<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
MESA Inc.
__________________
(Name of issuer)
Common Stock, $.01 Par Value
___________________________
(Title of class of securities)
590911103
--------------
(CUSIP number)
Dennis R. Washington Marvin Davis
c/o Washington Corporations Davis Companies
101 International Way 2121 Avenue of the Stars, Suite 2800
Missoula, Montana 59807 Los Angeles, California 90067
(406) 523-1300 (310) 551-1470
David H. Batchelder Dorn Parkinson
Batchelder & Partners, Inc. c/o Washington Corporations
4330 La Jolla Village Drive, Suite 200 101 International Way
San Diego, California 92122 Missoula, Montana 59807
(619) 456-6655 (406) 523-1300
_______________________________________________
(Name, address and telephone number of person
authorized to receive notices and communications)
COPY TO:
Scott R. Haber Kendall R. Bishop
Latham & Watkins O'Melveny & Myers
505 Montgomery Street, Suite 1900 1999 Avenue of the Stars, 7th Floor
San Francisco, California 94111 Los Angeles, California 90067
(415) 391-0600 (310) 553-6700
June 19, 1995
_______________________________________________________
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this statement because of Rule 13d-1(b)(3) or (4), check the
following box: [ ]
Check the following box if a fee is being paid with the statement: [X]
Page 1 of 47 Pages
Exhibit Index is on Page 20
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SCHEDULE 13D
- --------------------- ------------------
CUSIP No. 590911103 Page 2 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
DENNIS R. WASHINGTON
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
PF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares 3,500,000 SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
-0- SHARES OF COMMON STOCK
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
3,500,000 SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
-0- SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,500,000 SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
5.5%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
IN
- --------------------------------------------------------------------------------
2
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CUSIP No. 590911103 Page 3 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
DAVIS ACQUISITION, L.P.
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
CALIFORNIA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
3.9%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
PN
- --------------------------------------------------------------------------------
3
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CUSIP No. 590911103 Page 4 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
DAVIS COMPANIES
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
CALIFORNIA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
3.9%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
CO
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4
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CUSIP No. 590911103 Page 5 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
MARVIN DAVIS AND BARBARA DAVIS REVOCABLE TRUST
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
WC
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
CALIFORNIA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
3.9%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
OO
- --------------------------------------------------------------------------------
5
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- --------------------- ------------------
CUSIP No. 590911103 Page 6 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
MARVIN DAVIS
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
AF
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,500,000 SHARES OF COMMON STOCK (SEE ITEM 5 BELOW)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
3.9%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
IN
- --------------------------------------------------------------------------------
6
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CUSIP No. 590911103 Page 7 of 20 Pages
- --------------------- ------------------
- -------------------------------------------------------------------------------
1. Name of Reporting Person
DAVID H. BATCHELDER
- -------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
N/A
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
-0- SHARES OF COMMON STOCK
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
-0- SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
-0- SHARES OF COMMON STOCK
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
0%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
IN
- --------------------------------------------------------------------------------
7
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CUSIP No. 590911103 Page 8 of 20 Pages
- --------------------- ------------------
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1. Name of Reporting Person
DORN PARKINSON
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2. Check the Appropriate Box if a Member of a Group (a) [x ]
(b) [ ]
- --------------------------------------------------------------------------------
3. SEC Use Only
- --------------------------------------------------------------------------------
4. Source of Funds
N/A
- --------------------------------------------------------------------------------
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6. Citizenship or Place of Organization
UNITED STATES OF AMERICA
- --------------------------------------------------------------------------------
Number of 7. Sole Voting Power
Shares -0- SHARES OF COMMON STOCK (SEE ITEM 5)
Beneficially --------------------------------------------------------------
8. Shared Voting Power
Owned By
-0- SHARES OF COMMON STOCK (SEE ITEM 5)
Each --------------------------------------------------------------
9. Sole Dispositive Power
Reporting
-0- SHARES OF COMMON STOCK (SEE ITEM 5)
Person
--------------------------------------------------------------
With 10. Shared Dispositive Power
-0- SHARES OF COMMON STOCK (SEE ITEM 5)
- --------------------------------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
-0- SHARES OF COMMON STOCK (SEE ITEM 5)
- --------------------------------------------------------------------------------
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
- --------------------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
0%
- --------------------------------------------------------------------------------
14. Type of Reporting Person
IN
- --------------------------------------------------------------------------------
8
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Item 1. Security and Issuer.
--------------------
This statement relates to shares of common stock, par value $.01 per
share (the "Shares"), of MESA Inc., a Texas corporation (the "Company"). The
principal executive offices of the Company are located at 5205 North O'Connor
Boulevard, Suite 1400, Irving, Texas 75039-3746.
Item 2. Identity and Background.
------------------------
(a)-(c), (f). This statement is being filed by (i) Dennis R.
Washington ("Mr. Washington"), (ii) Davis Acquisition, L.P., a California
limited partnership ("Davis Acquisition"), (iii) Davis Companies, a California
corporation ("Davis Companies"), (iv) the Marvin and Barbara Davis Revocable
Trust, a trust established under California law (the "Davis Trust"), (v) Marvin
Davis, (vi) David H. Batchelder ("Mr. Batchelder") and (vii) Dorn Parkinson
("Mr. Parkinson"). Davis Acquisition, Davis Companies, the Davis Trust and
Marvin Davis are sometimes collectively referred to herein as the "Davis
Entities." Mr. Washington, the Davis Entities, Mr. Batchelder and Mr. Parkinson
are sometimes collectively referred to herein as the "Reporting Persons."
Mr. Washington's principal business is to make and hold investments.
Mr. Washington is the founder and principal shareholder of Washington
Corporations, and his business address is c/o Washington Corporations, 101
International Way, Missoula, Montana 59807. The principal businesses of
Washington Corporations are interstate trucking and the repair and sale of
machinery and equipment. Mr. Washington also is the principal shareholder or
partner of entities the principal businesses of which include rail
transportation, mining, heavy construction, environmental remediation and real
estate development. Mr. Washington is a citizen of the United States of
America.
