According to the Company’s Form 10-Q for the quarterly period ended March 31, 1998, in November, 1997, a comprehensive settlement of a number of shareholder lawsuits filed in 1996 and consolidated into one action in federal court in the Western District of Pennsylvania (Butler v. Northstar, No. 96-701 W.D. Pa) was given final approval by the court. The lawsuit alleged violations of federal securities laws by the Company and certain of its former officers and directors, and an alleged scheme to disseminate false and misleading information regarding the Company. This action was described in the Company's Form 10-K filing for the fiscal year ended December 31, 1996. In December 1997, with no party having appealed the order approving the settlement, the decision became final. The settlement agreement which was approved by the court, created a settlement fund of $6.45 million, of which $5.75 million, less expenses and legal counsel fees, will be paid to those Northstar shareholders who submitted proofs of claim by December 27, 1997, which the court approves as valid claims. The Company contributed $100,000 to the $6.45 million settlement fund; the insurer on the Company's directors and officers' liability policy contributed the $1.0 million limits of coverage of that policy; and the $5.35 million balance in the fund was contributed by other defendants.

As reported in the Company’s Form 10-K for the fiscal year ended December 31, 1996, in April 1996, the first of seven class action lawsuits against Northstar and certain of its former officers and directors was filed in federal court by Northstar shareholders; all of such suits were consolidated into one action (No. 96-1399 W.D. Pa.). The suit alleges violations of federal securities laws by Northstar and its former officers and directors in connection with the defendants' alleged scheme to disseminate false and misleading information regarding the Company, its operations, financial status and related-party transactions and to enrich themselves in the process. Settlement negotiations, which also involve Richard A. Eisner & Co., LLP, Northstar's former independent accountant and auditor, are continuing, and the plaintiffs have claimed damages of approximately $20,000,000.