<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-KSB/A NO. 1
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended January 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ______________
Commission File Number 1-7191
THOR ENERGY RESOURCES, INC.
(Name of small business issuer in its charter)
------------------
DELAWARE 59-1232278
(State or other jurisdiction (IRS employer
of incorporation or organization) identification number)
719 WEST FRONT STREET
P.O. BOX 307
TYLER, TEXAS 75710
(Address, including zip code, of
principal executive offices)
Issuer's telephone number: (903) 533-9111
__________________
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
NONE
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
TITLE OF CLASS
COMMON STOCK,
PAR VALUE $0.01 PER SHARE
__________________
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrants's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $1,567,000.
To the Registrant's knowledge, there has been no trading of, or average bid and
asked prices for, the Registrant's Common Stock since trading of the
Registrant's Common Stock was halted on October 24, 1994. The Registrant's
Common Stock was delisted from
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the American Stock Exchange on December 23, 1994. As of January 31, 1995, the
Registrant had outstanding 6,076,703 shares of its Common Stock.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [x] No [ ]
Transitional Small Business Disclosure Format (check one) Yes [ ] No [x]
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THOR ENERGY RESOURCES, INC.
INDEX TO THE JANUARY 31, 1995 FORM 10-KSB/A AMENDMENT NO. 1
<TABLE>
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PAGE
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<S> <C>
PART I
Item 1. Description of Business 1
Item 2. Description of Property 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for Common Equity and Related
Stockholder Matters 5
Item 6. Management's Discussion and Analysis
or Plan of Operation 5
Item 7. Financial Statements 5
Item 8. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure 5
PART III
Item 9. Directors, Executive Officers, Promoters
and Control Persons; Compliance with Section 16(a) of the
Exchange Act 6
Item 10. Executive Compensation 7
Item 11. Security Ownership of Certain Beneficial Owners and Management 10
Item 12. Certain Relationships and Related Transactions 11
Item 13. Exhibits and Reports on Form 8-K 13
Signatures 16
Financial Statements --
</TABLE>
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Not Amended.
ITEM 2. DESCRIPTION OF PROPERTY
Not Amended.
ITEM 3. LEGAL PROCEEDINGS
Bankruptcy
On October 21, 1994, the Company filed a Form 1 Voluntary Petition in
the United States Bankruptcy Court for the Eastern District of Texas (the
"Bankruptcy Court"). The Company became a debtor-in-possession pursuant to the
Notice of Commencement of Case under Chapter 11 of the Bankruptcy Code, Meeting
of Creditors and Fixing of Dates In Re Thor Energy Resources, Inc., Case Number
94-61047. The Bankruptcy petition was filed in response to continued and
mounting litigation cost resulting from a wrongful termination suit filed
against the Company by the Company's former chief financial officer, Lindsay
Sneed ("Sneed"), that has continued for the last three years (the "Sneed
Litigation"). See "Sneed Litigation" below.
The Company filed a plan of reorganization with the Bankruptcy Court
on April 18, 1995 (the "Plan"). Under the Plan, (i) the Company's taxes will be
paid in cash in accordance with a payment schedule, (ii) the two secured notes
under which the Company is obligated will be paid, with interest, in monthly
installments equal to 50% of the production of the well that secures the
relevant note, (iii) holders of claims of less than $500 will be paid in cash,
(iv) royalty claims will be offset against expenses, and any remainder owed by
the Company will be paid, with interest, in 48 equal monthly installments, (v)
the holders of certain claims regarding an incinerator in New Hampshire will
receive title to the incinerator, (vi) the Company's other unsecured creditors
will receive, at their option, either (a) a six-month, interest-bearing note in
full payment of the debt or (b) a payment in cash equal to 75% of the amount of
the debt and (vii) the remainder of the Company's assets will be put into a
trust (the "Trust") from which the settlement or final judgment in the Sneed
Litigation, if any, will be paid; however, no claims from the Sneed Litigation
for any damage other than actual pecuniary damage suffered by Sneed will be
allowed. Once all the claims are paid as described above, each of the owners
(the "Minority Holders") of the Company's common stock (the "Common Stock")
other than Zapata Partnership, Ltd.(1) ("Zapata"), David Fender, Harris R.
Fender, Jr., LaVelle D. Fender and the LaVelle D. Fender Trust (the "Majority
Holders") will be paid $.38 per share, the closing price of the Common Stock on
the day the bankruptcy filing was made, less the amount paid to
__________________________________
(1) Zapata Partnership, Ltd. is a limited partnership. David M. Fender
and Harris R. Fender, Jr. are the general partners of Zapata. David M.
Fender is, and was at the time of the Transaction, President and Chief
Executive Officer of the Company. Harris R. Fender, Jr. is, and was at the
time of the Transaction, the Vice President and a Director of the Company.
<PAGE> 5
creditors and the amount, if any, paid in regard to a settlement or final
judgment of the Sneed Litigation that is attributable to their shares. The
funds for this payment will come from a new capital contribution from an
investor (the "Investor"). (It is anticipated that the new Investor will be an
entity controlled by the Majority Holders.) On the effective date of the Plan,
the shares of Common Stock that are held by the Minority Holders and the
Majority Holders will be cancelled. In return for the new capital
contribution, the Investor will receive all the shares of the reorganized
company ("New Thor"). New Thor will be a privately held company and will
receive all of the assets, if any, of the Trust that are not paid as described
above. The Company anticipates that the Plan will be approved or rejected
within 60 to 90 days of its filing. If the Plan is not approved, the
Bankruptcy Court, the Company or any of the creditors may submit another plan
of reorganization for approval.
On May 30, 1995, the Bankruptcy Court will hold a hearing on (i)
Sneed's motion to have an independent trustee appointed to administer the
Company during the bankruptcy proceedings (ii) Sneed's motion for authority to
pursue claims on behalf of the estate and (iii) the Company's motion to have
an independent examiner appointed to review the Company's previous practices.
Sneed Litigation
In 1993, Sneed, who was the Chief Financial Officer, Vice President
and a Director of the Company from October 1988 to July 1992, filed an amended
petition (the "Petition") in the lawsuit he previously filed, in May 1992,
against the Company in the District Court of Dallas County, Texas (the "State
Court"). The Petition includes allegations that the Company's January 1989
purchase of oil and gas reserves (the "Transaction") from Zapata, a transaction
that was restructured in August of 1990, was based on false reserve information
and that the public disclosures made concerning the Transaction were inadequate
and misleading. The Petition also alleges that the Company and the members of
its Board of Directors refused to disclose the alleged nature of the
Transaction and other unspecified matters and that the Company wrongfully
terminated Sneed, in part, for his refusal to concur with the Company's
reporting of the Transaction. Sneed is seeking unspecified damages on these
claims as well as exemplary damages in excess of $10,000,000 and attorney's
fees.
