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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 13, 1995
Thor Energy Resources, Inc.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 1-7191 59-1232278
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(State or other jurisdiction (Commission (IRS Employer
of incorporation File Number) Identification No.)
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719 West Front St. Tyler, Texas 75702
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (903) 533-9111
Page 1 of 8 pages.
Index to Exhibits appears on page 6.
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
On March 13, 1995, Weaver and Tidwell was engaged (subject to the
approval of the United States Bankruptcy Court for the Eastern District of
Texas (the "Bankruptcy Court")) to replace Hein + Associates ("Hein") as the
principal independent accountant for Thor Energy Resources, Inc. (the
"Company"). The decision to change accountants was recommended by the
Company's Audit Committee following a review of potential auditors for the 1995
fiscal year and the status of the Company's litigation and was approved by the
Company's Board of Directors.
The Hein reports on the financial statements of the Company for the
past two fiscal years did not contain any adverse opinion or disclaimer of
opinion, nor were such opinions modified as to uncertainty, audit scope or
accounting principles, except that Hein's report on the Company's audited
financial statements for the year ended January 31, 1994, was modified with a
note stating that there was uncertainty as to the outcome of certain litigation
brought against the Company by a former officer and director. See "Item 5.
Other Events."
There were no disagreements with Hein on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to the Hein's satisfaction, would have caused
it to make reference to the subject matter of the disagreement in connection
with its report. Hein has not advised the Company that (i) internal controls
necessary to develop reliable financial statements did not exist, (ii)
information had come to the attention of Hein that made them unwilling to rely
on management's representations, or unwilling to be associated with the
financial statements prepared by management or (iii) the scope of the audit
should have been expanded significantly, or information had come to Hein's
attention that it concluded would, or if further investigated might have,
materially impacted the fairness or reliability of a previously issued audit
report or the underlying financial statements or the financial statements
issued or to be issued covering the fiscal period subsequent to the date of the
most recent audited financial statements (including information that might have
precluded the issuance of an unqualified audit report) and the issue was not
resolved to Hein's satisfaction prior to its resignation or dismissal.
The Company has not consulted Weaver and Tidwell regarding the
application of accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered on the
Company's financial statements and neither written or oral advice was provided
by Weaver and Tidwell that was an important factor considered by the Company in
reaching a decision as to the accounting, auditing or financial reporting
issue. Additionally, the Company has not consulted Weaver and Tidwell with
regard to the litigation described above. The engagement is subject to
Bankruptcy Court approval.
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ITEM 5. OTHER EVENTS
(a) The note to Hein's report on the Company's financial
statements for the year ended January 31, 1994 referred to in Item 3 refers to
a complaint originally filed in state district court where a former officer and
director of the Company alleged wrongful termination and that the Company had
previously improperly structured and disclosed an oil and gas reserve purchase.
The note also refers to a counterclaim in Bankruptcy Court, which was
subsequently moved to federal district court, where the former officer alleged
that the Company and the president of the Company acted fraudulently in regards
to the purchase of certain oil and gas reserves and their subsequent disclosure
in various public filings. A trial with respect to the various issues in this
litigation was held in the federal district court in January and February,
1995.
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 Mr. Sneed, the
plaintiff, (ii) the Company was not guilty of fraud; (iii) the Company had not
made negligent misrepresentations to Mr. Sneed; (iv) the Company had not made
misrepresentations to Mr. Sneed regarding a transaction in which either the
Company or Mr. Sneed had an interest or in a stock transaction; (v) the Company
intentionally inflicted emotional distress on Mr. Sneed; (vi) the Company and
its Chief Executive Officer defamed Mr. 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
Mr. Sneed for damages. The jury found that Mr. 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 Mr. Sneed's
employment agreement. The Company is awaiting the judge's ruling as to whether
all or only some of the issues presented to the jury must be retried and the
related question of whether some of the jury's findings will be preserved.
(b) The plaintiff in this litigation has filed a motion in the
Bankruptcy Court to have a trustee appointed to operate the Company during the
pendency of the Company's bankruptcy. The Company opposes this motion.
