Thor Energy Resources and Subsidiaries - Page 3

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          business activities included mechanical, electrical, and plumbing           
          engineering services.  In 1987, Thor acquired 100 percent of the            
          issued and outstanding stock of S&B.  S&B's board of directors              
          included LaVelle D. Fender, David M. Fender, and Sol M.                     
          Shefferman.  LaVelle D. Fender is David M. Fender's mother, and             
          she served as chairman of the board of directors of S&B.                    
               During the tax year ending January 31, 1989, S&B was a                 
          member of an affiliated group of corporations, as defined under             
          section 1504, and Thor was the common parent of that affiliated             
          group.  Thor filed a consolidated return with the affiliated                
          group for the tax year ending January 31, 1989, which included              
          S&B for the period beginning February 1, 1988, and ending                   
          November 17, 1988.  Thor owned 100 percent of the S&B stock                 
          during the entire period that S&B was a member of the affiliated            
          group.                                                                      
               In March 1988, Thor began negotiating with a management                
          group of S&B employees (the management group) regarding the                 
          management group's desire to acquire S&B from Thor.  The                    
          management group intended that an employee stock ownership plan             
          would hold the S&B shares after they were acquired from Thor.               
          The management group formed S&B Acquisition Co. (the Buyer) to              
          purchase the S&B stock.                                                     
               The S&B board of directors held a telephone conference                 
          special meeting on April 26, 1988, and discussed the status of              
          the management group's proposal to purchase the S&B stock from              




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