Davis Acquisition is a California limited partnership. Davis
Companies is a California corporation and the sole general partner of Davis
Acquisition. The Davis Trust is a trust established under California law and is
the sole shareholder of Davis Companies. Marvin Davis is the sole trustee of
the Davis Trust. The principal office of each of the Davis Entities is 2121
Avenue of the Stars, Suite 2800, Los Angeles, California 90067. The principal
business or occupation of each of the Davis Entities is to make and hold
investments.
The following sets forth as to each executive officer and director of
Davis Companies, (a) his name; (b) citizenship; (c) his business address; and
(d) his principal occupation and address where such employment is conducted.
1. (a) Marvin Davis
(b) United States of America
(c) 2121 Avenue of the Stars, Suite 2800, Los Angeles,
California 90067.
(d) The principal occupation of Marvin Davis is to make and hold
investments. Marvin Davis is the sole director and
President of Davis Companies, and his principal business
address is at the address in (c) above.
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2. (a) John Davis
(b) United States of America
(c) 2121 Avenue of the Stars, Suite 2900, Los Angeles,
California 90067.
(d) The principal occupation of John Davis is President of Davis
Entertainment Company, the principal business of which is
media and entertainment. John Davis is also Vice President
of Davis Companies. The principal business address of Davis
Entertainment Company is at the address in (c) above.
Mr. Batchelder's principal occupation is sole shareholder, President,
Secretary and Director of Batchelder & Partners, Inc., a Texas corporation
("BPI"). BPI is a financial advisory and consulting firm. Mr. Batchelder is
President, Secretary and Director of Batchelder Co., the general partner of DHB
Partners, L.P., an investor in acquisition partnerships since 1988 and also is a
director of each of the Company, Kasler Holding Company, MacFrugal's
Bargains*Close-outs, Inc. and Allwaste, Inc. Kasler Holding Company is an
affiliate of Mr. Washington. Mr. Batchelder's principal business address is
located at 4330 La Jolla Village Drive, Suite 200, San Diego, California 92122.
Mr. Batchelder is a citizen of the United States of America.
Mr. Parkinson's principal occupation is President of Washington
Corporations, which is an affiliate of Mr. Washington, and his business address
is c/o Washington Corporations, 101 International Way, Missoula, Montana 59807.
The principal businesses of Washington Corporations are interstate trucking and
the repair and sale of machinery and equipment. Mr. Washington also is the
President of other affiliates of Mr. Washington, the principal businesses of
which include rail transportation, mining and real estate development. Mr.
Parkinson is Chairman of Kasler Holding Company, which is an affiliate of Mr.
Washington. Mr. Parkinson also is a director of the Company. Mr. Parkinson is
a citizen of the United States of America.
(d) and (e). During the last five years, Mr. Washington has not (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
During the last five years, none of the Davis Entities or any
executive officer, director or controlling person of Davis Companies has (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
During the last five years, Mr. Batchelder has not (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such
10
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proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
During the last five years, Mr. Parkinson has not (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
As of the close of business on June 28, 1995, Mr. Washington had
purchased an aggregate of 3,500,000 Shares for a total consideration of
$17,897,336, which amount was provided from his personal funds.
As of the close of business on June 28, 1995, the Davis Entities had
purchased an aggregate of 2,500,000 Shares for a total consideration of
$12,976,546. All of such Shares initially were acquired by an affiliate and in
June 1995 were transferred to Davis Acquisition at cost. The source of the
funds used by Davis Acquisition to purchase such Shares was a capital
contribution from its general and limited partners out of their respective
assets. As of the close of business on June 28, 1995, John Davis had purchased
an aggregate of 35,000 Shares for a total consideration of $178,509, which
amount was provided from his personal funds.
As of the close of business on June 28, 1995, Mr. Batchelder had not
purchased any Shares.
As of the close of business on June 28, 1995, Mr. Parkinson had not
purchased any Shares. As of the close of business on June 28, 1995, Mr.
Parkinson's minor son had purchased 3,800 Shares for a total consideration of
$20,791, which amount was provided from his son's personal funds.
Item 4. Purpose of Transaction.
-----------------------
Mr. Washington and the Davis Entities each acquired their respective
Shares in order to obtain an equity position in the Company. In the opinion of
each of the Reporting Persons, the Shares are currently undervalued, and each
Reporting Person believes that the Board should evaluate all alternatives
available to the Company to maximize the value of the Company for all
shareholders, including, among other things, a restructuring of the Company or a
sale of the Company through the sale of all or substantially all of the assets
of the Company to, or merger or other business combination with, a party
unaffiliated with any of the Reporting Persons. On June 29, 1995, Mr.
Washington and Marvin Davis sent a letter to the Board of Directors of the
Company asking the Board of Directors to promptly form a committee consisting of
all independent directors, with independent financial and legal advisors, to
explore
11
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all alternatives to enhance the value of the Company for all shareholders. A
copy of the letter is filed herewith as Exhibit 2 and is incorporated herein by
reference.
In the event that the Board does not promptly cause the independent
directors of the Company to evaluate all alternatives to maximize the value of
the Company for all shareholders, the Reporting Persons, individually or
together, intend to seek to call a special meeting of shareholders for the
purpose of electing a majority of the board of directors who would be committed
to exploring all alternatives for maximizing shareholder value. The Company's
Articles of Incorporation provide that a special meeting of shareholders may be
called by the chief executive officer, the Board of Directors or the holders of
not less than 20% of the outstanding Shares entitled to vote at the proposed
special meeting. The Reporting Persons, individually or together, reserve the
right, subject to applicable law, to seek proxies, consents and/or ballots in
support of nominees at a special meeting of shareholders or a subsequent meeting
of shareholders or otherwise, or in support of or against other matters that may
come before the Company's shareholders for their vote or consent.
The Reporting Persons, individually or together, may communicate with
shareholders to determine if they share the same concerns as the Reporting
Persons with respect to their desire to have the Board consider all alternatives
to maximize shareholder value. The Reporting Persons, individually or together,
also may communicate with other parties who may be potential parties to a
transaction involving the Company, including a restructuring, sale of assets,
merger or other business combination.
In December 1994, Mr. Washington notified the Company and the federal
antitrust authorities that he had a present good faith intention to acquire more
than $15 million of the outstanding Shares and, depending on market conditions,
might acquire more of such Shares. His notification under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "Act"), designated the 25%
acquisition threshold, which had the effect of permitting him, following the
applicable waiting period, to acquire up to 49.9% of the outstanding Shares
without further notification under such Act. On December 27, 1994, Mr.