(c) On March 9, 1995, the Bankruptcy Court approved a Compromise
and Settlement of the Company's dispute with Morris & Co. and BMI Services,
Inc. ("BMI") on the following basic terms:
(1) The Company will be paid $300,000 in cash upon
execution of definitive documentation;
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(2) The Company's 10% equity interest in BMI and the put
rights related to the equity interest will be converted into a 20% net
profits interest (the "NPI") in any contract of BMI. The Company is
to receive annually the greater of 20% of BMI's pre-tax annual net
profits or $200,000. Such payments are to begin on or before October
1, 1995 and are to be secured by a security interest in all contract
rights held by BMI pursuant to contracts between BMI and the
University of Texas Medical Branch at Galveston ("UTMBG"); and
(3) In the event that BMI or Morris & Co. determines to
divest any interests in contractual relationships between BMI and
UTMBG, BMI must pay to the Company within ten days following
completion of any such transaction the greater of (i) 20% of the
consideration attributable to such transaction or (ii) the difference
between $2,500,000 and payments received by the Company prior to such
date attributable to the NPI.
The Bankruptcy Court's order approving this transaction, including a
letter agreement more specifically describing the basic terms of this
transaction, has been filed as an Exhibit to this Form 8-K. This transaction
is subject to the preparation and execution of definitive documentation.
ITEM 7(C). EXHIBITS
Exhibit 16.1 Letter to the Company from Hein + Associates dated
March 16, 1995.
Exhibit 99.1 Order on Motion to Approve Compromise and Settlement
of Advisory Proceeding.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THOR ENERGY RESOURCES, INC.
Date: March 17, 1995 By:/s/ David M. Fender
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David M. Fender,
President and
Chief Executive Officer
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EXHIBIT INDEX
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Exhibit No. Description Sequentially
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Numbered
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Page
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16.1 Letter to the Company from Hein + Associates dated March
16, 1995.
99.1 Order on Motion to Approve Compromise and Settlement of
Advisory Proceeding
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Exhibit 16.1
7
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HEIN+ASSOCIATES LLP [LOGO]
[LETTERHEAD]
March 16, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D. C. 20549
We have read Item 4 of the Thor Energy Resources, Inc. Form 8-k (Commission
File Number 1-7191) dated March 13, 1995, and concur with the statements made
therein that apply to us.
Very truly yours,
/s/ HIEN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
cc: Thor Energy Resources, Inc.
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Exhibit 99.1
8
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF TEXAS
TYLER DIVISION
IN RE: )
)
THOR ENERGY RESOURCES, INC., ) CASE NO. 94-61047-A
)
DEBTOR ) CHAPTER 11
NOTICE OF HEARING ON DEBTOR'S MOTION TO
APPROVE COMPROMISE AND SETTLEMENT OF ADVERSARY PROCEEDING
TO ALL PARTIES IN INTEREST:
PLEASE TAKE NOTICE that a hearing on Debtor's Motion to Approve Compromise
and Settlement of Adversary Proceeding filed March 6, 1995 has been scheduled
for Thursday, March 9, 1995, at 3:30 p.m., and will be held at the United
States Bankruptcy Court, 660 N. Central Expressway, Plano, Texas 75204.
Respectfully submitted,
JASON R. SEARCY, P.C.
/s/JASON R. SEARCY, P.C.
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JASON R. SEARCY, P.C.
P.O. Box 3929
Longview, Texas 75606
903/757-3399
903/757-9559 FAX
STATE BAR NO. 17953500
ATTORNEY FOR DEBTOR
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the above and foregoing
has been furnished via facsimile to all parties per the Certificate of Mailing
on this the 7 day of March, 1995.
/s/JASON R. SEARCY, P.C.
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JASON R. SEARCY, P.C.
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IN THE UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
IN RE: )
) CASE NO. 94-61047-A
THOR ENERGY RESOURCES, INC )
) CHAPTER 11
DEBTOR )
ORDER ON MOTION TO APPROVE COMPROMISE AND SETTLEMENT
OF ADVERSARY PROCEEDING
On this date came on to be heard the Motion to Approve Compromise and
Settlement of Adversary Proceeding filed by Thor Energy Resources, Inc., Debtor
in Possession. It appearing to the court that the relief requested should be
granted, it is
ORDERED that Thor Energy Resources, Inc., Debtor in Possession, is
authorized to compromise and settle adversary no. 94-6099-A pending in this
court, styled Thor Energy Resources, Inc. v. S. Morris & Co. and BMI Services,
Inc., on the terms and conditions as set out in said motion; it is further
ORDERED that Thor Energy Resources, Inc. is authorized to enter into and
execute such documents as are necessary to effect the settlement herein
approved on terms and conditions acceptable to thor Energy Resources, Inc.
Signed this 9th day of March, 1995.
/s/ Houston Abel
JUDGE PRESIDING
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THOR ENERGY RESOURCES, INC.