In a second lawsuit involving the bankruptcy of Zapata, Zapata filed a
declaratory judgment action with the Bankruptcy Court, which originally
approved the Company's purchase of reserves from Zapata in connection with
Zapata's bankruptcy proceedings (which were originally instituted on March 20,
1987) requesting that the Bankruptcy Court confirm that no fraud was involved
in the Transaction. Sneed filed a counterclaim (the "Counterclaim") in the
Bankruptcy Court against the Company and each of its Directors. The
Counterclaim alleges that (i) David M. Fender and the Company acted
fraudulently in connection with the Transaction, (ii) public disclosures
regarding the Transaction were false, (iii) the Company and each of its
Directors refused to publicly disclose the alleged fraudulent nature of the
Transaction and other alleged self-dealing transactions, (iv) the Company's
Annual Report on Form 10-K for the year ended January 31, 1992, as well as such
reports for prior years, contained deficiencies and (v) the Company wrongfully
terminated Sneed's employment because he brought the alleged
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improprieties to the attention of the Company's Board of Directors. In the
Counterclaim, Sneed seeks unspecified damages and attorney's fees from the
Company for claims based on federal racketeering laws, wrongful termination,
breach of contract (against the Company only), common law fraud, tortious
interference with contractual relations, breach of duty, negligent
misrepresentation and quantum meruit (against the Company and Zapata only).
The Counterclaim was removed to the Federal District Court for the Eastern
District of Texas (the "Federal Court") in January, 1993. Sneed dismissed the
claims pending in the Federal Court against the directors of the Company other
than David M. Fender. The presiding judge in the Federal Court dismissed that
portion of the complaint against the Company regarding alleged securities law
violations.
The State Court action and the second lawsuit involving Zapata, were
transferred to and consolidated by the United States District Court for the
Northern District of Texas.
The consolidated case was tried before a jury in January and February,
1995. Testimony continued for 5 weeks, and, after the close of testimony, the
jury deliberated for an additional week. The jury in that case was unable to
reach a verdict as to all issues presented to it. Among the findings the jury
made were the following: (i) there was an employment contract between the
Company and Sneed; (ii) the Company was not guilty of fraud; (iii) the Company
had not made negligent misrepresentations to Sneed; (iv) the Company had not
made misrepresentations to Sneed regarding a transaction in which either the
Company or Sneed had an interest or in a stock transaction; (v) the Company
intentionally inflicted emotional distress on Sneed; (vi) the Company and its
Chief Executive Officer defamed Sneed; (vii) the Company made fraudulent
conveyances; (viii) the Company and its directors were part of an unspecified
civil conspiracy; (ix) the Company's directors had committed predicate acts for
a violation of the Racketeering Influenced Corrupt Practices Act; and (x) the
Company and its directors abused process. The Company believes there was no
evidence to support the findings referenced in clauses (vi), (vii), (viii),
(ix) and (x) of the immediately preceding sentence. The jury was not able to
make any finding as to whether the Company is liable to Sneed for damages. The
jury found that Sneed was negligent in the performance of his duties to the
Company, but did not award the Company any damages as the result of such
negligence. The jury was unable to make a finding as to whether there was a
breach or wrongful termination of Sneed's employment agreement.
After receiving the jury verdict, the Company moved that the Court
declare a mistrial and Sneed moved that the Court enter judgment against the
Company beyond what was found by the jury. On May 1, 1995, the Court issued an
order making the following rulings on the parties' motions: (i) a partial
judgment will be entered on the verdict regarding liability and a new trial was
ordered as to damages only on the following claims: (a) intentional infliction
of emotional distress by the Company; (b) abuse of process by all the defendants
in the case; (c) fraudulent conveyance by the Company; and (d) racketeering by
the defendants other than the Comapny; (ii) a judgment will be entered, in
accordance with the jury's verdict, that David M. Fender was the alter ego of
the Company; (iii) a new trial was ordered as to both damages and liability on
the following claims: (a) breach of employment contracts; (b) tortious
interference with contract; (c) wrongful termination; and (d)
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defamation; and (iv) a judgment will be entered that Sneed take nothing on the
following claims: (a) fraud; (b) negligent misrepresentation; (c) allegations
of fraud under Section 27.01 of the Texas Business and Commerce Code; (d)
intentional infliction of emotional distress by Zapata and all individual
defendants; and (e) Sneed's services for Zapata. The next step in this lawsuit
is a new trial on certain issues.
The Company continues to believe that Sneed's claims are without
merit. Consequently, the Company intends to continue its vigorous defense of
this litigation. However, this litigation has, and continues to, place a
serious strain on the Company and its economic resources.
BMI
As a result of the failure of BMI to go forward with the preparation
of documents necessary to effect the Spin- Off until the Sneed Litigation is
resolved, which the Company does not believe relieves BMI of its obligations to
use its best efforts to assist the Company in effecting the Spin-Off, the
Company filed suit against BMI and Morris & Co. in the Smith County District
Court in August 1994 to enforce its rights under the Agreement and the
Shareholders' Agreement. See "Item 1. Description of Business - Discontinued
Waste Services Business - Sale by Subsidiary of Stock Subsequent to January 31,
1993." The Company sought specific performance or $1,000,000 in damages based
on breach of contract. The Company, BMI and Morris & Co. reached an agreement
to settle this action, which was approved by the Bankruptcy Court (the
"Settlement Agreement"), and the Company dismissed the suit. Under the terms
of the Settlement Agreement, (i) the Company would be paid $300,000 in cash
upon execution of definitive documentation, (ii) the Company's 10% equity
interest in BMI and the put rights related to the equity interest would be
converted into a 20% net profits interest (the "NPI") in any contract of BMI
and (iii) in the event that BMI or Morris & Co. determined to divest any
interests in contractual relationships between BMI and the University of Texas
Medical Branch at Galveston ("UTMB"), BMI was required to pay the Company,
within ten days following completion of any such transaction, the greater of
(a) 20% of the consideration attributable to such transaction or (b) the
difference between $2,500,000 and payments received by the Company prior to
such date attributable to the NPI. Under item (ii) of the preceding sentence,
the Company was to receive annually the greater of 20% of BMI's pre-tax annual
net profits or $200,000. Such payments were to begin on or before October 1,
1995, and were to be secured by a security interest in all contract rights held
by BMI pursuant to contracts between BMI and UTMB. However, subsequent to the
settlement, events occurred making the performance of the Settlement Agreement
by BMI and Morris & Co. questionable. The Company plans to continue to
negotiate with BMI and Morris & Co. to develop a mutually satisfactory
resolution.
