972)  $(2,615)
                                                            =======   ======= 

NOTE 8 -- COMMITMENTS                                                           

  The Unit leases certain equipment and facilities under operating leases.
Minimum rental payments under such leases which expire at various dates through 
2008 are as follows (in thousands):                                             

                                                                [Download Table]

        YEARS ENDING DECEMBER 31,                
------------------------------------------       
                                                 
     1996.................................   $621
     1997.................................    423
     1998.................................    344
     1999.................................    351
     2000.................................    249
     2001 and thereafter..................    223

Certain of the leases provide for payment of taxes and other expenses.
Total rent expense on all leases including month-to-month leases was $849,000 in
1995, $823,000 in 1994, and $830,000 in 1993.                                   

NOTE 9 -- EMPLOYEE RETIREMENT PLAN                                              

North Star maintains an incentive savings plan for its employees and  
employees including those of the Unit. Full-time employees that meet certain    
requirements are eligible to participate in the plan. Contributions are made    
annually, primarily at the discretion of North Star's Board of Directors.       
Contributions of $144,000, $138,000, $126,000, were charged to operations in the
years ended December 31, 1995, 1994 and 1993.                                   

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ENSTAR
(AN OPERATING UNIT OF NORTH STAR UNIVERSAL, INC.) 
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED) 

NOTE 10 -- RELATED PARTY TRANSACTION                                            

The Unit has an unsecured note receivable from North Star's majority  
shareholder and former chairman of the board of $257,872 at December 31, 1995.  
The note bears interest at the Unit's principal bank's reference rate plus 1%   
(9.5% at December 31, 1995). A principal payment of $150,000 was made in        
December 1995.                                                                  

NOTE 11 -- GEOGRAPHIC AREA AND BUSINESS SEGMENT INFORMATION                     

     Prior to 1994, the Unit's foreign operations included Americable's Canadian
subsidiary, Adanac Cable, Ltd. which was closed in December 1993 as discussed in
Note 3. In 1993, foreign operations consisted of revenues of $4.6 million and   
operating loss of $195,000.                                                     

     The Unit, through Transition, has international export sales throughout the
world. Substantially all of the export sales are denominated in U.S. dollars.   
Revenues classified by major geographic area are as follows:                    

                                                                [Download Table]

                                                      YEARS ENDED DECEMBER 31,   
                                                    -----------------------------
                                                     1995       1994       1993  
                                                    -------    -------    -------
                                                           (IN THOUSANDS)        
                                                                                 
Revenues from unaffiliated customers in the                                      
  United States.................................... $49,668    $43,020    $43,616
  Europe...........................................   3,363      2,737      2,230
  Other............................................   1,860      1,436        910
                                                    -------    -------    -------
                                                    $54,891    $47,193    $46,756
                                                    =======    =======    =======

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders of North Star Universal, Inc.               

We have audited the accompanying combined statements of operating unit
assets and liabilities of ENStar ("the Unit"), (an operating unit of North Star 
Universal, Inc.), as of December 31, 1995 and 1994, and the related combined    
statements of operating unit net income, operating unit equity, and cash flows  
for each of the three years in the period ended December 31, 1995. These        
financial statements are the responsibility of the Unit's management. Our       
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe our audits provide a reasonable basis for our opinion.               

     In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined operating unit assets and        
liabilities of ENStar as of December 31, 1995 and 1994, and the combined results
of their operations and their combined cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted       
accounting principles.                                                          

Minneapolis, Minnesota                                                          
February 15, 1996                                                               

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APPENDIX I

------------------------- 

AGREEMENT AND PLAN OF REORGANIZATION

BY AND BETWEEN

MICHAEL FOODS, INC.,
NORTH STAR UNIVERSAL, INC.
AND 

NSU MERGER CO.

------------------------- 

------------------------- 

DECEMBER 21, 1995 

------------------------- 

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                  PAGE NO.
                                                                                  --------
                                                                                          
ARTICLE 1.   DEFINITIONS AND PRELIMINARY TRANSACTIONS............................      I-1
       1.1   Definitions.........................................................      I-1
       1.2   Distribution of Spinco Common Stock.................................      I-5
       1.3   Reverse Stock Split.................................................      I-5
       1.4   No Fractional Shares................................................      I-5
       1.5   NSU Dissenters' Rights..............................................      I-5
       1.6   NSU Stock Option Plans..............................................      I-5
ARTICLE 2.   MERGER..............................................................      I-6
       2.1   Effect of Merger....................................................      I-6
       2.2   Effect on Michael Capital Stock and Merger Sub Capital Stock........      I-6
       2.3   Rights of Holders of Michael Capital Stock..........................      I-7
       2.4   Procedure for Exchange of Stock.....................................      I-7
ARTICLE 3.   REPRESENTATIONS AND WARRANTIES OF MICHAEL...........................     I-10
       3.1   Organization and Qualification......................................     I-10
       3.2   Authority Relative to this Agreement; Non-Contravention.............     I-10
       3.3   Capitalization......................................................     I-10
       3.4   Exchange Act Reports................................................     I-11
       3.5   Subsidiaries........................................................     I-11
       3.6   Litigation..........................................................     I-11
       3.7   No Brokers or Finders...............................................     I-11
       3.8   Prospectus/Proxy Statement..........................................     I-11
       3.9   Disclosure..........................................................     I-12
ARTICLE 4.   REPRESENTATIONS AND WARRANTIES OF NSU...............................     I-12
       4.1   Organization and Qualification......................................     I-12
       4.2   Authority Relative to this Agreement; Non-Contravention.............     I-12
       4.3   Capitalization......................................................     I-13
       4.4   Exchange Act Reports................................................     I-13
       4.5   Subsidiaries........................................................     I-13
       4.6   Absence of Certain Developments.....................................     I-13
       4.7   Litigation..........................................................     I-13
       4.8   No Brokers or Finders...............................................     I-14
       4.9   Prospectus/Proxy Statement..........................................     I-14
       4.10  Validity of the Surviving Corporation Common Stock..................     I-14
       4.11  Ownership of Michael Common Stock...................................     I-14
       4.12  Liabilities.........................................................     I-14
       4.13  Disclosure..........................................................     I-14
ARTICLE 5.   CONDUCT OF BUSINESS PENDING THE MERGER..............................     I-15
       5.1   Conduct of Business by NSU..........................................     I-15
       5.2   Conduct of Business by Michael......................................     I-15
ARTICLE 6.   ADDITIONAL COVENANTS AND AGREEMENTS.................................     I-15
       6.1   Governmental Filings................................................     I-15
       6.2   Expenses............................................................     I-15
       6.3   Access to Information; Confidentiality..............................     I-16
       6.4   Registration Statement..............................................     I-16
       6.5   Accounting and Tax Treatment........................................     I-17
       6.6   Michael Stock Plans.................................................     I-17
       6.7   Press Releases......................................................     I-17
       6.8   Directors and Officers Insurance....................................     I-17

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                                                                                   PAGE NO.
                                                                                   --------
                                                                                           
        6.9   Securities Reports..................................................     I-18
        6.10  Stock Listing.......................................................     I-18
        6.11  Shareholder Approvals...............................................     I-18
        6.12  No Solicitation.....................................................     I-18
        6.13  Failure to Fulfill Conditions.......................................     I-18
        6.14  Tax Ruling or Opinion...............................................     I-19
        6.15  Resignations and Election of Directors..............................     I-19
        6.16  Orderly Disposition and Registration Rights Agreement...............     I-19
        6.17  Shareholder Vote....................................................     I-19
        6.18  Filing of Reports Necessary for use of Rule 145.....................     I-19
        6.19  Notification of Certain Matters.....................................     I-19
        6.20  Notification of Anticipated NSU Net Indebtedness....................     I-20
        6.21  Distribution Agreement..............................................     I-20
 ARTICLE 7.   CONDITIONS..........................................................     I-20
        7.1   Conditions to Obligations of Each Party.............................     I-20
        7.2   Additional Conditions to Obligation of NSU..........................     I-21
        7.3   Additional Conditions to Obligation of Michael......................     I-22
 ARTICLE 8.   TERMINATION, AMENDMENT AND WAIVER...................................     I-23
        8.1   Termination.........................................................     I-23
        8.2   Effect of Termination...............................................     I-23
        8.3   Amendment...........................................................     I-24
        8.4   Waiver..............................................................     I-24
 ARTICLE 9.   GENERAL PROVISIONS..................................................     I-24
        9.1   Public Statements...................................................     I-24
        9.2   Notices.............................................................     I-24
        9.3   Interpretation......................................................     I-25
        9.4   Severability........................................................     I-25
        9.5   Miscellaneous.......................................................     I-25
        9.6   Non-Survival of Representations, Warranties and Covenants...........     I-26
        9.7   Schedules...........................................................     I-26
        9.8   Counterparts........................................................     I-26
        9.9   Third Party Beneficiaries...........................................     I-26
ARTICLE 10.   DISPUTE RESOLUTION..................................................     I-26
       10.1   Mediation and Binding Arbitration...................................     I-26
       10.2   Initiation..........................................................     I-26
       10.3   Submission to Mediation.............................................     I-26
       10.4   Selection of Mediator...............................................     I-26
       10.5   Mediation and Arbitration...........................................     I-26
       10.6   Selection of Arbitrators............................................     I-27
       10.7   Cost of Arbitration.................................................     I-27
   EXHIBITS                                                                                
  Exhibit A   -- Discount Factor..................................................     I-29
  Exhibit B   -- Form of Certificate of Merger                                             
  Exhibit C   -- Form of Distribution Agreement                                            
  Exhibit D   -- Form of New Articles                                                      
  Exhibit E   -- Form of Orderly Disposition and Registration Rights Agreement             

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AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION dated December 21, 1995, by and  
between MICHAEL FOODS, INC., a Delaware corporation ("Michael"), NORTH STAR     
UNIVERSAL, INC., a Minnesota corporation ("NSU"), and NSU MERGER CO., a Delaware
corporation and a wholly-owned subsidiary of NSU ("Merger Sub")                 

W I T N E S S E T H:

     WHEREAS, the Boards of Directors of Michael and NSU have determined that it
is in the best interests of Michael and NSU and their respective shareholders to
consummate the merger (the "Merger") of Merger Sub, a newly-formed subsidiary of
NSU, with and into Michael with Michael as the surviving corporation;           

  WHEREAS, Michael and NSU desire that the Merger be made on the terms and
subject to the conditions set forth in this Agreement and qualify as a          
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended;                                                            

     WHEREAS, as a condition of the Merger, Michael requires that NSU distribute
and NSU is willing to distribute immediately after the Merger to NSU            
shareholders of record prior to the Merger, all of the capital stock of a newly 
incorporated wholly owned subsidiary, to which, prior to the Merger, all of the 
assets of NSU will be assigned, contributed or otherwise transferred other than 
(i) the shares of Merger Sub, (ii) the shares of Michael Common Stock (defined  
below) owned by NSU on the date hereof, (iii) cash held by NSU, and (iv) certain
other assets as the parties mutually agree, and that NSU be released from, or   
mutually acceptable adequate provisions be made for, all liabilities and        
obligations other than as mutually agreed by the parties, so that, after giving 
effect to the Merger and such distribution, the business and operations of NSU  
after the Merger will be the business and operations of Michael;                

    WHEREAS, the distribution contemplated by the previous WHEREAS clause will
be made in accordance with the Distribution Agreement (as defined below);       

    WHEREAS, as a further condition of the Merger, Michael requires and NSU is
willing to reduce the number of outstanding shares of NSU Common Stock (as      
defined below) to an amount equal to the number of shares of Michael Common     
Stock owned by NSU less a number of shares determined by formula to reflect the 
amount of the liabilities retained by NSU at the time of the Merger net of the  
cash retained by NSU at the time of the Merger; and                             

   WHEREAS, Michael is requiring such reduction in the number of outstanding
shares of NSU Common Stock so that each share of Michael Common Stock will be   
exchangeable for one share of the Surviving Corporation Common Stock (as defined
below) after the Merger.                                                        

 NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:                

ARTICLE 1 

DEFINITIONS AND PRELIMINARY TRANSACTIONS

    1.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the      
singular and plural forms of the terms defined):                                

  Affiliate: as defined in Regulation 12b-2 promulgated under the Exchange
Act, as such Regulation is in effect on the date hereof.                        

Anticipated NSU Net Indebtedness: as defined in Section 6.20.         

    Average Price of Michael Common Stock: the average closing sales price per
share of Michael Common Stock reported on the NASDAQ-NMS as published by The    
Wall Street Journal during the twenty (20) trading days ending on the third     
trading day immediately preceding the Effective Date.                           

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    Certificate of Merger: the Certificate of Merger in substantially the form
of Exhibit B hereto.                                                            

Code: the Internal Revenue Code of 1986, as amended, or any successor 
legislation.                                                                    

Continuing Options: as defined in Section 2.2(b).                     

    Credit Agreement: the Credit Agreement between NSU and First Bank National
Association, a national banking association, including any amendments thereto,  
and any replacement credit agreement or facility.                               

Discount Factor: the factor determined in accordance with the table in
Exhibit A based on the amount of the NSU Net Assumed Liabilities at the         
Effective Time.                                                                 

Dissenting Shares: as defined in Section 1.5.                         

    Dissenting Shares Holdback: shall be an amount mutually agreed upon by NSU
and Michael based on the number of Dissenting Shares for which such Liability   
has not been paid by the Effective Date plus a reasonable amount to assure that 
the Surviving Corporation will not incur any Liability with respect to such     
Dissenting Shares in excess of the amount mutually agreed by Michael and NSU.   

 Distribution: the distribution, on the Distribution Date, of all of the
outstanding shares of Spinco Common Stock by NSU to the holders of record of NSU
Common Stock on the Distribution Record Date, which distribution shall be deemed
to have been effected by NSU upon delivery by NSU to the distribution agent of  
an instruction directing the distribution agent to effect the distribution of   
the Spinco Common Stock in accordance with Section 3.03 of the Distribution     
Agreement and such distribution shall not be effected nor deemed to have been   
effected until after the Effective Time.                                        

   Distribution Agreement: the Distribution Agreement between NSU and Spinco
in substantially the form of Exhibit C hereto.                                  

Distribution Date: the Effective Date; provided, however, that the    
Distribution shall not occur until after the Effective Time of the Merger.      

Distribution Record Date: the close of business on the date to be     
determined by the NSU Board as the record date for the Distribution, which date 
shall be prior to the Effective Date.                                           

DGCL: the Delaware General Corporation Law, as amended.               

Effective Date: as defined in Section 2.1(d).                         

Effective Time: as defined in Section 2.1(d).                         

Exchange Act: the Securities Exchange Act of 1934, as amended.        

Exchange Agent: as defined in Section 2.4(a).                         

Exchange Fund: as defined in Section 2.4(c).                          

Exchange Ratio: as defined in Section 2.2(a).                         

GAAP: generally accepted accounting principles.                       

HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as 
amended.                                                                        

IRS: the Internal Revenue Service.                                    

Liabilities: any and all debts, liabilities, accounts payable, Taxes, 
claims and other obligations, absolute or contingent, mature or not mature,     
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever    
arising (unless otherwise specified in this Agreement), including all costs and 
expenses relating thereto, and including, without limitation, those debts,      
liabilities and obligations arising under any law, rule, regulation, or any     
actual or threatened action, suit, proceeding or investigation by or before any 
court, any governmental or other regulatory or administrative agency or         
commission or any arbitration tribunal, any order or consent decrees of any     
governmental entity or any award of any arbitrator of any kind, and those       
arising under any contract, commitment or undertaking.                          

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 Material Adverse Effect: with respect to an entity means any condition,
event, change or occurrence that has had or may reasonably be expected to have a
material adverse effect on the business, operations, results of operations or   
financial condition of such entity on a consolidated basis.                     

MBCA: Minnesota Business Corporation Act, as amended.                 

Merger: as defined in the preambles of this Agreement.                

Michael 10-K Reports: as defined in Section 3.4.                      

Michael 10-Q Reports: as defined in Section 3.4.                      

Michael Board: the Board of Directors of Michael.                     

Michael Common Stock: the common stock, par value $.01 per share, of  
Michael.                                                                        

Michael Stock Plans: as defined in Section 2.2(b).                    

Michael Subsidiary: as defined in Section 3.5.                        

NASDAQ-NMS: the NASDAQ National Market System.                        

    New Articles: the amended and restated articles of incorporation of NSU in
substantially the form of Exhibit D hereto which will be effective on the       
Effective Date.                                                                 

NSU 10-K Reports: as defined in Section 4.4.                          

NSU 10-Q Reports: as defined in Section 4.4.                          

NSU Assumed Liabilities: the NSU Indebtedness and the NSU Retained    
Liabilities.                                                                    

NSU Board: the Board of Directors of NSU prior to the Merger Effective
Date.                                                                           

NSU Common Stock: the Common Stock, par value $1.00 per share, of NSU,
prior to the Merger Effective Date.                                             

     NSU Indebtedness: indebtedness (principal and accrued interest) represented
by NSU's outstanding subordinated debentures and subordinated extendable and    
fixed time certificates and the NSU indebtedness (principal and accrued         
interest) owing pursuant to the Credit Agreement.                               

     NSU Net Assumed Liabilities: an amount equal to (i) the NSU Indebtedness as
of the Effective Time plus the amount of the Dissenting Shares Holdback, less   
(ii) the amount of cash included in the NSU Retained Assets as of the Effective 
Time, provided that such amount shall be no less than $25,000,000 and no more   
than $38,000,000.                                                               

NSU Options: as defined in Section 1.6.                               

NSU Stock Option Plans: as defined in Section 1.6.                    

NSU Subsidiary: as defined in Section 4.5.                            

NSU Retained Assets: the following assets:                            

         (i) such amount of cash as NSU may, in its sole discretion, determine
to hold at the Effective Time;                                        

        (ii) 7,354,950 shares of Michael Common Stock owned by NSU as of the
date of this Agreement;                                               

(iii) the capital stock of Merger Sub;                      

 (iv) the rights of NSU under this Agreement, the Distribution
  Agreement and the Orderly Disposition and Registration Rights Agreement;
and                                                                   

  (v) any and all net operating loss carryforwards and other Tax
attributes properly allocable to NSU following the Effective Date in  
accordance with the relevant provisions of the Code.                  

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NSU Retained Liabilities: the following Liabilities:                  

(i) any Liability arising from any NSU shareholders who have
  effectively dissented from the NSU shareholder action in connection with
    the Merger and the Distribution in accordance with Sections 471 and 473 of
the MBCA;                                                             

(ii) any Liability of NSU (Surviving Corporation) under the 
Distribution Agreement arising after the Effective Date;              

 (iii) any Liability of NSU (Surviving Corporation) under this
Agreement after the Effective Date; and                               

       (iv) any Liability of NSU (Surviving Corporation) under the Orderly
    Distribution and Registration Rights Agreement arising after the Effective
Date.                                                                 

NSU Transferred Assets: all assets of NSU other than the NSU Retained 
Assets.                                                                         

     NSU Transferred Liabilities: all Liabilities of NSU (i) arising at any time
prior to the Effective Date other than the NSU Assumed Liabilities, or (ii)     
arising as a result of the Distribution (other than any liability of NSU for    
Taxes resulting from a breach of Section 2.07 of the Distribution Agreement by  
NSU (Surviving Corporation) after the Effective Date).                          

Orderly Disposition and Registration Rights Agreement: the Orderly    
Disposition and Registration Rights Agreement dated the date hereof between NSU 
and certain shareholders of NSU in the form of Exhibit E hereto.                

Prospectus/Proxy Statement: as defined in Section 6.4.                

Registration Statement: as defined in Section 6.4.                    

  Repurchased Michael Common Stock: the number of shares of Michael Common
Stock owned by NSU equal to (i) the NSU Net Assumed Liabilities, divided by (ii)
the product of the Discount Factor multiplied by the Average Price of Michael   
Common Stock.                                                                   

Requisite Michael Shareholder Vote: as defined in Section 3.2.        

Requisite NSU Shareholder Vote: as defined in Section 4.2.            

Reverse Stock Split: as defined in Section 1.3.                       

SEC: the Securities and Exchange Commission.                          

Securities Act: the Securities Act of 1933, as amended.               

   Spinco: the wholly owned subsidiary of NSU to which NSU will transfer the
NSU Transferred Assets and the NSU Transferred Liabilities.                     

     Spinco Common Stock: the Common Stock, par value $.01 per share, of Spinco.

     Subsidiary: with respect to any entity shall mean each corporation in which
such entity owns directly or indirectly fifty percent or more of the voting     
securities of such corporation and shall, unless otherwise indicated, be deemed 
to refer to both direct and indirect subsidiaries of such entity.               

Surviving Corporation: as defined in Article 2.                       

  Surviving Corporation Common Stock: the common stock, par value $.01 per
share, of the Surviving Corporation.                                            

Taxes: any federal, state, local or foreign income, gross receipts,   
license, payroll, employment, excise, severance, stamp, occupation, premium,    
property or windfall profits taxes, environmental taxes, customs duties, capital
stock, franchise, employees' income withholding, foreign or domestic            
withholding, social security, unemployment, disability, workers' compensation,  
employment-related insurance, real property, personal property, sales, use,     
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fee, assessment or charge of any kind whatsoever including any interest,        
penalties or additions to any Tax or additional amounts in respect of the       
foregoing.                                                                      

1.2 Distribution of Spinco Common Stock.                              

(a) Provided that this Agreement shall not have been terminated in    
accordance with Section 8.1 and the conditions set forth in Article 7 shall have
been fulfilled or waived,                                                       

        (i) NSU shall, prior to the Effective Date, contribute to Spinco all
of the NSU Transferred Assets in accordance with the Distribution     
Agreement;                                                            

      (ii) NSU shall use all reasonable efforts to obtain releases from,
     cause Spinco to assume, indemnify NSU and Merger Sub from or, in accordance
 with the terms of the Distribution Agreement, otherwise provide for the
payment or recovery by NSU or Merger Sub with respect to the NSU      
Transferred Liabilities; and                                          

          (iii) NSU shall declare the Distribution to NSU shareholders of record
 on the Distribution Record Date which shall be payable conditioned only
upon the Merger on the Distribution Date.                             

   (b) The Distribution will be effected in accordance with the terms of the
Distribution Agreement, which will also govern the relative rights and          
obligations of Spinco and the Surviving Corporation after the Merger. NSU shall 
cause the Distribution to be conducted in accordance with all applicable federal
and state securities laws.                                                      

   1.3 Reverse Stock Split. Provided that this Agreement shall not have been
terminated in accordance with Section 8.1 and the conditions set forth in       
Article 7 have been fulfilled or waived, NSU shall authorize and effect a       
combination of the outstanding NSU Common Stock in the form of a reverse stock  
split (the "Reverse Stock Split") effective on the Effective Date and           
immediately prior to the Effective Time so that, immediately prior to the       
Effective Time and after giving effect to the Reverse Stock Split, the aggregate
number of shares of NSU Common Stock outstanding on a fully diluted basis       
(excluding any Dissenting Shares) is equal to: (i) the number of shares of      
Michael Common Stock then owned directly or beneficially by NSU, less (ii) the  
number of shares of Repurchased Michael Common Stock.                           

     1.4 No Fractional Shares. No fractional shares of the Surviving Corporation
Common Stock, and no certificates representing such fractional shares, shall be 
issued in connection with the Reverse Stock Split. In lieu of any fractional    
share, the Surviving Corporation shall pay to each holder of NSU Common Stock   
subject to the Reverse Stock Split who otherwise would be entitled to receive a 
fractional share of NSU Common Stock as a result of the Reverse Stock Split an  
amount of cash (without interest) determined by multiplying (a) the Average     
Price of Michael Common Stock times (b) the fractional share interest to which  
such holder would otherwise be entitled. The payment for fractional shares shall
be made upon the surrender for exchange of certificates representing NSU Common 
Stock which were subject to the Reverse Stock Split.                            

   1.5 NSU Dissenters' Rights. Notwithstanding anything in this Agreement to
the contrary, shares of NSU Common Stock that are issued and outstanding on the 
record date for the meeting of NSU shareholders referred to in Section 6.11 and 
which are held by NSU shareholders who shall have effectively dissented from the
NSU shareholder action with respect to the Distribution in accordance with the  
MBCA (the "Dissenting Shares") shall not be converted into shares of the        
Surviving Corporation, shall not be subject to the Reverse Stock Split and shall
not be entitled to the Distribution, unless and until such holder shall have    
failed to perfect or shall have effectively withdrawn or lost its, his or her   
right to appraisal and payment under the MBCA. The Dissenting Shares shall have 
only those rights granted to dissenting shares under the MBCA.                  

     1.6 NSU Stock Option Plans. NSU shall cause all options (the "NSU Options")
outstanding under the 1986 Incentive Stock Option Plan of NSU, the 1986         
Non-Qualified Stock Option Plan of NSU, the 1988 Nonqualified Stock Option Plan 
of NSU (the "NSU Stock Option Plans") or otherwise disclosed in Schedule 4.3 to 
be cancelled or exercised prior to the Effective Time. At or prior to the       
Effective Time, all of the NSU Stock Option Plans shall be terminated.          

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ARTICLE 2 

MERGER

Subject to the satisfaction or waiver of the conditions set forth in  
Article 7, on a date mutually satisfactory to the parties as soon as practicable
following satisfaction or waiver of such conditions, (i) Merger Sub will merge  
with and into Michael, (ii) Michael will become a wholly-owned subsidiary of    
NSU, (iii) Michael will change its name to "Michael Foods of Delaware, Inc.,"   
(iv) NSU will complete the Distribution, and (v) NSU will change its name to    
"Michael Foods, Inc." NSU, in its capacity as the publicly held entity owning   
Michael as a wholly-owned subsidiary after giving effect to the Merger, the     
Reverse Stock Split and Distribution, is then defined herein as the "Surviving  
Corporation." The Merger will be effected pursuant to the Certificate of Merger 
and pursuant to the provisions of, and with the effect provided in Section 251  
of the DGCL.                                                                    

2.1 Effect of Merger.                                                 

 (a) On the Effective Date, (i) Merger Sub shall be merged with and into
Michael and the separate existence of Merger Sub shall cease, (ii) Michael will 
become a wholly-owned subsidiary of NSU, (iii) Michael will change its name to  
"Michael Foods of Delaware, Inc.," and (iv) NSU will change its name to "Michael
Foods, Inc." On the Effective Date, effective at the Effective Time, the        
articles of incorporation of the Surviving Corporation will be amended and      
restated as the New Articles. The Board of Directors of the Surviving           
Corporation immediately after the Effective Time will consist of nine (9)       
members of which two (2) directors will be designated in accordance with Section
8 of the Orderly Disposition and Registration Rights Agreement and the remaining
directors will be designated by the Michael Board. Immediately after the        
Effective Time the Board of Directors of the Surviving Corporation will elect   
the officers of Michael immediately prior to the Effective Time as the officers 
of Surviving Corporation.                                                       

(b) At the Effective Time, Michael shall thereupon and thereafter be  
responsible and liable for all the liabilities, debts and obligations of each of
Michael and the Merger Sub.                                                     

   (c) At the Effective Time, Michael shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises, of a public as well as of
a private nature, of each of Michael and the Merger Sub; all property, real,    
personal and mixed, and all debts due on whatever account, and all and every    
other interest, of or belonging to or due to each of Michael and the Merger Sub,
shall be taken and deemed to be transferred to and vested in Michael without    
further act or deed; and the title to any real estate or any interest therein,  
vested in Michael and the Merger Sub shall not revert or be in any way impaired 
by reason of the Merger.                                                        

  (d) Subject to the provisions of Articles 7 and 8 hereof, the closing of
the transactions contemplated hereby shall take place at such location, on such 
date and at such time as Michael and NSU mutually agree at the earliest         
practicable time after the satisfaction or waiver of the conditions in Article  
7, but in no event later than ten (10) business days after all such conditions  
have been satisfied or waived, or on such other date as may be mutually agreed  
by the parties hereto. On the closing date, to effect the Merger, the parties   
hereto will cause a Certificate of Merger to be filed with the Delaware         
Secretary of State in accordance with the DGCL. Also on the Effective Date, the 
parties hereto will effect the other transactions contemplated hereby, including
the filing of the New Articles with the Minnesota Secretary of State. The Merger
shall be effective when the Certificate of Merger is filed with the Delaware    
Secretary of State (the "Effective Time"). As used herein, the term "Effective  
Date" shall mean the date on which the Certificate of Merger is filed with the  
Delaware Secretary of State.                                                    

2.2 Effect on Michael Capital Stock and Merger Sub Capital Stock.     

   To effectuate the Merger, and subject to the terms and conditions of this
Agreement, at the Effective Time:                                               

   (a) each issued and outstanding share of Michael Common Stock (other than
shares of Michael Common Stock (i) held as treasury stock of Michael or (ii)    
held directly or indirectly by NSU) shall be converted into and exchangeable for
one share (the "Exchange Ratio") of the Surviving Corporation Common Stock      
(after giving effect to the adoption of the New Articles on the Effective Date  
as provided in                                                                  

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Section 2.1(a) above) and the Surviving Corporation shall issue to holders of   
Michael Common Stock shares of the Surviving Corporation Common Stock based on  
the Exchange Ratio in exchange for the outstanding shares of Michael Common     
Stock;                                                                          

     (b) the 1987 Incentive Stock Option Plan of Michael, the 1987 Non-Qualified
Stock Option Plan of Michael, the 1992 Stock Option Plan for Non-Employee       
Directors of Michael and the 1994 Executive Incentive Plan (the "Michael Stock  
Plans") and all outstanding options (the "Michael Options") to purchase shares  
of Michael Common Stock issued pursuant to the Michael Stock Plans shall be     
assumed and adopted by the Surviving Corporation in accordance with the terms of
the Michael Stock Plans and the Michael Options shall have the rights provided  
in such plans (the "Continuing Options"). In the case of any option to which    
Section 421 of the Code applies by reason of its qualification under Section 422
of the Code, the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such options shall be        
determined in order to comply with Section 424(a) of the Code; and              

     (c) each share of Michael Common Stock held as treasury stock of Michael or
held directly or indirectly by NSU shall be canceled, retired and cease to      
exist, and no exchange or payment shall be made with respect thereof.           