Washington received notification that the Federal Trade Commission had granted
his request for early termination of the waiting period under the Act.
By letter dated February 17, 1995, pursuant to a provision of the
Company's bylaws, Mr. Washington notified the Company of his wish to nominate
three candidates for election as directors at the 1995 annual meeting of
shareholders (the "1995 Annual Meeting") and his intent to cumulate votes in the
election of directors at the annual meeting. As of February 17, 1995, Mr.
Washington beneficially owned 2,854,900 Shares (which constituted approximately
4.5% of the then outstanding Shares).
In its proxy statement dated April 4, 1995 with respect to the 1995
Annual Meeting, the Company stated that after discussions with Mr. Washington's
representatives, the Company concluded that the best interests of the Company
and its shareholders would be served by the Board's nominating two of Mr.
Washington's representatives as candidates for election as directors.
Accordingly, on April 1, 1995, the Company and Mr. Washington entered into an
agreement pursuant to which the parties agreed that the slate of nominees to be
proposed by the Board of Directors for election at the 1995 Annual Meeting would
include two of Mr. Washington's designees, Mr. Batchelder and Mr. Parkinson, and
eight other directors nominated
12
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by the Board, and that the parties would vote and cause their affiliates to vote
in favor of such nominees. The agreement is described in Item 6 below and a
copy is attached hereto as Exhibit 6 and such description and Exhibit are
incorporated herein by reference.
On May 17, 1995, the Company's shareholders elected Messrs. Batchelder
and Parkinson to the Board. As a result, Mr. Washington, through his nominees
to the Board of Directors has the ability to participate in and influence the
formulation, determination and direction of certain business decisions and
policies of the Company. On June 19, 1995, Mr. Washington and Marvin Davis
discussed their respective views concerning the Company's need to explore all
alternatives to maximize shareholder value and agreed to act together in an
effort to seek to have the Board of Directors consider all available
alternatives to maximize shareholder value. Concurrently with the filing of
this Schedule 13D, Mr. Washington and Marvin Davis issued a joint press release
announcing, among other things, that they had formed a group for the purpose of
maximizing shareholder value of the Company. A copy of the press release is
attached hereto as Exhibit 8 and is incorporated herein by reference.
Mr. Batchelder and Mr. Parkinson, as directors of the Company, intend
to communicate with management and other directors in order to influence the
Board of Directors to consider all available alternatives to maximize
shareholder value. A copy of a letter dated June 29, 1995 which Mr. Batchelder
and Mr. Parkinson sent to the other members of the Board of Directors of the
Company is filed herewith as Exhibit 3 and is incorporated herein by reference.
Any actions taken by Mr. Batchelder and Mr. Parkinson would be taken subject to
their fiduciary duties as directors of the Company.
By letter dated July 29, 1994, BPI was engaged by Mr. Washington to
act as his financial advisor with respect to a possible investment in the
Company. BPI provides advice and assistance in formulating a strategy to
achieve Mr. Washington's objectives with respect to the Company. By letter
dated July 18, 1994, BPI was engaged by Davis Companies to act as financial
adviser with respect to a possible investment in the Company. From the
inception of such agreement, Davis Companies and BPI orally agreed that BPI
would not provide any advice with respect to purchasing, selling, holding or
voting of Company securities by the Davis Entities or their affiliates. So long
as the Davis Entities participate in a group with Mr. Washington, BPI will
advise the Davis Entities on their strategy for achieving their goal to maximize
the value of the Company for all shareholders. Copies of the agreement between
Mr. Washington and BPI and the agreement between Davis Companies and BPI, each
as amended, are described in Item 6 below and are filed herewith as Exhibits 4
and 5, respectively, and such descriptions and such Exhibits are incorporated
herein by reference.
The Reporting Persons, individually or together, may take such other
actions as he, it or they deem appropriate in an effort to assist the Company in
enhancing shareholder value. The Reporting Persons intend to review on a
continuing basis their respective investments in the Shares and may, subject to
the continuing evaluation of the factors discussed herein, acquire from time to
time additional Shares in the open market or in privately negotiated
transactions. The Reporting Persons do not intend to acquire additional Shares
through a tender or exchange offer or through a merger or other business
combination. Depending on the factors discussed herein, the Reporting Persons
may, from time to time, retain or sell all or a portion of their respective
holdings of the Shares in the open market or in privately negotiated
transactions. Any open market or privately negotiated purchases or sales may be
made at any
13
<PAGE>
time without further prior notice. Each of the Reporting Persons reserves the
right to cease his or its participation in a group with the other Reporting
Persons.
Any actions that any of the Reporting Persons might undertake with
respect to the Shares will be dependent upon its or his individual review of
numerous factors, including, among other things, the availability of Shares for
purchase and the price levels of such Shares, general market and economic
conditions, on-going evaluation of the Company's business, financial condition,
operations and prospects, the relative attractiveness of alternative business
and investment opportunities, the actions of the management and the Board of
Directors of the Company, and other future developments. By letter dated June
27, 1995, Mr. Washington and Davis Acquisition have agreed to use their best
efforts to notify the other of his or its intention to enter into any
transactions involving the Company's securities, and in the event that both
desire to buy or sell such securities, to use their best efforts to coordinate
any such transactions in a manner that will result in the least detriment to
their respective interests as shareholders of the Company, which may include
using the same securities broker to effect the transactions on a pro-rata basis.
Each of the Reporting Persons will make all decisions to purchase, sell, hold or
vote his or its securities of the Company and, subject to the foregoing, no
Reporting Person will have any power or right with respect to purchasing,
selling, holding or voting any securities of the Company held by any other
Reporting Person. The June 27, 1995 letter is described in Item 6 below and
filed herewith as Exhibit 7, and such description and exhibit are incorporated
herein by reference.