Oryx
Thor Exploration, Inc., a wholly-owned subsidiary of the Company
("Thor Exploration"), filed suit against Oryx Energy Company ("Oryx") in the
Smith County District Court in December, 1992, for collection of underpaid
royalties relating to a cotenancy between Thor
4
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Exploration and Oryx. Thor Exploration's claims in this suit amount to
approximately $1,000,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Amended.
PART II
ITEM 5. MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Not Amended.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
Not Amended.
ITEM 7. FINANCIAL STATEMENTS
Not Amended.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Amended.
5
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
DIRECTORS AND EXECUTIVE OFFICERS
Each director serves as a director until the next annual meeting of
stockholders and until his successor is elected and qualified. Each director
has served continuously as a director since the date of his first election or
appointment to the Board. Further information with respect to each director or
executive officer as of January 31, 1995, is set forth in the following table.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
LAST 5 YEARS AND FIRST
NAME AND POSITION DIRECTORSHIPS OF BECAME A
WITH THE COMPANY AGE PUBLIC COMPANIES DIRECTOR
---------------- --- ---------------- --------
<S> <C> <C> <C>
David M. Fender 47 President and Chief 1985
President, Chief Executive Officer of the
Executive Officer and Company
Chairman of the Board;
Director
Harris R. Fender, Jr. 49 Investments; Surgeon in 1985
Vice President and private practice since
Assistant Secretary; September 1978
Director
B. Bruce Freitag 64 Attorney at Law 1981
Director
LeRoy LaSalle 75 Attorney at Law; Director 1983
Director of Shelby-Panola Savings
Association of Carthage,
Texas
David W. Sipperly 52 Technical consultant(1) 1991
Director
G. Jeff Mennen 54 Business consultant(2) 1991
Director
Lashley A. Bell 37 Accountant(3) N/A
Treasurer and Chief
Financial Officer
</TABLE>
(1) Since 1991, Mr. Sipperly has been a partner in Sipperly and Cabot and
the Managing Director of Adirondack Gas Consortium Energy Industry
Consultants, both of which firms provide consulting services. Prior
to that, Mr. Sipperly was an Executive Vice President and a director
of Lawrence Energy Associates, Inc. ("Lawrence"). During February
1991, Lawrence was forced into involuntary bankruptcy. None of the
entities in which Mr. Sipperly has been involved are affiliates of
the Company.
(2) Since 1990, Mr. Mennen has been the President of G. J. Mennen Group, a
family business consulting firm founded by him. From 1968 to 1990,
Mr. Mennen served in various capacities for The Mennen Company,
including as Vice President of Latin American Operations from 1975 to
1977, President of Mennen International from 1977 to 1981 and Chairman
and a director of The Mennen Company from 1981 to 1990. Mr. Mennen is
a director of MobileMedia MBf USA, Inc.
(3) Ms. Bell has served as Treasurer and Chief Financial Officer of the
Company since September 1994. From December 1991 until August 1994,
she was the Controller of the Company, and, from July 1991 until
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November 1991, she was an accountant for the Company. For the
preceding eight years, she served in various capacities for Mason
Tyler Manufacturing Co.
Messrs. Sipperly, LaSalle and Freitag are members of the audit
committee. Messrs. Mennen, LaSalle, Freitag and Harris R. Fender, Jr. comprise
the compensation committee. David M. Fender and Harris R. Fender, Jr. are
brothers.
All the current directors and executive officers of the Company
occupied their positions on October 21, 1994, when the Company filed for
bankruptcy. See "Item 3. Legal Proceedings - Bankruptcy."
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
the Company's common stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than ten-percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
February 1, 1994, through January 31, 1995, all filing requirements applicable
to its officers, directors and greater than ten-percent beneficial owners were
met, except that the Harris R. Fender Q.T.I.P. Trust failed to file a report on
Form 5 for fiscal 1995 indicating that it was dissolved and that its general
partnership interest in Zapata Partners, Ltd., which owns 4,651,181 of the
Company's common stock, was distributed to the beneficiaries of the trust.
ITEM 10. EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal years to the
Company's Chief Executive Officer. No other executive officer of the Company
received salary and bonus in excess of $100,000 during fiscal 1995.
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<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
AWARDS PAYOUTS
-------------------------- ----------
ANNUAL COMPENSATION SECURITIES
----------------------------------------- RESTRICTED UNDERLYING
NAME AND STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL FISCAL OTHER ANNUAL AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($) (#) ($) ($)
----------------- ------- -------------- ---------- --------------- -------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David M. Fender, 1995 97,000 (1) -- -- -- 2,000/600 -- 10,980 (2)
President and 1994 98,500 (3) -- 58,984 (4) -- 2,000/600 -- 39,398
Chief Executive 1993 107,250 (5) -- -- -- 2,000/600 -- 161,313
Officer
</TABLE>
(1) Includes $2,000 in director's fees.
(2) Consists of $3,000 for the estimated fair market value attributable to
the 2% of 8/8ths overriding royalty interest granted to Mr. Fender
pursuant to his compensation package and insurance premiums of $7,980
on a whole life insurance policy for Mr. Fender's benefit. See
"Employment and Change of Control Agreements." Any cash surrender
value of the insurance policy will be paid into a trust for the
benefit of Mr. Fender's children.
(3) Includes $3,500 in director's fees.
(4) $11,070 and $47,914 were authorized to be reimbursed for the payment
of income taxes applicable to stock bonuses received in fiscal 1991
and fiscal 1990, respectively, but were not paid until fiscal 1994.
These amounts were accrued as expenses of the Company in prior years.
(5) Includes $3,500 in director's fees.