   (d) all outstanding shares of common stock, $.01 par value, of the Merger
Sub held by the Surviving Corporation shall be converted into one thousand      
(1,000) shares of Michael Common Stock at the Effective Time and will remain    
outstanding after the Effective Date as capital stock of Michael held by the    
Surviving Corporation and all other outstanding shares of Michael Common Stock  
shall be canceled.                                                              

2.3 Rights of Holders of Michael Capital Stock.                       

 (a) On and after the Effective Date and until surrendered for exchange,
each outstanding stock certificate which immediately prior to the Effective Date
represented shares of Michael Common Stock shall be deemed for all purposes, to 
evidence ownership of and to represent the number of whole shares of the        
Surviving Corporation Common Stock into which such shares of Michael Common     
Stock shall have been converted, and the record holder of such outstanding      
certificate shall, after the Effective Date, be entitled to vote the shares of  
the Surviving Corporation Common Stock into which such shares of Michael Common 
Stock shall have been converted on any matters on which the holders of record of
the Surviving Corporation Common Stock, as of any date subsequent to the        
Effective Date, shall be entitled to vote. In any matters relating to such      
certificates of Michael Common Stock, the Surviving Corporation may rely        
conclusively upon the record of shareholders maintained by Michael containing   
the names and addresses of the holders of record of Michael Common Stock on the 
Effective Date.                                                                 

(b) On and after the Effective Date, the Surviving Corporation shall  
reserve a sufficient number of authorized but unissued shares of the Surviving  
Corporation Common Stock for issuance in connection with the conversion of      
Michael Common Stock into the Surviving Corporation Common Stock and the shares 
of Michael Common Stock reserved for issuance under the Michael Stock Plans,    
including the shares issuable upon exercise of the Continuing Options.          

2.4 Procedure for Exchange of Stock.                                  

(a) After the Effective Date, holders of certificates theretofore     
evidencing outstanding shares of Michael Common Stock, upon surrender of such   
certificates to an exchange agent appointed by Michael (the "Exchange Agent"),  
shall be entitled to receive certificates representing the number of whole      
shares of the Surviving Corporation Common Stock into which shares of Michael   
Common Stock theretofore represented by the certificates so surrendered shall   
have been converted as provided in Section 2.2(a) hereof. As soon as practicable
after the Effective Date, the Surviving Corporation shall cause the Exchange    
Agent to mail appropriate and customary transmittal materials (which shall      
specify that delivery shall be effected, and risk of loss and title to the      
certificates theretofore representing shares of Michael Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent) to each   
holder of Michael Common Stock of record as of the Effective Date advising such 
holder of the effectiveness of the Merger and the procedure for surrendering to 
the Exchange Agent outstanding certificates formerly evidencing ownership of the
Michael Common Stock in exchange for new certificates evidencing ownership of   
the Surviving Corporation Common                                                

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Stock. The Surviving Corporation shall not be obligated to deliver the          
consideration to which any former holder of shares of Michael Common Stock is   
entitled as a result of the Merger until such holder surrenders the certificate 
or certificates representing such shares for exchange as provided in such       
transmittal materials and this Section 2.4(a). Upon surrender, each certificate 
evidencing Michael Common Stock shall be canceled.                              

(b) After the Effective Date, holders of certificates theretofore     
evidencing outstanding shares of NSU Common Stock subject to the Reverse Stock  
Split, upon surrender of such certificates to the Exchange Agent, shall be      
entitled to receive (i) certificates representing the whole number of shares of 
the Surviving Corporation Common Stock into which the shares of NSU Common Stock
subject to the Reverse Stock Split so surrendered shall have been combined as a 
result of the Reverse Stock Split, and (ii) cash payments in lieu of fractional 
shares, if any, as provided in Section 1.4 hereof. As soon as practicable after 
the Effective Date, the Surviving Corporation shall cause the Exchange Agent to 
mail appropriate and customary transmittal materials (which shall specify that  
delivery shall be effected, and risk of loss and title to the certificates      
theretofore representing shares of NSU Common Stock subject to the Reverse Stock
Split shall pass, only upon proper delivery of such certificates to the Exchange
Agent) to each holder of NSU Common Stock subject to the Reverse Stock Split of 
record as of the Effective Date advising such holder of the effectiveness of the
Merger, the Reverse Stock Split and the Distribution and the procedure for      
surrendering to the Exchange Agent outstanding certificates formerly evidencing 
ownership of the NSU Common Stock subject to the Reverse Stock Split in exchange
for new certificates evidencing ownership of the Surviving Corporation Common   
Stock. The Surviving Corporation shall not be obligated to deliver the          
consideration to which any former holder of shares of NSU Common Stock subject  
to the Reverse Stock Split is entitled as a result of the Merger and the Reverse
Stock Split until such holder surrenders the certificate or certificates        
representing such shares for exchange as provided in such transmittal materials 
and this Section 2.4(b). Notwithstanding the immediately preceding sentence, as 
provided in the Distribution Agreement and in accordance with the terms thereof,
the certificates evidencing the Spinco Common Stock shall be mailed on the      
Distribution Date to the NSU shareholders of record on the Distribution Record  
Date, other than holders of Dissenting Shares, and the surrender of the         
certificates evidencing the NSU Common Stock subject to the Reverse Stock Split 
shall not be a condition to the delivery, after the Effective Date, of the      
certificates evidencing the Spinco Common Stock. Upon surrender, each           
certificate evidencing NSU Common Stock subject to the Reverse Stock Split shall
be canceled.                                                                    

(c) On the Effective Date, the Surviving Corporation shall deposit, or
shall cause to be deposited, with the Exchange Agent, for exchange in accordance
with this Section 2.4, certificates representing the shares of the Surviving    
Corporation Common Stock and cash in lieu of fractional shares (such            
certificates and cash are hereinafter referred to as the "Exchange Fund") to be 
issued or paid by the Surviving Corporation pursuant to Articles 1 and 2 in     
connection with the Merger and the Reverse Stock Split. As provided in the      
Distribution Agreement, the certificates evidencing the Spinco Common Stock     
shall have been deposited by NSU with the transfer agent of NSU on or prior to  
the Effective Date, for distribution on the Distribution Date in accordance with
the terms of the Distribution Agreement and the terms hereof. After the         
Effective Date, the Surviving Corporation shall, on the payment or distribution 
date, tender to the Exchange Agent as an addition to the Exchange Fund all      
dividends and other distributions applicable to certificates held in the        
Exchange Fund for shares of the Surviving Corporation Common Stock issuable in  
respect of the NSU Common Stock subject to the Reverse Stock Split.             

     (d) Until outstanding certificates representing NSU Common Stock subject to
the Reverse Stock Split are surrendered as provided in Section 2.4(b) hereof, no
dividend or distribution payable to such holders of record of NSU Common Stock, 
except the Spinco Common Stock payable in connection with the Distribution,     
shall be paid to any holder of such outstanding certificates, but upon surrender
of such outstanding certificates by such holder there shall be paid to such     
holder the amount of any dividends or distributions (without interest)          
theretofore paid with respect to the whole shares of the Surviving Corporation  
Common Stock into which such shares are converted as a result of the Reverse    
Stock Split, but not paid to such holder, and which dividends or distributions  
had a record date occurring subsequent to the Effective Date.                   

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 (e) After the Effective Date, there shall be no further registration of
transfers on the records of Michael of outstanding certificates formerly        
representing shares of Michael Common Stock at the Effective Date (other than   
the shares of the Merger Sub which are converted into Michael Common Stock      
pursuant to Section 2.3(c)) and there shall be no further registration of       
transfers on the records of the Surviving Corporation of outstanding            
certificates representing shares of NSU Common Stock subject to the Reverse     
Stock Split. If any such certificate is presented to Michael or the Surviving   
Corporation, it shall be forwarded to the Exchange Agent for cancellation and   
exchange for certificates representing shares of the Surviving Corporation      
Common Stock as herein provided.                                                

  (f) All shares of the Surviving Corporation Common Stock issued upon the
surrender for exchange of Michael Common Stock in accordance with the above     
terms and conditions shall be deemed to have been issued and paid in full       
satisfaction of all rights pertaining to such shares of Michael Common Stock.   
All shares of the Surviving Corporation Common Stock issued upon the surrender  
for exchange of NSU Common Stock subject to the Reverse Stock Split in          
accordance with the above terms and conditions shall be deemed to have been     
issued in full satisfaction of all rights pertaining to such shares of NSU      
Common Stock.                                                                   

(g) Any portion of the Exchange Fund (including the proceeds of any   
investments thereof, any shares of the Surviving Corporation Common Stock and   
any dividends or distributions thereon) that remains unclaimed by the holders of
Michael Common Stock or NSU Common Stock subject to the Reverse Stock Split, as 
the case may be, for six months after the Effective Date shall be returned or   
repaid to the Surviving Corporation. Any holders of Michael Common Stock or NSU 
Common Stock subject to the Reverse Stock Split who have not theretofore        
complied with this Section 2.4 shall thereafter look only to the Surviving      
Corporation for issuance of their shares of the Surviving Corporation Common    
Stock, cash in lieu of fractional shares and any unpaid dividends and           
distributions on the Surviving Corporation Common Stock deliverable in respect  
of the shares of NSU Common Stock subject to the Reverse Stock Split that such  
holder holds as determined pursuant to this Agreement, in each case, without any
interest thereon. If outstanding certificates for shares of Michael Common Stock
or NSU Common Stock subject to the Reverse Stock Split are not surrendered or   
the payment for them not claimed prior to the date on which such payments would 
otherwise escheat to or become the property of any governmental unit or agency, 
the unclaimed items shall, to the extent not prohibited by abandoned property   
and any other applicable law, become the property of the Surviving Corporation  
(and to the extent not in its possession shall be paid over to it), free and    
clear of all claims or interest of any person previously entitled to such       
claims. Notwithstanding the foregoing, none of Surviving Corporation, Michael,  
NSU, the Exchange Agent or any other person shall be liable to any former holder
of Michael Common Stock or NSU Common Stock subject to the Reverse Stock Split  
for any amount delivered to a public official pursuant to applicable abandoned  
property, escheat or similar laws.                                              

 (h) In the event any certificate for Michael Common Stock or NSU Common
Stock subject to the Reverse Stock Split shall have been lost, stolen or        
destroyed, the Exchange Agent shall issue and pay in exchange for such lost,    
stolen or destroyed certificate, upon the making of an affidavit of that fact by
the holder thereof, such shares of the Surviving Corporation Common Stock and   
cash for fractional shares, if any, as may be required pursuant to this         
Agreement; provided, however, that the Surviving Corporation, in its discretion 
and as a condition precedent to the issuance and payment thereof, may require   
the owner of such lost, stolen or destroyed certificate to deliver a bond in    
such sum as it may direct as indemnity against any claim that may be made       
against the Surviving Corporation, Michael, NSU, the Exchange Agent or any other
party with respect to the certificate alleged to have been lost, stolen or      
destroyed.                                                                      

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ARTICLE 3 

REPRESENTATIONS AND WARRANTIES OF MICHAEL 

Michael hereby represents and warrants to NSU as follows:             

3.1 Organization and Qualification. Michael is a corporation duly     
organized, validly existing and in good standing under the laws of the State of 
Delaware, and has the requisite corporate power to carry on its business as now 
conducted. Each of the Michael Subsidiaries is a corporation duly organized,    
validly existing and in good standing under the laws of the state of its        
incorporation. The copies of the Charter and Bylaws of Michael which have been  
made available to NSU prior to the date of this Agreement are correct and       
complete copies of such documents as in effect as of the date of this Agreement.
As used in this Agreement, the term "Charter" with respect to any corporation   
shall mean those instruments that at that time constitute its charter as filed  
or recorded under the general corporation or other applicable law of the        
jurisdiction of its incorporation or organization, including the articles or    
certificate of incorporation and any and all amendments thereto. Each of Michael
and the Michael Subsidiaries is licensed or qualified to do business in every   
jurisdiction in which the nature of its business or its ownership of property   
requires it to be licensed or qualified, except where the failure to be so      
licensed or qualified would not have a Material Adverse Effect on Michael.      

  3.2 Authority Relative to this Agreement; Non-Contravention. Michael has
the requisite corporate power and authority to enter into this Agreement and the
Certificate of Merger and to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and the Certificate of Merger by   
Michael and the consummation by Michael of the transactions contemplated hereby 
and thereby have been duly authorized by the Board of Directors of Michael and, 
except for approval of this Agreement and the Merger by the requisite vote of   
Michael's shareholders, no other corporate proceedings on the part of Michael   
are necessary to authorize this Agreement and the consummation of the           
transactions contemplated hereby. This Agreement has been duly executed and     
delivered by Michael and, assuming it is a valid and binding obligation of NSU, 
constitutes a valid and binding obligation of Michael enforceable in accordance 
with its terms except as enforcement may be limited by general principles of    
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally. 
Except as set forth in Schedule 3.2, neither Michael nor any of the Michael     
Subsidiaries is subject to, or obligated under, any provision of (a) its Charter
or Bylaws, (b) any agreement, arrangement or understanding, (c) any license,    
franchise or permit or (d) subject to obtaining the approvals referred to in the
next sentence, any law, regulation, order, judgment or decree, which would be   
breached or violated, or in respect of which a right of termination or          
acceleration or any encumbrance on any of its assets would be created, by the   
execution, delivery or performance of this Agreement, the Certificate of Merger,
or the consummation of the transactions contemplated hereby or thereby, other   
than any such breaches, violations, rights of termination or acceleration or    
encumbrances which, in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect on Michael. Except for (a) the filing required by  
the HSR Act and the termination of any waiting period thereunder, (b) the filing
with the SEC of a joint proxy statement in definitive form relating to the      
meetings of Michael's and NSU's shareholders to be held in connection with this 
Agreement and the transactions contemplated hereby, (c) the filing with the SEC 
of the Registration Statement and effectiveness of the Registration Statement,  
(d) the approval of the Merger, the Certificate of Merger and this Agreement by 
the requisite vote of the shareholders of Michael (the "Requisite Michael       
Shareholder Vote"), (e) approvals under applicable Blue Sky laws, (f) the filing
of the Certificate of Merger with the Delaware Secretary of State in accordance 
with the DGCL, and (g) such filings, authorizations or approvals as may be set  
forth in Schedule 3.2, no authorization, consent or approval of, or filing with,
any public body, court or authority is necessary on the part of Michael or any  
of the Michael Subsidiaries for the consummation by Michael of the transactions 
contemplated by this Agreement, except for such authorizations, consents,       
approvals and filings as to which the failure to obtain or make the same will   
not, in the aggregate, have a Material Adverse Effect on Michael or adversely   
affect the consummation of the transactions contemplated hereby.                

3.3 Capitalization. The authorized, issued and outstanding shares of  
capital stock of Michael as of the date hereof is correctly set forth on        
Schedule 3.3. The issued and outstanding shares of capital stock of             

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Michael are duly authorized, validly issued, fully paid and nonassessable and   
have not been issued in violation of any preemptive rights.                     

     3.4 Exchange Act Reports. Prior to the execution of this Agreement, Michael
has delivered or made available to NSU complete and accurate copies of (a)      
Michael's Annual Reports on Form 10-K for the years ended December 31, 1990,    
1991, 1992, 1993 and 1994 (the "Michael 10-K Reports") as filed with the SEC,   
(b) all Michael proxy statements and annual reports to shareholders used in     
connection with meetings of Michael shareholders held since January 1, 1991 and 
(c) Michael's Quarterly Reports on Form 10-Q for the quarters ended March 31,   
June 30, and September 30, 1995 (the "Michael 10-Q Reports") as filed with the  
SEC. As of their respective dates or as subsequently amended prior to the date  
hereof, such documents (i) did not contain any untrue statement of a material   
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they  
were made, not misleading and (ii) complied as to form in all material respects 
with the applicable rules and regulations of the SEC. Since January 1, 1991,    
Michael has filed in a timely manner all reports that it was required to file   
with the SEC pursuant to the Exchange Act, as amended, and the rules and        
regulations promulgated thereunder. The Michael financial statements (including 
any footnotes thereto) contained in the Michael 10-K Reports and the Michael    
10-Q Reports were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as otherwise noted therein) and fairly      
present the financial condition of Michael as of the dates thereof, except, in  
the case of unaudited interim financial statements, subject to normal year-end  
adjustments and the omission of footnotes.                                      

3.5 Subsidiaries. Schedule 3.5 correctly sets forth the name and      
jurisdiction of incorporation of each Subsidiary of Michael (each a "Michael    
Subsidiary" and collectively the "Michael Subsidiaries"). Except as disclosed on
Schedule 3.5, all of the issued and outstanding shares of capital stock of each 
Michael Subsidiary are owned directly or indirectly by Michael free and clear of
any lien, pledge, security interest, encumbrance or charge of any kind.         

3.6 Litigation. As of the date hereof, there are no actions, suits,   
proceedings, orders or investigations pending or, to the knowledge of Michael,  
threatened against Michael, at law or in equity, or before or by any federal,   
state or other governmental department, commission, board, bureau, agency or    
instrumentality, domestic or foreign which challenges or seeks to make illegal  
or to delay or otherwise directly or indirectly to restrain or prohibit the     
consummation of the transactions contemplated hereby or seeks to obtain material
damages in connection with the transactions contemplated hereby. As used in this
Agreement, the phrase "to the knowledge of," or words of similar import, with   
respect to an entity means to the knowledge of management officials of such     
entity having responsibility for the matter in question.                        

   3.7 No Brokers or Finders. Except as disclosed on Schedule 3.7, there are
no claims for brokerage commissions, finders' fees, investment advisory fees or 
similar compensation in connection with the transactions contemplated by this   
Agreement based on any arrangement, understanding, commitment or agreement made 
by or on behalf of Michael or any of the Michael Subsidiaries.                  

3.8 Prospectus/Proxy Statement. At the time the Registration Statement
becomes effective and at the time the Prospectus/Proxy Statement is mailed to   
the shareholders of Michael and NSU in order to obtain approvals referred to in 
Section 6.11 and at all times subsequent to such mailing up to and including the
times of such approvals, the Registration Statement and the Prospectus/Proxy    
Statement (including any amendments or supplements thereto), with respect to all
information furnished to NSU by Michael as provided in Section 6.4(b) below) for
inclusion in the Prospectus/Proxy Statement or consistent with information so   
furnished by Michael relating to Michael (including the Michael Subsidiaries)   
and its shareholders, Michael Common Stock, the Michael Stock Plans, the        
Continuing Options, this Agreement, the Certificate of Merger, the Merger and   
all other transactions contemplated hereby, will (a) comply in all material     
respects with applicable provisions of the Securities Act and the Exchange Act  
and the rules and regulations promulgated thereunder, and (b) not contain any   
untrue statement of material fact or omit to state a material fact required to  
be stated therein or necessary to make the statements contained therein, in     
light of the circumstances under which they are made, not misleading.           

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    3.9 Disclosure. The representations and warranties of Michael contained in
this Agreement are true and correct in all material respects, and such          
representations and warranties do not omit any material fact necessary to make  
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to Michael which has not been 
disclosed to NSU pursuant to this Agreement, the Schedules hereto, the Michael  
10-K Reports and the Michael 10-Q Reports, all taken together as a whole, which 
has had or could reasonably be expected to have a Material Adverse Effect on    
Michael or materially adversely affect the ability of Michael to consummate in a
timely manner the transactions contemplated hereby.                             

ARTICLE 4 

REPRESENTATIONS AND WARRANTIES OF NSU 

NSU hereby represents and warrants to Michael as follows:             

  4.1 Organization and Qualification. NSU is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota, 
and has the requisite corporate power to carry on its business as now conducted.
Each of the NSU Subsidiaries is a corporation duly organized, validly existing  
and in good standing under the laws of the state of its incorporation. The      
copies of the Charter and Bylaws of NSU and Merger Sub which have been made     
available to Michael on or prior to the date of this Agreement are correct and  
complete copies of such documents as in effect as of the date of this Agreement.
Each of NSU and the NSU Subsidiaries is licensed or qualified to do business in 
every jurisdiction in which the nature of its business or its ownership of      
property requires it to be licensed or qualified, except where the failure to be
so licensed or qualified would not have a Material Adverse Effect on NSU.       

   4.2 Authority Relative to this Agreement; Non-Contravention. Each of NSU,
the Merger Sub and Spinco has the requisite corporate power and authority to    
enter into this Agreement, the Certificate of Merger and the Distribution       
Agreement to which it is or will be a party and to carry out its obligations    
hereunder and thereunder. The execution and delivery of this Agreement, the     
Certificate of Merger and the Distribution Agreement by NSU, the Merger Sub and 
Spinco to which it is or will be a party, and the consummation by NSU, the      
Merger Sub and Spinco of the transactions contemplated hereby and thereby have  
been duly authorized by the Boards of Directors of NSU, the Merger Sub and      
Spinco. Except for approval of this Agreement, the Merger, the New Articles, the
Reverse Stock Split and the Distribution by the requisite vote of NSU's         
shareholders, no other corporate proceedings on the part of NSU, Merger Sub or  
Spinco are necessary to authorize this Agreement, the Certificate of Merger and 
the Distribution Agreement and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been duly executed and delivered by NSU  
and Merger Sub and, assuming it is a valid and binding obligation of Michael,   
constitutes a valid and binding obligation of NSU and Merger Sub enforceable in 
accordance with its terms except as enforcement may be limited by general       
principles of equity whether applied in a court of law or a court of equity and 
by bankruptcy, insolvency and similar laws affecting creditors' rights and      
remedies generally. Except as set forth in Schedule 4.2, neither NSU nor any of 
the NSU Subsidiaries is subject to, or obligated under, any provision of (a) its
Charter or Bylaws, (b) any agreement, arrangement or understanding, (c) any     
license, franchise or permit or (d) subject to obtaining the approvals referred 
to in the next sentence, any law, regulation, order, judgment or decree, which  
would be breached or violated, or in respect of which a right of termination or 
acceleration or any encumbrance on any of its assets would be created, by the   
execution, delivery or performance of this Agreement, the Certificate of Merger,
the Distribution Agreement or the consummation of the transactions contemplated 
hereby or thereby, other than any such breaches, violations, rights of          
termination or acceleration or encumbrances which, in the aggregate, could not  
reasonably be expected to have a Material Adverse Effect on NSU. Except for (a) 
the filings, notices, consents and approvals described in Section 3.2 hereof,   
(b) the filing with the SEC of a registration statement on Form S-1 registering 
the shares of Spinco Common Stock to be distributed in the Distribution, if     
required, (c) approval of the Merger and this Agreement, the New Articles, the  
Reverse Stock Split and the Distribution by the requisite vote of the           
shareholders of NSU (the "Requisite NSU Shareholder Vote"), (d) the filing of   
the New Articles with the Minnesota Secretary of State, and (e) such filings,   
authorizations or approvals as may                                              

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be set forth in Schedule 4.2, no authorization, consent or approval of, or      
filing with, any public body, court or authority is necessary on the part of NSU
or any of the NSU Subsidiaries for the consummation by NSU or the Merger Sub of 
the transactions contemplated by this Agreement, except for such authorizations,
consents, approvals and filings as to which the failure to obtain or make the   
same will not, in the aggregate, have a Material Adverse Effect on NSU or       
adversely affect the consummation of the transactions contemplated hereby.      

4.3 Capitalization. The authorized, issued and outstanding shares of  
capital stock of each of NSU and Merger Sub as of the date hereof is correctly  
set forth on Schedule 4.3. The issued and outstanding shares of capital stock of
each of NSU, Merger Sub and Spinco are duly authorized, validly issued, fully   
paid and nonassessable and have not been issued in violation of any preemptive  
rights. Except as disclosed on Schedule 4.3, there are no options, warrants,    
conversion privileges or other rights, agreements, arrangements or commitments  
obligating NSU or Merger Sub to issue, sell, purchase or redeem any shares of   
its capital stock or securities or obligations of any kind convertible into or  
exchangeable for any shares of its capital stock. Schedule 4.3 contains true and
correct copies of all such agreements, arrangements (including all stock plans, 
but excluding individual stock option agreements) or commitments. The           
outstanding shares of NSU Common Stock have been duly listed for trading on the 
Pacific Stock Exchange and the NASDAQ-NMS.                                      

     4.4 Exchange Act Reports. Prior to the execution of this Agreement, NSU has
delivered or made available to Michael complete and accurate copies of (a) NSU's
Annual Reports on Form 10-K for the years ended December 31, 1990, 1991, 1992,  
1993 and 1994 (the "NSU 10-K Reports") as filed with the SEC, (b) all NSU proxy 
statements and annual reports to shareholders used in connection with meetings  
of NSU shareholders held since January 1, 1991 and (c) NSU's Quarterly Reports  
on Form 10-Q for the quarters ended March 31, June 30, and September 30, 1995   
(the "NSU 10-Q Reports") as filed with the SEC. As of their respective dates or 
as subsequently amended prior to the date hereof, such documents (i) did not    
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statement therein, in    
light of the circumstances under which they were made, not misleading and (ii)  
complied as to form in all material respects with the applicable rules and      
regulations of the SEC. Since January 1, 1991, NSU has filed in a timely manner 
all reports that it was required to file with the SEC pursuant to the Exchange  
Act. The NSU financial statements (including footnotes thereto) contained in the
NSU 10-K Reports and the NSU 10-Q Reports were prepared in accordance with GAAP 
applied on a consistent basis during the periods involved (except as otherwise  
noted therein) and fairly present the financial condition of NSU as of the dates
thereof, except in the case of unaudited interim financial statements subject to
normal year-end adjustments and the omission of footnotes.                      

4.5 Subsidiaries. Schedule 4.5 correctly sets forth the name and      
jurisdiction of incorporation of each corporation, fifty percent or more of the 
voting securities of which is owned directly or indirectly by NSU (each a "NSU  
Subsidiary" and collectively the "NSU Subsidiaries"). All of the issued and     
outstanding shares of capital stock of each NSU Subsidiary are owned directly or
indirectly by NSU free and clear of any lien, pledge, security interest,        
encumbrance or charge of any kind.                                              

     4.6 Absence of Certain Developments. Except as disclosed in NSU's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995 or on Schedule 4.6,
unless otherwise expressly contemplated or permitted by this Agreement, since   
September 30, 1995 to the date hereof, neither NSU nor any of the NSU           
Subsidiaries has:                                                               

         (a) issued or sold any of its equity securities other than NSU Common
Stock, securities convertible into or exchangeable for its equity     
   securities other than NSU Common Stock, warrants, options or other rights
to acquire its equity securities other than NSU Common Stock;         

       (b) reclassified any of its outstanding shares of capital stock; or

(c) agreed to do any of the foregoing.                      

4.7 Litigation. As of the date hereof, there are no actions, suits,   
proceedings, orders or investigations pending or, to the knowledge of NSU,      
threatened against NSU or any of the NSU Subsidiaries, at law or in equity, or  
before or by any federal, state or other governmental department, commission,   
board, bureau,                                                                  

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agency or instrumentality, domestic or foreign which challenges or seeks to make
illegal or to delay or otherwise directly or indirectly to restrain or prohibit 
the consummation of the transactions contemplated hereby or seeks to obtain     
material damages in connection with the transactions contemplated hereby.       

   4.8 No Brokers or Finders. Except as disclosed on Schedule 4.8, there are
no claims for brokerage commissions, finders' fees, investment advisory fees or 
similar compensation in connection with the transactions contemplated by this   
Agreement based on any arrangement, understanding, commitment or agreement made 
by or on behalf of NSU or any of the NSU Subsidiaries.                          

4.9 Prospectus/Proxy Statement. At the time the Registration Statement
becomes effective and at the time the Prospectus/Proxy Statement is mailed to   
the shareholders of NSU and Michael in order to obtain approvals referred to in 
Section 6.11 hereof and at all times subsequent to such mailing up to and       
including the times of such approvals, the Registration Statement and the       
Prospectus/Proxy Statement (including any amendments or supplements thereto),   
with respect to all information set forth therein relating to NSU (including the
NSU Subsidiaries) and its shareholders, this Agreement, the Certificate of      
Merger, the Distribution and all other transactions contemplated hereby, will   
(a) comply in all material respects with applicable provisions of the Securities
Act and the Exchange Act, and (b) not contain any untrue statement of material  
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under   
which they are made, not misleading, except that, in each case, no such         
representations shall apply to any written information, including financial     
statements, of or provided by Michael for such Prospectus/Proxy Statement.      

    4.10 Validity of the Surviving Corporation Common Stock. The shares of the
Surviving Corporation Common Stock to be issued to holders of Michael Common    
Stock pursuant to this Agreement will be, when issued, duly authorized, validly 
issued, fully paid and nonassessable.                                           

 4.11 Ownership of Michael Common Stock. As of the date hereof, NSU owns
good and valid title to 7,354,950 shares of Michael Common Stock, free and clear
of any liens, claims, encumbrances or restrictions (other than restrictions     
imposed by securities laws) except as disclosed on Schedule 4.11.               