P.O. BOX 307
TYLER, TEXAS 75710
903-533-9111
February 23, 1995
VIA TELECOPIER
Mr. Steven M. Morris
Morris & Co.
16000 Barkers Point Lane, Suite 200
Houston, Texas 77079
RE: SETTLEMENT AGREEMENT NOT SUBJECT TO DISCOVERY
Dear Steve:
I received your counter-proposal. After careful consideration of your proposal,
the board of directors has authorized me to forward the following
counter-proposal to you in an effort to resolve the litigation and to modify
the securities purchase agreement of March 31, 1993. The following basic terms
are what the board has authorized me to communicate to you.
BASIC TERMS
1. THOR shall be paid $300,000 in cash within ten days following approval of
the final agreement by the Bankruptcy Court in the Eastern District of
Texas.
2. THOR shall convert its retained 10% interest in BMI Services, Inc. and its
existing put rights into a 20% net profits interest (NPI) in any contract,
including but not limited to any contract contemplated with the University
of Texas Medical Branch at Galveston (UTMBG). The 20% NPI will be in
perpetuity and will apply to any and all extentions or renewals of
contemplated, existing, or future agreements. THOR shall receive annually
the greater of 20% of BMI Services pre-tax annual net profits, or a
minimum of $200,000. Such payments shall begin on or before October 1,
1995, and shall be secured by a first lien security interest covering all
contract rights held with UTMBG by BMI Services. Such payments under the
NPI shall be made quarterly to THOR in Tyler, Texas, within 30 days of
receipt.
3. THOR terminates all covenants from the Securities Purchase Agreement of
March
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Steven M. Morris
February 23, 1995
Page 2
31, 1993, including but not limited to put rights, bonus rights, and
foreclosure rights, and releases Morris & Co. and BMI Services, Inc., their
officers, directors, employees, and shareholders from all obligations
thereunder; and the parties mutually release each other from all claims
they have relating to said agreement. However, such waiver and release
provision shall not apply to or affect THOR's first lien security interest
reserved in paragraph (2) above or THOR's legal rights to enforce this
agreement.
4. Should BMI Services or Morris & Co. elect to divest or transfer their
interest in the UTMBG to any party, in whole or part, THOR will receive in
cash, within ten business days following completion of such transaction,
20% of all consideration received from such divestiture or transfer or that
amount required for THOR to receive the difference between $2.5 million and
the payments received to date pursuant to the terms of this agreement all
consideration received by BMI or Morris & Co. for its interest in the UTMBG
incinerator.
5. THOR shall be included as an additional insured party with an appropriate
indemnification on all insurance coverage relating to its interest in UTMBG
incinerator. Such indemnification shall be for liabilities arising from
any cause of action brought against THOR's net profits interest in the
UTMBG's incinerator by any party.
6. BMI Services and Morris & Co. will take all necessary steps to have THOR
removed as guarantor on the note obligations that currently exist at Tyler
Bank & Trust in Tyler within ten business days from acceptance of this
agreement.
7. BMI Services and Morris & Co. shall take necessary steps through its
contemplated agreement with BioMed SW and other third parties to insure
that a minimum amount of medical waste be delivered to the UTMBG
incinerator each month at a minimum price to insure payment of THOR's
quarterly net profits interest described in (2) above.
8. THOR shall not be assessed any cost whatsoever relating to its ownership
interest, or net profits interest in UTMBG incinerator.
9. THOR, its directors, officers, employees, agents and affiliates shall be
held harmless from any liability relating to its ownership and net profits
interest in UTMBG, incinerator by BioMed SW, BMI Services, Inc., and
Morris & Co. or their assignees.
10. All monthly, quarterly, and annual financial statements shall be furnished
to THOR on a timely basis, but no later than seven (7) business days after
they are produced, or fifteen days following the end of any reporting
period in question.
11. Any final agreement must be approved by THOR, BMI Services, Inc. and Morris
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Steven M. Morris
February 23, 1995
Page 3
& Co.'s respective Board of Directors.
Yours very truly,
/s/ DAVID M. FENDER
David M. Fender
President
Thor Energy Resources, Inc.
DMF/kkw
Accepted and agreed this 24th day of February, 1995.
/s/ STEVEN M. MORRIS
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Morris & Co. by Steven M. Morris
Accepted and agreed this 24th day of February, 1995.
/s/ [illegible] 2/24/95
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Authorized Officer for BMI Services, Inc.