OPTION/SAR GRANTS DURING 1995 FISCAL YEAR
The following table provides information related to options granted to
the Company's Chief Executive Officer during fiscal 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/
OPTIONS/ SARS
SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE
NAME (#)(1)(2) FISCAL YEAR ($/SH)(3) EXPIRATION DATE
----------------- ----------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
David M. Fender 2,000/600 16.7%/16.7% $1.00 July 20, 1999
</TABLE>
(1) The options are exercisable as follows: 25% from July 20, 1995, to
July 19, 1996; 50% from July 20, 1996, to July 19, 1997; 75% from July 20,
1997, to July 19, 1998; and 100% from July 20, 1998, to July 20, 1999.
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(2) The SAR's are granted in tandem with the stock options.
(3) The exercise price of the options was in excess of the fair market
value of the Common Stock on the date of grant of the options.
AGGREGATED OPTION/SAR EXERCISES DURING 1995 FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information related to the number and
value of options held by the Company's Chief Executive Officer at fiscal year
end. The Company's Chief Executive Officer did not exercise any options during
fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FY-END ($)
AT FY-END (#)
--------------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
David M. Fender 5,000/1,500 5,000/1,500 $0 $0
</TABLE>
COMPENSATION OF DIRECTORS
The Company pays each director a fee of $1,000 for each meeting
attended, other than David M. Fender who receives $500 for each meeting
attended. Committee members are also paid a fee of $500 for each committee
meeting attended. In addition, under the terms of the Company's Amended and
Restated 1986 Stock Option Plan, each continuing director receives options to
purchase 2,000 shares of Common Stock and stock appreciation rights with
respect to 600 shares of Common Stock upon his re-election to the Board.
See "Item 12. Certain Relationships and Related Transactions."
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS
The Company has entered into a change of control agreement (the
"Change of Control Agreement") with David M. Fender. The Change of Control
Agreement provides, among other things, that if the employment of Mr. Fender is
terminated without good cause, as defined therein, after a change of control of
the Company, Mr. Fender shall be entitled to receive a severance payment, equal
to 2.99 times the average of the annual compensation which was payable to him
by the Company over the preceding five years, and continue certain benefits.
The term of the Change of Control Agreement expires on December 31, 1995, but
the agreement contains a self-renewing provision subject to a cancellation
clause. The aggregate maximum commitment under the Change of Control Agreement
was approximately $688,437 at January 31, 1995. A change of control of the
Company is defined in the Change of Control Agreement as a change in control of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company is then
subject to such reporting requirement; provided that, without limitation, such
a change in control shall be deemed to have occurred if (A) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined
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voting power of the Company's then outstanding securities; (B) during any
period of two consecutive years (not including any period prior to the
execution of the Change of Control Agreement), individuals who at the beginning
of such period constitute the Board of Directors of the Company and any new
director, whose election by the Board of Directors of the Company or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or (C) the business of the company for which services are
principally performed is disposed of by the Company pursuant to a partial or
complete liquidation of the Company, a sale of assets (including stock of a
subsidiary) of the Company, or otherwise.
Effective September 1, 1989, the compensation committee of the Board
of Directors approved a compensation package for David M. Fender. This package
was later approved and ratified by the entire Board of Directors on January 31,
1990. Pursuant to this arrangement, Mr. Fender was paid a base salary of
$130,000 per annum during fiscal 1992. At Mr. Fender's recommendation, the
Board of Directors modified one aspect of this compensation package to provide
that Mr. Fender will be paid a base salary of $95,000 per annum effective
beginning May 1, 1992. Additionally, the package provides for an annual cash
bonus of 5% of the pretax profits of the Company based on audited year-end
figures. Further, pursuant to this compensation package, Mr. Fender is
entitled to an annual stock bonus equal to 5% of the annual increase in the
weighted average aggregate value of the Company's Common Stock and an
additional cash bonus to cover the income taxes due on the stock bonus. No
cash or stock bonus was earned for fiscal 1993, 1994 or 1995. Other benefits
provided to Mr. Fender under this compensation package include: (1) payment of
the premiums on a $1 million whole life insurance policy for the named
beneficiary of Mr. Fender, (2) furnishing Mr. Fender with an automobile every
three years and (3) an overriding royalty interest of 2% of 8/8ths interest in
all oil and gas prospects drilled or sold (the "Royalty Interest"). The
Royalty Interest is intended to tie Mr. Fender's compensation to the success or
failure of the Company's drilling projects in order to increase his incentive
to work for the success of the Company. The Royalty Interest is reported in
Mr. Fender's income in the Summary Compensation Table and was valued in fiscal
1993 based on the cash he received at the time the Company received income from
the wells subject to the Royalty Interest and in fiscal 1994 and 1995 based on
the estimated fair market value of the Royalty Interest. In fiscal 1995, Mr.
Fender received a Royalty Interest in one well, the fair market value of which
was estimated by an independent appraiser to be $3,000 at the time of its
granting. In fiscal 1994, Mr. Fender declined to accept his Royalty Interest
in one of the wells drilled. The fair market value of the Royalty Interest
received by Mr. Fender in fiscal 1994, on the one well where he did accept his
Royalty Interest, was estimated by an independent appraiser to be $32,000 at
the time of its granting. In fiscal 1993, Mr. Fender received a Royalty
Interest in one well. In fiscal 1993, he received cash attributable to the
Royalty Interest in that well and two other wells, which he received in
previous years, in the amount of approximately $154,000. See "Summary
Compensation Table."
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 15, 1995, information with
respect to the beneficial ownership of voting securities of the Company by (i)
each person known to management to be the beneficial owner of more than five
percent of any class of the Company's voting securities and (ii) all directors
and executive officers of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock LaVelle D. Fender* . . . . . . . . . . . . 4,722,716 (1)(2) 78%
Zapata Partnership, Ltd.* . . . . . . . . . 4,651,181 (2) 77%
David M. Fender* . . . . . . . . . . . . . 4,675,799 (2)(3)(4)(5) 77%
Harris R. Fender, Jr.* . . . . . . . . . . 4,659,181 (2)(3)(6) 77%
</TABLE>
10
<PAGE> 14
<TABLE>
<S> <C> <C> <C>
All directors and executive officers
as a group (7 persons) . . . . . . . . . 4,713,899 (2)(3)(4)(5) 78%
(6)
</TABLE>
____________________________
* The mailing address of the beneficial owner is 719 West Front Street,
Tyler, Texas 75702. Unless otherwise indicated in the footnotes
below, each beneficial owner has sole voting and investment power with
respect to the shares listed opposite its name above.