 4.12 Liabilities. As of the Effective Time, (a) NSU shall have no known
Liabilities other than (i) the NSU Assumed Liabilities for which the Surviving  
Corporation shall be responsible, and (ii) the contingent liabilities listed in 
Schedule 4.12 hereto against which the Surviving Corporation and its            
Subsidiaries will be indemnified pursuant to Section 5.01 of the Distribution   
Agreement, and (b) Merger Sub shall have no Liabilities, except its obligations 
under this Agreement.                                                           

 4.13 Disclosure. The representations and warranties of NSU contained in
this Agreement are true and correct in all material respects, and such          
representations and warranties do not omit any material fact necessary to make  
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to NSU and the NSU            
Subsidiaries which has not been disclosed to Michael pursuant to this Agreement,
the Schedules hereto and the NSU 10-K Reports and the NSU 10-Q Reports, all     
taken together as a whole, which has had or could reasonably be expected to have
a Material Adverse Effect on NSU or materially adversely affect the ability of  
NSU to consummate in a timely manner the transactions contemplated hereby.      

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ARTICLE 5 

CONDUCT OF BUSINESS PENDING THE MERGER

5.1 Conduct of Business by NSU. From the date of this Agreement to the
Effective Date, unless Michael shall otherwise agree in writing or as otherwise 
expressly contemplated or permitted by other provisions of this Agreement,      
including but not limited to, this Section 5.1, NSU shall not, directly or      
indirectly, (a) amend or propose to amend its Charter or Bylaws except for the  
New Articles, (b) issue, sell or grant any of its equity securities other than  
NSU Common Stock, securities convertible into or exchangeable for its equity    
securities other than NSU Common Stock, warrants, options or other rights to    
acquire its equity securities other than NSU Common Stock, (c) reclassify any   
outstanding shares of capital stock of NSU, (d) acquire (by merger, exchange,   
consolidation, acquisition of stock or assets or otherwise) any corporation,    
partnership, joint venture or other business organization or division or assets 
thereof, except by a NSU Subsidiary and in a transaction in which NSU shall not 
have any Liabilities with respect thereto after the Effective Date, (e) sell,   
transfer, pledge or otherwise encumber the Michael Common Stock owned by NSU    
other than as collateral for indebtedness under the Credit Agreement, (f)       
purchase or otherwise acquire any additional shares of Michael Common Stock, (g)
default in its obligations under any material debt, contract or commitment which
default results in the acceleration of obligations due thereunder, or (h) enter 
into or propose to enter into, or modify or propose to modify, any agreement,   
arrangement, or understanding with respect to any of the foregoing matters.     

    5.2 Conduct of Business by Michael. From the date of this Agreement to the
Effective Date, unless NSU shall otherwise agree in writing or as otherwise     
expressly contemplated or permitted by other provisions of this Agreement,      
including but not limited to, this Section 5.2, Michael shall not, directly or  
indirectly, (a) amend its Charter or Bylaws, (b) split, combine or reclassify   
any outstanding shares of capital stock of Michael, (c) declare, set aside, make
or pay any dividend or distribution in cash, stock, property or otherwise with  
respect to the capital stock of Michael, except for regular quarterly dividends 
which are not in excess of $.05 per share per quarter on the Michael Common     
Stock, or (d) default in its obligations under any material debt, contract or   
commitment which default results in the acceleration of obligations due         
thereunder, except for such defaults arising out of this Agreement for which    
consents, waivers or modifications are required to be obtained as set forth on  
Schedule 3.2.                                                                   

ARTICLE 6 

ADDITIONAL COVENANTS AND AGREEMENTS 

  6.1 Governmental Filings. Each party will use all reasonable efforts and
will cooperate with the other party in the preparation and filing, as soon as   
practicable, of all filings, applications or other documents required under     
applicable laws, including the Securities Act, the Exchange Act and the HSR Act,
to consummate the transactions contemplated by this Agreement. Prior to         
submitting each filing, application, registration statement or other document   
with the applicable regulatory authority, each party will, to the extent        
practicable, provide the other party with an opportunity to review and comment  
on each such application, registration statement or other document to the extent
permitted by applicable law. Each party will use all reasonable efforts and will
cooperate with the other party in taking any other actions necessary to obtain  
such regulatory or other approvals and consents at the earliest practicable     
time, including participating in any required hearings or proceedings. Subject  
to the terms and conditions herein provided, each party will use all reasonable 
efforts to take, or cause to be taken, all actions and to do, or cause to be    
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement.     

     6.2 Expenses. Except as otherwise provided in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions        
contemplated hereby shall be paid by the party incurring such costs and         
expenses. Any such costs or expenses incurred by NSU shall be paid prior to the 
Effective Time. Notwithstanding the foregoing, NSU and Michael will each pay,   
when due, one-half of (i) all filing fees required to be paid under the HSR Act 
by Michael, NSU or any shareholder of NSU who may be an "Ultimate Parent Entity"
under the HSR Act in connection with the Merger (but excluding the              
Distribution), (ii) all                                                         

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costs of all SEC filing fees with respect to the Registration Statement as those
fees relate to the shares of Surviving Corporation Common Stock issuable to the 
holders of Michael Common Stock as a result of the Merger, and (iii) all costs  
of qualifying the Surviving Corporation securities to be issued in connection   
with the transactions contemplated by this Agreement under state blue sky laws  
to the extent necessary.                                                        

6.3 Access to Information; Confidentiality.                           

 (a) Each party shall permit and shall cause each of its subsidiaries to
permit the other party full access on reasonable notice and at reasonable hours 
to its properties and shall disclose and make available (together with the right
to copy) to the other party and its officers, employees, attorneys, accountants 
and other representatives, all books, papers and records relating to the assets,
stock, properties, operations, obligations and liabilities of such party and its
subsidiaries, including, without limitation, all books of account (including,   
without limitation, the general ledger), tax records, minute books of directors'
and shareholders' meetings, organizational documents, bylaws, contracts and     
agreements, filings with any regulatory authority, accountants' work papers,    
litigation files (including, without limitation, legal research memoranda),     
documents relating to assets and title thereto (including, without limitation,  
abstracts, title insurance policies, surveys, environmental reports, opinions of
title and other information relating to the real and personal property), plans  
affecting employees, securities transfer records and shareholder lists, and any 
books, papers and records relating to other assets or business activities in    
which such party may have a reasonable interest; provided, however, that the    
foregoing rights granted to each party shall, whether or not and regardless of  
the extent to which the same are exercised, in no way affect the nature or scope
of the representations, warranties and covenants of the respective party set    
forth herein.                                                                   

(b) Each party shall comply with the provisions of its confidentiality
letter dated December 1, 1995 with the other party. This Agreement does not     
supersede or modify the terms of such confidentiality letters.                  

6.4 Registration Statement.                                           

    (a) For the purpose (i) of holding meetings of shareholders of Michael and
NSU to approve the Merger and this Agreement and, in the case of NSU, to approve
the New Articles, the Reverse Stock Split and the Distribution, and (ii) of     
registering with the SEC and with applicable state securities authorities the   
securities of the Surviving Corporation to be issued as contemplated by this    
Agreement, the parties hereto shall cooperate in the preparation of an          
appropriate registration statement (such registration statement, together with  
all and any amendments and supplements thereto, being herein referred to as the 
"Registration Statement"), which shall include a prospectus/joint proxy         
statement satisfying all applicable requirements of the Securities Act, the     
Exchange Act, applicable state securities laws and the rules and regulations    
thereunder (such prospectus/joint proxy statement, together with any and all    
amendments or supplements thereto, being herein referred to as the              
"Prospectus/Proxy Statement").                                                  

(b) Michael shall furnish such information concerning Michael and the 
Michael Subsidiaries as is necessary in order to cause the Prospectus/Proxy     
Statement, insofar as it relates to Michael, the Michael Subsidiaries and       
Michael securities, to be prepared in accordance with Section 6.4(a). Michael   
agrees promptly to advise NSU if at any time prior to the Michael or NSU        
shareholders' meetings any information provided by Michael in the               
Prospectus/Proxy Statement becomes incorrect or incomplete in any material      
respect, and to share with NSU the information needed to correct such inaccuracy
or omission.                                                                    

    (c) NSU shall furnish Michael with such information concerning NSU and the
NSU Subsidiaries as is necessary in order to cause the Prospectus/Proxy         
Statement, insofar as it relates to NSU, the NSU Subsidiaries and the NSU       
securities, to be prepared in accordance with Section 6.4(a). NSU agrees        
promptly to advise Michael if at any time prior to the Michael or NSU           
shareholders' meetings any information provided by NSU in the Prospectus/Proxy  
Statement becomes incorrect or incomplete in any material respect, and to       
provide Michael with the information needed to correct such inaccuracy or       
omission.                                                                       

   (d) NSU shall use all reasonable efforts to promptly prepare and (subject
to receipt of audited financial statements of each of NSU and Michael for the   
year ended December 31, 1995) file the Registration Statement with the SEC and  
applicable state securities agencies. NSU shall use reasonable efforts to cause 
the Registration Statement to become effective under the Securities Act and     
applicable state securities laws at                                             

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the earliest practicable date. NSU agrees to provide Michael with reasonable    
opportunity to review and comment on the Registration Statement and any         
amendment thereto before filing with the SEC or any other governmental entity   
and agrees not to make such filing if Michael reasonably objects to the         
completeness or accuracy of any information contained therein. Michael          
authorizes NSU to utilize in the Registration Statement the information         
concerning Michael, the Michael Subsidiaries and Michael securities provided to 
NSU for the purpose of inclusion in the Prospectus/Proxy Statement. NSU shall   
advise Michael promptly when the Registration Statement has become effective and
of any supplements or amendments thereto, and NSU shall furnish Michael with    
copies of all such documents. Prior to the Effective Date or the termination of 
this Agreement, each party shall consult with the other with respect to any     
material (other than the Prospectus/Proxy Statement) that might constitute a    
"prospectus" relating to the Merger within the meaning of the Securities Act.   

    (e) Michael shall use reasonable efforts to cause to be delivered to NSU a
letter relating to the financial statements of Michael included in the          
Registration Statement from Grant Thornton LLP, Michael's independent auditors, 
dated a date within two business days before the date on which the Registration 
Statement shall become effective and addressed to NSU, in form and substance    
reasonably satisfactory to NSU and customary in scope and substance for letters 
delivered by independent public accountants in connection with registration     
statements similar to the Registration Statement.                               

    (f) NSU shall use reasonable efforts to cause to be delivered to Michael a
letter relating to the financial statements of NSU included in the Registration 
Statement from Grant Thornton LLP, NSU's independent auditors, dated a date     
within two business days before the date on which the Registration Statement    
shall become effective and addressed to Michael, in form and substance          
reasonably satisfactory to Michael and customary in scope and substance for     
letters delivered by independent public accountants in connection with          
registration statements similar to the Registration Statement.                  

  (g) NSU shall bear all printing and mailing costs in connection with the
preparation and mailing of the Prospectus/Proxy Statement to NSU shareholders.  
Michael shall bear all printing and mailing costs in connection with the        
preparation and mailing of the Prospectus/Proxy Statement to Michael            
shareholders. Michael and NSU shall each bear their own legal and accounting    
expenses in connection with the Registration Statement.                         

  6.5 Accounting and Tax Treatment. Neither NSU nor Michael, nor Surviving
Corporation after the Effective Date, shall, directly or indirectly, voluntarily
take any action which would disqualify the Merger, the Reverse Stock Split and  
the Distribution as a business combination utilizing the reverse acquisition    
concept with Michael being the accounting acquiror for accounting purposes and  
the Merger as a "reorganization" that would be tax free to the shareholders of  
NSU and Michael pursuant to Section 368(a) of the Code.                         

    6.6 Michael Stock Plans. At or prior to the Effective Time, NSU shall take
all corporate action necessary to authorize and reserve for issuance a          
sufficient number of shares of the Surviving Corporation Common Stock, equal to 
the number of shares of Michael Common Stock reserved for issuance under the    
Michael Stock Plans to be adopted and assumed by the Surviving Corporation at   
the Effective Time, including the shares issuable upon exercise of the          
Continuing Options, in accordance with Section 2.2(b).                          

   6.7 Press Releases. Michael and NSU shall agree with each other as to the
form and substance of any press release related to this Agreement or the        
transactions contemplated hereby, and shall consult with each other as to the   
form and substance of other public disclosures which may relate to the          
transactions contemplated by this Agreement, provided, however, that nothing    
contained herein shall prohibit either party, following notification to the     
other party, from making any disclosure which is required by law or regulation. 

    6.8 Directors and Officers Insurance. Each of NSU and Michael will use its
reasonable efforts to obtain a quote for "tail policy" coverage for a period of 
three years after the Effective Date under its officers and directors liability 
insurance for claims asserted after the Effective Date against any person who   
was an officer or director of NSU or any NSU Subsidiary prior to the Effective  
Date which claims relate to the period prior to the Effective Date. If such     
coverage is available, NSU will, prior to the Effective Date, select which      
coverage it prefers and purchase or reimburse Michael for the cost of such      
coverage.                                                                       

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 6.9 Securities Reports. Each of Michael and NSU agree to provide to the
other party copies of all reports and other documents filed under the Securities
Act or Exchange Act with the SEC by it between the date hereof and the Effective
Date within two days after the date such reports or other documents are filed   
with the SEC. Upon delivery of any such report or document, the delivering party
shall be deemed to have made the representations to the receiving party with    
respect thereto as set forth in Sections 3.4 and 4.4, respectively.             

 6.10 Stock Listing. NSU shall use all reasonable efforts to list on the
NASDAQ-NMS the shares of the Surviving Corporation Common Stock to be issued in 
connection with the Merger and the Reverse Stock Split, and to change the       
trading symbol for the Surviving Corporation Common Stock to MIKL on the        
Effective Date.                                                                 

     6.11 Shareholder Approvals. Each of Michael and NSU shall call a meeting of
its shareholders for the purpose of voting upon this Agreement and the Merger,  
and, in the case of NSU, the New Articles, the Reverse Stock Split and the      
Distribution, and shall hold such meeting on the later of (a) June 6, 1996, or  
(b) such other date(s) as mutually agreed by NSU and Michael, but such mutually 
agreed date(s) shall not be later than forty-five (45) days after the           
effectiveness of the Registration Statement. The Board of Directors of each of  
Michael and NSU shall recommend approval of this Agreement and the Merger, and, 
in the case of NSU, the New Articles, the Reverse Stock Split and the           
Distribution, and use all reasonable efforts (including, without limitation,    
soliciting proxies for such approvals) to obtain approvals thereof from its     
shareholders, provided, however, the Board of Directors of either may fail to   
make the recommendation, and/or to seek to obtain the shareholder approval      
referred to in this sentence, or withdraw, modify or change any such            
recommendation, if such Board of Directors determines, after consultation with  
counsel, that the making of such recommendation, the seeking to obtain such     
shareholder approval, or the failure to so withdraw, modify or change its       
recommendation, is reasonably likely to constitute a breach of the fiduciary or 
legal obligations of such Board of Directors.                                   

6.12 No Solicitation.                                                 

    (a) Unless and until this Agreement shall have been terminated pursuant to
Section 8.1, neither NSU nor its officers, directors or agents shall, directly  
or indirectly, encourage, solicit or initiate discussions or negotiations with, 
or engage in negotiations or discussions with, or provide non-public information
to, any corporation, partnership, person or other entity or groups concerning   
any merger or sale of substantial assets, except for the sale of NSU assets     
other than the Michael Common Stock owned by NSU; provided that NSU may engage  
in such discussion in response to an unsolicited proposal from an unrelated     
party if the Board of Directors of NSU determines, after consultation with      
counsel, that the failure to engage in such discussions is reasonably likely to 
constitute a breach of the fiduciary or legal obligations of the Board of       
Directors of NSU. NSU will promptly advise Michael if it receives a proposal or 
inquiry with respect to the matters described above.                            

    (b) Unless and until this Agreement shall have been terminated pursuant to
Section 8.1, neither Michael nor its officers, directors or agents shall,       
directly or indirectly, encourage, solicit or initiate discussions or           
negotiations with, or engage in negotiations or discussions with, or provide    
non-public information to, any corporation, partnership, person or other entity 
or groups concerning any merger or sale of substantial assets, except if (i)    
Michael is the surviving corporation in such transaction, and (ii) the          
shareholders of Michael immediately preceding such transaction will own at least
51% of the outstanding shares of Michael after giving effect to such            
transaction; provided that Michael may engage in such discussion in response to 
an unsolicited proposal from an unrelated party if the Board of Directors of    
Michael determines, after consultation with counsel, that the failure to engage 
in such discussions is reasonably likely to constitute a breach of the fiduciary
or legal obligations of the Board of Directors of Michael. Michael will promptly
advise NSU if it receives a proposal or inquiry with respect to the matters     
described above.                                                                

     6.13 Failure to Fulfill Conditions. In the event that either of the parties
hereto determines that a condition to its respective obligations to consummate  
the transactions contemplated hereby cannot be fulfilled on or prior to the     
termination of this Agreement, it will promptly notify the other party.         

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     6.14 Tax Ruling or Opinion. Michael and NSU shall reasonably cooperate with
each other in submitting the request for private letter ruling by the IRS       
contemplated by Section 7.1(d), shall promptly notify the other of any          
communications with or from the IRS with respect to the ruling request, and     
shall not submit any written material to the IRS in connection with the ruling  
request without consulting with the other.                                      

 6.15 Resignations and Election of Directors. At the Effective Time, NSU
shall deliver the voluntary resignations of each officer of NSU and each        
director of NSU who is not designated to be a director of the Surviving         
Corporation in accordance with Section 2.1(a) and shall elect the other persons 
who shall be directors of the Surviving Corporation in accordance with Section  
2.1(a) to be directors of the Surviving Corporation upon the consummation of the
Merger.                                                                         

     6.16 Orderly Disposition and Registration Rights Agreement. Contemporaneous
with the execution and delivery of this Agreement, NSU shall execute and deliver
and shall cause the parties other than NSU to execute and deliver the Orderly   
Disposition and Registration Rights Agreement. NSU covenants and agrees that the
provisions of the Orderly Disposition and Registration Rights Agreement will not
be amended, waived, terminated or otherwise modified prior to the Effective Date
without the prior written consent of Michael.                                   

 6.17 Shareholder Vote. NSU will vote the shares of Michael Common Stock
owned by NSU in favor of the Merger, this Agreement, the Certificate of Merger  
and the persons nominated by the Michael Board of Directors for election as     
directors of Michael at the meeting of the Michael shareholders contemplated by 
Section 6.11, provided the number of nominees is not greater than nine and      
provided further that James H. Michael, Miles E. Efron and Jeffrey J. Michael   
are nominees of Michael.                                                        

   6.18 Filing of Reports Necessary for use of Rule 145. After the Effective
Date, Surviving Corporation shall use reasonable efforts to file all reports and
data with the SEC necessary to permit the shareholders of Michael and NSU who   
may be deemed "underwriters" (within the meaning of Rule 145 under the          
Securities Act) of Michael Common Stock to sell the Surviving Corporation Common
Stock received by them in connection with the Merger pursuant to Rules 144 and  
145(d) under the Securities Act if they would otherwise be so entitled. After   
the Effective Date, Surviving Corporation will use reasonable efforts to file   
with the SEC reports, statements, and other materials required by the federal   
securities laws on a timely basis.                                              

6.19 Notification of Certain Matters.                                 

(a) Each party shall give prompt notice to the other party of (i) the 
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any             
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof in any material respect or, in   
the case of any representation or warranty given as of a specific date, would be
likely to cause any such representation or warranty on its part contained in    
this Agreement to be untrue, inaccurate or incomplete in any material respect as
of such specific date, and (ii) any material failure of such party to comply    
with or satisfy any covenant or agreement to be complied with or satisfied by it
hereunder.                                                                      

(b) From time to time after the date hereof and prior to the Effective
Time, each party shall promptly supplement or amend any of its representations  
and warranties which apply to the period after the date hereof by delivering an 
updated Schedule to the other party pursuant to this Section 6.19(b) with       
respect to any matter hereafter arising which would render any such             
representation or warranty after the date of this Agreement materially untrue,  
inaccurate or incomplete as a result of such matter arising. Such supplement or 
amendment to a party's representations and warranties contained in an updated   
Schedule delivered pursuant to this Section 6.19(b) shall be deemed to have     
modified the representations and warranties of the disclosing party, and no such
supplement or amendment, or the information contained in such updated Schedule, 
shall constitute a breach of a representation or warranty of the disclosing     
party; provided that no such supplement or amendment may cure any breach of a   
covenant or agreement of any party under Articles 5 or 6. Within fifteen (15)   
days after receipt of such supplement or amendment, the receiving party may     
terminate this Agreement pursuant to Section 7.1(g) hereof if (i) the           
information in such supplement or amendment together with the information in any
and all of the supplements or amendments previously provided by the             

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disclosing party indicate that the disclosing party has suffered or is          
reasonably likely to suffer a Material Adverse Effect or, in the case of an     
updated Schedule 4.12 is, in Michael's reasonable determination a material      
liability, and (ii) the disclosing party has not cured the matters giving rise  
to such termination within fifteen (15) days after the receiving party notifies 
the disclosing party that it is exercising its right to terminate this Agreement
under this Section 6.19(b).                                                     

     6.20 Notification of Anticipated NSU Net Indebtedness. No later than thirty
(30) days after the initial filing of the Registration Statement, NSU shall     
notify Michael of the anticipated amount of the NSU Indebtedness at the         
Effective Time, less the amount of cash to be included in the Retained Assets at
the Effective Time (the "Anticipated NSU Net Indebtedness"). NSU covenants that 
the amount of the NSU Net Assumed Liabilities at the Effective Time less the    
amount of the Dissenting Shares Holdback will be an amount within the range of  
(i) the Anticipated NSU Net Indebtedness less $2,000,000, and (ii) the          
Anticipated NSU Net Indebtedness plus $2,000,000.                               

 6.21 Distribution Agreement. Prior to the Effective Date, NSU shall and
shall cause Spinco to duly execute and deliver the Distribution Agreement. NSU  
shall perform all of its obligations under the Distribution Agreement which are 
to be performed thereunder prior to the Effective Time and NSU shall cause      
Spinco to perform all of its obligations under the Distribution Agreement which 
are to be performed thereunder prior to the Effective Time. NSU covenants that  
the Distribution Agreement will not be amended, waived, terminated or otherwise 
modified prior to the Effective Time without the prior written consent of       
Michael.                                                                        

ARTICLE 7 

CONDITIONS

    7.1 Conditions to Obligations of Each Party. The respective obligations of
each party to effect the transactions contemplated hereby shall be subject to   
the fulfillment or waiver at or prior to the Effective Date of the following    
conditions:                                                                     

(a) No Injunction. No injunction or other order entered by a state or 
federal court of competent jurisdiction shall have been issued and remain in    
effect which would prohibit or make illegal the consummation of the transactions
contemplated hereby.                                                            

  (b) No Prohibitive Change of Law. There shall have been no law, statute,
rule or regulation, domestic or foreign, enacted or promulgated which would     
prohibit or make illegal the consummation of the transactions contemplated      
hereby.                                                                         

     (c) Registration Statement. The Registration Statement and the registration
statement relating to the Spinco Common Stock to be distributed in the          
Distribution, if required, shall have been declared effective and shall not be  
subject to a stop order of the SEC, the Spinco Common Stock shall have been     
registered pursuant to the Exchange Act and, if the offer and sale of the       
Surviving Corporation securities in the Merger or the Spinco Common Stock in the
Distribution pursuant to this Agreement is required to be registered under the  
securities laws of any state, the registration statements shall have been       
declared effective and shall not be subject to a stop order of the securities   
commission in such state.                                                       

    (d) Tax Ruling or Federal Tax Opinion. Michael and NSU shall have received
a private letter ruling from the IRS or tax opinion addressed to both Michael   
and NSU by counsel or independent certified accountants mutually acceptable to  
Michael and NSU based on customary reliance and subject to customary            
qualifications, to the effect that for federal income tax purposes:             

     (i) The formation of Merger Sub and the merger of Merger Sub into
Michael will be disregarded for federal income tax purposes, and the  
transaction will be treated as an acquisition by NSU of the stock of  
Michael in exchange solely for the shares of the Surviving Corporation
Common Stock.                                                         

      (ii) The acquisition by NSU of all of the stock of Michael held by
stockholders other than NSU solely in exchange for the Surviving      
Corporation Common Stock will qualify as a reorganization under       

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   Section 368(a)(1)(B) of the Code. NSU and Michael will each be a party to
the reorganization within the meaning of Section 368(b) of the Code.  

         (iii) The transfer by NSU of all of the stock of the NSU Subsidiaries
  (other than Spinco and the Merger Sub) held, directly and indirectly, by
   NSU to Spinco will qualify as a reorganization under Section 368(a)(i)(D)
of the Code.                                                          

        (iv) No gain or loss will be recognized by NSU upon the distribution
of the stock of Spinco to persons who were stockholders of NSU on the 
     record date for the distribution pursuant to Section 361(c)(1) of the Code.

          (v) No gain or loss will be recognized by stockholders of NSU upon the
receipt of the Spinco stock distributed by NSU pursuant to Section    
355(a)(1) of the Code.                                                

(vi) The Reverse Stock Split will not be treated as a stock 
    distribution, or a transaction that has the effect of such a distribution,
to which Sections 301, 305(b) or 305(c) apply. As a result, no taxable
     income will be recognized under such Sections by any of the stockholders of
Michael or NSU, except for cash paid in lieu of fractional shares to  
holders of NSU Common Stock.                                          

     (e) Listing. The Surviving Corporation Common Stock to be issued to holders
of Michael Common Stock as a result of the Merger and to the holders of NSU     
Common Stock as a result of the Reverse Stock Split shall have been approved for
listing on the NASDAQ-NMS.                                                      

   (f) Consents and Approvals. All material consents and approvals necessary
to consummate the transactions contemplated by this Agreement shall have been   
obtained, including those set forth on Schedules 3.2 and 4.2, but excluding any 
consents or approvals required pursuant to the Credit Agreement.                

(g) Adverse Proceedings. There shall not be threatened, instituted or 
pending any action or proceeding before any court or governmental authority or  
agency, domestic or foreign, challenging or seeking to make illegal, or to delay
or otherwise directly or indirectly to restrain or prohibit, the consummation of
the transactions contemplated hereby or seeking to obtain material damages in   
connection with the transactions contemplated hereby.                           

(h) Governmental Action. There shall not be any action taken, or any  
statute, rule, regulation, judgment, order or injunction proposed, enacted,     
entered, enforced, promulgated, issued or deemed applicable to the transactions 
contemplated hereby by any federal, state or other court, government or         
governmental authority or agency, which could reasonably be expected to result, 
directly or indirectly, in any of the consequences referred to in Section       
7.1(g).                                                                         

(i) Distribution Agreement Conditions. The conditions precedent to the
Distribution (other than consummation of the Merger) set forth in Section 3.02  
of the Distribution Agreement shall have been satisfied or waived.              

  7.2 Additional Conditions to Obligation of NSU. The obligation of NSU to
consummate the transactions contemplated hereby in accordance with the terms of 
this Agreement is also subject to the fulfillment or waiver of the following    
conditions:                                                                     

   (a) Representations and Compliance. The representations and warranties of
Michael set forth in Article 3 shall have been true and correct as of the date  
hereof, and, except to the extent such representations and warranties are made  
as of a specified date, shall be true and correct as of the Effective Date as if
made at and as of the Effective Date, except where the failure to be true and   
correct would not have, or would not reasonably be expected to have, a Material 
Adverse Effect on Michael. Michael shall in all material respects have performed
each obligation and agreement and complied with each covenant to be performed   
and complied with by it hereunder at or prior to the Effective Date.            

(b) Officers' Certificate. Michael shall have furnished to NSU a      
certificate of the Chief Executive Officer and the Chief Financial Officer of   
Michael, dated as of the Effective Date, in which such officers shall certify   
that, to their best knowledge, they have no reason to believe that the          
conditions set forth in Section 7.2(a) have not been fulfilled.                 

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     (c) Secretary's Certificate. Michael shall have furnished to NSU (i) copies
of the text of the resolutions by which the corporate action on the part of     
Michael necessary to approve this Agreement, the Certificate of Merger and the  
transactions contemplated hereby and thereby were taken, (ii) a certificate     
dated as of the Effective Date executed on behalf of Michael by its corporate   
secretary or one of its assistant corporate secretaries certifying to NSU that  
such copies are true, correct and complete copies of such resolutions and that  
such resolutions were duly adopted and have not been amended or rescinded and   
(iii) an incumbency certificate dated as of the Effective Date executed on      
behalf of Michael by its corporate secretary or one of its assistant corporate  
secretaries certifying the signature and office of each officer of Michael      
executing this Agreement, the Certificate of Merger or any other agreement,     
certificate or other instrument executed pursuant hereto by Michael.            

    (d) Shareholder Approval. This Agreement and the Merger, the New Articles,
the Reverse Stock Split and the Distribution shall have been approved by the    
Requisite NSU Shareholder Vote.                                                 

(e) Fairness Opinion. Within five days prior to mailing the           
Prospectus/Proxy Statement to the shareholders of NSU, NSU shall have received a
written opinion in a form reasonably acceptable to NSU from Goldsmith Agio &    
Company (or another investment banking firm reasonably acceptable to NSU) to the
effect that the Merger and the Distribution, together, are fair from a financial
point of view to the holders of NSU Common Stock prior to the Effective Date.   