Although the foregoing reflects activities presently contemplated by
the Reporting Persons with respect to the Company, the foregoing is subject to
change at any time, and there can be no assurance that any of the Reporting
Persons will purchase additional Shares or take any of the other actions
referred to above. Except as set forth above, none of the Reporting Persons has
any present plans or intentions which would result in or relate to any of the
transactions described in subparagraphs (a) through (j) of Item 4 of Schedule
13D.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a)-(b) As of the close of business on June 28, 1995, Mr. Washington
directly owned in the aggregate 3,500,000 Shares, which represent approximately
5.5% of the 64,050,009 Shares outstanding as of May 12, 1995, as reported in the
Company's Form 10-Q for the quarter ended March 31, 1995 (the "Outstanding
Shares"). Mr. Washington has the sole power to vote or direct the vote, and to
dispose or to direct the disposition of, the Shares which he owns directly.
As of the close of business on June 28, 1995, Davis Acquisition
directly owned in the aggregate 2,500,000 Shares, which represent approximately
3.9% of the Outstanding Shares. Davis Acquisition, acting through its general
partner, Davis Companies, has the sole power to vote or direct the vote, and to
dispose or to direct the disposition of, the Shares which it owns directly.
Davis Companies and Marvin Davis, as the sole executive officer and the sole
director of Davis Companies and as the sole trustee of the Davis Trust, which is
the sole shareholder of Davis Companies, may be deemed to beneficially own the
Shares. As of the close of business on June 28, 1995, John Davis directly owned
in the aggregate 35,000 Shares, which represent less than .1% of the Outstanding
Shares. John Davis has the sole power to vote or direct the vote, and to
dispose or to direct the disposition of, the Shares which he owns directly.
14
<PAGE>
As of the close of business on June 28, 1995, Mr. Batchelder did not
directly or indirectly own any Shares.
As of the close of business on June 28, 1995, Mr. Parkinson did not
directly or indirectly own any Shares, other than 3,800 Shares owned by Mr.
Parkinson's son which Mr. Parkinson may be deemed to beneficially own. Mr.
Parkinson may be deemed to share the power to vote or direct the vote, and to
dispose or to direct the disposition of, the Shares which his son owns, but
disclaims beneficial ownership of such Shares. Such Shares represent less than
.1% of the Outstanding Shares.
Other than the foregoing, no Reporting Person or any executive
officer, director or controlling person of Davis Companies beneficially owns any
Shares. Except as set forth in this Item 5(a)-(b), each of the persons named in
this Item 5(a)-(b) disclaims beneficial ownership of any Shares owned
beneficially or of record by any other person named in this Item 5(a)-(b).
(c) Within the past 60 days, none of the Reporting Persons or any
executive officer, director or controlling person of Davis Companies has
purchased any Shares, except as set forth on Schedule I hereto.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
---------------------------------------------------------------------
By letter dated July 29, 1994, Mr. Washington agreed to pay BPI, as
compensation for the financial advisory services provided to Mr. Washington, 15%
of the profits (through December 31, 1995) realized by Mr. Washington on his
investment in securities of the Company and two other companies in the oil and
gas industry identified by BPI. In June 1995, such agreement was amended to
exclude any and all references to such other companies. As a result of such
amendment, BPI's fees under the agreement will be calculated solely based on the
profits realized by Mr. Washington with respect to the Company's securities. In
addition, Mr. Washington agreed to reimburse BPI for its reasonable and
documented out-of-pocket expenses and to indemnify BPI and its affiliates
against all expenses and liabilities in connection with BPI's engagement to
consult with respect to the foregoing. All of the Shares held by Mr. Washington
are subject to this agreement with BPI.
By letter dated July 18, 1994, Davis Companies agreed to pay BPI, as
compensation for the financial advisory services provided to Davis Companies, 5%
of the profits (through December 31, 1995) realized by Davis Companies or its
affiliates on its investment in securities of the Company and two other
companies in the oil and gas industry identified by BPI. In June 1995, such
agreement was amended to exclude any and all references to such other companies.
As a result of such amendment, BPI's fees under the agreement will be calculated
solely based on the profits realized by Davis Companies or its affiliates with
respect to the Company's securities. In addition, Davis Companies agreed to
reimburse BPI for its reasonable and documented out-of-pocket expenses and to
indemnify BPI and its affiliates against all
15
<PAGE>
expenses and liabilities in connection with BPI's engagement to consult with
respect to the foregoing. From the inception of such agreement, Davis Companies
and BPI orally agreed that BPI would not provide any advice with respect to
purchasing, selling, holding or voting of Company securities by Davis Companies
or its affiliates. In May 1995, BPI and Davis Companies agreed that the letter
agreement would apply only to Shares acquired before May 17, 1995, the date on
which Mr. Batchelder was elected to the Company's Board of Directors. Of the
Shares held by the Davis Entities, 2,000,000 Shares purchased prior to May 17,
1995 are subject to this agreement with BPI. Of the Shares held by John Davis,
25,000 Shares purchased prior to May 17, 1995 are subject to this agreement with
BPI.
On April 1, 1995, Mr. Washington and the Company entered into an
agreement pursuant to which they agreed that the slate of directors to be
proposed by the Board of Directors for election at the 1995 Annual Meeting would
include Mr. Batchelder and Mr. Parkinson and eight other directors nominated by
the Board, and that they would vote and cause their affiliates to vote in favor
of such nominees. The Company and Mr. Washington further agreed that one of the
nominees designated by Mr. Washington would serve on the Board's Compensation
and Stock Option Committee, and the other would serve on its Audit Committee
(one would also serve on any other committee of the Board of Directors that may
exist from time to time, subject to the reasonable eligibility requirements of
such committee). Under the agreement, Mr. Washington withdrew the notifications
made in his February 17, 1995 letter in which he had requested the Board to
nominate three designees for election to the Board. Mr. Washington also agreed
not to engage in any solicitation of proxies at the 1995 Annual Meeting. If Mr.
Washington and his affiliates beneficially own less than 1,300,000 shares of
Common Stock at any time after the date of the agreement, Mr. Washington has
further agreed not to nominate candidates for election as directors or engage in
any proxy solicitation at the Company's annual meeting of shareholders to be
held in 1996. At the option of the Company, if at any time Mr. Washington and
his affiliates beneficially own less than 2,800,000 shares of Common Stock, one
nominee designated by Mr. Washington will resign from the Board of Directors,
and if at any time Mr. Washington and his affiliates beneficially own less than
1,300,000 Shares, the remaining Washington designee also will resign. In
addition, as part of the agreement, each party released the other party (and
such other party's affiliates, associates and representatives) from any claims
arising prior to the date of the agreement that he or it may have with respect
to Mr. Washington's investment in the Company, any actions taken by the Company
in response thereto, the execution and delivery of the agreement or the business
and affairs of the Company, other than a breach of the agreement.