(1) LaVelle D. Fender is the sole beneficiary of the LaVelle D. Fender
Trust, which owns 62,249 shares of Common Stock.
(2) Includes 4,651,181 shares owned by Zapata Partnership, Ltd.
("Zapata"), a limited partnership the general partners of which are
David M. Fender and Harris R. Fender, Jr., and the limited partner of
which is LaVelle D. Fender. LaVelle D. Fender is the mother of both
David M. Fender and Harris R. Fender, Jr.
(3) The shares owned by David M. Fender, Harris R. Fender, Jr. and all
executive officers and directors as a group (7 persons) include 7,000,
7,000 and 37,000 shares, which may be purchased by such individuals
pursuant to the terms of currently exercisable stock options and stock
options exercisable within 60 days of May 30, 1995.
(4) Includes 3,000 shares owned by David M. Fender's wife, with respect to
which Mr. Fender disclaims beneficial ownership.
(5) Includes 8,000 shares held by David M. Fender as custodian for his
children.
(6) Includes 1,000 shares held by Harris R. Fender, Jr. as custodian for
his children.
See "Item 3. Legal Matters - Bankruptcy" for a description of changes in
control that may occur if the currently proposed plan of reorganization is
approved.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On November 21, 1990, the Company and Mr. David W. Sipperly, a
director of the Company, entered into an agreement whereby Mr. Sipperly agreed
to assist the Company in identifying investors to drill oil and gas wells on
certain leases owned by the Company. The Company currently pays $1,500 a month
to Mr. Sipperly and reimburses him for administrative and travel expenses. If
the efforts of Mr. Sipperly are successful, he will receive 2.5% of the first
$5,000,000 raised, 3.5% of the next $5,000,000 raised, and 1% of any additional
money raised for the Company through his efforts. In addition, if the efforts
of Mr. Sipperly raise at least $1,000,000 for the Company, he will receive an
overriding royalty interest on the leases that are the subject of the
agreement. This overriding royalty interest increases proportionately with the
amount raised and could equal 1%, if $5,000,000 is raised through his efforts.
Pursuant to this agreement Mr. Sipperly was paid $18,000 by the Company during
the fiscal year ended January 31, 1994, and $18,000 during the fiscal year
ended January 31, 1995.
During fiscal 1993, the Company entered into an agreement with LaVelle
D. Fender, former Chairman of the Board of the Company and the mother of David
M. Fender and Harris R. Fender, Jr., pursuant to which Mrs. Fender extended to
the Company a $300,000 line of credit, which was fully disbursed to the Company
during fiscal 1993. This indebtedness bears interest at 10% per annum and is
secured by the Company's interest in the Loy Gilbert #1 and real estate owned
by the Company in St. Croix, U.S. Virgin Islands. The note representing this
loan was renewed for one year on March 16, 1994, in the amount of $160,000 and
was renewed again for one year, this time in favor of the LaVelle D. Fender
Trust, the sole beneficiary of which is LaVelle D. Fender (the "Trust"), on
March 16, 1995, in the amount of $135,000. Interest paid to Mrs. Fender on
this indebtedness during
11
<PAGE> 15
fiscal 1994 was $17,814 and during fiscal 1995 was $16,163. At May 17, 1995,
$125,000 was outstanding under this line of credit. This indebtedness is due
by March 15, 1996.
During fiscal 1995, the Company and Thor Exploration, Inc., a
wholly-owned subsidiary of the Company ("Thor Exploration") entered into an
agreement with the Trust pursuant to which the Trust extended to the Company
and Thor Exploration a $275,000 line of credit, which was fully disbursed to
the Company and Thor Exploration during fiscal 1995. This indebtedness bears
interest at 10% per annum and is secured by the Company's and Thor
Exploration's interest in Breedlove-Rogers #2. Interest paid to the Trust on
this indebtedness during fiscal 1995 was $8,615. At May 17, 1995, $176,827 was
outstanding under this line of credit. This indebtedness is due by August 23,
1996.
During fiscal 1994 David M. Fender, Harris R. Fender, Jr. and members
of their families purchased from the Company interests in oil and gas wells on
terms provided to outside investors in the same wells at the time of the sale
of the interests in these wells. Funds received from the sales of the
interests in the wells were used to fund drilling activities. The aggregate
amount paid by members of the Fender family for these interests in wells and
related drilling and completion costs was approximately $269,000 in fiscal
1994.
12
<PAGE> 16
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
a. The response to the portion of Item 13 regarding financial
statements is submitted as a separate section of this report (see page F-1).
The following exhibits are filed as part of this report:
2.1 Notice of Commencement of Case under Chapter 11 of
the Bankruptcy Code, Meeting of Creditors and Fixing
of Dates In Re Thor Energy Resources, Inc., Case
Number 94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company and
each of its directors.(3)
10.3 Agreement for sale of property between the Company
and Neomar Resources, Inc.(2)
10.4 Agreement for sale of property between Thor
Exploration, Inc. and an unrelated party executed
March 3, 1993 [dated February 25, 1993](5)
10.5 Securities Purchase Agreement between the Company,
BMI and Morris & Co. dated March 31, 1993(6)
10.6 Shareholders' Agreement between the Company and
Morris & Co. dated March 31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the
Company dated March 31, 1993.(6)
10.8 Severance Agreement dated July 16, 1990, between
David M. Fender and the Company(7)
10.9 Letter dated November 21, 1990, from the Company to
David W. Sipperly(3)
10.10 Letter dated August 30, 1991, from the Company to
David W. Sipperly.(3)
10.11 Letter dated September 3, 1991, from David W.
Sipperly to the Company.(3)
13
<PAGE> 17
10.12 Letter dated October 7, 1991, from the Company to
David W. Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995,
executed by the Company and payable to the LaVelle D.
Fender Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the
Company in favor of LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994,
executed by the Company and Thor Exploration, Inc.
and payable to the LaVelle D. Fender Trust.(2)
10.16 Deed of Trust, dated August 23, 1994, executed by the
Company and Thor Exploration, Inc. in favor of the
LaVelle D. Fender Trust(2)
10.17 Office lease between the Company and Lucy Corporation
commencing October 1, 1993(4)
21.1 Subsidiaries of the Registrant.(3)
23.1 Consent of Weaver and Tidwell.(2)
23.2 Consent of Hein + Associates.(2)
27.1 Financial Data Schedule.(2)
99.1 Order on Motion to Approve Compromise and Settlement
of Advisory Proceedings(8)
b. A Form 8-K dated October 21, 1994, was filed during the last
quarter of the period covered by this report. The report covered the Company's
bankruptcy filing. See "Item 3 - Legal Proceedings."