(f) Dissenting Shares. The number of shares of NSU Common Stock with  
respect to which the holders thereof have effectively dissented from the NSU    
shareholder action contemplated hereby pursuant to the provisions of the MBCA   
shall not exceed one percent (1%) of the issued and outstanding shares of NSU   
Common Stock as of the record date for the meeting relating to such NSU         
shareholder action.                                                             

7.3 Additional Conditions to Obligation of Michael. The obligation of 
Michael to consummate the transactions contemplated hereby in accordance with   
the terms of this Agreement is also subject to the fulfillment or waiver of the 
following conditions:                                                           

   (a) Representations and Compliance. The representations and warranties of
NSU set forth in Article 4 shall have been true and correct as of the date      
hereof, and, except to the extent such representations and warranties are made  
as of a specified date, shall be true and correct as of the Effective Date as if
made at and as of the Effective Date, except where the failure to be true and   
correct would not have, or would not reasonably be expected to have, a Material 
Adverse Effect on NSU. NSU shall in all material respects have performed each   
obligation and agreement and complied with each covenant to be performed and    
complied with by it hereunder at or prior to the Effective Date.                

(b) Officers' Certificate. NSU shall have furnished to Michael a      
certificate of the Chief Executive Officer and the Chief Financial Officer of   
NSU, dated as of the Effective Date, in which such officers shall certify that, 
to their best knowledge, they have no reason to believe that the conditions set 
forth in Section 7.3(a) have not been fulfilled.                                

     (c) Secretary's Certificate. NSU shall have furnished to Michael (i) copies
of the text of the resolutions by which the corporate action on the part of NSU 
necessary to approve this Agreement, the Certificate of Merger, the             
Distribution, the Reverse Stock Split, the election of the directors of the     
Surviving Corporation pursuant to Section 2.1, the Distribution Agreement and   
the transactions contemplated hereby and thereby were taken, (ii) certificates  
dated as of the Effective Date executed on behalf of NSU by its corporate       
secretary or one of its assistant corporate secretaries certifying to Michael   
that such copies are true, correct and complete copies of such resolutions and  
that such resolutions were duly adopted and have not been amended or rescinded  
and (iii) an incumbency certificate dated as of the Effective Date executed on  
behalf of NSU by its corporate secretary or one of its assistant corporate      
secretaries certifying the signature and office of each officer of NSU executing
this Agreement, the Certificate of Merger or any other agreement, certificate or
other instrument executed pursuant hereto.                                      

 (d) Shareholder Approval. This Agreement and the Merger shall have been
approved by the Requisite Michael Shareholder Vote.                             

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(e) Accounting Matters. No event shall have occurred which, in the    
reasonable opinion of Michael and concurred in by Grant Thornton LLP, would     
prevent the Merger, the Reverse Stock Split and the Distribution from being     
accounted as a business combination utilizing the reverse acquisition concept   
with Michael being the accounting acquiror for accounting purposes under        
generally accepted accounting principles.                                       

(f) Fairness Opinion. Within five days prior to mailing the           
Prospectus/Proxy Statement to the shareholders of Michael, Michael shall have   
received a written opinion in a form reasonably acceptable to Michael from Piper
Jaffray Inc. (or another investment banking firm reasonably acceptable to       
Michael) to the effect that the Merger is fair from a financial point of view to
Michael.                                                                        

 (g) Net Assumed Debt Certificate. NSU shall have furnished to Michael a
certificate of the Chief Financial Officer of NSU certifying the amounts of the 
NSU Net Assumed Liabilities, the NSU Indebtedness, the Dissenting Shares        
Holdback and the cash held by NSU as a Retained Asset at the Effective Time.    

(h) Other Agreements and Resignations. Michael shall have received the
Orderly Disposition and Registration Rights Agreement and the Distribution      
Agreement duly executed by the parties thereto. Each of the officers of NSU     
immediately prior to the Effective Time shall deliver duly executed resignations
from their positions with NSU effective immediately after the Effective Time.   

ARTICLE 8 

TERMINATION, AMENDMENT AND WAIVER 

  8.1 Termination. This Agreement may be terminated prior to the Effective
Date:                                                                           

     (a) by mutual consent of Michael and NSU, if the board of directors of each
so determines by vote of a majority of the members of its entire board;         

(b) by either Michael or NSU, if any of the conditions to such party's
obligation to consummate the transactions contemplated in this Agreement shall  
have become impossible to satisfy;                                              

   (c) by either Michael or NSU, if (i) the Merger and this Agreement is not
duly approved by the shareholders of each of Michael or NSU, including if a     
shareholder meeting is not held as contemplated by the first sentence of Section
6.11, or (ii) the New Articles, the Reverse Stock Split and the Distribution are
not approved by the shareholders of NSU, including if a shareholder meeting is  
not held as contemplated by the first sentence of Section 6.11;                 

(d) by either Michael or NSU if the Effective Date is not on or before
September 30, 1996 or such later date as Michael and NSU may mutually agree     
(unless the failure to consummate the Merger by such date shall be due to the   
action or failure to act of the party seeking to terminate this Agreement in    
breach of such party's obligations under this Agreement);                       

     (e) by NSU if the Average Price of Michael Common Stock is less than $11.00
per share;                                                                      

  (f) by Michael if the Average Price of Michael Common Stock is more than
$17.00 per share; or                                                            

  (g) by Michael or NSU pursuant to Section 6.19(b) in accordance with the
provisions of Section 6.19(b).                                                  

     Any party desiring to terminate this Agreement shall give written notice of
such termination and the reasons therefor to the other party.                   

8.2 Effect of Termination.                                            

(a) In the event this Agreement is properly terminated (i) by NSU as  
provided in Section 8.1(b) due to the failure to satisfy the condition under    
Section 7.2(d), (ii) by Michael under Section 8.1(b) due to the failure of the  
condition under Section 7.3(a), (b) or (c), (iii) by Michael or NSU pursuant to 
Section 8.1(c) due to the failure of the shareholders of NSU to approve the     
Merger, this Agreement, the New Articles, the Reverse Stock Split or the        
Distribution, (iv) by NSU pursuant to Section 8.1(e), (v) by Michael pursuant to
Section 8.1(g), or (vi) by NSU as provided in Section 8.1(b) due to the failure 
to satisfy the condition under                                                  

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Section 7.2(f), then, within ten days after written demand from Michael, NSU    
shall pay to Michael an amount equal to the out of pocket expenses incurred by  
Michael in connection with the transactions contemplated by this Agreement,     
including but not limited to the fees and expenses of Michael's attorneys,      
accountants and investment banker, up to an aggregate of $500,000 payable       
either, at the option of NSU, in immediately available funds or in shares of    
Michael Common Stock having a fair market value (determined on the basis of the 
average closing sales price of Michael Common Stock during the twenty (20)      
trading days immediately preceding such termination) equal to such amount.      

(b) In the event this Agreement is properly terminated (i) by Michael 
pursuant to Section 8.1(b) due to the failure to satisfy the condition under    
Section 7.3(d), (ii) by NSU under Section 8.1(b) due to the failure of the      
condition under Section 7.2(a), (b) or (c), (iii) by Michael or NSU pursuant to 
Section 8.1(c) due to the failure of the shareholders of Michael to approve the 
Merger and this Agreement, (iv) by Michael pursuant to Section 8.1(f), (v) by   
NSU pursuant to Section 8.1(g), or (vi) the transactions contemplated by this   
Agreement are not consummated solely because Michael shall not have obtained the
necessary modifications to its material debt instruments as disclosed in        
Schedule 3.2 or prepaid such debt instruments, then, within ten days after      
written demand from NSU, Michael shall pay to NSU an amount equal to the out of 
pocket expenses incurred by NSU in connection with the transactions contemplated
by this Agreement, including but not limited to the fees and expenses of NSU's  
attorneys, accountants and investment banker, up to an aggregate of $500,000,   
payable either, at the option of Michael, in immediately available funds or in  
shares of Michael Common Stock having a fair market value (determined on the    
basis of the average closing sales price of Michael Common Stock during the     
twenty (20) trading days immediately preceding such termination) equal to such  
amount.                                                                         

   Notwithstanding anything contained in this Agreement to the contrary, the
expense reimbursement provisions of this Section 8.2(a) or (b), shall be the    
sole and exclusive remedies of the parties to this Agreement for any violation  
or breach hereof and shall be in lieu of any and all claims that the            
non-breaching party has, or might have at law or in equity.                     

     8.3 Amendment. This Agreement may not be amended except by an instrument in
writing approved by the parties to this Agreement and signed on behalf of each  
of the parties hereto.                                                          

   8.4 Waiver. At any time prior to the Effective Date, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts 
of the other party hereto or (b) waive compliance with any of the agreements of 
the other party or with any conditions to its own obligations, in each case only
to the extent such obligations, agreements and conditions are intended for its  
benefit. Any such extension or waiver shall only be effective if made in writing
and duly executed by the party giving such extension or waiver.                 

ARTICLE 9 

GENERAL PROVISIONS

9.1 Public Statements. Neither Michael nor NSU shall make any public  
announcement or statement with respect to the Merger, this Agreement, the       
Reverse Stock Split, the Distribution or any related transactions without the   
approval of the other party; provided, however, that either Michael or NSU may, 
upon reasonable notice to the other party, make any public announcement or      
statement that it believes is required by federal securities law. To the extent 
practicable, each of Michael and NSU will consult with the other with respect to
any such public announcement or statement.                                      

 9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by    
telecopier, by overnight delivery service, or by registered or certified        

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mail (postage prepaid and return receipt requested) to the parties at the       
following addresses (or at such other address for a party as shall be specified 
by it by like notice):                                                          

If to Michael:                                                        

Michael Foods, Inc.                                             
324 Park National Building                                      
5353 Wayzata Boulevard                                          
Minneapolis, MN 55416                                           

Attn: President and Chief Executive Officer                     

with copies to:                                                       

Maun & Simon, PLC                                               
2900 Norwest Center                                             
90 South Seventh Street                                         
Minneapolis, MN 55402-4133                                      

Attn: Albert A. Woodward                                        

If to NSU:                                                            

North Star Universal, Inc.                                      
610 Park National Bank Building                                 
5353 Wayzata Boulevard                                          
Minneapolis, MN 55416                                           

Attention: President and Chief Executive Officer                

with copies to:                                                       

Dorsey & Whitney                                                
Pillsbury Center South                                          
220 South Sixth Street                                          
Minneapolis, MN 55402                                           

Attention: J. Andrew Herring                                    

     All such notices and other communications shall be deemed to have been duly
given as follows: when delivered by hand, if personally delivered; when         
received, if delivered by registered or certified mail (postage prepaid and     
return receipt requested); when receipt acknowledged, if faxed or telecopied;   
and the next day delivery after being timely delivered to a recognized overnight
delivery service.                                                               

9.3 Interpretation. The headings contained in this Agreement are for  
reference purposes only and shall not affect in any way the meaning or          
interpretation of this Agreement. References to Sections and Articles refer to  
Sections and Articles of this Agreement unless otherwise stated. Words such as  
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and word 
of like import, unless the context requires otherwise, refer to this Agreement  
(including the Exhibits and Schedules hereto). As used in this Agreement, the   
masculine, feminine and neuter genders shall be deemed to include the others if 
the context requires.                                                           

   9.4 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or   
unenforceable, the remainder of the terms, provisions, covenants and            
restrictions of this Agreement shall remain in full force and effect and shall  
in no way be affected, impaired or invalidated, and the parties shall negotiate 
in good faith to modify this Agreement and to preserve each party's anticipated 
benefits under this Agreement.                                                  

  9.5 Miscellaneous. This Agreement (together with all other documents and
instruments referred to herein): (a) constitutes the entire agreement, and      
supersedes all other prior agreements and undertakings, both written and oral,  
among the parties, with respect to the subject matter hereof; (b) shall be      
governed in all respects, including validity, interpretation and effect, by the 
internal laws of the State of Minnesota, without                                

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giving effect to the principles of conflict of laws thereof; and (c) shall be   
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assignable by either party hereto      
without the prior written consent of the other party hereto. This Agreement may 
be executed in two or more counterparts which together shall constitute a single
agreement.                                                                      

9.6 Non-Survival of Representations, Warranties and Covenants. The    
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to       
periods, activities or obligations subsequent to the Merger shall survive the   
Merger. In addition, if this Agreement is terminated pursuant to Section 8.1,   
the covenants contained in Section 6.3(b) and 8.2 shall survive such            
termination.                                                                    

9.7 Schedules. The Schedules and other disclosure referred to in this 
Agreement shall be delivered as of the date hereof under cover of a letter from 
the Chief Executive Officer or Chief Financial Officer of Michael or NSU, as the
case may be.                                                                    

9.8 Counterparts. This Agreement may be executed in any number of     
counterparts, and each such counterpart shall be deemed to be an original       
instrument, but all such counterparts together shall constitute but one         
agreement.                                                                      

 9.9 Third Party Beneficiaries. Except as provided in the next following
sentence, each party hereto intends that this Agreement shall not benefit or    
create any right or cause of action in or on behalf of any person other than the
parties hereto. The provisions of Section 6.18 are intended for the benefit of  
Affiliates of NSU and Michael.                                                  

ARTICLE 10
DISPUTE RESOLUTION

     10.1 Mediation and Binding Arbitration. If a dispute arises between NSU and
Michael as to the interpretation of this Agreement or any other agreement       
entered into pursuant hereto, NSU and Michael agree to use the following        
procedures, in lieu of either party pursuing other available remedies and as the
sole remedy, to resolve the dispute.                                            

10.2 Initiation. A party seeking to initiate the procedures shall give
written notice to the other party, describing briefly the nature of the dispute.
A meeting shall be held between the parties within 10 days of the receipt of    
such notice, attended by individuals with decision-making authority regarding   
the dispute, to attempt in good faith to negotiate a resolution of the dispute. 

  10.3 Submission to Mediation. If, within 30 days after such meeting, the
parties have not succeeded in negotiating a resolution of the dispute, they     
agree to submit the dispute to mediation in accordance with the Center for      
Public Resources Model ADR Procedure -- Mediation of Business Disputes, as      
modified herein, and to bear equally the costs of the mediation.                

 10.4 Selection of Mediator. The parties will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the Center for      
Public Resources or another mutually agreed-upon organization if they have been 
unable to agree upon such appointment within 20 days from the conclusion of the 
negotiation period.                                                             

  10.5 Mediation and Arbitration. The parties agree to participate in good
faith in the mediation and negotiations related thereto for a period of 30 days 
following the initial mediation session. If the parties are not successful in   
resolving the dispute through the mediation by the end of such 30-day period,   
then the parties agree to submit the matter to binding arbitration in accordance
with the Center for Public Resources Rules for Non-Administered Arbitration of  
Business Disputes, as modified herein, by a panel of three arbitrators, in      
Minneapolis, Minnesota, selected in accordance with the provisions of Section   
10.6 hereof. The arbitration shall be governed by the Rules of the American     
Arbitration Association then in effect and as modified herein, and judgment upon
the award rendered by the arbitrator may be entered by any court having         
jurisdiction thereof. The arbitrators shall not, under any circumstances, have  
any authority to award punitive, exemplary or                                   

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similar damages and may not, in any event, make any ruling, finding or award    
that does not conform to the terms and conditions of this Agreement. Nothing    
contained in this Article 10 shall limit or restrict in any way the right or    
power of a party at anytime to seek injunctive relief in any court and to       
litigate the issues relevant to such request for injunctive relief before such  
court (i) to restrain the other party from breaching this Agreement or (ii) for 
specific enforcement of this Article 10. The parties agree that any legal remedy
available to a party with respect to a breach of this Article 10 will not be    
adequate and that, in addition to all other legal remedies, each party is       
entitled to an order specifically enforcing this Article 10.                    

    10.6 Selection of Arbitrators. The parties shall have 10 days from the end
of the mediation period to agree upon mutually acceptable neutral persons not   
affiliated with either of the parties to act as arbitrators. If the panel of    
arbitrators has not been selected within such time, the parties agree jointly to
request the Center for Public Resources or another mutually agreed-upon         
organization to supply within 10 days a list of potential arbitrators with      
qualifications as specified by the parties in the joint request. Within five    
days of receipt of the list, the parties shall independently rank the proposed  
candidates, shall simultaneously exchange rankings, and shall select as the     
arbitrator the individual receiving the highest combined ranking who is         
available to serve. Neither party nor the arbitrators may disclose the existence
or results of any arbitration under this Agreement or any evidence presented    
during the course of arbitration without the prior consent of both parties,     
except as required to fulfill applicable disclosure and reporting requirements, 
or as otherwise required by law.                                                

   10.7 Cost of Arbitration. Each party shall bear its own costs incurred in
the arbitration. If either party refuses to submit to arbitration any dispute   
required to be submitted to arbitration pursuant to this Article 10, and instead
commences any other proceeding, including litigation, then the party who seeks  
enforcement of the obligation to arbitrate shall be entitled to its attorneys'  
fees and costs incurred in any such proceeding.                                 

IN WITNESS WHEREOF, NSU and Michael have caused this Agreement to be  
executed on the date first written above by their respective officers.          

                       MICHAEL FOODS, INC.

                             By /s/ GREGG A. OSTRANDER

                                            ------------------------------------
                          Gregg A. Ostrander
                                     President and Chief Executive
                 Officer

                              NORTH STAR UNIVERSAL, INC.

                             By /s/ JEFFREY J. MICHAEL

                                            ------------------------------------
                          Jeffrey J. Michael
                                     President and Chief Executive
                 Officer

                  NSU MERGER CO.

                             By /s/ JEFFREY J. MICHAEL

                                            ------------------------------------
                          Jeffrey J. Michael
                                     President and Chief Executive
                 Officer

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STATE OF MINNESOTA                                                              
COUNTY OF HENNEPIN                                                              
ss.                     

The foregoing instrument was acknowledged before me this 21st day of  
December, 1995 by Gregg A. Ostrander, President and Chief Executive Officer of  
Michael Foods, Inc., a Delaware corporation, on behalf of the corporation.      

       /s/

                                          --------------------------------------
                 Notary Public
[SEAL]                                                                          

STATE OF MINNESOTA                                                              
COUNTY OF HENNEPIN                                                              
ss.                     

The foregoing instrument was acknowledged before me this 21st day of  
December, 1995 by Jeffrey J. Michael, President and Chief Executive Officer of  
North Star Universal, Inc., a Minnesota corporation, on behalf of the           
corporation.                                                                    

       /s/

                                          --------------------------------------
                 Notary Public
[SEAL]                                                                          

STATE OF MINNESOTA                                                              
COUNTY OF HENNEPIN                                                              
ss.                     

The foregoing instrument was acknowledged before me this 21st day of  
December, 1995 by Jeffrey J. Michael, President and Chief Executive Officer of  
NSU Merger Co., a Delaware corporation, on behalf of the corporation.           

       /s/

                                          --------------------------------------
                 Notary Public
[SEAL]                                                                          

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                                                                       EXHIBIT A

DISCOUNT FACTOR 

                                                        [Enlarge/Download Table]

AMOUNT OF NSU NET ASSUMED LIABILITIES                                           DISCOUNT FACTOR
------------------------------------------------------------------------------  ---------------
                                                                                               
More than $33,750,000 and less than                                                            
  or equal to $38,000,000.....................................................       0.9000    
More than $32,500,000 and less than                                                            
  or equal to $33,750,000.....................................................       0.9025    
More than $31,250,000 and less than                                                            
  or equal to $32,500,000.....................................................       0.9050    
More than $30,000,000 and less than                                                            
  or equal to $31,250,000.....................................................       0.9075    
More than $28,750,000 and less than                                                            
  or equal to $30,000,000.....................................................       0.9100    
More than $27,500,000 and less than                                                            
  or equal to $28,750,000.....................................................       0.9125    
More than $26,250,000 and less than                                                            
  or equal to $27,500,000.....................................................       0.9150    
More than $25,000,000 and less than                                                            
  or equal to $26,250,000.....................................................       0.9175    
$25,000,000...................................................................       0.9200    

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                                                                       EXHIBIT B

CERTIFICATE OF MERGER 
OF
NSU MERGER SUB CO.
INTO
MICHAEL FOODS, INC. 

Pursuant to Section 251 of the Delaware General Corporation Law, the  
undersigned President and Secretary of MICHAEL FOODS, INC., a Delaware          
corporation, hereby certify that:                                               

       1. The constituent corporations are: NSU Merger Sub Co., a Delaware
corporation, and Michael Foods, Inc., a Delaware corporation.         

          2. An Agreement and Plan of Reorganization has been adopted, approved,
executed, certified and acknowledged by each of the constituent       
corporations in accordance with section 251(c) of the Delaware General
Corporation Law.                                                      

3. Michael Foods, Inc. shall be the surviving corporation.  

       4. The certificate of incorporation of Michael Foods, Inc. shall be
the certificate of incorporation of the surviving corporation.        

          5. The executed Agreement and Plan of Reorganization is on file at the
     principal office of Michael Foods, Inc. at 5353 Wayzata Boulevard, 324 Park
National Building, Minneapolis, Minnesota 55416.                      

 6. A copy of the Agreement and Plan of Reorganization will be
furnished by Michael Foods, Inc., on request and without cost, to any 
stockholder of any constituent corporation.                           

   IN WITNESS WHEREOF, Michael Foods, Inc. has caused this certificate to be
executed by Gregg A. Ostrander, its President and attested by Jeffrey M.        
Shapiro, its Secretary, this     day of       , 1996.                           

                       MICHAEL FOODS, INC.

      By
                                          --------------------------------------
                                     Gregg A. Ostrander, President
ATTEST:                                                                         

By                                                                              
-----------------------------------------------------                           
Jeffrey M. Shapiro, Secretary                                             

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                                                                       EXHIBIT C

DISTRIBUTION AGREEMENT

BY AND BETWEEN

NORTH STAR UNIVERSAL, INC.

AND 

NEW HOLDING COMPANY, INC. 

              , 1996

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TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]
                                                                                            
      ARTICLE I  DEFINITIONS..........................................................   C-1
Section 1.01     General..............................................................   C-1
Section 1.02     Exhibits, etc........................................................   C-4
     ARTICLE II  REORGANIZATION AND RELATED TRANSACTIONS..............................   C-5
Section 2.01     Sequence of Events...................................................   C-5
Section 2.02     Transfers of Assets; Assumption of Liabilities.......................   C-5
Section 2.03     Elimination of Intercompany Accounts.................................   C-5
                 Transfers Not Effected At or Prior to the Distribution; Transfers          
Section 2.04     Deemed Effective as of the Distribution Date.........................   C-5
Section 2.05     No Representations or Warranties.....................................   C-6
Section 2.06     Conveyancing and Assumption Instruments..............................   C-6
Section 2.07     Tax Treatment........................................................   C-6
    ARTICLE III  THE DISTRIBUTION.....................................................   C-7
Section 3.01     Cooperation Prior to the Distribution................................   C-7
Section 3.02     NSU Board Action; Conditions Precedent to the Distribution...........   C-7
Section 3.03     The Distribution.....................................................   C-8
Section 3.04     Fractional Shares....................................................   C-8
     ARTICLE IV  SPINCO ASSUMPTION OF CERTAIN NSU INDEBTEDNESS........................   C-8
Section 4.01     Assumption of Certain NSU Indebtedness...............................   C-8
      ARTICLE V  INDEMNIFICATION......................................................   C-9
Section 5.01     Indemnification by Spinco............................................   C-9
Section 5.02     Indemnification by NSU...............................................   C-9
Section 5.03     Procedure for Indemnification........................................  C-10
Section 5.04     Set-Off Rights.......................................................  C-11
     ARTICLE VI  EMPLOYEE BENEFIT PLANS...............................................  C-11
Section 6.01     The 401(k) Savings Plan..............................................  C-11
Section 6.02     Welfare Plans........................................................  C-12
Section 6.03     NSU Employees........................................................  C-12
Section 6.04     Other Liabilities and Obligations....................................  C-12
Section 6.05     Preservation of Rights To Amend or Terminate Plans...................  C-12
    ARTICLE VII  TAX MATTERS..........................................................  C-12
Section 7.01     Allocation of Items of Income or Deduction for Reporting Purposes....  C-12
Section 7.02     Spinco Indemnification for Tax Periods Prior to Distribution Date....  C-12
                 NSU Liable for Filing and Payment of Spinco's Taxes Prior to               
Section 7.03     Distribution Date....................................................  C-13
                 Spinco Liable for Filing and Payment of Its Own Taxes for Tax Periods      
                 Beginning Prior to Distribution Date and Ending After Distribution         
Section 7.04     Date.................................................................  C-13
                 Spinco's Right to Make Section 172(b)(3) Election and Qualified Right      
Section 7.05     to Subsequent Refund.................................................  C-13
                 Scope of NSU's Power to Negotiate Settlement During Audit for Periods      
Section 7.06     after the Merger Effective Date......................................  C-13
Section 7.07     Rights of Parties With Respect to an Asserted Tax Liability..........  C-13
                 Mutual Duty to Cooperate and Act in Good Faith With Respect to Filing      
Section 7.08     or Amending of Returns, Claiming Refunds, or Conducting Audit........  C-14
   ARTICLE VIII  CERTAIN ADDITIONAL MATTERS...........................................  C-15
Section 8.01     The Spinco Board.....................................................  C-15
Section 8.02     Spinco Charter and By-Laws...........................................  C-15
Section 8.03     NSU Long-Term Liabilities; Minimum Value of Spinco...................  C-15
Section 8.04     Adjustment for Dissenting Shares Liability...........................  C-15

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                                                        [Enlarge/Download Table]
                                                                                           
Section 8.05     NSU Covenants........................................................ C-16
     ARTICLE IX  ACCESS TO INFORMATION AND SERVICES................................... C-16
Section 9.01     Provision of Corporate Records....................................... C-16
Section 9.02     Access to Information................................................ C-16
Section 9.03     Provision of Services................................................ C-16
Section 9.04     Production of Witnesses.............................................. C-16
Section 9.05     Reimbursement........................................................ C-16
Section 9.06     Retention of Records................................................. C-17
Section 9.07     Confidentiality...................................................... C-17
      ARTICLE X  DISPUTE RESOLUTION................................................... C-17
Section 10.01    Mediation and Binding Arbitration.................................... C-17
Section 10.02    Initiation........................................................... C-17
Section 10.03    Submission to Mediation.............................................. C-17
Section 10.04    Selection of Mediator................................................ C-17
Section 10.05    Mediation and Arbitration............................................ C-17
Section 10.06    Selection of Arbitrators............................................. C-18
Section 10.07    Cost of Arbitration.................................................. C-18
     ARTICLE XI  MISCELLANEOUS........................................................ C-18
Section 11.01    Complete Agreement; Construction..................................... C-18
Section 11.02    Survival of Agreements............................................... C-18
Section 11.03    Expenses............................................................. C-18
Section 11.04    Governing Law........................................................ C-18
Section 11.05    Notices.............................................................. C-18
Section 11.06    Amendments........................................................... C-19
Section 11.07    Successors and Assigns............................................... C-19
Section 11.08    Termination.......................................................... C-19
Section 11.09    Subsidiaries......................................................... C-19
Section 11.10    No Third Party Beneficiaries......................................... C-19
Section 11.11    Titles and Headings.................................................. C-20
Section 11.12    Exhibits and Schedules............................................... C-20
Section 11.13    Legal Enforceability................................................. C-20

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DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT, dated as of             , 1996 (this     
"Agreement"), is entered into by and between NORTH STAR UNIVERSAL, INC., a      
Minnesota corporation ("NSU"), and NEW HOLDING COMPANY, INC., a Minnesota       
corporation and a wholly owned subsidiary of NSU ("Spinco"). This Agreement is  
intended to survive and continue after the "Merger" and the "Distribution" (as  
such terms are hereinafter defined), and any reference to NSU in this Agreement 
shall be deemed to include NSU from and after the consummation of the Merger and
the change of the name of NSU to "Michael Foods, Inc."                          

  WHEREAS, NSU is a party to an Agreement and Plan of Reorganization dated
December 21, 1995 (the "Merger Agreement"), providing for the merger (the       
"Merger") of NSU Merger Co. ("Merger Sub"), a Delaware corporation and a newly  
formed and wholly-owned subsidiary of NSU, with and into Michael Foods, Inc., a 
Delaware corporation ("Michael"), with Michael as the surviving corporation;    

WHEREAS, Michael has required that, as a condition of the Merger, the 
non-food businesses, including assets and liabilities, be separated from the    
food business of NSU represented by the shares of common stock of Michael owned 
by NSU;                                                                         

   WHEREAS, to satisfy this condition to the Merger, the parties hereto have
agreed that (i) immediately following the Merger, NSU will distribute to NSU    
shareholders of record prior to the Merger, all assets of NSU other than (A) any
issued and outstanding shares of common stock, $.01 par value, of Merger Sub,   
(B) the shares of common stock, $.01 par value, of Michael ("Michael Common     
Stock") owned by NSU as of the date of the Merger Agreement, (C) a certain      
amount of cash held by NSU at the time of the consummation of the Merger, and   
(D) such other assets as to which the parties may mutually agree, and (ii) NSU  
will be released from, or adequate provisions be made for all liabilities and   
obligations of NSU other than as mutually agreed by the parties, so that after  
giving effect to the Merger and such distribution, the business and operations  
of NSU after the Merger will be the business and operations of Michael, except  
for certain known and specified NSU indebtedness and certain obligations and    
liabilities to be retained by NSU subsequent to the consummation of the Merger; 
and                                                                             

    WHEREAS, NSU and Spinco have determined that it is necessary and desirable
to set forth the principal corporate transactions required to effect such       
distribution and to set forth other agreements that will govern certain other   
matters following such distribution.                                            

   NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:     

ARTICLE I 

DEFINITIONS 

    Section 1.01 General. Any term not otherwise defined herein shall have the
meaning ascribed to it in the Merger Agreement. As used in this Agreement, the  
following terms shall have the following meanings (such meanings to be equally  
applicable to both the singular and plural forms of the terms defined):         

Actual Payment: as defined in Section 8.03(b) of this Agreement.      