On June 27, 1995, Mr. Washington and Davis Acquisition entered into a
letter agreement pursuant to which each of them agreed to reimburse the other
for one-half of all out-of-pocket expenses (in excess of $25,000) that may be
incurred by either or both of them in connection with actions that either or
both of them (or their representatives) may take in furtherance of the group's
purpose after June 19, 1995. Mr. Washington and Davis Acquisition also agreed
to use their best efforts to notify the other in the event either of them
intends to engage in any transaction with respect to the securities of the
Company, including purchases or sales of the Shares. In the event that Mr.
Washington and Davis Acquisition determine as a result of such notification that
they both intend either to purchase or sell any Shares, they have agreed to use
their best efforts to coordinate such transactions in a manner that will result
in the least detriment to their respective interests as shareholders of the
Company, which may include using the same securities broker to effect the
transactions on a pro-rata basis. In the agreement,
16
<PAGE>
Mr. Washington and Davis Acquisition confirmed that all decisions to purchase,
sell, hold or vote the Company's securities will be made by each of them
independently and, subject to the foregoing, neither will have any power or
right with respect to purchasing, selling, holding or voting any securities of
the Company held by the other. Either party may terminate this agreement at any
time by notifying the other party in writing. The June 27, 1995 letter
agreement did not change Mr. Washington's or Davis Companies' respective
obligations under the respective July 1994 letter agreements with BPI, as
amended.
A copy of each of the agreements referred to in this Item 6 is
attached hereto as Exhibits 4, 5, 6 and 7, respectively, and is incorporated
herein by reference.
Except as described herein, none of the Reporting Persons has any
contracts, arrangements, understandings or relationships (legal or otherwise)
with any person with respect to any securities of the Company, including but not
limited to any contracts, arrangements, understandings or relationships
concerning the transfer or voting of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
---------------------------------
Exhibit 1 Joint Filing Agreement
Exhibit 2 Letter dated June 29, 1995 from Marvin Davis and Dennis R. Washington
to the Board of Directors of MESA Inc.
Exhibit 3 Letter dated June 29, 1995 from David Batchelder and Dorn Parkinson
to the Directors of MESA Inc.
Exhibit 4 Letter Agreement dated July 29, 1994 between Batchelder & Partners,
Inc. and Dennis R. Washington, as amended June 26, 1995, including
indemnification agreement
Exhibit 5 Letter Agreement dated July 18, 1994 between Batchelder & Partners,
Inc. and Davis Companies, as amended June 26, 1995, including
indemnification agreement and letter dated May 8, 1995
Exhibit 6 Agreement dated April 1, 1995 between MESA Inc. and Dennis R.
Washington
Exhibit 7 Letter Agreement dated June 27, 1995 between Dennis R. Washington and
Davis Acquisition, L.P.
Exhibit 8 Press Release dated June 29, 1995 of Dennis R. Washington and Marvin
Davis
17
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of each of the undersigned's
knowledge and belief, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Dated: June 29, 1995
/s/ Dennis R. Washington
---------------------------
Dennis R. Washington
/s/ David H. Batchelder
---------------------------
David H. Batchelder
/s/ Dorn Parkinson
---------------------------
Dorn Parkinson
Davis Acquisition, L.P.
By: Davis Companies
Its: General Partner
By: /s/ Marvin Davis
-------------------------
Name: Marvin Davis
Its: President
Davis Companies
By: /s/ Marvin Davis
-------------------------
Name: Marvin Davis
Its: President
Marvin and Barbara Davis Revocable Trust
By: /s/ Marvin Davis
-------------------------
Name: Marvin Davis
Its: Trustee
/s/ Marvin Davis
-----------------------------
Marvin Davis
18
<PAGE>
SCHEDULE I
----------
During the past 60 days, Mr. Washington has engaged in the following
transactions in Shares. All transactions involved purchases of Shares on the
New York Stock Exchange. All Shares are held by Mr. Washington.
<TABLE>
<CAPTION>
NUMBER
OF
TRANSACTION DATE SHARES PURCHASE PRICE PER SHARE*
<S> <C> <C>
6/20/95 171,300 $ 4.00
6/21/95 152,500 4.125
6/21/95 700 4.00
6/22/95 37,200 4.25
6/23/95 103,200 4.50
6/23/95 1,500 4.25
6/23/95 33,600 4.375
6/26/95 145,100 4.50
</TABLE>
During the past 60 days, the Davis Entities have engaged in the
following transactions in Shares. All transactions involved purchases of Shares
on the New York Stock Exchange by an affiliate. As of June 29, 1995, all Shares
are held by Davis Acquisition unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER
OF
TRANSACTION DATE SHARES PURCHASE PRICE PER SHARE*
<S> <C> <C>
**5/12/95 10,000 $5.625
6/20/95 171,400 4.00
6/21/95 152,400 4.125
6/21/95 700 4.00
6/22/95 37,300 4.25
6/23/95 103,100 4.50
6/23/95 1,500 4.25
6/23/95 33,600 4.375
**6/26/95 10,000 4.50
</TABLE>
* Excluding Commissions
** Represents Shares acquired by John Davis.
19
<PAGE>
EXHIBIT INDEX
-------------
Page Number
-----------
Exhibit 1 Joint Filing Agreement
Exhibit 2 Letter dated June 29, 1995 from Marvin Davis and
Dennis R. Washington to the Board of Directors of MESA Inc.
Exhibit 3 Letter dated June 29, 1995 from David Batchelder
and Dorn Parkinson to the Directors of MESA Inc.
Exhibit 4 Letter Agreement dated July 29, 1994 between Batchelder &
Partners, Inc. and Dennis R. Washington, as amended June 26,
1995, including indemnification agreement
Exhibit 5 Letter Agreement dated July 18, 1994 between Batchelder &
Partners, Inc. and Davis Companies, as amended June 26, 1995,
including indemnification agreement and amendment dated May 8, 1995
Exhibit 6 Agreement dated April 1, 1995 between MESA Inc. and
Dennis R. Washington
Exhibit 7 Letter Agreement dated June 27, 1995 between Dennis R.