___________________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October 21,
1994.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the fiscal year ended January 31, 1995, and incorporated herein by
reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1993, and incorporated
herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1994, and incorporated
herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the sale of certain oil and gas properties, on
March 5, 1993.
14
<PAGE> 18
(6) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the issuance of BMI stock to Morris & Co., on April
15, 1993.
(7) Filed herewith.
(8) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the change in the Company's accountants on March
13, 1995.
15
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
THOR ENERGY RESOURCES, INC.
(Registrant)
Dated: May 26, 1995
By: /s/ David M. Fender
-------------------------------------
David M. Fender
President and Chief Executive Officer
16
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ------------------------------------------------------------------------------------------------
<S> <C>
2.1 Notice of Commencemenet of Case under Chapter 11 of the
Bankruptcy Code, Meeting of Creditors and Fixing of
Dates In Re Thor Energy Resources, Inc., Case Number
94-61047.(1)
2.2 Press Release dated October 24, 1994.(1)
2.3 Proposed Plan of Reorganization.(2)
3.1 Restated Certificate of Incorporation.(3)
3.2 Bylaws and all amendments to date.(3)
10.1 Amended and Restated 1986 Stock Option Plan.(4)
10.2 Form of Indemnity Agreement between the Company
and each of its directors.(3)
10.3 Agreement for sale of property between the Company and Neomar
Resources, Inc.(2)
10.4 Agreement for sale of property between Thor Exploration, Inc.
and an unrelated party executed March 3, 1993
[dated February 25, 1993].(5)
10.5 Securities Purchase Agreement between the Company, BMI
and Morris & Co. dated March 31, 1993.(6)
10.6 Shareholders' Agreement between the Company and Morris & Co.
dated March 31, 1993.(6)
10.7 Pledge Agreement by Morris & Co. in favor of the Company
dated March 31, 1993.(6)
10.8 Severance Agreement dated July 16, 1990, between
David M. Fender and the Company.(7)
10.9 Letter dated November 21, 1990, from the Company to
David W. Sipperly.(3)
</TABLE>
E - 1
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- -------------------------------------------------------------------------------------------------
<S> <C>
10.10 Letter dated August 30, 1991, from the Company to
David W. Sipperly.(3)
10.11 Letter dated September 3, 1991, from David W. Sipperly
to the Company.(3)
10.12 Letter dated October 7, 1991, from the Company to
David W. Sipperly.(3)
10.13 $135,000 Promissory Note, dated March 16, 1995, executed
by the Company and payable to the LaVelle D. Fender Trust.(2)
10.14 Deed of Trust, dated March 16, 1992, executed by the
Company in favor of LaVelle D. Fender.(3)
10.15 Real Estate Lien Note, dated August 23, 1994, executed by
the Company and Thor Exploration, Inc. and payable to
the LaVelle D. Fender Trust.(2)
10.16 Deed of Trust, dated August 23, 1994, executed by the Company
and Thor Exploration, Inc. in favor of the LaVelle D. Fender
Trust.(2)
10.17 Office lease between the Company and Lucy Corporation
commencing October 1, 1993.(4)
22.1 Subsidiaries of the Registrant.(3)
23.1 Consent of Weaver and Tidwell.(2)
23.2 Consent of Hein + Associates.(2)
27.1 Financial Data Schedule.(2)
99.1 Order on Motion to Approve Compromise and Settlement of
Advisory Proceeding.(8)
</TABLE>
E - 2
<PAGE> 22
___________________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the Company's filing for bankruptcy on October 21,
1994.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
the fiscal year ended January 31, 1995, and incorporated herein by
reference.
(3) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1993, and incorporated
herein by reference.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB, as
amended, for the fiscal year ended January 31, 1994, and incorporated
herein by reference.
(5) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the sale of certain oil and gas properties, on
March 5, 1993.
(6) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, regarding the issuance of BMI stock to Morris & Co., on April
15, 1993.
(7) Filed herewith.
(8) Filed as an exhibit to the Company's Current Report on Form 8-K, as
amended, as amended, regarding the change in the Company's accountants
on March 13, 1995.
E - 3
<PAGE> 1
July 16, 1990
David M. Fender
Thor Energy Resources, Inc.
P. O. Box 307
Tyler, Texas 75710
Dear Mr. Fender:
Thor Energy Resources, Inc. (the "Company") considers it essential to
the best interests of its stockholders to foster the continuous employment of
key management personnel. In this connection, the Board of Directors of the
Company (the "Board") recognizes that in light of current economic and market
conditions, the possibility of a change in control exists, and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
the Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from
any possible change in control of the Company. The Board has also determined
that it is in the best interest of the Company and its stockholders to ensure
your continued availability to the Company in the event of a "potential change
in control" (as defined in Section 2 hereof).
In order to induce you to remain in the employ of the Company and in
consideration of your agreement set forth in Subsection 2(ii) hereof, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement ("Agreement") in the event your employment with the Company is
terminated subsequent to a Change in Control (as defined in Section 2 hereof)
under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1990; provided,
however, that commencing on January 1, 1991 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one additional year
unless, not later than September 30 of the preceding year, the Company shall
have given notice that it does not wish to extend this Agreement; provided,
further that notwithstanding any such notice by the Company not to extend, if a
Change in Control shall have occurred during the original or extended term of
this Agreement, this Agreement shall continue in effect for a period of
twenty-four (24) months beyond the term in effect immediately before such
Change in Control.
<PAGE> 2
July 16, 1990
Page 2
2. Change in Control. (i) No benefits shall be payable hereunder
unless there shall have been a Change in Control, as set forth below. For
purposes of this Agreement, a "Change in Control" of the Company shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (A)
any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities; (B) during any period of two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any new director,
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or (C) the
business of the Company for which your services are principally performed is
disposed of by the Company pursuant to a partial or complete liquidation of the
Company, a sale of assets (including stock of a subsidiary) of the Company, or
otherwise.