  Affiliate: as defined in Regulation 12b-2 promulgated under the Exchange
Act, as such Regulation is in effect on the date hereof.                        

    Agent: the distribution agent for the shareholders of record of NSU on the
Record Date, as appointed by NSU, to distribute shares of Spinco Common Stock   
pursuant to the Distribution (as defined below).                                

Code: the Internal Revenue Code of 1986, as amended, or any successor 
legislation.                                                                    

Commission: the Securities and Exchange Commission.                   

Contracts: as defined in Section 2.02 of this Agreement.              

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Conveyancing and Assumption Instruments: collectively, the various    
agreements, instruments and other documents, in form and substance mutually     
satisfactory to NSU and Spinco, to be entered into to effect the transfer of    
assets and the assumption of Liabilities in the manner contemplated by this     
Agreement.                                                                      

    Credit Agreement: the Credit Agreement dated             , 199 between NSU
and First Bank National Association, a national banking association, including  
any amendments thereto and any replacement credit agreement or credit facility. 

Dissenting Shares: as defined in Section 1.5 of the Merger Agreement. 

Dissenting Shares Holdback: as defined in Section 1.1 of the Merger   
Agreement.                                                                      

    Dissenting Shares Liability: as defined below under the definition of "NSU
Retained Liabilities."                                                          

 Distribution: the distribution, on the Distribution Date, of all of the
outstanding shares of Spinco Common Stock by NSU to the holders of record of NSU
Common Stock on the Record Date, which distribution shall be deemed to have been
effected by NSU upon delivery by NSU to the Agent of an instruction directing   
the Agent to effect the distribution of the Spinco Common Stock in accordance   
with Section 3.03 of this Agreement and such distribution shall not be effected 
nor deemed to have been effected until after the Effective Time.                

   Distribution Date: the Merger Effective Date; provided, however, that the
Distribution shall not occur until after the Effective Time.                    

Eagle Guaranty: the obligations of NSU under that certain Guaranty    
Agreement dated May 1, 1989 between NSU and American National Bank & Trust      
Company pursuant to which NSU guaranteed the payment of the principal of,       
premium, if any, and interest on $1,470,000 City of Welcome, Minnesota          
Industrial Development Revenue Bonds, Series 1989.                              

Effective Time: as defined in Section 2.1(d) of the Merger Agreement. 

Exchange Act: the Securities Exchange Act of 1934, as amended.        

Exchange Ratio: the ratio of one share of Spinco Common Stock for each
  shares of NSU Common Stock (outstanding on the Record Date), or such
other ratio determined by NSU and Spinco to be the number of shares (or fraction
of a share) of Spinco Common Stock to be distributed in the Distribution for    
each share of NSU Common Stock (outstanding on the Record Date).                

IRS: the Internal Revenue Service.                                    

Liabilities: any and all debts, liabilities, accounts payable, Taxes, 
claims and other obligations, absolute or contingent, mature or not mature,     
liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever    
arising (unless otherwise specified in this Agreement), including all costs and 
expenses relating thereto, and including, without limitation, those debts,      
liabilities and obligations arising under any law, rule, regulation, or any     
actual or threatened action, suit, proceeding or investigation by or before any 
court, any governmental or other regulatory or administrative agency or         
commission or any arbitration tribunal, any order or consent decrees of any     
governmental entity or any award of any arbitrator of any kind, and those       
arising under any contract, commitment or undertaking.                          

Merger: as defined in the preambles of this Agreement.                

Merger Agreement: as defined in the preambles of this Agreement.      

Merger Effective Date: the date, pursuant to the terms of the Merger  
Agreement, on which the Merger is effective.                                    

Michael: as defined in the first paragraph of this Agreement.         

  Michael Common Stock: as defined in Section 1.1 of the Merger Agreement.

NSU: as defined in the first paragraph of this Agreement.             

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NSU Assumed Liabilities: the NSU Indebtedness and the NSU Retained    
Liabilities.                                                                    

NSU Board: the Board of Directors of NSU prior to the Merger Effective
Date.                                                                           

NSU Common Stock: the Common Stock, par value $1.00 per share, of NSU,
prior to the Merger Effective Date.                                             

     NSU Indebtedness: indebtedness (principal and accrued interest) represented
by NSU's outstanding subordinated debentures and subordinated extendable and    
fixed time certificates and the NSU indebtedness owing pursuant to the Credit   
Agreement.                                                                      

     NSU Long-Term Liabilities: the Liability of NSU relating to the U.K. Leases
and the Eagle Guaranty.                                                         

NSU Retained Assets: the following assets:                            

         (i) such amount of cash as NSU may, in its sole discretion, determine
to hold at the Merger Effective Date;                                 

        (ii) 7,354,950 shares of Michael Common Stock owned by NSU as of the
date of this Agreement;                                               

(iii) the capital stock of Merger Sub;                      

         (iv) the rights of NSU under this Agreement, the Merger Agreement and
the Orderly Disposition and Registration Rights Agreement; and        

  (v) any and all net operating loss carryforwards and other Tax
     attributes properly allocable to NSU following the Merger Effective Date in
accordance with the relevant provisions of the Code.                  

NSU Retained Liabilities: the following Liabilities:                  

(i) any Liability arising from any NSU shareholders who have
  effectively dissented from the NSU shareholder action in connection with
   the Merger and the Distribution in accordance with Section 471 and 473 of
the MBCA ("Dissenting Shares Liability");                             

    (ii) any Liability of NSU under this Agreement arising after the
Merger Effective Date;                                                

       (iii) any Liability of NSU under the Merger Agreement arising after
the Merger Effective Date; and                                        

(iv) any Liability of NSU under the Orderly Disposition and 
Registration Rights Agreement arising after the Merger Effective Date.

NSU Transferred Assets: all assets of NSU other than the NSU Retained 
Assets, specifically including Spinco rights under this Agreement (including    
Spinco's rights pursuant to Section 8.05 and Section 5.04).                     

     NSU Transferred Liabilities: all Liabilities of NSU (i) arising at any time
prior to the Merger Effective Date, other than the NSU Assumed Liabilities, or  
(ii) arising as a result of the Distribution (other than any liability of NSU   
for Taxes resulting from a breach of Section 2.07 by NSU after the Merger       
Effective Date).                                                                

Orderly Disposition and Registration Rights Agreement: the Orderly    
Disposition and Registration Rights Agreement, dated December 21, 1995, between 
NSU and certain shareholders of NSU in the form of Exhibit E to the Merger      
Agreement.                                                                      

    Record Date: the close of business on the date to be determined by the NSU
Board as the record date for the Distribution, which date shall be prior to the 
Merger Effective Date.                                                          

 Registration Statement: that certain registration statement on Form S-1
registering under the Securities Act the Spinco Common Stock to be distributed  
in the Distribution.                                                            

Release Date: the date upon which Spinco shall have taken one of the  
following actions with respect to each of the NSU Long-Term Liabilities:        

          (i) obtained a release and discharge of the NSU Long-Term Liabilities;

          (ii) provided evidence to NSU, after the Merger Effective Date, of the
satisfaction of the NSU Long-Term Liabilities in a form reasonably    
satisfactory to NSU; or                                               

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       (iii) obtained an irrevocable stand-by letter of credit (the "L/C")
    approved as to issuer, form and content by NSU (which approval will not be
     unreasonably withheld), to be issued in favor of NSU for an amount at least
   equal to the present value of any remaining Liability with respect to the
    NSU Long-Term Liabilities, such present value calculation to be based on a
discount rate of 6%.                                                  

Securities Act: the Securities Act of 1933, as amended.               

Spinco: as defined in the first paragraph of this Agreement.          

Spinco Board: the Board of Directors of Spinco.                       

     Spinco By-Laws: the By-Laws of Spinco, substantially in the form of Exhibit
A to be in effect at the Distribution Date.                                     

Spinco Charter: the Restated Articles of Incorporation of Spinco,     
substantially in the form of Exhibit B, to be in effect at the Distribution     
Date.                                                                           

     Spinco Common Stock: the Common Stock, par value $.01 per share, of Spinco.

  Spinco Employee: any individual who, prior to the Merger Effective Date,
was employed by NSU or any Subsidiary of NSU and who, on or after the Merger    
Effective Date, or otherwise in connection with the Distribution, is employed by
Spinco or a Subsidiary of Spinco.                                               

     Subsidiary: with respect to any entity shall mean each corporation in which
such entity owns directly or indirectly fifty percent or more of the voting     
securities of such corporation and shall, unless otherwise indicated, be deemed 
to refer to both direct and indirect subsidiaries of such entity.               

Taxes: any federal, state, local or foreign income, gross receipts,   
license, payroll, employment, excise, severance, stamp, occupation, premium,    
property or windfall profits taxes, environmental taxes, customs duties, capital
stock, franchise, employees' income withholding, foreign or domestic            
withholding, social security, unemployment, disability, workers' compensation,  
employment-related insurance, real property, personal property, sales, use,     
transfer, value added, alternative or add-on minimum or other tax, fee,         
assessment or charge of any kind whatsoever including any interest, penalties or
additions to any Tax or additional amounts in respect of the foregoing.         

     Transfer Effective Date: the date, as determined by the NSU Board, on which
the transfers of assets by NSU to Spinco and the assumption of liabilities by   
Spinco, as described in Section 2.02 shall be effective, which in any case shall
be prior to the Merger Effective Date.                                          

  U.K. Leases: (i) the Lease of Unit 4 Bracknell Business Centre, Downmill
Road, Bracknell, Berkshire, United Kingdom dated August 1, 1984 between         
Queensgate Developments Limited and The Burton Group Public Limited Company and 
assigned to C.E. Services (Europe) Ltd. (f.k.a. Landmark Communications Services
Limited) guaranteed by C.E. Services, Inc. (as the successor in interest to     
Landmark Communications Services, Inc.) pursuant to a License to Assign dated   
March 15, 1990 and assumed by NSU in connection with the Stock Purchase         
Agreement by and between Amdahl Corporation and NSU dated May 5, 1995 and       
pursuant to the terms of an Assumption Agreement dated             , 1995       
between NSU and Queensgate Developments Limited, and (ii) the Lease of Unit 5   
Bracknell Business Centre, Downmill Road, Bracknell, Berkshire, United Kingdom  
dated March 22, 1985, between Benton Nominees Limited and Robert David Grant and
Susan Margaret Grant trading as Grants Electrical Supplies and assigned to C.E. 
Services (Europe) Ltd. (f.k.a. Landmark Communications Services Limited) and    
guaranteed by Richard Charles Jones and Dennis Leonard Western pursuant to a    
License to Assign dated June 28, 1991 and assumed by NSU in connection with a   
Stock Purchase Agreement by and between Amdahl Corporation and NSU dated May 5, 
1995 and pursuant to the terms of an Assumption Agreement dated             ,   
1995 between NSU and Benton Nominees Limited.                                   

   Section 1.02 Exhibits, etc. References to an "Exhibit" or to a "Schedule"
are, unless otherwise specified, to one of the Exhibits or Schedules attached to
this Agreement, and references to a "Section" or an "Article" are, unless       
otherwise specified, to one of the Sections or Articles of this Agreement.      

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ARTICLE II

REORGANIZATION AND RELATED TRANSACTIONS 

    Section 2.01 Sequence of Events. It is the intention of the parties hereto
that the transactions contemplated by this Article II shall, to the extent      
practicable, be effected in the order in which such transactions are set forth  
in this Article II.                                                             

     Section 2.02 Transfers of Assets; Assumption of Liabilities. (a) Subject to
the terms and conditions of this Agreement, effective at the start of business  
on the Transfer Effective Date:                                                 

(i) NSU shall contribute and transfer to Spinco or a Spinco 
   Subsidiary, as appropriate, all of NSU's right, title and interest in and
to all of the NSU Transferred Assets.                                 

       (ii) NSU shall assign and transfer, and Spinco shall assume, all of
  NSU's rights, benefits and Liabilities arising pursuant to and under all
contracts, agreements, real and personal property leases, licenses,   
instruments, arrangements and commitments (collectively, "Contracts") 
     entered into or made by NSU prior to the Merger Effective Date, other than#
the Contracts relating to the NSU Assumed Liabilities (the "Assumed   
    Contracts"); provided, however, that no Assumed Contract shall be assigned
    contrary to law or the terms of such Assumed Contract and, with respect to
   the Assumed Contracts that cannot be assigned or novated to Spinco on the
Transfer Effective Date, the performance obligations of NSU thereunder
   shall, unless not permitted by such Assumed Contract, be subcontracted or
     subleased to Spinco until such Assumed Contract has been fully performed by
    Spinco or assigned or novated. NSU and Spinco shall use reasonable efforts
to obtain all necessary consents and Spinco shall take all necessary  
  actions to perform and complete all Assumed Contracts in accordance with
their terms even if neither assignment, novation, subcontracting nor  
subleasing is permitted by the other party. As provided in Article V  
   hereof, Spinco shall indemnify NSU from and against any Liabilities under
    the Assumed Contracts. NSU covenants and agrees that it shall promptly pay
 over to Spinco any amounts received by NSU after the Transfer Effective
Date as a result of the performance by Spinco of any of the Assumed   
Contracts.                                                            

         (iii) Spinco shall assume and agrees to pay, perform or discharge all
the NSU Transferred Liabilities.                                      

     (b) Whether or not all of the NSU Transferred Assets or the NSU Transferred
Liabilities shall have been legally transferred to Spinco as of the Transfer    
Effective Date, NSU and Spinco agree that, as of the Transfer Effective Date,   
Spinco shall have, and shall be deemed to have acquired, complete and sole      
beneficial ownership over all the NSU Transferred Assets together with all of   
NSU's rights, powers and privileges incident thereto, and shall be deemed to    
have assumed the NSU Transferred Liabilities and all of NSU's duties,           
obligations and responsibilities incident thereto.                              

Section 2.03 Elimination of Intercompany Accounts. All intercompany   
receivables, payables and loans in existence as of the Merger Effective Date    
between NSU, on the one hand, and any NSU Subsidiary, on the other hand (other  
than accounts, if any, relating to intercompany contractual or other obligations
which are to survive the Distribution as provided herein) shall be eliminated,  
as of the Merger Effective Date, without the transfer of cash, by dividend or   
capital contributions, as appropriate.                                          

Section 2.04 Transfers Not Effected At or Prior to the Distribution;  
Transfers Deemed Effective as of the Distribution Date. To the extent that any  
transfers and assumptions contemplated by this Article II shall not have been   
consummated on or prior to the Transfer Effective Date, the parties shall       
cooperate to effect such transfers and assumptions as promptly following the    
Transfer Effective Date as shall be practicable, it nonetheless being agreed and
understood by the parties that no party shall be liable in any manner to any    
other party for any failure of any of the transfers contemplated by this Article
II to be consummated prior to the Transfer Effective Date and that this Section 
2.04 shall in no way affect the indemnification obligations of the parties      
pursuant to Article V. Subject to the provisions of Section 3.02, nothing herein
shall be deemed to require the transfer of any assets or the assumption of any  
Liabilities which by their terms or by operation of law cannot be transferred or
assumed; provided that Spinco shall indemnify NSU against all NSU Transferred   

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Liabilities pursuant to Section 5.01. In the event that any such transfer of the
NSU Transferred Assets (other than capital stock of corporations to be          
transferred hereunder) or assumption of the NSU Transferred Liabilities has not 
been consummated, effective as of and after the Transfer Effective Date (i) NSU 
shall thereafter hold such assets for the benefit of Spinco (at the expense of  
Spinco) and retain any such Liabilities for the account of Spinco, and take such
other action as may be reasonably requested by Spinco, at Spinco's expense, in  
order to place such party, insofar as reasonably possible, in the same position 
as would have existed had such asset or Liability been transferred as of the    
Transfer Effective Date, (ii) NSU shall, at Spinco's expense, continue to be    
bound under any agreements relating to the NSU Transferred Assets or NSU        
Transferred Liabilities that cannot be so transferred, and (iii) unless not     
permitted by law, Spinco shall pay, perform and discharge fully all obligations 
of NSU thereunder from and after the Transfer Effective Date and indemnify NSU  
for all indemnifiable losses arising out of such performance by Spinco pursuant 
to the provisions of Article V hereto. NSU shall, without further consideration 
therefor, pay and remit to Spinco promptly all monies, rights and other         
considerations received in respect of any such performance. NSU shall exercise  
its rights and options under any such agreements relating to the NSU Transferred
Assets or NSU Transferred Liabilities only as reasonably directed by Spinco, and
at Spinco's expense. As and when any such asset or liability becomes            
transferable, such transfer shall be effected forthwith. Notwithstanding the    
foregoing, the parties shall use their best efforts to obtain all consents and  
approvals, to enter into all amendatory agreements and to make all filings and  
applications which may be required for the consummation of the transactions     
contemplated by this Agreement, including, without limitation, all applicable   
regulatory filings or consents under federal or state environmental laws.       

Section 2.05 No Representations or Warranties. Spinco understands and 
agrees that NSU is not, in this Agreement or in any other agreement or document 
contemplated by this Agreement or otherwise, representing or warranting in any  
way (i) as to the value or freedom from encumbrance of, or any other matter     
concerning, any NSU Transferred Assets or (ii) as to the legal sufficiency to   
convey title to any such assets or the execution, delivery and filing of this   
Agreement, including, without limitation, any Conveyancing or Assumption        
Instruments, it being agreed and understood that all such assets are being      
transferred AS IS, WHERE IS, and that the party to which such assets are to be  
transferred hereunder shall bear the economic and legal risk that any           
conveyances of such assets shall prove to be insufficient or that Spinco or any 
of its Subsidiaries' title to any such assets shall be other than good and      
marketable and free from encumbrances. Similarly, each party hereto understands 
and agrees that no party hereto is, in this Agreement or in any other agreement 
or document contemplated by this Agreement or otherwise, representing or        
warranting in any way that the obtaining of any consents or approvals, the      
execution and delivery of any amendatory agreements and the making of any       
filings or applications contemplated by this Agreement will satisfy the         
provisions of any or all applicable agreements or the requirements of any or all
applicable laws or judgments, it being agreed and understood that the party to  
which any assets are transferred shall bear the economic and legal risk that any
necessary consents or approvals are not obtained or that any requirements of    
laws or judgments are not complied with.                                        

  Section 2.06 Conveyancing and Assumption Instruments. In connection with
the transfers of the NSU Transferred Assets other than capital stock and the    
assumptions of the NSU Transferred Liabilities contemplated by this Agreement,  
the parties shall execute or cause to be executed by the appropriate entities   
the Conveyancing and Assumption Instruments in such forms as the parties shall  
agree. The transfer of capital stock shall be effected by means of delivery of  
stock certificates and executed stock powers and notation on the stock record   
books of the corporation.                                                       

     Section 2.07 Tax Treatment. During the two year period following the Merger
Effective Date, NSU shall not, nor shall it permit Michael to do any of the     
following, and neither of them has any plan or intention to:                    

(a) liquidate Michael;                                      

         (b) merge Michael with or into another corporation, unless Michael is
     the surviving corporation and the merger is not treated for tax purposes as
a sale or other disposition of Michael common stock;                  

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         (c) sell any shares of Michael Common Stock or cause Michael to issue
any of shares of Michael Common Stock to any party other than NSU; or 

  (d) sell any assets of NSU to any third party not otherwise an
    affiliate of the foregoing, except for (i) sales in the ordinary course of
 business or (ii) sales of assets if, after giving effect to such sales,
Michael will retain at least 90% of the fair market value of its gross
    assets in active trades or businesses within the meaning of Section 355 of
the Code.                                                             

provided, however, NSU or Michael may undertake any of the actions listed above 
if (i) Spinco consents thereto or (ii) NSU obtains either a tax opinion or a    
favorable private letter ruling from the Internal Revenue Service, in each case 
reasonably satisfactory to Spinco, to the effect that the actions to be         
undertaken would not adversely affect the tax free nature of the Merger or the  
Distribution to all of the parties thereto. The shareholders of record of NSU on
the Record Date shall be third party beneficiaries of the provisions of this    
Section 2.07.                                                                   

ARTICLE III 

THE DISTRIBUTION

 Section 3.01 Cooperation Prior to the Distribution. Prior to the Merger
Effective Date:                                                                 

  (a) NSU and Spinco shall prepare and shall use all reasonable efforts to
cause the Registration Statement to become effective under the Securities Act.  
Once declared effective under the Securities Act, NSU shall mail to the holders 
of NSU Common Stock the prospectus included in the Registration Statement, which
shall set forth appropriate disclosure concerning Spinco, the Distribution and  
other matters. NSU and Spinco shall also prepare, and Spinco shall file with the
Commission, a Form 8 -A, to register the Spinco Common Stock under the Exchange 
Act. NSU and Spinco shall use all reasonable efforts to cause the Form 8-A to   
become effective under the Exchange Act.                                        

     (b) NSU and Spinco shall cooperate in preparing, filing with the Commission
and causing to become effective any registration statements or amendments       
thereof which are appropriate to reflect the establishment of, or amendments to,
any employee benefit and other plans contemplated by Article VI.                

(c) NSU and Spinco shall take all such action as may be necessary or  
appropriate under the securities or blue sky laws of states or other political  
subdivisions of the United States in connection with the Distribution and the   
other transactions contemplated by this Agreement.                              

(d) NSU and Spinco shall prepare, and Spinco shall file and pursue, an
application to permit listing of the Spinco Common Stock on the NASDAQ National 
Market.                                                                         

Section 3.02 NSU Board Action; Conditions Precedent to the            
Distribution. The NSU Board shall, in its discretion, establish the Record Date,
the Transfer Effective Date and the Distribution Date (which shall be the same  
as the Merger Effective Date) and any appropriate procedures in connection with 
the Distribution. The Distribution is expressly conditioned on the prior        
consummation of the Merger. Additionally, in no event shall the Distribution    
occur (i) if at the Distribution Date NSU shall not have received an opinion of 
tax counsel or a private letter ruling from the IRS to the effect that the      
Distribution will qualify as a tax-free spin-off under Section 355 of the Code, 
and (ii) unless prior to such time the following conditions shall have been     
satisfied or waived by the parties hereto:                                      

    (a) the transactions contemplated by Sections 2.02 hereof, shall have been
consummated in all material respects;                                           

   (b) the Spinco Common Stock shall have been approved for quotation on the
NASDAQ National Market or listing on a national securities exchange, subject to 
official notice of issuance;                                                    

     (c) the Spinco Board, comprised as contemplated by Section 8.01, shall have
been elected by NSU, as sole shareholder of Spinco, and the Spinco Charter and  
Spinco ByLaws shall have been adopted and shall be in effect;                   

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  (d) the Registration Statement shall have been declared effective by the
Commission and the Form 8-A relating to the shares of Spinco Common Stock to be 
distributed in the Distribution shall have become effective under the Exchange  
Act; and                                                                        

  (e) all conditions precedent to the obligations of NSU and Michael under
the Merger Agreement (other than consummation of the Distribution) shall have   
been satisfied or waived and the Merger shall have been consummated.            

The satisfaction or waiver of such conditions shall create an obligation on the 
part of NSU to effect the Distribution on the Distribution Date.                

  Section 3.03 The Distribution. On or prior to the Distribution Date, NSU
shall deliver to the Agent the certificate for all of the outstanding shares of 
Spinco Common Stock which are owned by NSU. On the Distribution Date, after the 
Effective Time of the Merger, NSU shall deliver to the Agent an instruction to  
distribute as promptly as practicable following the Distribution Date to each   
holder of record of NSU Common Stock on the Record Date stock certificates      
evidencing such number of shares of Spinco Common Stock equal to the product of 
the Exchange Ratio times the number of shares of NSU Common Stock held of record
by such holder on the Record Date and cash in lieu of any fractional share of   
Spinco Common Stock obtained in the manner provided in Section 3.04 hereof. If  
the number of outstanding shares of Spinco Common Stock exceeds the amount to be
distributed in the Distribution, then the remaining shares shall be deemed to   
have been contributed by NSU to the capital of Spinco and retired and canceled. 
Spinco agrees to provide to the Agent sufficient certificates in such           
denominations as the Agent may request in order to effect the Distribution. All 
of the shares of Spinco Common Stock issued in the Distribution shall be fully  
paid, nonassessable and free of preemptive rights. The Distribution shall, for  
all purposes under this Agreement, be deemed to have been effected at the time  
NSU delivers to the Agent the instruction directing the Agent to distribute the 
certificates evidencing Spinco Common Stock and cash in lieu of fractional      
shares.                                                                         

Section 3.04 Fractional Shares. No certificate or scrip representing  
fractional shares of Spinco Common Stock shall be issued as part of the         
Distribution, and in lieu of receiving fractional shares each holder of NSU     
Common Stock who would otherwise be entitled to receive a fractional share of   
Spinco Common Stock pursuant to the Distribution will receive cash for such     
fractional share. NSU and Spinco agree that NSU shall instruct the Agent to     
determine the number of whole shares and fractional shares of Spinco Common     
Stock allocable to each holder of record of NSU Common Stock as of the Record   
Date, to aggregate all such fractional shares into whole shares and sell the    
whole shares obtained thereby in the open market pursuant to Rule 236 under the 
Securities Act, if available, at then prevailing prices on behalf of holders who
otherwise would be entitled to receive fractional share interests and to        
distribute to each such holder such holder's ratable share of the total proceeds
of such sale. Spinco shall bear the costs of commissions incurred in connection 
with such sale. If the Agent is unable to sell such shares in the open market   
pursuant to Rule 236, Spinco will pay to such holders of NSU Common Stock in    
lieu of any fractional share or amount of cash determined by multiplying (a) the
average closing price per share of Spinco Common Stock on the NASDAQ National   
Market during the five days following the Distribution Date times (b) the       
fractional share interest to which such holder would otherwise be entitled.     

ARTICLE IV

SPINCO ASSUMPTION OF CERTAIN NSU INDEBTEDNESS 

    Section 4.01 Assumption of Certain NSU Indebtedness. Spinco and NSU shall,
on or prior to the Distribution Date, to the extent required under any indenture
with respect to any of the outstanding debentures or any of the outstanding     
subordinated extendable or fixed time certificates, execute and deliver         
supplemental indentures or other agreements or instruments evidencing Spinco's  
assumption of NSU's obligations with respect to such outstanding debentures and 
subordinated extendable and fixed time certificates; provided, however, that as 
provided herein, and as contemplated by the Merger Agreement, as between NSU and
Spinco, the NSU Indebtedness is not an NSU Transferred Liability and NSU shall  
be responsible for the payment in full, in accordance with the terms thereof of 
all of the NSU Indebtedness and                                                 

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shall indemnify, pursuant to Section 5.02 of this Agreement, Spinco for any and 
all Liabilities with respect to the NSU Indebtedness.                           

ARTICLE V 

INDEMNIFICATION 

Section 5.01 Indemnification by Spinco.                               

(a) From and after the Merger Effective Date, Spinco shall indemnify, 
defend, assume and hold harmless NSU, Michael, all Michael Subsidiaries and     
Merger Sub and any of them (together, the "NSU Indemnified Parties") from and   
against: (i) all Liabilities (other than the NSU Assumed Liabilities) of NSU or 
any NSU Subsidiary (other than Michael and its Subsidiaries), including any     
Subsidiary owned by NSU prior to the Merger Effective Date but not owned by NSU 
on the Merger Effective Date, arising out of: (A) the NSU Transferred           
Liabilities, specifically including the Assumed Contracts, and (B) the          
transactions contemplated under this Agreement, including the Distribution and  
any Taxes as a result of the Distribution (other than (X) any liabilities       
resulting from any breach by NSU, after the Merger Effective Date, of this      
Agreement, (Y) any liability of NSU for Taxes resulting from a breach by NSU,   
after the Merger Effective Date, of Section 2.07, and (Z) obligations, after the
Merger Effective Date, expressly assumed by NSU hereunder); (ii) all Liabilities
arising from any claim made by any shareholder of Spinco on or after the        
Distribution Date or by any shareholder or former shareholder of NSU prior to   
the Merger Effective Date relating to any act or omission of NSU on or prior to 
the Merger Effective Date in connection with the Merger or any of the other     
transactions as contemplated by the Merger Agreement; (iii) all Liabilities     
assumed by Spinco pursuant to Article VI; (iv) all Liabilities of Spinco or any 
Subsidiary of Spinco arising out of transactions or events entered into or      
occurring after the Merger Effective Date, or any action or inaction, including 
but not limited to, contracts, commitments and litigation, with respect to,     
entered into or based upon transactions or events occurring after the Merger    
Effective Date with respect to Spinco or any Subsidiary of Spinco (other than   
the NSU Assumed Liabilities); (v) any breach of this Agreement by Spinco or any 
Subsidiary of Spinco after the Merger Effective Date; and (vi) damages, costs,  
and expenses including attorney's fees incurred in defending and settling claims
for such Liabilities.                                                           

(b) The obligations to indemnify the NSU Indemnified Parties shall be 
unconditional and shall not be subject to any claim of setoff, contribution or  
waiver, except as provided in Section 5.04.                                     