Washington and Davis Acquisition
Exhibit 8 Press Release dated June 29, 1995 of Dennis R. Washington
and Marvin Davis
20
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) of the Securities Exchange Act of 1934, as
amended, the undersigned agree to the joint filing on behalf of each of them a
Statement on Schedule 13D (including any and all amendment thereto) with respect
to the Common Stock of MESA Inc., and further agree that this Agreement shall be
included as an Exhibit to such joint filings.
The undersigned further agree that each party hereto is responsible for
timely filing of such Statement on Schedule 13D and any amendments thereto, and
for the completeness and accuracy of the information concerning such party
contained therein; provided that no party is responsible for the completeness or
--------
accuracy of the information concerning the other party, unless such party knows
or has reason to believe that such information is inaccurate.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original instrument, but all of such counterparts
together shall constitute but one agreement.
In evidence thereof the undersigned, being duly authorized, hereby execute
this Agreement this 29th day of June, 1995.
/s/ Dennis R. Washington
-----------------------------
Dennis R. Washington
/s/ David H. Batchelder
-----------------------------
David H. Batchelder
/s/ Dorn Parkinson
-----------------------------
Dorn Parkinson
Davis Acquisition, L.P.
By: Davis Companies
Its: General Partner
By: /s/ Marvin Davis
-----------------------
Name: Marvin Davis
Its: President
Davis Companies
By: /s/ Marvin Davis
-----------------------
Name: Marvin Davis
Its: President
Marvin and Barbara Davis
Revocable Trust
By: /s/ Marvin Davis
-----------------------
Name: Marvin Davis
Its: Trustee
/s/ Marvin Davis
----------------------------
Marvin Davis
<PAGE>
EXHIBIT 2
June 29, 1995
Board of Directors
MESA Inc.
1400 Williams Square West
5205 N. O'Conner Boulevard
Irving, Texas 75039-3746
To the Board of Directors of MESA Inc.:
As shareholders of MESA Inc. since the summer of 1994, we have closely
monitored the events occurring at the Company, including the recent failed
auction of the Hugoton Field properties. We supported your decision to conduct
an auction of the Hugoton Field properties, although we do not understand why
you did not engage independent financial advisors to assist management on such a
material transaction. We are, of course, disappointed with the failed auction
process especially given the disclosure that management did not permit partial
bids nor solicit foreign buyers. Most distressing to us, however, is the Board
of Directors' response to the failed auction. We are specifically referring to
the Board's decision to accept management's proposal which narrowly focuses on
only refinancing and partial property sale alternatives. As significant
shareholders, we believe that the Board must evaluate all alternatives available
to the Company to maximize value for all shareholders. Accordingly, in addition
to the alternatives proposed by management, the Board should also consider a
possible sale of the Company, or merger or other business combination. In light
of the current financial distress of the Company, we respectfully request that
the Board of Directors promptly form a committee consisting of all of the
independent directors, with independent financial and legal advisors, to explore
all alternatives to enhance the value of the Company for shareholders.
We would appreciate your prompt response regarding this critical issue to all
the shareholders of MESA Inc.
Yours truly,
/s/ Marvin Davis
------------------------
Marvin Davis
/s/ Dennis R. Washington
------------------------
Dennis R. Washington
cc: Secretary of MESA Inc.
David H. Batchelder
Scott R. Haber, Esq.
<PAGE>
EXHIBIT 3
June 29, 1995
Board of Directors
MESA Inc.
1400 Williams Square West
5205 N. O'Connor Boulevard
Irving, Texas 75039-3746
Dear Fellow Directors of MESA Inc.:
We are writing you to express concern regarding management's current course of
action as outlined to the Board on Friday, June 9, 1995. During the conference
call, management described a plan to refinance certain indebtedness. We were
told that this action is necessary to permit partial sales of MESA's Hugoton
properties. The plan was presented to the Board as the Company's best response
to its failure to secure a reasonable bid for all of MESA's Hugoton assets. No
materials or detailed analysis was presented to the Board to support this
conclusion.
During the call, David proposed that management consider exploring all
alternatives including potential business combinations or a sale of the Company.
Although he is on record having stated that the Board rejected this proposal,
the Chairman foreclosed discussion of these alternatives without presenting any
materials to the Directors nor seeking a vote. We believe the following points
are central to this issue and offer them for your consideration:
1. Management has made the point that since no acceptable offers were
forthcoming for the Hugoton properties, a sale of the Company could not possibly
produce a favorable result for shareholders. The Board should know whether
management in arriving at this conclusion considered (i) the synergies to a
buyer of the Company including the present value of potential overhead savings
approaching $2.50 per MESA share; (ii) the ability of certain buyers to
refinance debt of the Company and realize substantial interest savings which
could exceed $3.00 per MESA share on a present value basis; and (iii) the fact
that certain buyers, such as financial or foreign entities, might only be
attracted to the Company if the total enterprise were available for purchase
since the availability of a "vehicle" with management, systems and operations
would be material to such a buyer. This is particularly significant since
management has stated that it now regrets that foreign buyers were not solicited
to participate in the Hugoton auction.
2. During the conference call, management did not address why they had
rejected the exploration of possible business combinations saying only that the
Company is not for sale. This is management's position even though the
<PAGE>
-2-
Board of Directors June 29, 1995
potential advantages are obvious. A business combination could relieve the
current liquidity crisis while permitting our shareholders an opportunity to
continue to participate in the upside touted by management. Potential partners
include mid to large size independents with underleveraged balance sheets as
well as companies with sufficient market capitalization and access to financing
markets to permit an assumption of the Company's debt. These companies tend not
to approach potential merger partners unless invited since the transactions
must, by definition, be negotiated with the Board.
3. More complex transactions could also be explored, such as debt
restructuring and partial assets sales combined with a merger or sale of the
Company.
4. Management has implied that the urgency with which we are addressing this
matter reflects Batchelder & Partners' fee arrangement with Mr. Washington which
entitles it to 15% of profits on Mr. Washington's shares through December 31,
1995. We do believe that if asked, a majority of shareholders would prefer a
prompt and comprehensive review of alternatives. However, the urgency that we
attach to this matter is due to the fact that the Company's interest costs total
$140 million per year and overhead costs total an additional $30 million per
year. Management's own forecasts indicate that the Company will be unable to
fund its principal and interest obligations in 1996 with cash flows from
operating activities and available cash and securities balances. Time is of the
essence. Delays continue to diminish the Company's flexibility, alternatives
and book equity value of only $125 million.