(ii) For purposes of this Agreement, a "potential change
in control of the Company" shall be deemed to have occurred if (A) the Company
enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control; (B) any person (including the Company)
publicly announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control; (C) any person (other than
persons beneficially owning securities of the Company representing 9.5% or more
of the combined voting power of the Company's currently outstanding securities
as of the date hereof) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 9.5% or more of the combined voting
power of the Company's then outstanding securities; or (D) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a potential
change in control of the Company has occurred. You agree that, subject to the
terms and conditions of this Agreement, in the event of a potential change in
control of the Company occurring after the date hereof or within 30 days prior
to the date hereof, you will remain in the employ of the Company for a period
of six (6) months from the occurrence of such potential change in control of
the Company. If more than one potential change in control occurs during the
term of this Agreement, the provisions of the preceding sentence shall be
applicable to each potential change of control occurring prior to the
occurrence of a Change in Control.
3. Termination Following Change in Control. If any of the events
described in Subsection 2(i) hereof constituting a Change in Control shall have
occurred, you shall be entitled to the benefits provided in Subsection 4(iv)
hereof upon the subsequent termination of your employment during the term of
this Agreement unless such termination is (A) because of your death or
Retirement, (B) by the Company for Cause or Disability, or (C) by you other
than for Good Reason.
<PAGE> 3
July 16, 1990
Page 3
(i) Disability; Retirement. If, as a result of your
incapacity due to physical or mental illness, you shall have been absent from
the full-time performance of your duties with the Company for six (6)
consecutive months, and within thirty (30) days after written Notice of
Termination is given you shall not have returned to the full-time performance
of your duties, the Company may terminate your employment for "Disability".
Any question as to the existence of your Disability upon which you and the
Company cannot agree shall be determined by a qualified independent physician
selected by you (or, if you are unable to make such selection, it shall be made
by any adult member of your immediate family), and approved by the Company.
The determination of such physician made in writing to the Company and to you
shall be final and conclusive for all purposes of this Agreement. Termination
by the Company or you of your employment based on "Retirement" shall mean
termination in accordance with the Company's retirement policy, generally
applicable to its salaried employees or in accordance with any retirement
arrangement established with your consent with respect to you.
(ii) Cause. Termination by the Company of your employment
for "Cause" shall mean termination upon (A) the willful and continued failure
by you to substantially perform your duties with the Company (other than any
such failure resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure resulting from termination by you for
Good Reason) after a written demand for substantial performance is delivered to
you by the Board, which demand specifically identifies the manner in which the
Board believes that you have not substantially performed your duties, or (B)
the willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed "willful"
unless done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a meeting of the
Board called and held for such purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of conduct
set forth above in clauses (A) or (B) of the first sentence of this Subsection
and specifying the particulars thereof in detail.
(iii) Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without your express written consent, any of the following:
(A) the assignment to you of any duties
inconsistent with your status as President and Chief Executive Officer
of the Company, your removal from the position of President and Chief
Executive Officer of the Company, or a substantial alteration in the
nature or status of your responsibilities from those in effect
immediately prior to the Change in Control;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the same may be increased
from time to time;
<PAGE> 4
July 16, 1990
Page 4
(C) the relocation of the Company's principal
executive offices to a location more than fifty miles from Tyler,
Texas or the Company's requiring you to be based anywhere other than
the Company's principal executive offices except for required travel
on the Company's business to an extent substantially consistent with
your present business travel obligations;
(D) the failure by the Company to continue in effect
any compensation plan in which you participate, including but not
limited to the Company's Amended and Restated 1986 Stock Option Plan
(the "1986 Option Plan") or any substitute plans adopted prior to the
Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to
such plan in connection with the Change in Control, or the failure by
the Company to continue your participation therein on the same basis,
both in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed at the time
of the Change in Control;
(E) the failure by the Company to continue to
provide you with benefits at least as favorable to those enjoyed by
you under any of the Company's pension, life insurance, medical,
health and accident, disability, deferred compensation or savings
plans in which you were participating at the time of the Change in
Control, the taking of any action by the Company which would directly
or indirectly materially reduce any of such benefits or deprive you of
any material fringe benefit enjoyed by you at the time of the Change
in Control, or the failure by the Company to provide you with the
number of paid vacation days to which you are entitled at the time of
the Change in Control;
(F) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 5 hereof; or
(G) any purported termination of your employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Subsection (iv) below (and, if applicable, the
requirements of Subsection (ii) above); for purposes of this
Agreement, no such purported termination shall be effective.
(iv) Notice of Termination. Any purported termination of
your employment by the Company or by you shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 6
hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such thirty (30)
day period), and (B) if your employment is terminated pursuant to Subsection
<PAGE> 5
July 16, 1990
Page 5
(ii) or (iii) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection (ii) above shall not be less than thirty (30) days, and
in the case of a termination pursuant to Subsection (iii) above shall not be
less than thirty (30) nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given); provided that if within thirty (30)
days after any Notice of Termination is given the party receiving such Notice
of Termination notified the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected); provided further
that the Date of Termination shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to pay you your full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and continue you as a participant
in all compensation, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Subsection. Amounts paid
under this Subsection are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement.
4. Compensation Upon Termination or During Disability. Following
a Change in Control of the Company, as defined by Subsection 2(i), upon
termination of your employment or during a period of Disability you shall be
entitled to the following benefits:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of your Disability, you shall
continue to receive your base salary at the rate in effect at the commencement
of any such period, together with all compensation payable to you as long-term
disability benefits under any employee benefit plan during such period, until
this Agreement is terminated pursuant to Section 3(i) hereof. Thereafter, your
benefits shall be determined in accordance with the Company's insurance
programs then in effect and the Company's Retirement Plan (the "Retirement
Plan").
(ii) If your employment shall be terminated by the Company
for Cause or by you other than for Good Reason or Retirement, the Company shall
pay you your full base salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given and any amounts to be paid to
you pursuant to the Retirement Plan and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment shall be terminated by the Company
or by you for Retirement, or by reason of your death, your benefits shall be
determined in accordance with the Company's retirement and insurance programs
then in effect, as well as the Retirement Plan.