Section 5.02 Indemnification by NSU.                                  

    (a) From and after the Merger Effective Date, NSU shall indemnify, defend,
assume and hold harmless Spinco and any Spinco Subsidiary and any of them       
(together, the "Spinco Indemnified Parties") from and against: (i) all          
Liabilities of NSU, Michael or any Subsidiary of NSU or Michael arising out of  
transactions or events entered into or occurring after the Merger Effective     
Date, or any action or inaction, including but not limited to, contracts,       
commitments and litigation, with respect to, entered into or based upon         
transactions or events occurring after the Merger Effective Date with respect to
NSU, Michael, any Subsidiary of NSU after the Merger Effective Date or any      
Subsidiary of Michael, other than any Liability arising out of the NSU          
Transferred Liabilities, including the Assumed Contracts; (ii) all Liabilities  
relating to the NSU Assumed Liabilities; (iii) all Liabilities of Michael or any
Subsidiary of Michael arising before, on or after the Merger Effective Date;    
(iv) all Liabilities arising from any claim made by any current or former       
Michael shareholder or shareholder of NSU after the Merger Effective Date who   
was a Michael shareholder immediately prior to the Merger Effective Date        
relating to any act or omission of Michael in connection with the Merger or any 
of the other transactions contemplated in the Merger Agreement or this          
Agreement; (v) any breach of this Agreement by NSU after the Merger Effective   
Date; and (vi) damages, costs and expenses including attorney's fees incurred in
defending and settling claims for such obligations, expenses or Liabilities.    

  (b) The obligations to indemnify the Spinco Indemnified Parties shall be
unconditional and shall not be subject to any claim of setoff, contribution or  
waiver, except as provided herein.                                              

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Section 5.03 Procedure for Indemnification.                           

 (a) The Spinco Indemnified Parties or the NSU Indemnified Parties (each
referred to hereinafter as an "Indemnified Party"), as the case may be, shall   
promptly give notice to the indemnifying party hereunder (the "Indemnifying     
Party") after obtaining knowledge of any claim, demand or request for payment   
against any Indemnified Party for any Liabilities indemnifiable hereunder and   
shall permit the Indemnifying Party to pay or assume the defense of such        
Liability, and any litigation arising from such Liability. Notwithstanding the  
foregoing notice requirement, the right to indemnification hereunder shall not  
be affected by the failure of the party seeking indemnification to give such    
notice or any delay by such party in giving such notice unless, and only to the 
extent that, the rights and remedies of the Indemnifying Party shall have been  
prejudiced as a result of the failure to give, or the delay in giving, such     
notice. The failure by an Indemnifying Party to notify the Indemnified Party of 
its election to defend any such Liability within ten (10) days after notice     
thereof shall have been given to the Indemnifying Party, shall be deemed a      
waiver by the Indemnifying Party of its right to defend such Liability.         

   (b) If an Indemnifying Party assumes the defense of any Liability and any
litigation that results from such Liability, then the obligations of the        
Indemnifying Party as to such litigation shall include employing counsel        
reasonably satisfactory to the Indemnified Party, taking all steps necessary in 
the defense or settlement of such litigation and holding the Indemnified Party  
harmless from and against any and all claims and expenses caused by or arising  
out of any settlement approved by the Indemnified Party or any judgment in      
connection with such litigation. Without the prior written consent of the       
Indemnified Party, the Indemnifying Parties shall not, in the defense of any    
such litigation, consent to the entry of any judgment or enter into any         
settlement that does not include as an unconditional term thereof, the giving by
the claimant or the plaintiff to the Indemnified Party of a full release, in    
form reasonably satisfactory to the Indemnified Party, from all liability in    
respect of such litigation. The Indemnified Party shall be entitled to          
participate in the defense of any litigation at its own expense. If the         
defendants in any such action include both the Indemnified Party and the        
Indemnifying Party and the Indemnified Party shall have reasonably concluded    
that there may be legal defenses available to it which are different from or    
additional to those available to the Indemnifying Party, the Indemnified Party  
shall have the right, at the expense of the Indemnifying Party, to select       
separate counsel reasonably satisfactory to the Indemnifying Party to assume    
such additional legal defenses, and to otherwise participate in the defense of  
such action on behalf of the Indemnified Party.                                 

    (c) If the Indemnifying Party does not assume the defense of any Liability
within ten (10) days after the Indemnified Party gives notice thereof to the    
Indemnifying Party, then the Indemnified Party may defend against such Liability
and any litigation with respect thereto, in such manner as it deems appropriate 
and the Indemnified Party may settle any such litigation on such terms as it    
deems appropriate and the Indemnifying Party shall, in accordance with the      
provisions of Sections 5.01 or 5.02, as the case may be, reimburse the          
Indemnified Party for the amount of such settlement and for all losses and      
expenses, including attorney's fees, incurred by the Indemnified Party in       
connection with the defense of such Liability.                                  

 (d) The Indemnified Party and the Indemnifying Party agree to cooperate
with each other in resolving or attempting to resolve any claim as to which     
indemnification is sought under this Agreement and will permit the other party  
access to all books and records which might be useful for such purpose during   
normal business hours and at the place where such books and records are normally
kept. The Indemnified Party and the Indemnifying Party further agree to make    
available, at reasonable times, such of their respective employees, officers and
agents who may have knowledge of matters relating to any claim arising out of   
this agreement for the purpose of providing testimony or assisting in the       
preparation or prosecution of a defense to any claim by a third party as to     
which indemnification is sought under this Agreement.                           

  (e) Any dispute arising between the parties hereto as to the obligations
under this Article V shall be resolved pursuant to Article X hereto. If there is
no dispute with respect to any payment under this Article V from an Indemnifying
party to an Indemnified Party, then within ten (10) days after written demand   
for such payment by the Indemnified Party, the Indemnifying Party shall pay to  
the Indemnified Party the amount of any loss, expense, damage or other payment  
suffered, incurred or made by the Indemnified Party against which the           
Indemnified Party is indemnified by the Indemnifying Party under this Article V.
In the event the                                                                

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Indemnifying Party fails to pay such undisputed amount within said ten (10) day 
period, or it is determined pursuant to the provisions of Article X that the    
Indemnifying Party is obligated to pay an amount which it had previously        
disputed, the Indemnified Party shall be entitled to collect the following from 
the Indemnifying Party: (i) interest from the date of the Indemnified Party's   
demand for payment on the amount owing to the Indemnified Party at the rate     
equal to the reference rate as publicly announced from time to time by First    
Bank National Association plus two (2) percentage points, compounded monthly,   
until the full amount owing, including any interest, has been paid in full with 
all payments being applied first against accrued and unpaid interest, and (ii)  
all costs and expenses, including reasonable attorneys fees, incurred by the    
Indemnified Party in collecting the amounts owing from the Indemnifying Party   
under this Article V.                                                           

    Section 5.04 Set-Off Rights. If and when, as a result of the net operating
loss carryforwards properly allocable to NSU from all Tax periods prior to or   
ending on the Merger Effective Date, NSU unconditionally realizes a benefit in  
the form of a reduction in the federal or state income Taxes which NSU would    
otherwise be obligated to pay, Spinco may set-off the amount of any such Tax    
savings against any Liability of Spinco under this Agreement (including the     
indemnification obligations under Section 5.01) or, in the event Spinco has     
already made payments pursuant to its indemnification obligations hereunder, NSU
will reimburse Spinco for payments previously made by Spinco to or on behalf of 
an NSU Indemnified Party with respect to its obligations under this Agreement.  
The benefit shall not be finally and unconditionally determined for any year    
until such year is closed for any future adjustment of federal income Tax       
liability. Any amount set-off by Spinco or reimbursed to Spinco by NSU hereunder
shall bear interest from and after the date that such benefit was reflected on  
the consolidated Tax return of NSU or taken into account in an NSU estimated Tax
payment to the date of such off-set or reimbursement at the rate of 6% per      
annum. NSU shall promptly provide Spinco notice of each and every time it has   
filed a Tax report or return wherein it has claimed or used such Tax benefit.   

ARTICLE VI

EMPLOYEE BENEFIT PLANS

    Section 6.01 The 401(k) Savings Plan. (a) As soon as practicable after the
date hereof (i) effective as of the Merger Effective Date, Spinco shall assume  
and be solely responsible for, all Liabilities of NSU under the [NORTH STAR     
UNIVERSAL 401(K) SAVINGS PLAN] (the "Savings Plan") and (ii) prior to the Merger
Effective Date, NSU agrees to take such actions as may be necessary in order for
Spinco or a Subsidiary of Spinco effectively to maintain and administer such    
Savings Plan. Spinco and NSU shall each take, or cause to be taken, all such    
actions as may be necessary or appropriate in order to establish Spinco or a    
Subsidiary of Spinco as successor to NSU as to all rights, assets, duties and   
Liabilities of NSU under, or with respect to, the Savings Plan, including, but  
not limited to, the rights, assets, duties and Liabilities of NSU under, or with
respect to, any and all trust agreements to the extent that they relate solely  
to the Savings Plan. Any action taken by NSU pursuant to this Section 6.01 after
the Merger Effective Date shall be at Spinco's expense.                         

   (b) Upon Spinco or a Subsidiary of Spinco becoming the successor employer
or successor plan sponsor to NSU or any of its subsidiaries under the Savings   
Plan, NSU agrees to take such actions as may be necessary to amend any trust    
agreement required to be amended in order for Spinco or a Subsidiary of Spinco  
effectively to assume and administer the Savings Plan.                          

(c) Transfers pursuant to this Section 6.01 shall be effected, where  
practicable, so as to preserve each plan participant's investment election.     

 (d) NSU and Spinco shall, in connection with the transfers described in
this Section 6.01, cooperate in making all appropriate filings required under   
the Code or ERISA, and the regulations thereunder and any applicable securities 
laws, and take all such action as may be necessary and appropriate to cause such
transfers to take place as soon as practicable after the Distribution Date.     

(e) From and after the Merger Effective Date, NSU and its Subsidiaries
thereafter shall cease to have any liability or obligation whatsoever with      
respect to the Savings Plan. As provided in Article V, Spinco shall indemnify   
NSU and such Subsidiaries against any such liability.                           

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Section 6.02 Welfare Plans.                                           

   (a) Except as otherwise specifically provided in this Section 6.02, as of
the Merger Effective Date, Spinco shall assume all Liabilities of NSU in        
connection with claims brought under any of NSU's or its Subsidiaries' medical, 
dental, life insurance, health, accident, disability or other welfare benefit   
plans in existence on or prior to the Merger Effective Date and from and after  
the Merger Effective Date, NSU and its Subsidiaries thereafter shall cease to   
have any such liability or obligation. From and after the Merger Effective Date,
NSU shall no longer be a participating employer in such welfare benefit plans.  

(b) As of the Merger Effective Date, Spinco shall assume and shall be 
solely responsible for, all Liabilities of NSU in connection with claims for    
post-employment welfare benefits (including, but not limited to, medical, health
and life insurance benefits) made by or in respect of (i) any Spinco Employee or
(ii) any employee of NSU prior to the Merger Effective Date who shall have      
retired or whose employment otherwise terminates on or before the Merger        
Effective Date, regardless of whether such claim shall relate to events which   
occurred prior or subsequent to the Merger Effective Date. Spinco shall also    
assume all "COBRA" continuation Liabilities of NSU as of the Merger Effective   
Date.                                                                           

(c) Prior to the Merger Effective Date, NSU and Spinco shall take all 
actions necessary and appropriate to effect the assumption of the NSU welfare   
plans by Spinco or a Subsidiary of Spinco and to provide the benefit coverage   
otherwise necessary to assume the Liabilities which are or shall become the     
responsibility of Spinco under this Section 6.02.                               

Section 6.03 NSU Employees. Effective as of the Merger Effective Date,
Spinco agrees to assume the employment of all employees of NSU who have not     
resigned or been terminated on or prior to such date. Spinco shall assume and be
solely responsible for all Liabilities in connection with claims made by or on  
behalf of such NSU employees in respect of salary, benefits, severance pay,     
salary continuation and similar obligations relating to the employment or the   
termination or alleged termination of the employment of any such person,        
regardless of whether such termination or alleged termination occurred prior to 
or subsequent to the Merger Effective Date.                                     

    Section 6.04 Other Liabilities and Obligations. As of the Merger Effective
Date, Spinco shall assume and be solely responsible for all Liabilities of NSU  
with respect to claims made by persons who were, prior to the Merger Effective  
Date, employees of NSU, relating to any employee liability or obligation not    
otherwise provided for in this Agreement.                                       

Section 6.05 Preservation of Rights To Amend or Terminate Plans. No   
provisions of this Agreement shall be construed as a limitation on the right of 
Spinco or any Spinco Subsidiary to amend such plan or terminate its             
participation therein which Spinco or any Spinco Subsidiary would otherwise have
under the terms of such plan or otherwise, and no provision of this Agreement   
shall be construed to create a right in any employee or beneficiary of such     
employee under a plan which such employee or beneficiary would not otherwise    
have under the terms of the plan itself.                                        

ARTICLE VII 

TAX MATTERS 

Section 7.01 Allocation of Items of Income or Deduction for Reporting 
Purposes. NSU, in consultation with and subject to the approval of Spinco, shall
either (i) cause Spinco to close its permanent books and records (including work
papers) as of the Distribution Date, in accordance with Treasury Regulations    
Section 1.1502-76(b)(2) in order to permit Spinco's taxable income for the      
taxable period ending on the Distribution Date to be reported and determined on 
the basis of income shown on its permanent books and records (including work    
papers) or (ii) allocate items of income or deduction between tax periods ending
on or before the Distribution Date and tax periods beginning after the          
Distribution Date in accordance with Treasury Regulations Section               
1.1502-76(b)(2)(ii).                                                            

   Section 7.02 Spinco Indemnification for Tax Periods Prior to Distribution
Date. Spinco agrees to indemnify and hold harmless NSU from and against any     
liability for Taxes attributable to NSU or Spinco                               

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(specifically including for all purposes of this Article VII, Taxes attributable
to all NSU Transferred Assets and NSU Transferred Liabilities transferred       
pursuant to Article II) for Tax periods or portions thereof ending on or before 
the Distribution Date. For purposes of this Section 7.02, "Spinco" shall mean   
Spinco, itself, as well as all of its Subsidiaries eligible to be included in a 
consolidated federal income tax return filed by Spinco as the common parent,    
including any Subsidiary owned by NSU prior to the Merger Effective Date but not
then owned by NSU, and "NSU" shall mean NSU, itself, as well as all of its      
Subsidiaries eligible to be included in a consolidated federal income tax return
filed by NSU as the common parent.                                              

   Section 7.03 NSU Liable for Filing and Payment of Spinco's Taxes Prior to
Distribution Date. NSU, in consultation with and subject to the approval of     
Spinco, shall, at Spinco's expense, file (or shall cause to be filed) all tax   
returns of Spinco for tax periods ending on or before the Distribution Date. NSU
shall, to the extent permissible, include (or cause to be included) the results 
of the operations of Spinco in NSU's consolidated federal tax return and in any 
other consolidated, unitary, or combined tax return for tax periods ending on or
before the Distribution Date and shall, subject to the indemnification          
obligations under Section 7.02, pay all Taxes due for such periods with respect 
to Spinco.                                                                      

    Section 7.04 Spinco Liable for Filing and Payment of Its Own Taxes for Tax
Periods Beginning Prior to Distribution Date and Ending After Distribution      
Date. Spinco shall file (or shall cause to be filed) all Tax returns of Spinco  
for any Tax period which begins before the Distribution Date and ends on or     
after the Distribution Date. Spinco shall also file (or shall cause to be filed)
all Tax returns of Spinco for all subsequent Tax periods. Accordingly, Spinco   
shall pay all Taxes shown as due on such returns or ultimately determined to be 
due with respect to such periods and shall be entitled to keep and retain for   
itself any refunds of Taxes or credits paid on behalf of or made available to   
it. All Tax returns and any schedules to be included therewith for the Tax      
period which begins before the Distribution Date and ends after the Distribution
Date shall be prepared on a basis consistent with those prepared for prior Tax  
periods and consistent with the method used by NSU to allocate items of Spinco's
income or deduction for the Tax period ending on the Distribution Date pursuant 
to Section 7.01 hereof, and shall be subject to the approval of NSU prior to    
being filed by Spinco, which approval shall not be unreasonably withheld.       

Section 7.05 Spinco's Right to Make Section 172(b)(3) Election and    
Qualified Right to Subsequent Refund. Spinco shall have the right and option to 
make an election pursuant to Section 172(b)(3) of the Code to carry forward any 
of its net operating losses incurred in tax periods beginning after the         
Distribution Date which, if carried back, would be carried back to a tax period 
ending on or before the Distribution Date. Notwithstanding the foregoing,       
whether or not Spinco makes such an election, Spinco shall be entitled to any   
and all tax refunds, whether received by NSU or Spinco, that result from a      
carryback of net operating losses or credits of Spinco arising in a tax period  
beginning after the Distribution Date to a tax period ending on or before the   
Distribution Date.                                                              

    Section 7.06 Scope of NSU's Power to Negotiate Settlement During Audit for
Periods after the Merger Effective Date. In the event that any Taxing authority 
conducts an audit to determine the amount of any net operating loss             
carryforwards of NSU as of the Merger Effective Date for any Tax period         
beginning after the Distribution Date, NSU shall notify Spinco and allow Spinco 
to participate with NSU in contesting such issue and each party shall pay its   
own expenses relating to the contesting of such issue. Notwithstanding the      
foregoing, NSU shall have the right to finally resolve such issue.              

Section 7.07 Rights of Parties With Respect to an Asserted Tax        
Liability. Promptly after receipt by NSU of a written notice of any demand,     
claim or circumstance, including any Tax audit, which, after the lapse of time, 
would or might give rise to a claim or commencement of any action, proceeding,  
or investigation with respect to which indemnity may be sought under Section    
7.02 hereof (an "Asserted Tax Liability"), NSU shall give written notice thereof
to Spinco (the "Tax Claim Notice"). The Tax Claim Notice shall contain factual  
information (to the extent known to NSU) describing in reasonable detail the    
Asserted Tax Liability and shall include copies of any notice or other document 
received from any taxing authority in respect of such Asserted Tax Liability. If
NSU fails to give Spinco prompt notice of an Asserted Tax Liability as required 
by this Section 7.07, and if such failure results in an irrevocable financial   
detriment to Spinco, then any amount which Spinco is otherwise required to pay  
NSU pursuant to Section 7.02 hereof with respect to such Asserted               

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Tax Liability shall be reduced by the amount of such irrevocable financial      
detriment. Spinco may elect to direct, through counsel of its own choosing      
reasonably acceptable to NSU and at its own expense, the compromise or contest, 
either administratively or in the courts, of any Asserted Tax Liability. If     
Spinco elects to direct the compromise or contest of any Asserted Tax Liability,
it shall, either within 30 calendar days after receiving the Tax Claim Notice   
with respect to such Asserted Tax Liability (or sooner, if the nature of the    
Asserted Tax Liability so requires) notify NSU of its intent to do so, and NSU  
shall cooperate at its own expense in the compromise or contest of such Asserted
Tax Liability. Spinco, at its discretion, may enter into a settlement agreement 
with respect to, or otherwise resolve, any Asserted Tax Liability without the   
express consent of NSU, unless such settlement affects the Tax returns of NSU   
after the Merger Effective Date, in which case the consent of NSU shall be      
required and shall not be unreasonably withheld. If Spinco (1) within 30        
calendar days after receiving the Tax Claim Notice with respect to such Asserted
Tax Liability (or sooner, if the nature of the Asserted Tax Liability so        
requires) notifies NSU that it has elected not to direct the compromise or      
contest of the Asserted Tax Liability, or (2) fails to properly notify NSU      
within such period of its election to direct or not to direct the compromise or 
contest of the Asserted Tax Liability, NSU may pay, compromise, or contest at   
its own expense and in its sole discretion such Asserted Tax Liability. If NSU  
or Spinco elects to direct the compromise or contest of any liability for Taxes 
as provided herein, the other party shall promptly empower (by power of attorney
and such other documentation as may be appropriate) such representative of the  
empowered party as the empowered party may designate to represent the empowering
party in any audit, claim for refund or administrative or judicial proceeding   
insofar as such audit, claim for refund or proceeding involves an asserted      
liability for Taxes for which Spinco would be liable under Section 7.02 hereof. 
For all purposes of this Section 7.07, the right to participate in all          
proceedings either administratively or in the courts relating to an Asserted Tax
Liability shall include the right to attend and be kept fully informed of all of
the foregoing but shall not include, unless expressly provided for herein, the  
power to compromise, contest or make any other decisions with respect to an     
Asserted Tax Liability.                                                         

     Section 7.08 Mutual Duty to Cooperate and Act in Good Faith With Respect to
Filing or Amending of Returns, Claiming Refunds, or Conducting Audit. NSU and   
Spinco shall provide each other with such cooperation and information as either 
reasonably may request of the other in filing any tax return, amended return, or
claim for refund, in determining a liability for Taxes or a right to a refund of
Taxes, or in conducting any audit or proceeding in respect of Taxes. Such       
cooperation and information shall include providing copies of relevant tax      
returns or portions thereof, together with accompanying schedules and related   
work papers and documents relating to rulings or other determinations by tax    
authorities. Each party shall make its employees available on a mutually        
convenient basis to provide explanation of any documents or information provided
hereunder. NSU shall make available to Spinco, with respect to all tax years in 
which Spinco was includable in NSU's affiliated group (as defined in Section    
1504 of the Code) copies of all work papers and schedules relating to the       
preparation of Spinco's pro forma federal and state income tax returns which    
were included in NSU's federal consolidated and state income tax returns which  
are necessary to reconcile such pro forma returns with the amounts actually     
included in such consolidated returns. NSU and Spinco shall make available to   
each other all other books and records relating to Taxes of Spinco with respect 
to all tax years in which Spinco was includable in NSU's affiliated group (as   
defined in Section 1504 of the Code). NSU and Spinco agree to maintain and      
preserve for a period of eight (8) years after the period to which such         
documents relate, and, upon written request, to provide to the other party, such
factual information as that party reasonably requires for filing tax returns,   
tax planning, and contesting any tax audit that only NSU or Spinco, as the case 
may be, actually possesses.                                                     

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ARTICLE VIII

CERTAIN ADDITIONAL MATTERS

    Section 8.01 The Spinco Board. Spinco and NSU shall take all actions which
may be required to elect or otherwise appoint, as of the Distribution Date, the 
following [five] persons as directors of Spinco:                                

Section 8.02 Spinco Charter and By-Laws. Prior to the Merger Effective
Date, Spinco shall adopt the Spinco Charter and the Spinco By-Laws and shall    
file the Spinco Charter with the Secretary of State of the State of Minnesota.  

Section 8.03 NSU Long-Term Liabilities; Minimum Value of Spinco.      

  (a) Release Date. Prior to the third anniversary of the Merger Effective
Date, Spinco shall have caused the Release Date to have occurred with respect to
each of the NSU Long-Term Liabilities.                                          

    (b) Minimum Value. Spinco shall not (A) pay any dividends, whether in cash
or in property, or make any other distribution to its shareholders, or redeem   
any of its capital stock for cash or property, (B) sell, transfer or dispose of 
any material amount of its assets in a single transaction or related series of  
transactions, except in the ordinary course of its business or for fair value,  
or (C) sell, transfer or dispose of all or substantially all of its assets or   
engage in any merger, consolidation or reorganization unless (X) in the case of 
the sale, transfer or other disposition of all or substantially all of its      
assets, the purchaser assumes the obligations of Spinco (jointly and severally  
with Spinco) under this Agreement, (Y) in the case of a merger, consolidation or
reorganization, the surviving entity assumes the obligations of Spinco under    
this Agreement, or (Z) the Market Value (as defined below) of Spinco immediately
after giving effect to such dividend, distribution, redemption or other         
transaction is at least equal to the following amounts during the following     
periods:                                                                        

      (i) $9,000,000 during the period beginning on the Merger Effective
  Date and continuing to the later to occur of (x) the Release Date or (y)
the third anniversary of the Merger Effective Date;                   

(ii) $3,000,000 during the period from the end of the period
   referenced in clause (i) above and continuing to the fifth anniversary of
the Merger Effective Date.                                            

The term "Market Value" shall mean the greater of: (a) the market capitalization
of Spinco's outstanding equity securities, if Spinco is a publicly traded       
company, or (b) the net book value of Spinco computed in accordance with        
generally accepted accounting principles, except that securities owned by Spinco
which are publicly traded shall be valued at their market value without any     
adjustment for lack of liquidity or control premium, but reduced for any taxes  
payable on the disposition of such securities, taking into account any and all  
tax benefits (e.g., net operating loss carryforward, tax credits, deductions or 
exclusions) available to Spinco and using Spinco's then applicable effective tax
rate for purposes of such calculations.                                         

Section 8.04 Adjustment for Dissenting Shares Liability. If the actual
amount paid after the Merger Effective Date with respect to the Dissenting      
Shares (the "Actual Payment") is less than the Dissenting Shares Holdback, then 
within ten days after the date of determination of the Actual Payment, NSU shall
pay to Spinco by wire transfer of immediately available funds to a designated   
account the amount of such shortfall. Notwithstanding anything herein or in the 
Merger Agreement to the contrary, with respect to the Dissenting Shares and the 
Dissenting Shares Liability, NSU agrees that it shall promptly give notice to   
Spinco after obtaining knowledge of any threatened or pending claim regarding   
the Dissenting Shares or the Dissenting Shares Liability and Spinco shall, at   
its expense, assume and direct the negotiation, settlement or defense of such   
claim and any litigation arising from such claim, and NSU agrees to cooperate   
with Spinco in resolving or attempting to resolve any such claim or litigation; 
provided that Spinco shall not, without NSU's prior                             

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consent, settle any such claim after the Merger Effective Date if such          
settlement may result in the Dissenting Shares Liability exceeding the          
Dissenting Shares Holdback.                                                     

Section 8.05 NSU Covenants.                                           

(a) From and after the Merger Effective Date, NSU shall be solely     
responsible for the payment, performance and discharge of the NSU Assumed       
Liabilities and shall pay, perform and discharge the NSU Assumed Liabilities in 
accordance with the governing instruments and applicable laws related thereto.  
Subject to the prior consummation of the Merger, NSU covenants and agrees to    
repay in full all of the NSU Indebtedness not later than six months after the   
Merger Effective Date, all such repayments (excluding any payments made with    
respect to any instruments that have matured or otherwise become due and payable
in accordance with their respective terms prior to such repayment date) to be   
effected on or about the same date.                                             

ARTICLE IX

ACCESS TO INFORMATION AND SERVICES

   Section 9.01 Provision of Corporate Records. NSU shall arrange as soon as
practicable following the Distribution Date for the transportation at Spinco's  
cost to Spinco of existing corporate records in its possession relating to the  
NSU Transferred Assets and the NSU Transferred Liabilities, including original  
corporate minute books, stock ledgers and certificates and corporate seals of   
Spinco and the Spinco Subsidiaries, and all active agreements, active litigation
files and filings with governmental agencies, except to the extent such items   
are already in the possession of Spinco or a Spinco Subsidiary. NSU shall also  
provide to Spinco, unless already in the possession of Spinco or a Spinco       
Subsidiary and only to the extent that NSU maintains them, lists of trademarks, 
patents (design and mechanical) and copyrights included in the Spinco Assets.   
Such records shall be the property of Spinco, but shall be available to NSU for 
review and duplication until NSU shall notify Spinco in writing that such       
records are no longer of use to NSU.                                            

   Section 9.02 Access to Information. From and after the Distribution Date,
NSU shall afford to Spinco and its authorized accountants, counsel and other    
designated representatives reasonable access (including using reasonable efforts
to give access to persons or firms possessing information) and duplicating      
rights during normal business hours to all records, books, contracts,           
instruments, computer data and other data and information (collectively,        
"Information") within NSU's possession relating to Spinco, the NSU Transferred  
Assets or the NSU Transferred Liabilities, insofar as such access is reasonably 
required by Spinco. Information may be requested under this Article IX for,     
without limitation, audit, accounting, claims, litigation and tax purposes, as  
well as for purposes of fulfilling disclosure and reporting obligations and for 
performing this Agreement and the transactions contemplated hereby.             

Section 9.03 Provision of Services. In addition to any services       
contemplated to be provided following the Distribution Date by this Agreement,  
each party, upon written request, shall make available to the other party,      
during normal business hours and in a manner that will not unreasonably         
interfere with such party's business, its financial, tax, accounting, legal,    
employee benefits and similar staff and services (collectively "Services")      
whenever and to the extent that they may be reasonably required in connection   
with the preparation of tax returns, audits, claims, litigation or              
administration of employee benefit plans, and otherwise to assist in effecting  
an orderly transition following the Distribution.                               

Section 9.04 Production of Witnesses. At all times from and after the 
Distribution Date, each of Spinco and NSU shall use reasonable efforts to make  
available to the other upon written request, its and its subsidiaries' officers,
directors, employees and agents as witnesses to the extent that such persons may
reasonably be required in connection with any legal, administrative or other    
proceedings in which the requesting party may from time to time be involved.    