5. We do not see and management has not presented any downside that could
flow from concurrently exploring all alternatives. We are not suggesting that
the Company forego pursuing possible refinancing or partial asset sales, only
that these alternatives be explored along with potential restructurings,
business combinations and a sale of the Company.
6. There is, however, substantial downside to exploring only the narrow
----
alternatives management presented on the conference call. A refinancing of the
Hugoton debt will trigger make whole or prepayment penalties estimated by
management at $70 million. We estimate additional refinancing costs of $10 to
$20 million. Therefore, management will be required to ask the Board to approve
a permanent impairment of the equity value of the Company of $80 to $90 million
in connection with the refinancing. We do not believe that the Board could
fulfill its duty of care with respect to this decision without making informed
judgments about all other reasonable alternatives. Under the current course,
the Board will be asked to approve an $80 to $90 million expense (which is equal
to 30% of the Company's current market capitalization) without having explored
all available alternatives. We believe that the independent directors must be
advised by independent legal counsel with respect to this issue.
<PAGE>
-3-
Board of Directors June 29, 1995
We believe that it is incumbent upon the Board to form a committee of all
independent directors, with separate legal and financial advisors, to explore
all alternatives for enhancing shareholder value including business combinations
or a sale of the Company. We request that the Chairman of the Board call a
meeting of the directors to discuss this matter in greater detail. As
fiduciaries, we must each be concerned with our legal liability as directors and
be assured that we are making informed business judgments on behalf of all the
shareholders.
Yours truly,
/s/ David H. Batchelder
-----------------------
David H. Batchelder
/s/ Dorn Parkinson
------------------
Dorn Parkinson
<PAGE>
EXHIBIT 4
Batchelder & Partners, Inc.
4180 La Jolla Village Drive, Suite 560
La Jolla, California 92037
David H. Batchelder telephone: (619) 456-6655
President telecopier: (619) 456-7969
July 29, 1994
(as amended)
Mr. Dennis R. Washington
101 International Way
Missoula, Montana 59802
Dear Dennis:
This is to confirm our understanding that you have engaged Batchelder
& Partners, Inc. to act as your non-exclusive advisor with respect to the
investment in Mesa Inc. (the "Company"). "You" as used herein shall refer to
Dennis R. Washington.
In connection with this assignment, we will provide non-exclusive
advice and assistance in formulating an investment strategy and any other such
advice and assistance as you may require to achieve your investment objective.
Our aggregate compensation for the services referred to above will be
as follows:
(a) In the event that you and/or any affiliate (singly or collectively,
"Acquiror") purchase shares, warrants or other securities of the Company
("Securities") and thereafter realize a Profit (as hereinafter defined) with
respect thereto, you will pay to us a fee equal to 15% of such Profit.
Any fee payable to us shall be paid in cash at the consummation of the
particular transaction giving rise to such fee. For purposes of subparagraph
(a) above, "Profit" shall mean the excess (if any) of the "Value" received by
you upon the final disposition of the Securities over your "Total Cost" of the
Securities sold. "Value" shall mean, (i) with respect to cash consideration,
the amount of such cash; (ii) with respect to non-cash consideration consisting
of marketable securities, the mean between the high and low trading prices of
such securities on their principal trading market on the first trading day
following issuance or transfer thereof to you; and (iii) with respect to non-
cash consideration other than marketable securities, the fair value thereof as
agreed by you and us. "Total Cost" shall mean the aggregate purchase price of
acquiring such Securities, including commissions. Total Cost shall be
appropriately adjusted to reflect any stock dividend, stock split, extraordinary
cash or non-cash distribution or similar event. If substantially all, but not
all of such Securities have been sold, a fee shall
<PAGE>
-2-
Dennis R. Washington July 29, 1994
be paid pursuant to subparagraph (a) above equal to the Profit on such
Securities sold based upon the Value received over the average cost per Security
sold. If any such Securities have not been sold as of December 31, 1995, Profit
shall be computed as if the remaining Securities were sold at the mean between
the high and low trading prices of such Securities on their principal trading
market on December 31, 1995, and, if the Profit so computed exceeds amounts
previously paid pursuant to subparagraph (a) above, a fee shall be paid as if
such Securities had been sold on that date. You agree to provide us a
computation of Profit certified by a financial officer of Acquiror.
In addition to the foregoing compensation, you shall reimburse us (or cause
us to be reimbursed) for our reasonable and documented out-of-pocket expenses,
which shall include the reasonable fee and disbursements of our counsel. We
shall use counsel acceptable to both you and us. We shall not incur out of
pocket expenses in excess of $25,000 without your consent.
Since we will be acting on your behalf, you are agreeing to provide us with
indemnification pursuant to the letter of even date herewith from you to us.
It is understood that our services may be terminated by you or by us upon
notice of the other party at any time and without liability or continuing
obligation to you or to us (except for any compensation theretofore earned
hereunder and expenses theretofore incurred and except that if you terminate our
services and Acquiror realizes a Profit with respect to the Securities, then we
shall be entitled to compensation pursuant to subparagraph (a) and the fourth
paragraph hereof to the same extent as if our services had not been terminated).
Notwithstanding the foregoing, the indemnity provisions described in the
preceding paragraph shall survive such termination.
Except as required by law, any advice (written or oral) rendered by us
pursuant to this letter may not be disclosed publicly without our prior written
consent, which consent shall not be unreasonably withheld.
<PAGE>
-3-
Dennis R. Washington July 29, 1994
Please confirm that the foregoing is in accordance with your understanding
by signing and returning the duplicate of this letter attached hereto, which
shall thereupon constitute a binding agreement.
Very truly yours,
BATCHELDER & PARTNERS, INC.
By: /s/ David H. Batchelder
------------------------------
David H. Batchelder, President
Confirmed:
DENNIS R. WASHINGTON
By: /s/ Dennis R. Washington
------------------------
Dennis R. Washington
Date: August 17, 1994
---------------
<PAGE>
July 29, 1994
Batchelder & Partners, Inc.