<PAGE> 6
July 16, 1990
Page 6
(iv) If your employment shall be terminated (a) by the
Company other than for Cause, Retirement or Disability or (b) by you for Good
Reason, then you shall be entitled to the benefits provided below:
(A) The Company shall pay you your full base
salary through the Date of Termination at the rate in effect at the
time the Notice of Termination is given;
(B) In lieu of any further salary payments to you
for periods subsequent to the Date of Termination, the Company shall
pay as severance pay to you, not later than the fifth day following
the Date of Termination, a lump sum severance payment (the "Severance
Payment") equal to 2.99 times the average of the annual compensation
which was payable to you by the Company (or any corporation
("Affiliate") affiliated with the Company within the meaning of
section 1504 of the Internal Revenue Code of 1986 (the "Code")) and
includable in your gross income for Federal income tax purposes for
the five calendar years (the "Base Period") preceding the earlier of
the calendar year in which a change in control of the Company occurred
or the calendar year of the Date of Termination. Such average shall
be determined in accordance with applicable regulations promulgated
under section 280G(d) of the Code. For purposes of this Subsection
4(iv) a "change in control of the Company" shall have the meaning set
forth in section 280G(d) of the Code and any temporary or final
regulations promulgated thereunder.
(C) The Severance Payment shall be reduced by the
amount of any other payment or the value of any benefit received or to
be received by you in connection with your termination of employment
or contingent upon a Change in Control of the Company (whether payable
pursuant to the terms of this Agreement, any other plan, agreement or
arrangement with the Company or an Affiliate) unless (1) you shall
have effectively waived your receipt or enjoyment of such payment or
benefit prior to the date of payment of the Severance Payment, (2) in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to you, such other payment or benefit does not
constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, or (3) in the opinion of such tax counsel, the
Severance Payment (in its full amount or as partially reduced, as the
case may be) plus all other payment or benefits which constitute
"parachute payments" within the meaning of section 280G(b)(2) of the
Code are reasonable compensation for services actually rendered,
within the meaning of section 280G(b)(4) of the Code, and such
payments are deductible by the Company. The value of any non-cash
benefit or any deferred cash payment shall be determined by the
Company's independent auditors in accordance with the principles of
sections 280G(d)(3) and (4) of the Code.
(D) Except to the extent that such payments would
result, under paragraph (C) above, in a reduction in the Severance
Payment:
(1) The Company shall pay to you, not
later than the fifth day following the Date of
Termination, a lump sum amount equal to the amount of
any incentive compensation which has been allocated
or
<PAGE> 7
July 16, 1990
Page 7
awarded to you for a fiscal year or other measuring
period preceding the Date of Termination but has not
yet been paid.
(2) The Company shall also pay to you
all legal fees and expenses incurred by you as a
result of such termination (including all such fees
and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by
this Agreement).
(3) For a twenty-four (24) month period
after such termination, the Company shall arrange to
provide you with life, disability, accident and
health insurance benefits substantially similar to
those which you are receiving or entitled to receive
immediately prior to the Notice of Termination.
Benefits otherwise receivable by you pursuant to this
Subsection 4(iv) shall be reduced to the extent
comparable benefits are actually received by you
during the twenty-four (24) month period following
your termination, and any such benefits actually
received by you shall be reported to the Company.
(4) In addition to the retirement
benefits to which you are entitled under the
Retirement Plan or any successor plans thereto, the
Company shall pay you in one sum in cash on the fifth
day following the Date of Termination, a lump sum
equal to the actuarial equivalent of the excess of
(x) the retirement pension (determined as a straight
life annuity commencing at age 65) which you would
have accrued under the terms of the Retirement Plan
(without regard to any amendment to the Retirement
Plan made subsequent to the Change in Control and on
or prior to the Date of Termination, which amendment
adversely affects in any manner, the computation of
the retirement benefits thereunder), determined as if
you were fully vested thereunder and had accumulated
(after the Date of Termination) twenty-four (24)
additional months of service credit thereunder at
your highest annual rate of compensation during the
twelve (12) months immediately preceding the Date of
Termination (but in no event shall you be deemed to
have accumulated additional months of service credit
after your sixty-fifth (65th) birthday), over (y) the
retirement pension (determined as a straight life
annuity commencing at age sixty-five (65)) which you
had then accrued pursuant to the provisions of the
Retirement Plan. For purposes of clause (x), the
term "compensation" shall include amounts payable
pursuant to Subsection 4(iv) (B) hereof, and amounts
payable pursuant to Subsection 4(iv) (B) hereof shall
be deemed to represent twenty-four (24) months of
compensation (or such lesser number of months of
compensation to your sixty-fifth (65th) birthday) for
purposes of determining benefits under the Retirement
Plan. For purposes of this Subsection, "actuarial
equivalent" shall be determined
<PAGE> 8
July 16, 1990
Page 8
using the same methods and assumptions utilized under
the Retirement Plan immediately prior to the Change
in Control.
(E) If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding
that, notwithstanding the good faith of you and the Company in
applying the terms of this Subsection 4(iv), the aggregate "parachute
payments" paid to or for your benefit are in an amount that would
result in any portion of such "parachute payments" not being
deductible by the Company or its Affiliates by reason of section 280G
of the Code, then you shall have an obligation to pay the Company upon
demand an amount equal to the sum of (1) the excess of (x) the
aggregate "parachute payments" paid to you or for your benefit over
(y) the highest amount of the aggregate "parachute payments" that
could have been paid to you or for your benefit without any portion of
such "parachute payments" being disallowed as a deduction by reason of
section 280G of the Code; and (2) interest on the amount set forth in
clause (1) of this sentence at the applicable Federal rate (as defined
in section 1274(d) of the Code) from the date of your receipt of such
excess until the date of such payment.
(v) You shall not be required to mitigate the amount of
any payment provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer or by retirement benefits after the Date of
Termination, or otherwise except as specifically provided in this Section 4.
(vi) In addition to all other amounts payable to you under
this Section 4, you shall be entitled to receive all benefits payable to you
under the Retirement Plan and any other plan or agreement relating to
retirement benefits.
5. Successors; Binding Agreement. (i) The Company will require
any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation from
the Company in the same amount and on the same terms as you would be entitled
hereunder if you had terminated your employment for Good Reason following a
Change in Control, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in
<PAGE> 9
July 16, 1990
Page 9
accordance with the terms of this Agreement to your devisee, legatee or other
designee or, if there is no such designee, to your estate.
6. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the first page of this Agreement,
provided that all notices to the Company shall be directed to the attention of
the Board with a copy to the Secretary of the Company, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
7. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by you and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
8. Validity. The invalidity or unenforceability or any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's awarded in any court
having jurisdiction; provided, however, that you shall be entitled to seek
specific performance of your right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
<PAGE> 10
July 16, 1990
Page 10
Sincerely,
THOR ENERGY RESOURCES, INC.
By: ______________________________
Its: ______________________________
AGREED TO THIS 16th DAY OF JULY, 1990.
_______________________________________
David M. Fender