    Section 9.05 Reimbursement. Except to the extent otherwise contemplated by
this Agreement, a party providing Information or Services to the other party    
under this Article IX shall be entitled to receive from the recipient, upon the 
presentation of invoices therefor, payments for such amounts, relating to       
supplies,                                                                       

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disbursements and other out-of-pocket expenses, as may be reasonably incurred in
providing such Information or Services.                                         

    Section 9.06 Retention of Records. Except as otherwise required by law, or
agreed to in writing, each of NSU and Spinco shall retain, and shall cause its  
Subsidiaries to retain, for a period of at least eight years following the      
Distribution Date, all information relating to the other and the other's        
subsidiaries.                                                                   

  Section 9.07 Confidentiality. NSU and Spinco shall hold, and shall cause
their respective officers, employees, agents and consultants and advisors to    
hold, in strict confidence, unless compelled to disclose by judicial or         
administrative process or, in the opinion of its independent legal counsel, by  
other requirements of law, all confidential information concerning the other    
party furnished to it by such other party or its representatives pursuant to    
this Agreement (except to the extent that such information can be shown to have 
been (i) available to such party on a non-confidential basis prior to its       
disclosure by the other party, (ii) in the public domain through no fault of    
such party or (iii) later lawfully acquired from other sources by the party to  
which it was furnished), and each party shall not release or disclose such      
information to any other person, except its auditors, attorneys, financial      
advisors, bankers and other consultants and advisors who shall be bound by the  
provisions of this Section 9.07. Each party shall be deemed to have satisfied   
its obligation to hold confidential information concerning or supplied by the   
other party if it exercises the same care as it takes to preserve               
confidentiality for its own similar information.                                

ARTICLE X 

DISPUTE RESOLUTION

Section 10.01 Mediation and Binding Arbitration. If a dispute arises  
between NSU and Spinco as to the interpretation of this Agreement or any other  
agreement entered into pursuant hereto, including, without limitation, any      
indemnification obligations pursuant to Article V, NSU and Spinco agree to use  
the following procedures, in lieu of either party pursuing other available      
remedies and as the sole remedy, to resolve the dispute.                        

    Section 10.02 Initiation. A party seeking to initiate the procedures shall
give written notice to the other party, describing briefly the nature of the    
dispute. A meeting shall be held between the parties within 10 days of the      
receipt of such notice, attended by individuals with decision-making authority  
regarding the dispute, to attempt in good faith to negotiate a resolution of the
dispute.                                                                        

Section 10.03 Submission to Mediation. If, within 30 days after such  
meeting, the parties have not succeeded in negotiating a resolution of the      
dispute, they agree to submit the dispute to mediation in accordance with the   
Center for Public Resources Model ADR Procedure -- Mediation of Business        
Disputes, as modified herein, and to bear equally the costs of the mediation.   

 Section 10.04 Selection of Mediator. The parties will jointly appoint a
mutually acceptable mediator, seeking assistance in such regard from the Center 
for Public Resources or another mutually agreed-upon organization if they have  
been unable to agree upon such appointment within 20 days from the conclusion of
the negotiation period.                                                         

   Section 10.05 Mediation and Arbitration. The parties agree to participate
in good faith in the mediation and negotiations related thereto for a period of 
30 days following the initial mediation session. If the parties are not         
successful in resolving the dispute through the mediation by the end of such    
30-day period, then the parties agree to submit the matter to binding           
arbitration in accordance with the Center for Public Resources Rules for        
Non-Administered Arbitration of Business Disputes, as modified herein, by a     
panel of three arbitrators, in Minneapolis, Minnesota, selected in accordance   
with the provisions of Section 10.06 hereof. The arbitration shall be governed  
by the Rules of the American Arbitration Association then in effect and as      
modified herein, and judgment upon the award rendered by the arbitrator may be  
entered by any court having jurisdiction thereof. The arbitrators shall not,    
under any circumstances, have any authority to award punitive, exemplary or     
similar damages and may not, in any event, make any ruling, finding or award    
that does not conform to the terms and conditions of this Agreement. Nothing    
contained in this Article X shall limit or                                      

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restrict in any way the right or power of a party at any time to seek injunctive
relief in any court and to litigate the issues relevant to such request for     
injunctive relief before such court (i) to restrain the other party from        
breaching this Agreement or (ii) for specific enforcement of this Article X. The
parties agree that any legal remedy available to a party with respect to a      
breach of this Article X will not be adequate and that, in addition to all other
legal remedies, each party is entitled to an order specifically enforcing this  
Article X.                                                                      

     Section 10.06 Selection of Arbitrators. The parties shall have 10 days from
the end of the mediation period to agree upon mutually acceptable neutral       
persons not affiliated with either of the parties to act as arbitrators. If the 
panel of arbitrators has not been selected within such time, the parties agree  
jointly to request the Center for Public Resources or another mutually          
agreed-upon organization to supply within 10 days a list of potential           
arbitrators with qualifications as specified by the parties in the joint        
request. Within five days of receipt of the list, the parties shall             
independently rank the proposed candidates, shall simultaneously exchange       
rankings, and shall select as the arbitrator the individual receiving the       
highest combined ranking who is available to serve. Neither party nor the       
arbitrators may disclose the existence or results of any arbitration under this 
Agreement or any evidence presented during the course of arbitration without the
prior consent of both parties, except as required to fulfill applicable         
disclosure and reporting requirements, or as otherwise required by law.         

Section 10.07 Cost of Arbitration. Each party shall bear its own costs
incurred in the arbitration. If either party refuses to submit to arbitration   
any dispute required to be submitted to arbitration pursuant to this Article X, 
and instead commences any other proceeding, including litigation, then the party
who seeks enforcement of the obligation to arbitrate shall be entitled to its   
attorneys' fees and costs incurred in any such proceeding.                      

ARTICLE XI

MISCELLANEOUS 

   Section 11.01 Complete Agreement; Construction. This Agreement, including
the Schedules and Exhibits and other agreements and documents referred to       
herein, shall constitute the entire agreement between the parties with respect  
to the subject matter hereof and shall supersede all previous negotiations,     
commitments and writings with respect to the subject matter.                    

   Section 11.02 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this   
Agreement shall survive the Distribution Date.                                  

Section 11.03 Expenses. All costs and expenses arising prior to the   
Distribution Date (whether or not then payable) in connection with the          
preparation, execution, delivery and implementation of this Agreement and with  
the consummation of the transactions contemplated by this Agreement shall be    
paid in accordance with Section 6.2 of the Merger Agreement.                    

Section 11.04 Governing Law. This Agreement shall be governed by and  
construed in accordance with the laws of the State of Minnesota, without regard 
to the principles of conflicts of laws thereof.                                 

     Section 11.05 Notices. All notices and other communications hereunder shall
be in writing and shall be delivered by hand or mailed by registered or         
certified mail (return receipt requested) to the parties at the                 

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following addresses (or at such other addresses for a party as shall be         
specified by like notice) and shall be deemed given on the date on which such   
notice is received:                                                             

To NSU:                                                               

with a copy to:                                                       

To Spinco:                                                            

with a copy to:                                                       

 Section 11.06 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by the parties.                        

Section 11.07 Successors and Assigns. This Agreement and all of the   
provisions hereof shall be binding upon and inure to the benefit of the parties 
and their respective successors and permitted assigns.                          

Section 11.08 Termination. This Agreement may be terminated and the   
Distribution abandoned at any time prior to the Merger Effective Date by and in 
the sole discretion of the NSU Board without the approval of Spinco or NSU's    
shareholders. In the event of such termination, no party shall have any         
liability of any kind to any other party.                                       

  Section 11.09 Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any subsidiary of such party    
which is contemplated to be a subsidiary of such party on and after the         
Distribution Date.                                                              

  Section 11.10 No Third Party Beneficiaries. Except for the provisions of
Article V relating to Indemnified Parties and as specified in Section 2.07, this
Agreement is solely for the benefit of the parties hereto and their respective  
subsidiaries and Affiliates and should not be deemed to confer upon third       
parties any remedy, claim, Liability, reimbursement, claim of action or other   
right in excess of those existing without reference to this Agreement.          

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   Section 11.11 Titles and Headings. Titles and headings to sections herein
are inserted for the convenience of reference only and are not intended to be   
part of or to affect the meaning or interpretation of this Agreement.           

   Section 11.12 Exhibits and Schedules. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent as  
if the same had been set forth verbatim herein.                                 

   Section 11.13 Legal Enforceability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such            
jurisdiction, be ineffective to the extent of such prohibition or               
unenforceability without invalidating the remaining provisions hereof. Any such 
prohibition or unenforceability in any jurisdiction shall not invalidate or     
render unenforceable such provision or remedies otherwise available to any party
hereto. Without prejudice to any rights or remedies otherwise available to any  
party hereto, each party hereto acknowledges that damages would be an inadequate
remedy for any breach of the provisions of this Agreement and agrees that the   
obligations of the parties hereunder shall be specifically enforceable.         

   IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written                                            

                              NORTH STAR UNIVERSAL, INC.

      By
                                          --------------------------------------

        Name

                                              ----------------------------------

       Its

                                            ------------------------------------

                             NEW HOLDING COMPANY, INC.

      By
                                          --------------------------------------

        Name

                                              ----------------------------------

       Its

                                            ------------------------------------

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                                                                       EXHIBIT D

AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
NORTH STAR UNIVERSAL, INC.

     We, the undersigned, respectively the President and Secretary of North Star
Universal, Inc., a corporation subject to the provisions of Minnesota Statutes  
Chapter 302A., known as the Minnesota Business Corporation Act, do hereby       
certify that at a meeting of the shareholders of said corporation duly called   
and held at                               , at      p.m. on           , 1996,   
pursuant to notice mailed to all shareholders entitled to vote thereon, the     
following Amended and Restated Articles of Incorporation were adopted by a      
majority vote of all of the shares of stock present at such meeting and entitled
to vote to supersede and take the place of the existing articles of             
incorporation and all amendments and restatements thereto, to wit:              

ARTICLE I.

NAME

The name of this corporation shall be Michael Foods, Inc.             

ARTICLE II. 

PURPOSE 

This corporation shall have general business purposes.                

ARTICLE III.

REGISTERED OFFICE 

   The registered office of this corporation shall be 324 Park National Bank
Building, 5353 Wayzata Boulevard, Minneapolis, Minnesota, 55416, County of      
Hennepin.                                                                       

ARTICLE IV. 

CAPITAL STOCK 

This corporation shall have authorized capital stock consisting of    
50,000,000 shares, which shall be composed of 40,000,000 shares of common stock 
having a par value of $.01 per share and 10,000,000 undesignated shares. Each   
share of common stock shall be entitled to one vote on all matters presented to 
the shareholders for a vote.                                                    

 The Board of Directors may, from time to time, establish by resolution,
different classes or series of shares and may fix the rights and preferences of 
said shares in any class or series. The Board of Directors shall have the       
authority to issue shares of a class or series, shares of which may then be     
outstanding to holders of shares of another class or to effectuate share        
dividends, splits, or conversions of its outstanding shares.                    

ARTICLE V.

CERTAIN SHAREHOLDER RIGHTS

    Shareholders shall have no preemptive rights to purchase, subscribe for or
otherwise acquire any new or additional securities of the corporation. No       
shareholder shall be entitled to cumulative voting rights.                      

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ARTICLE VI. 

DIRECTORS 

1. The business of this corporation shall be managed by or under the  
direction of a board of directors consisting of not less than three (3)         
directors. Directors need not be shareholders of the corporation. The Board of  
Directors in its discretion may elect honorary directors who shall serve without
voting power.                                                                   

  2. Directors shall be elected for a term of one (1) year and until their
successors are elected and qualified. If any vacancy occurs in the board of     
directors, the remaining directors, by the affirmative vote of a majority       
thereof, shall elect a director or directors to fill the vacancy until the next 
regular meeting of the shareholders.                                            

   3. The directors shall have all of the powers conferred upon directors by
the Minnesota Business Corporation Act.                                         

     4. An action required or permitted to be taken by the board of directors of
this corporation may be taken by written action signed by the number of         
directors that would be required to take the same action at a meeting of the    
board at which all directors are present except as to those matters which       
require shareholder approval, in which case the written action must be signed by
all members of the board of directors.                                          

    5. To the full extent permitted by the Minnesota Business Corporation Act,
as it exists on the date hereof or may hereafter be amended, a director of this 
corporation shall not be liable to the corporation or its shareholders for      
monetary damages for breach of fiduciary duty as a director. No amendment to or 
repeal of this section shall apply to or have any effect on the liability or    
alleged liability of any director of the corporation for or with respect to acts
or omissions of such director occurring prior to such amendment or repeal.      

ARTICLE VII.

INDEMNIFICATION 

The corporation shall indemnify any person 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    
(including an action by or in the right of the corporation) to the full extent  
permitted by the Minnesota Business Corporation Act.                            

ARTICLE VIII. 

   The private property of the shareholders of this corporation shall not be
subject to the payment of corporate debts to any extent whatsoever.             

IN TESTIMONY WHEREOF, we have hereunto set our hands this      day of 
, 1996.                                                     

                                          --------------------------------------
                      GREGG A. OSTRANDER
             President

                                          --------------------------------------
                      JEFFREY M. SHAPIRO
             Secretary

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STATE OF MINNESOTA }                                                            
ss.                                 
COUNTY OF HENNEPIN }                                                            

The foregoing instrument was acknowledged before me this      day of  
       , 1996, by Gregg A. Ostrander and Jeffrey M. Shapiro, President and
Secretary respectively of North Star Universal, Inc., a Minnesota corporation,  
on behalf of the Corporation.                                                   

                                          --------------------------------------
                 Notary Public

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                                                                       EXHIBIT E

FORM OF ORDERLY DISPOSITION AND 
REGISTRATION RIGHTS AGREEMENT 

ORDERLY DISPOSITION AND REGISTRATION RIGHTS AGREEMENT 

  This Agreement made and entered into this      day of December, 1995, by
and between NORTH STAR UNIVERSAL, INC., a Minnesota corporation, which, upon the
effective date of the Merger defined in the first recital hereof, will be the   
parent corporation to the surviving corporation resulting from the merger of    
Merger Sub and Michael as described in the first recital hereof ("Michael       
Minnesota)", and 4J2R1C, a Minnesota limited partnership, 3J2R, a Minnesota     
limited partnership, JAMES H. MICHAEL and JEFFREY J. MICHAEL (such individuals  
and partnerships, together with any immediate family members of such individuals
or any corporation, partnership of trust in which such individuals or their     
immediate family members are the sole shareholders, partners or beneficiaries   
thereof, to be hereinafter collectively referred to as the "Michael             
Shareholders").                                                                 

WITNESSETH:                                                           

WHEREAS, Michael Minnesota is a party to an Agreement and Plan of     
Reorganization dated December   , 1995 (the "Merger Agreement") providing for   
the merger (the "Merger") of NSU Merger Co. ("Merger Sub"), a newly formed      
Delaware corporation and wholly-owned subsidiary of Michael Minnesota, with and 
into Michael Foods, Inc., a Delaware corporation ("Michael"), as the surviving  
corporation; and                                                                

WHEREAS, under Section 6.16 of the Merger Agreement, Michael Minnesota
agreed to execute and deliver and to cause the Michael Shareholders to execute  
and deliver this Orderly Disposition and Registration Rights Agreement.         

NOW THEREFORE, IN CONSIDERATION of the premises and of the terms and  
conditions hereinafter set forth, the parties agree as follows:                 

   1. Definitions. Unless the context otherwise requires or unless otherwise
defined in this agreement, capitalized terms shall have the meanings ascribed to
them in the Merger Agreement. Any references to Michael Minnesota shall include 
North Star Universal, Inc. and Michael Minnesota from and after the consummation
of the Merger and the change of its name to Michael Foods, Inc.                 

  2. Actions Pending Effective Time. From the date of this Agreement until
the Effective Time, the Michael Shareholders, individually and collectively,    
shall:                                                                          

     a. not sell or offer to sell, hypothecate or transfer any shares of Michael
Minnesota common stock, except that this limitation shall not apply to sales of 
Michael Minnesota common stock made pursuant to Rule 144 of the Securities and  
Exchange Commission (the "SEC"), or the pledge of Michael Minnesota common stock
to secure surety bonds for Michael-Curry Companies, Inc. or transfers of Michael
Minnesota common stock among Michael Shareholders;                              

  b. vote in favor of the Merger, the Spinoff, the Reverse Stock Split and
the election of directors nominated by Michael Minnesota management at any      
meeting of shareholders duly called and held for such purposes; and             

c. prepare and file any pre-merger notification to the Federal Trade  
Commission required in connection with the Merger under the Hart-Scott-Rodino   
Antitrust Improvements Act of 1976 and the rules of the Federal Trade Commission
thereunder.                                                                     

   3. Restrictions Upon Disposition. For a period of twenty-four (24) months
following the Effective Date, the Michael Shareholders, individually or         
collectively, shall not:                                                        

a. sell or offer to sell shares of common stock of Michael Minnesota  
exceeding five percent (5%) of the then outstanding shares of common stock of   
Michael Minnesota to any person or group in any single                          

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transaction or series of transactions without providing to Michael Minnesota the
first right to buy such shares as provided in Section 5 below;                  

     b. sell or offer to sell any shares of common stock of Michael Minnesota to
any person or group which owns five percent (5%) or more of the outstanding     
common stock of Michael Minnesota without providing to Michael Minnesota the    
first right to buy such shares as provided in Section 5 below; or               

   c. pledge, hypothecate, or encumber any shares of Michael Minnesota owned
by any of the Michael Shareholders except to secure surety bonds obtained by    
Michael-Curry Companies, Inc.                                                   

For purposes of this agreement, the term "group" shall mean any two or more     
persons who agree to act together for the purpose of acquiring, holding, voting 
or disposing of common stock of Michael Minnesota.                              

     4. Shares Covered. This agreement shall apply to all shares of common stock
of Michael Minnesota which are owned by the Michael Shareholders at the date of 
this agreement or which are acquired by the Michael Shareholders prior to the   
Effective Date or as a result of the Merger, but shall not apply to any shares  
of common stock of Michael Minnesota which are purchased or otherwise acquired  
by any of the Michael Shareholders subsequent to the Effective Date unless such 
shares were subject to this agreement at the time they were so acquired by a    
Michael Shareholder.                                                            

   5. Option to Purchase. Upon the occurrence of any of the events described
in Section 3(a) or (b), the Michael Shareholders or Shareholder proposing to    
sell or offer shares of common stock of Michael Minnesota shall provide written 
notice thereof to Michael Minnesota and shall offer to Michael Minnesota the    
right to purchase such shares. The notice shall state the number of shares      
offered and the price per share and any other conditions of the proposed sale or
offer and shall include a copy of any written document setting forth the terms  
of the proposed sale or offer between the Michael Shareholders and the purchaser
or offeree. Michael Minnesota shall have twenty (20) days from its receipt of   
such notice within which to purchase the shares so offered. In the event Michael
Minnesota does not complete the purchase within such twenty (20) day period, the
Michael Shareholders or Shareholder sending the notice shall be permitted for a 
period of thirty (30) days thereafter to sell Michael Minnesota shares equal in 
number to the shares offered in such notice free of any restrictions of this    
agreement at a price no less than the purchase price per share set forth in such
notice and under terms and conditions no more favorable to the purchaser than   
the terms and conditions offered to Michael Minnesota in such notice.           

    6. Tender Offer. The restrictions set forth in Section 3 and the option to
purchase granted to Michael Minnesota in Section 5 shall not apply if a tender  
offer is made for all or substantially all of the outstanding Michael Minnesota 
common stock and the management of Michael Minnesota does not, within seven (7) 
days of the commencement of such tender offer, announce its opposition to the   
tender offer. Notwithstanding the foregoing, the following additional terms and 
conditions shall apply in the event of a tender offer:                          

  a. In the event that one or more of the Michael Shareholders has offered
shares to Michael Minnesota pursuant to Section 5 hereof and, prior to          
acceptance of such offer by Michael Minnesota, a tender offer is made for all or
substantially all of the outstanding Michael Minnesota common stock, Michael    
Minnesota shall, within twenty (20) days of the date such Michael Shareholder(s)
have made such offer, have the right to acquire the shares offered by such      
Michael Shareholder(s) at the higher of the price offered by the Michael        
Shareholder(s) or the tender offer price, regardless of whether Michael         
Minnesota's management has announced it opposition to such tender offer.        

  b. In the event that one or more of the Michael Shareholders has offered
shares to Michael Minnesota pursuant to Section 5 hereof and, following         
acceptance of such offer by Michael Minnesota but prior to the closing of such  
transaction, either a tender offer is made for all or substantially all of the  
outstanding Michael Minnesota common stock or the management of Michael         
Minnesota rescinds an earlier opposition to such a tender offer, Michael        
Minnesota shall have the option of (a) rescinding its agreement to purchase the 
shares from such Michael Shareholder(s) within two (2) days of the commencement 
of such tender offer or its announcement of its rescindment of its opposition to
the tender offer; or (b) acquiring such shares at the higher of the price       
offered by such Michael Shareholder(s) at the tender offer price.               

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    7. Legend. Each of the Michael Shareholders shall forthwith deliver to the
secretary of Michael Minnesota all certificates representing shares of common   
stock of Michael Minnesota which are subject to this agreement for the purpose  
of placing thereon the following legend:                                        

"The shares represented by this certificate are subject to certain    
restrictions on the transfer, sale or other disposition of the shares 
  pursuant to an agreement dated             , 1995 between the issuer and
the registered owner hereof, a copy of which may be obtained from the 
secretary of the corporation."                                        

The secretary shall promptly return the legended certificates to the Michael    
Shareholders.                                                                   

8. Directors. For a period of twenty-four (24) months following the   
Effective Date, the Board of Directors of Michael Minnesota shall include       
representatives of the Michael Shareholders as provided below. The first board  
of directors of Michael Minnesota at the Effective Date shall include Jeffrey J.
Michael and Miles E. Efron or other substitute nominees of the Michael          
Shareholders if either of them are unable or unwilling to serve as              
representatives of the Michael Shareholders. Within thirty (30) days following  
the end of each calendar year after the Effective Date and within the           
twenty-four (24) months following the Effective Date, the Michael Shareholders  
shall give notice to Michael Minnesota of their nominee or nominees for Board of
Directors. If the Michael Shareholders collectively own 10% or more of the      
outstanding common stock of Michael Minnesota, they shall be entitled to        
nominate two (2) directors. If the Michael Shareholders own less than 10% of the
outstanding common stock of Michael Minnesota, they shall be entitled to        
nominate one (1) director. Notice hereunder shall be given by Jeffrey J.        
Michael, as representative of all the Michael Shareholders.                     

9. Registration Rights.                                               

a. Piggyback Rights. If at any time within twenty-four (24) months    
following the Effective Date, Michael Minnesota proposes to register common     
stock under the Securities Act of 1933, as amended (the "Securities Act") in    
connection with a public offering of common stock for its own account solely for
cash (other than a registration on form S-4 or S-8 or any successor form        
thereof) in a manner that would permit registration of all or a portion of the  
Michael Minnesota common stock owned by the Michael Shareholders, it will give  
prompt notice thereof to the Michael Shareholders. Upon written notice of any   
Michael Shareholders to Michael Minnesota received within fifteen (15) days     
after delivery of notice of the proposed offering by Michael Minnesota, Michael 
Minnesota will use its best efforts to effect the registration of the Michael   
Minnesota shares covered by such notice under the Securities Act; provided,     
however, that Michael Minnesota shall have the right to abandon the registration
in its entirety at any time and shall not be required to register shares of the 
Michael Shareholders if the underwriters in any underwritten offering reasonably
object to the inclusion of such shares in the registration, and provided        
further, that in any underwritten offering, the Michael Shareholders            
participating in the registration agree to sell their shares to the underwriters
on the same terms and conditions as apply to Michael Minnesota, with such       
differences as customarily apply in combined primary and secondary offerings.   

     b. Requested Registration. If, at any time commencing on the Effective Date
and continuing for a period of twenty-four (24) months thereafter, Michael      
Minnesota shall receive a written request from one or more Michael Shareholders 
that Michael Minnesota effect the registration under the Securities Act of all  
or a part of such Michael Shareholder's(') shares of Michael Minnesota common   
stock constituting in the aggregate at least 500,000 shares (such number of     
shares to be adjusted to reflect any stock split, stock dividend or other       
combination or reclassification of Michael Minnesota's capital stock after the  
Effective Date) and requesting that such shares be sold in a registered public  
offering in accordance with this Section 9, then Michael Minnesota will, within 
ten (10) days after receipt thereof, give notice to all other Michael           
Shareholders of the receipt of such request and each such holder may elect by   
written notice received by Michael Minnesota within ten (10) days from the date 
of the notice by Michael Foods to have all or part of his shares of Michael     
Minnesota common stock included in such registration; provided, however, that   
the Michael Shareholders collectively shall only have the right to cause Michael
Minnesota to effect a registration pursuant to this section on two occasions    
during such twenty-four (24) month period. Upon receipt of such notice, Michael 
Minnesota will, as soon as practicable, use reasonable efforts to effect the    
registration under the Securities Act of all registrable securities which it has
been so requested to register and provided further, that Michael                

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Minnesota: (i) shall not be obligated to cause any special audit to be          
undertaken in connection with any such registration; (ii) shall be entitled to  
postpone for a reasonable period of time, but not in excess of one hundred      
twenty (120) days, the filing of any registration statement otherwise required  
to be prepared pursuant to this section if Michael Minnesota is, at such time,  
conducting or about to conduct an underwritten public offering of equity        
securities (or securities convertible into equity securities) and is advised in 
writing by its managing underwriter that such offer would, in its opinion, be   
adversely effected by the registration so requested; and (iii) shall be entitled
to postpone such requested registration for up to 120 days if Michael Minnesota 
determines, in view of the advisability of deferring public disclosure of       
material corporate developments or other information, that such registration and
the disclosure required to be made pursuant thereto would not be in the best    
interest of Michael Minnesota at such time.                                     

c. Form of Requested Registration. All registrations proposed to be   
effected under this Section shall be made on Form S-3 unless the registration   
shall be in connection with underwritten public offering and the managing       
underwriter shall advise Michael Minnesota in writing that, in its opinion, the 
use of another form of registration statement is of material importance to the  
success of such proposed offering. In such case, the registration shall be      
effected on such other form. During the term of this agreement, Michael         
Minnesota shall take all such reasonable actions as may be necessary to maintain
its eligibility to use such form(s).                                            

     d. Expenses. In connection with any registration statement pursuant to this
section and whether or not the sale of the shares is consummated, each selling  
Michael Shareholder will pay: (i) a pro rata portion of the aggregate           
registration expenses and other expenses incurred by Michael Minnesota in       
connection with the registration of the sale of the shares and the sale of the  
shares offered based on the number of such Michael Shareholder's(') registrable 
securities included in the registration statement at the time the registration  
statement is filed with the SEC relative to the total number of securities      
covered by such registration statement at such time, (ii) a pro rata portion    
(based on the number of such Michael Shareholder's registrable securities       
included in the registration statement at the time the registration statement is
filed with the SEC relative to the total number of securities covered by such   
registration statement at such time) of the aggregate fees and disbursements of 
underwriters customarily paid by issuers or sellers of securities, including    
liability insurance if Michael Minnesota so desires or if the underwriters so   
require, and the reasonable fees and expenses of any special experts retained in
connection with the requested registration; (iii) the fees and disbursements of 
counsel to Michael Shareholder(s); and (iv) all underwriting discounts and      
commissions and transfer taxes, if any, applicable to shares of registrable     
securities to be sold on behalf of Michael Shareholder(s). All such amounts     
shall be due and payable at the request of Michael Minnesota at the closing of  
any underwritten offering, the effective date of the registration statement in  
the case of a non-underwritten offering or upon abandonment of the registration.

   e. Completion. A registration requested pursuant to this section will not
be deemed to have been effected unless it has become effective under the        
Securities Act, provided that, if within 180 days after it has become effective 
the offering of registrable securities pursuant to such registration is         
interfered with by any stop order, injunction or other order or requirement of  
the SEC or other governmental agency or court, such registration will be deemed 
not to have been effected.                                                      

f. Selection of Underwriter and Investment Manager. If a requested    
registration pursuant to this section involves an underwritten offering, Michael
Minnesota shall have the exclusive right to select an investment banker or      
bankers and managers to administer the offering. The offer or sale of Michael   
Minnesota shares to an underwriter in a registered public offering shall not    
constitute a sale or offer to sell the shares for purposes of Section 3(a) or   
3(b).                                                                           

   g. Registration. If and whenever Michael Minnesota is required to use its
reasonable efforts to cause the registration of any registrable securities under
the Securities Act as provided in this agreement, Michael Minnesota will, as    
expeditiously as reasonably possible: (i) prepare and file with the SEC a       
registration statement with respect to such registrable securities and use its  
best efforts to cause such registration statement to become effective and, upon 
the request of the holders of a majority of the registrable securities          
registered by the Michael Shareholder(s) hereunder, keep such registration      
statement effective for one hundred eighty (180) days; (ii) prepare and file    
with the SEC such amendments and supplements to such                            

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registration statement and the prospectus used in connection therewith as may be
necessary to comply with the provisions of the Securities Act with respect to   
the disposition of all securities covered by such registration statement; (iii) 
furnish to each Michael Shareholder seeking registration hereunder such number  
of copies of the prospectus included in such registration statement (including  
each preliminary prospectus and summary prospectus), and such other documents as
each such Michael Shareholder may reasonably request in order to facilitate the 
disposition of the registrable securities by such seller but only while it shall
be required under the provisions hereof to cause the registration statement to  
remain current; (iv) use its reasonable efforts to register or qualify such     
registrable securities covered by such registration statement under such other  
securities or blue sky laws of such jurisdictions as the sellers shall          
reasonably request, except that Michael Minnesota shall not, for any purpose, be
required to qualify generally to do business as a foreign corporation in any    
jurisdiction where, but for the requirements of this clause, it would not be    
obligated to be so qualified, to subject itself to taxation in any such         
jurisdiction, or consent to general service of process in any such jurisdiction;
(v) use its reasonable efforts to list the securities being registered on the   
National Association of Securities Dealers, Inc. National Market System         
("NASDAQ-NMS"), if such registrable securities are not already so listed.       

h. Information. Michael Minnesota may require each selling Michael    
Shareholder to furnish it with such information regarding such selling Michael  
Shareholder and pertinent to the disclosure requirements relating to the        
registration and the distribution of such securities as Michael Minnesota may   
from time to time reasonably request in writing.                                

   i. Underwriting Agreement. The selling Michael Shareholders shall execute
and deliver an underwriting agreement in customary form in connection with any  
underwritten offering made pursuant to a registration hereunder.                

     10. Indemnification and Contribution. As a condition to the registration of
registrable securities of the Michael Shareholders pursuant to this agreement,  
Michael Minnesota may require the selling Michael Shareholders to enter into an 
Indemnification and Contribution Agreement with respect to claims or liabilities
arising under the Securities Act or the Securities Exchange Act of 1934 as a    
result of the representations and warranties made by the selling Michael        
Shareholder(s) in connection with their offer or sale of the registrable        
securities. Such agreement shall be in customary form and shall contain mutual  
cross indemnity and contribution provisions.                                    

11. General Provisions.                                               

   a. Governing Law. This agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Minnesota without giving   
effect to any conflicts of law provisions.                                      

b. Remedies. Michael Minnesota, on the one hand, and the Michael      
Shareholders, on the other, acknowledges and agrees that the other would not    
have an adequate remedy at law for money damages in the event that any of the   
covenants or agreements in this agreement of such party were not performed in   
accordance with its terms, and it is therefore agreed that in addition to and   
without limiting any other remedy or right such party may have, any party will  
have the right to an injunction or other equitable relief (including specific   
performance) in any court of competent jurisdiction, enjoining any such breach  
and enforcing specifically the terms and provisions hereof. All rights, powers  
and remedies provided under this agreement or otherwise available in respect    
hereof at law or in equity shall be cumulative and not alternative.             
Notwithstanding the foregoing, Michael Minnesota hereby acknowledges and agrees 
that, from the date hereof until and including the Effective Date, it shall not 
be entitled hereunder to any claim for money damages against the Michael        
Shareholder, it being the intention of the parties hereto that any claim for    
damages arising out of a failure of the Merger to become effective shall be     
limited to the damages specified in Section 8.2(a) of the Merger Agreement,     
which such damages shall be payable by North Star Universal, Inc., a Minnesota  
corporation which is a constituent party to the proposed Merger.                

c. Notices. All notices, demands, requests, certificates or other     
communications under this Agreement and all legal processes in regard hereto    
shall be in writing and shall be decreed to be validly given, made or served    
when delivered personally or deposited in the U.S. mail, postage prepaid, for   
delivery by express,                                                            

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registered or certified mail, or delivered to a recognized overnight courier    
service guaranteeing next Business Day delivery, addressed as follows:          

If to North Star Universal, Inc.:  Michael Foods, Inc.                
                      5353 Wayzata Boulevard
                               324 Park National Bank Building
                            Minneapolis, Minnesota 55416
                    Attention: President

If to the Michael Shareholders:    Jeffrey J. Michael                 
                     5745 Seven Oaks Court
                           Minnetonka, Minnesota 55345

  d. Severability. If any term, provision, covenant or restriction of this
agreement is held by a court of competent jurisdiction to be invalid, void, or  
unenforceable, the remainder of the terms, provisions, covenants and            
restrictions shall remain in full force and effect and shall in no way be       
affected, impaired or invalidated. The parties agree that they will use their   
best efforts at all times to support and defend this agreement.                 

e. Amendments. This agreement may be amended only by an agreement in  
writing signed by all of the parties hereto.                                    

    f. Descriptive Headings. Descriptive headings are for convenience only and
shall not control or affect the meaning or construction of any provision of this
agreement.                                                                      

g. Counterparts. This agreement shall become binding when one or more 
counterparts hereof, individually or taken together, bears the signatures of    
each of the parties hereto. This agreement may be executed in any number of     
counterparts, each of which shall be an original as against the party whose     
signature appears thereon, or on whose behalf such counterpart is executed, but 
all of which when taken together shall be one and the same statement.           

   h. Successors and Assigns. This agreement shall be binding upon and inure
to the benefit of and be enforceable by the successors and assigns of the       
parties hereto, provided that a Michael Shareholder may not assign any of his   
rights or obligations hereunder to any person without the prior written consent 
of Michael Minnesota. Notwithstanding the foregoing, the consent of Michael     
Minnesota shall not be required in connection with the assignment of this       
agreement to the estate of a Michael Shareholder.                               

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   IN WITNESS WHEREOF, the parties hereto intending to be legally bound have
duly executed this agreement, all as of the day and year first above written.   

                              NORTH STAR UNIVERSAL, INC.

                              By: /s/ JEFFREY J. MICHAEL

                                          --------------------------------------

                                              Its: President and Chief Executive
           Officer

                                          --------------------------------------

                                 4J2R1C, A LIMITED PARTNERSHIP

                              By: /s/ JEFFREY J. MICHAEL

                                            ------------------------------------

                         A General Partner

                               3J2R, A LIMITED PARTNERSHIP

                              By: /s/ JEFFREY J. MICHAEL

                                            ------------------------------------

                         A General Partner

                        /s/ JAMES H. MICHAEL

                                          --------------------------------------
                    JAMES H. MICHAEL

                          /s/ JEFFREY J. MICHAEL

                                          --------------------------------------
                      JEFFREY J. MICHAEL

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APPENDIX II 

OPINION OF PIPER JAFFRAY INC. 

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[PIPER JAFFRAY LETTERHEAD]

, 1996                                              

Board of Directors                                                              
Michael Foods, Inc.                                                             
324 Park National Bank Building                                                 
5353 Wayzata Boulevard                                                          
Minneapolis, MN 55416                                                           

Members of the Board:                                                           

     This letter relates to the proposed merger of Michael Foods, Inc. ("Michael
Foods") and a newly formed merger subsidiary ("Merger Sub") of North Star       
Universal, Inc. ("NSU") (the "Merger") pursuant to the Agreement and Plan of    
Reorganization by and between Michael Foods, NSU and Merger Sub (the            
"Agreement"). Prior to the Merger, NSU will transfer to a subsidiary ("Spinco") 
all assets (other than its shares of Michael Foods and other mutually agreed    
assets) and liabilities (other than $25 to $38 million of net debt (the "Debt"))
of NSU and will then spin off the shares of Spinco on a pro rata basis to the   
NSU shareholders before the Merger. In connection with the Merger, NSU          
shareholders will receive their pro rata share of Michael Foods stock owned by  
NSU before the Merger after a portion of those shares are repurchased by Michael
Foods. The amount of shares repurchased will be equal to the amount of Debt     
assumed by Michael Foods in the Merger divided by the product of the Discount   
Factor (as defined in the Agreement) times the average price of Michael Foods   
common stock during the twenty trading days ending the third trading day        
immediately preceding the effective date of the Merger. It is our understanding,
and for purposes of this opinion we have assumed, that the Debt shall not be    
less than $25,000,000 nor more than $38,000,000 and that NSU will have no       
liabilities following the Merger other than liabilities assumed from Michael    
Foods, the NSU Retained Liabilities (as defined in the Agreement) and           
liabilities which are fully indemnified against by Spinco. In connection with   
the Merger, all shares of Michael Foods common stock held by shareholders other 
than NSU will be exchanged for NSU common stock. You have requested our opinion 
as to the fairness to Michael Foods, from a financial point of view, of the     
effective price per share that Michael Foods is paying NSU in the form of Debt  
assumed (the "Consideration") for the shares of Michael Foods common stock that 
it is repurchasing from NSU, and the exchange of Michael Foods common stock for 
NSU common stock.                                                               

     Piper Jaffray Inc. ("Piper Jaffray"), as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, underwritings and secondary        
distributions of securities, private placements, and valuations for estate,     
corporate and other purposes. Piper Jaffray makes a market in the Common Stock  
of Michael Foods and also provides research coverage for Michael Foods. We acted
as comanager of public offerings of Michael Foods common stock in 1987, 1988 and
1991 and an offering of senior notes in 1989. For our services in rendering this
opinion, Michael Foods will pay us a fee and indemnify us against certain       
liabilities. The fee is not contingent upon the consummation of the Merger.     

   In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among 
other things, we have:                                                          

       1. Reviewed the Agreement and Plan of Reorganization by and between
Michael Foods, NSU and Merger Sub dated December 21, 1995.            

     2. Reviewed the annual reports, Form 10-K's and audited financial
   statements for Michael Foods for the three years ended December 31, 1994.

        3. Reviewed the Form 10-Q's for Michael Foods for the quarters ended
March 31, June 30 and September 30, 1995.                             

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     4. Reviewed the annual reports, Form 10-K's and audited financial
statements for NSU for the three years ended December 31, 1994.       

    5. Reviewed the Form 10-Q's for NSU for the quarters ended March 31,
June 30 and September 30, 1995.                                       

       6. Reviewed two-year financial forecasts for Michael Foods furnished by
Michael Foods management.                                             

         7. Conducted discussions with members of senior management of Michael
     Foods, including the President and Chief Executive Officer, Chief Financial
Officer and Executive Vice President and Assistant Treasurer. Topics  
   discussed included, but were not limited to, the background and rationale
  for the proposed Merger, the financial condition, operating performance,
balance sheet characteristics and prospects of Michael Foods business 
  independently and the financial and operating prospects for the combined
company after consummation of the proposed Merger.                    

      8. Conducted discussions with members of senior management of NSU,
    including the Chief Financial Officer. Topics discussed included, but were
  not limited to, the background and rationale of the proposed Merger, the
financial condition, operating performance, and the balance sheet     
 characteristics of NSU and the prospects for the combined company after
consummation of the proposed Merger.                                  

        9. Reviewed the historical prices and trading activity for Michael Foods
common stock and NSU common stock.                                    

          10. Reviewed the financial terms, to the extent publicly available, of
certain comparable transactions which we deemed relevant.             

        11. Considered the proforma effect of the proposed Merger on Michael
     Foods earnings per share for the two fiscal years ending December 31, 1997.

       12. Compared certain financial and securities data of Michael Foods
   with certain financial and securities data of companies deemed similar to
 Michael Foods or representative of the business sector in which Michael
Foods operates.                                                       

         13. Reviewed such other financial data, performed such other analyses
and considered such other information as we deemed necessary and      
appropriate under the circumstances.                                  

We have relied upon and assumed the accuracy and completeness of the  
financial statements and other information provided by Michael Foods, NSU or    
otherwise made available to us and have not attempted independently to verify   
such information. We have further relied upon the assurances of Michael Foods'  
management that the information provided pertaining to Michael Foods has been   
prepared on a reasonable basis and, with respect to financial planning data,    
reflects the best currently available estimates and that they are not aware of  
any information or facts that would make the information provided to us         
incomplete or misleading. In that regard, we have assumed with your consent that
any projections or forecasts, reflect best currently available estimates and    
judgments of the Michael Foods management, and that such projections and        
forecasts will be realized in the amounts and in the time periods currently     
estimated by the management of Michael Foods. For the purpose of this opinion,  
we have assumed that neither Michael Foods nor NSU is a party to any pending    
transaction, including external financing, recapitalizations, acquisitions or   
merger discussions, other than the Merger or in the ordinary course of business.
We have also assumed, with your consent, that the Merger will qualify as a      
tax-free exchange.                                                              

In arriving at our opinion, we have not performed any appraisals or   
valuations of specific assets of Michael Foods or NSU and express no opinion    
regarding the liquidation value of Michael Foods or NSU. Our opinion is         
necessarily based upon information available to us, facts and circumstances and 
economic, market and other conditions as they exist and are subject to          
evaluation on the date hereof; events occurring after the date hereof could     
materially affect the assumptions used in preparing this opinion. We have not   
undertaken to reaffirm or revise this opinion or otherwise comment upon any     
events occurring after the date hereof. We                                      

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express no opinion herein as to the prices at which shares of Michael Foods     
common stock may trade at any future time.                                      

    This opinion is for the benefit of the Board of Directors of Michael Foods
and shall not be published or otherwise used, nor shall any public references to
Piper Jaffray be made without our written consent, except for inclusion in the  
full proxy/prospectus to be sent to all stockholders of Michael Foods and NSU   
and in any filings or disclosures required by law. This opinion is not intended 
to be and does not constitute a recommendation to any stockholder as to how such
stockholder should vote with respect to the Merger. In connection with this     
opinion, we were not requested to opine as to, and this opinion does not        
address, the merits of the basic business decision to proceed with or effect the
Merger.                                                                         

   Based upon and subject to the foregoing and based upon such other factors
as we consider relevant, it is our opinion that the Consideration for the       
repurchase of the Michael Foods common stock and the exchange of Michael Foods  
common stock for NSU common stock is fair, from a financial point of view, to   
Michael Foods.                                                                  

Sincerely,                                                                      

PIPER JAFFRAY INC.                                                              

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APPENDIX III

OPINION OF
GOLDSMITH, AGIO, HELMS SECURITIES INC.

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[GOLDSMITH, AGIO, HELMS SECURITIES, INC. LETTERHEAD]

                                                                          , 1996

PERSONAL AND CONFIDENTIAL                                                       

Board of Directors                                                              
NORTH STAR UNIVERSAL, INC.                                                      
5353 Wayzata Boulevard -- Suite 610                                             
Minneapolis, MN 55416-1370                                                      

RE: Fairness Opinion                                                            

Gentlemen:                                                                      

     In connection with the proposed transaction (the "Transaction"), consisting
of the Merger together with the Spin-off as defined below, whereby Michael      
Foods, Inc. ("MFI") will merge (the "Merger") into a newly organized subsidiary 
of North Star Universal, Inc. (the "Company"), immediately before the           
distribution (the "Spin-off") to the Company's shareholders, as constituted     
prior to the merger (the "Current Shareholders"), of all of the outstanding     
shares of second newly organized subsidiary of the Company ("Spinco"), you have 
requested our opinion ("Opinion") as to the fairness, from a financial point of 
view, of the Transaction to the Company's Current Shareholders.                 

  As a customary part of its investment banking business, Goldsmith, Agio,
Helms Securities, Inc. ("GAHS") is engaged in the valuation of businesses and   
securities in connection with mergers and acquisitions, private placements, and 
valuations for estate, corporate, and other purposes. GAHS does not make a      
market for the Company's common stock. GAHS is a party to a separate engagement 
agreement with the Company whereby GAHS is providing advisory services to the   
Company with respect to the Transaction, pursuant to which GAHS contingent on   
consummation of the Transaction. In return for GAHS' services in connection with
providing this Opinion, the Company will pay GAHS a fee of $100,000, twenty-five
percent of which fee is not contingent upon the consummation of the Transaction,
with the balance payable to GAHS upon closing of the Transaction. In addition,  
the Company will indemnify GAHS against certain liabilities.                    

   In arriving at our opinion, we have undertaken such reviews, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among 
other things, we have reviewed the Merger Agreement, the Distribution Agreement,
and financial and other information relating to the Company and MFI. We reviewed
the reported price and trading activity of the common stock of the Company and  
of MFI. We compared certain financial and stock market information with respect 
to the Company and MFI with similar information for certain other companies, the
securities of which are publicly traded. We have made inquiries of the Company's
management as to the Company's financial condition, operating results, business 
outlook, plans and opportunities.                                               

    We have relied upon and assume the accuracy, completeness, and fairness of
the financial statements and other information of the Company, and have not     
attempted independently to verify such information. We have further relied upon 
assurances by the Company that the information provided to us has a reasonable  
basis, and with respect to projections and other business outlook information,  
reflects the best currently available estimates, and that the Company is not    
aware of any information or fact that would make the information provided to us 
incomplete or misleading. Our Opinion is not based on any specific appraisal of 
the liquidation value of the Company, or any of its assets, or of Spinco. We are
not expressing any Opinion as to the prices at which shares of common stock of  
Spinco or the Company or MFI will trade subsequent to the date of the           
Transaction, and we are not expressing any Opinion as to the prices at which    
shares of the Company's or MFI's common stock have traded prior to the date of  
the Transaction. Our Opinion is based upon the information available to us and  
the facts and circumstances as they exist and are subject to evaluation on the  
date hereof; events occurring after the date hereof could materially affect the 
assumptions used in preparing this Opinion. We did not actively solicit         
indications of interest or value from any third parties for the Company or any  
of its assets, and we did not solicit indications of interest or value from any 
third parties for MFI. We                                                       

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were not requested to opine, and do not opine, in any way concerning other      
transactions or agreements entered into in conjunction with the Transaction.    

     Our opinion is rendered to the Board of Directors of the Company and cannot
be relied upon by any other person, nor published or otherwise used or referred 
to publicly, except as provided in our letter of engagement.                    

     Based upon and subject to the foregoing, and based upon such other facts as
we consider relevant, it is our opinion that, as of the date hereof, the        
Transaction is fair to the Company's Current Shareholders from a financial point
of view.                                                                        

          Sincerely,

                                      Goldsmith, Agio, Helms Securities Inc.

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APPENDIX IV 

EXCERPT FROM
THE MINNESOTA BUSINESS CORPORATION ACT
REGARDING DISSENTERS' RIGHTS

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SECTIONS 302A.471 AND 302A.473 OF THE MINNESOTA BUSINESS CORPORATION ACT-       
DISSENTERS' RIGHTS                                                              

302A.471. RIGHTS OF DISSENTING SHAREHOLDERS                                     

    SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares 
in the event of, any of the following corporate actions:                        

    (a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:   

(1) alters or abolishes a preferential right of the shares; 

          (2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;                               

          (3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;                               

          (4) excludes or limits the right of a shareholder to vote on a matter,
or to cumulate votes, except as the right may be excluded or limited  
   through the authorization or issuance of securities of an existing or new
 class or series with similar or different voting rights; except that an
  amendment to the articles of an issuing public corporation that provides
  that section 302A.671 does not apply to a control share acquisition does
not give rise to the right to obtain payment under this section;      

   (b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a          
transaction permitted without shareholder approval in section 302A.661,         
subdivision 1, or a disposition in dissolution described in section 302A.725,   
subdivision 2, or a disposition pursuant to an order of a court, or a           
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with   
their respective interests within one year after the date of disposition;       

    (c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3;          

   (d) A plan of exchange, whether under this chapter or under chapter 322B,
to which the corporation is a party as the corporation whose shares will be     
acquired by the acquiring corporation, if the shares of the shareholder are     
entitled to be voted on the plan; or                                            

  (e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.       

    SUBD. 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the          
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the      
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter     
shall be determined as if the shares as to which the shareholder has dissented  
and the other shares were registered in the names of different shareholders.    

  (b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial      
owner, and shall be treated as a dissenting shareholder under the terms of this 
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the   
shareholder.                                                                    

SUBD. 3. RIGHTS NOT TO APPLY. Unless the articles, the bylaws, or a   
resolution approved by the board otherwise provide, the right to obtain payment 
under this section does not apply to a shareholder of the surviving corporation 
in a merger, if the shares of the shareholder are not entitled to be voted on   
the merger.                                                                     

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   SUBD. 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or 
rescinded, except when the corporate action is fraudulent with regard to the    
complaining shareholder or the corporation.                                     

302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS                           

 SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.                       

     (b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the      
successor by merger of that issuer.                                             

(c) "Fair value of the shares" means the value of the shares of a     
corporation immediately before the effective date of the corporate action       
referred to in section 302A.471, subdivision 1.                                 

     (d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to   
and including the date of payment, calculated at the rate provided in section   
549.09 for interest on verdicts and judgments.                                  

    SUBD. 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted    
upon, the notice of the meeting shall inform each shareholder of the right to   
dissent and shall include a copy of section 302A.471 and this section and a     
brief description of the procedure to be followed under these sections.         

    SUBD. 3. NOTICE OF DISSENT. If the proposed action must be approved by the
shareholders, a shareholder who wishes to exercise dissenters' rights must file 
with the corporation before the vote on the proposed action a written notice of 
intent to demand the fair value of the shares owned by the shareholder and must 
not vote the shares in favor of the proposed action.                            

  SUBD. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES.  (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the  
corporation shall send to all shareholders who have complied with subdivision 3 
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:                                                         

     (1) The address to which a demand for payment and certificates of
     certificated shares must be sent in order to obtain payment and the date by
which they must be received;                                          

       (2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;                       

          (3) A form to be used to certify the date on which the shareholder, or
     the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and              

(4) A copy of section 302A.471 and this section and a brief 
description of the procedures to be followed under these sections.    

(b) In order to receive the fair value of the shares, a dissenting    
shareholder must demand payment and deposit certificated shares or comply with  
any restrictions on transfer of uncertificated shares within 30 days after the  
notice required by paragraph (a) was given, but the dissenter retains all other 
rights of a shareholder until the proposed action takes effect.                 

  SUBD. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever 
is later, the corporation shall remit to each dissenting shareholder who has    
complied with subdivisions 3 and 4 the amount the corporation estimates to be   
the fair value of the shares, plus interest, accompanied by:                    

       (1) The corporation's closing balance sheet and statement of income
    for a fiscal year ending not more than 16 months before the effective date
of the corporate action, together With the latest available interim   
financial statements;                                                 

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          (2) An estimate by the corporation of the fair value of the shares and
a brief description of the method used to reach the estimate; and     

(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding supplemental 
payment.                                                              

    (b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from   
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with     
subdivisions 3 and 4, the corporation shall forward to the dissenter the        
materials described in paragraph (a) a statement of the reason for withholding  
the remittance, and an offer to pay to the dissenter the amount listed in the   
materials if the dissenter agrees to accept that amount in full satisfaction.   
The dissenter may decline the offer and demand payment under subdivision 6.     
Failure to do so entitles the dissenter only to the amount offered. If the      
dissenter makes demand, subdivisions 7 and 8 apply.                             

     (c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated    
shares, it shall return all deposited certificates and cancel all transfer      
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.                       

 SUBD. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares   
plus interest, the dissenter may give written notice to the corporation of the  
dissenter's own estimate of the fair value of the shares, plus interest, within 
30 days after the corporation mails the remittance under subdivision 5, and     
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.                                             

SUBD. 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after    
discussion with the corporation or file in court a petition requesting that the 
court determine the fair value of the shares, plus interest. The petition shall 
be filed in the county in which the registered office of the corporation is     
located, except that a surviving foreign corporation that receives a demand     
relating to the shares of a constituent domestic corporation shall file the     
petition in the county in this state in which the last registered office of the 
constituent corporation was located. The petition shall name as parties all     
dissenters who have demanded payment under subdivision 6 and who have not       
reached agreement with the corporation. The corporation shall, after filing the 
petition, serve all parties with a summons and copy of the petition under the   
rules of 180 civil procedure. Nonresidents of this state may be served by       
registered or certified mail or by publication as provided by law. Except as    
otherwise provided, the rules of civil procedure apply to this proceeding. The  
jurisdiction of the court is plenary and exclusive. The court may appoint       
appraisers, with powers and authorities the court deems proper, to receive      
evidence on and recommend the amount of the fair value of the shares. The court 
shall determine whether the shareholder or shareholders in question have fully  
complied with the requirements of this section, and shall determine the fair    
value of the shares, taking into account any and all factors the court finds    
relevant, computed by any method or combination of methods that the court, in   
its discretion, sees fit to use, whether or not used by the corporation or by a 
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash 
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but    
shall not be liable to the corporation for the amount, if any, by which the     
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair  
value of the shares as determined by the court, plus interest.                  

     SUBD. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs and
expenses of a proceeding under subdivision 7, including the reasonable expenses 
and compensation of any appraisers appointed by the court, and shall assess     
those costs and expenses against the corporation, except that the court may     
assess part or all of those costs and expenses against a dissenter whose action 
in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or
not in good faith.                                                              

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(b) If the court finds that the corporation has failed to comply      
substantially with this section, the court may assess all fees and expenses of  
any experts or attorneys as the court deems equitable. These fees and expenses  
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party     
injured by those actions.                                                       

(c) The court may award, in its discretion, fees and expenses to an   
attorney for the dissenters out of the amount awarded to the dissenters, if any.

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PROXY                      NORTH STAR UNIVERSAL, INC.               EXHIBIT 99.1
5353 WAYZATA BOULEVARD
MINNEAPOLIS, MINNESOTA 55416

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 

  The undersigned hereby appoints Jeffrey J. Michael and Peter E. Flynn, and
each of them, as Proxies, each with the power to appoint his substitute, and    
hereby authorizes them to present and to vote, as designated below, all the     
shares of Common Stock, par value $.25 per share ("NSU Common Stock"), of North 
Star Universal, Inc. ("NSU"), held of record by the undersigned on April 15,    
1996, at the annual meeting of shareholders to be held on June 4, 1996, or any  
adjournment thereof.                                                            

                                                        [Enlarge/Download Table]
                                                                                                                   
1. A proposal to approve an Agreement and Plan of Reorganization dated as of December 21, 1995, (the              
   "Reorganization Agreement") between NSU, Michael Foods, Inc. ("Michael") and NSU Merger Co. ("Merger Co."), and
   the "Merger" (as defined below), pursuant to which (i) Merger Co. will be merged with and into Michael and     
   Michael will become a wholly-owned subsidiary of NSU (the "Merger"), (ii) each stockholder of Michael (other   
   than NSU) will receive, in exchange for each share of Michael Common Stock held by such stockholder, one share 
   of NSU Common Stock, (iii) NSU will change its name to Michael Foods, Inc. (NSU after the consummation of the  
   Merger is referred to hereinafter as "New Michael") and will continue the business previously conducted by     
   Michael, (iv) prior to the consummation of the Merger, NSU will transfer all of its assets and liabilities     
   other than certain indebtedness (not to be in excess of $38 million or less than $25 million) and other agreed 
   upon assets and liabilities to ENStar Inc., another wholly owned subsidiary of NSU ("ENStar"), (v) the         
   outstanding common stock of ENStar will be distributed pro rata to the shareholders of NSU of record as of a   
   record date just prior to the effective date of the Merger (the "Distribution"), (vi) immediately prior to the 
   effective time of the Merger, NSU will effectuate a reverse stock split (the "Reverse Stock Split"), the ratio 
   of the Reverse Stock Split to be determined pursuant to the terms of the Reorganization Agreement:             
                   / / FOR                    / / AGAINST                    / / ABSTAIN                          
2. A proposal to approve the Reverse Stock Split:                                                                 
                   / / FOR                    / / AGAINST                    / / ABSTAIN                          
3. A proposal to approve the Distribution:                                                                        
                   / / FOR                    / / AGAINST                    / / ABSTAIN                          

(continued, and to be dated and signed, on other side)

                                                        [Enlarge/Download Table]
                                                                                                                    
4.  A proposal to approve the amendment to and restatement of the existing Restated Articles of Incorporation of NSU
    in the form attached to the accompanying Proxy Statement/Prospectus as Exhibit D to Appendix I thereto:         
                    / / FOR                    / / AGAINST                    / / ABSTAIN                           
5.  Election of Directors:                                                                                          
    / / FOR all nominees listed below                                      / / WITHHOLD AUTHORITY                   
        (except as marked to the contrary below)                               to vote all nominees listed below    
    Miles E. Efron    Peter E. Flynn   James H. Michael   Fred E. Stout   Richard J. Braun   Jeffrey J. Michael     
    (INSTRUCTION: To withhold authority to vote for any individual nominee write that nominee's name on the space   
    provided below.)                                                                                                
------------------------------------------------------------------------------------------------------------------  
6.  In their discretion the proxies are authorized to vote upon such other business as may properly come before the 
    meeting.                                                                                                        

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN 
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE     
VOTED FOR ALL OF THE PROPOSALS DESCRIBED ABOVE AND FOR ALL OF THE NOMINEES FOR  
ELECTION TO THE BOARD OF DIRECTORS.                                             

                                        PLEASE SIGN EXACTLY AS YOUR NAME
                                            APPEARS HEREON. WHEN SHARES ARE HELD
                                           BY JOINT TENANTS, BOTH SHOULD SIGN.
                                    WHEN SIGNING AS ATTORNEY, AS
                                           EXECUTOR, ADMINISTRATOR, TRUSTEE OR
                                           GUARDIAN, PLEASE GIVE FULL TITLE AS
                                           SUCH. IF A CORPORATION, PLEASE SIGN
                                           IN FULL CORPORATE NAME BY PRESIDENT
                                         OR OTHER AUTHORIZED OFFICER. IF A
                                   PARTNERSHIP, PLEASE SIGN IN
                                      PARTNERSHIP NAME BY AUTHORIZED
               PERSON.

                  SIGNATURE:

                                                      --------------------------

             DATE:

                                                 -------------------------------

                  SIGNATURE:

                                                      --------------------------

             DATE:

                                                 -------------------------------

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED 
ENVELOPE.