4180 La Jolla Village Drive, Suite 560
La Jolla CA 92037
Gentlemen:
In connection with your engagement to consult with Dennis R. Washington
with respect to the matters contemplated by the letter from you to us of even
date herewith, I hereby agree to indemnify and hold harmless you and your
affiliates, the respective directors, officers, partners, agents, and employees
of you and your affiliates and each other person, if any, controlling you or any
of your affiliates, to the full extent lawful, from and against all losses,
claims, damages, liabilities and expenses incurred by you and such other persons
(including reasonable fees and disbursements of counsel) which (A) are related
to or arise out of (i) actions taken or omitted to be taken (including any
untrue statements made or any statements omitted to be made) by me or (ii)
actions taken or omitted to be taken by an indemnified person with my consent or
in conformity with my actions or omissions or (B) are otherwise related to or
arise out of your activities on my behalf under your engagement, and I will
reimburse you and any other person indemnified hereunder for all expenses
(including reasonable fees and disbursements of counsel) as they are incurred by
you or such other indemnified person in connection with investigating, preparing
or defending any such action or claim, whether or not in connection with pending
or threatened litigation in which you or any other indemnified person is a
party. I will not be responsible, however, for any losses, claims, damages,
liabilities or expenses pursuant to clause (B) of the preceding sentence which
are finally judicially determined to have resulted primarily from the bad faith
or gross negligence of the person seeking indemnification hereunder (although it
is expressly intended that I will be responsible for any thereof that result
from the negligence, other than gross negligence, of such person). I also agree
that neither you, nor any of your affiliates, nor any director, officer,
partner, agent or employee of you or any of your affiliates, nor any person
controlling you or any of your affiliates, shall have any liability to me for or
in connection with such engagement except for such liability for losses, claims,
damages, liabilities or expenses incurred by me which is finally judicially
determined to have resulted primarily from your bad faith or gross negligence as
herein described. The foregoing agreement shall be in addition to any rights
that you or any indemnified person may have at common law or otherwise,
including, but not limited to, any right to contribution. I hereby consent to
personal jurisdiction and service and venue in any appropriate court in which
any claim which is subject to this agreement is brought against you or any other
indemnified person.
All attorney retainer agreements and/or experts or advisors not associated
with Batchelder & Partners, Inc. shall be approved by Dennis R. Washington in
writing before I shall be
<PAGE>
-2-
Batchelder & Partners, Inc. July 29, 1994
responsible for payment. Such approval shall not be unreasonably withheld.
It is understood that, in connection with your engagement, you may also be
engaged to act for me in one or more additional capacities, and that the terms
of the original engagement or any such additional engagement may be embodied in
one or more separate written agreements. This indemnification shall apply to
the original engagement, any such additional engagement and any modification of
the original engagement or such additional engagement and shall remain in full
force and effect following the completion or termination of your engagement(s).
Very truly yours,
DENNIS R. WASHINGTON
/s/ Dennis R. Washington
------------------------
By: Dennis R. Washington
Accepted:
BATCHELDER & PARTNERS, INC.
By: David H. Batchelder
-------------------
Date: July 29, 1994
<PAGE>
EXHIBIT 5
Batchelder & Partners, Inc.
4180 La Jolla Village Drive, Suite 560
La Jolla, California 92037
David H. Batchelder telephone: (619) 456-6655
President telecopier: (619) 456-7969
July 18, 1994
(as amended)
Mr. John Davis
Davis Companies
2121 Avenue of the Stars
Suite 2900
Los Angeles, CA 90067
Dear John:
This is to confirm our understanding that you have engaged Batchelder &
Partners, Inc. to act as your non-exclusive advisor with respect to the
investment in Mesa Inc. (the "Company").
In connection with this assignment, we will provide non-exclusive advice and
assistance in formulating an investment strategy and any other such advice and
assistance as you may require to achieve your investment objective.
Our aggregate compensation for the services referred to above will be as
follows:
(a) In the event that you and/or any affiliate (singly or collectively,
"Acquiror") purchase shares, warrants or other securities of the Company
("Securities") and thereafter realizes a Profit (as hereinafter defined)
with respect thereto, you will pay to us a fee equal to 5% of such Profits
up to a maximum fee of $1 million.
Any fee payable to us shall be paid in cash at the consummation of the
particular transaction giving rise to such fee. For purposes of subparagraph
(a) above, "Profit" shall mean the excess (if any) of the "Value" received by
you upon the final disposition of the Securities over your "Total Cost" of the
Securities sold. "Value" shall mean, (i) with respect to cash consideration,
the amount of such cash; (ii) with respect to non-cash consideration consisting
of marketable securities, the mean between the high and low trading prices of
such securities on their principal trading market on the trading day of such
issuance or transfer thereof to you; and (iii) with respect to non-cash
consideration other than marketable securities, the fair value thereof as agreed
by you and us. "Total Cost" shall mean the aggregate purchase price of
acquiring such Securities, including commissions. Total Cost shall be
appropriately adjusted to reflect any extraordinary cash or non-cash
distribution or similar event. If substantially all, but not all, of such
Securities have been sold, a fee shall be paid pursuant to subparagraph (a)
above equal to the Profit on such Securities sold based upon the Value received
over the average cost per Security sold multiplied by the number of Securities
sold. The average cost per Security sold should be appropriately adjusted to
reflect
<PAGE>
-2-
Mr. John Davis July 18, 1994
a stock dividend or stock split. If any such Securities have not been sold as of
December 31, 1995, Profit shall be computed as if the remaining Securities were
sold at the mean between the high and low trading prices of such Securities on
their principal trading market on December 31, 1995, and, if the Profit so
computed exceeds amounts previously paid pursuant to subparagraph (a) above, a
fee shall be paid as if such Securities had been sold on that date. You agree to
provide us a computation of Profit certified by a financial officer of Acquiror.
In addition to the foregoing compensation, you shall reimburse us (or cause us
to be reimbursed) for our reasonable and documented out-of-pocket expenses,
which shall include the reasonable fee and disbursements of our counsel. We
shall use counsel acceptable to both you and us. We shall not incur out of
pocket expenses in excess of $25,000 without your consent.
Since we will be acting on your behalf, you are agreeing to provide us with
indemnification pursuant to the letter of even date herewith from you to us.
It is understood that our services may be terminated by you or by us upon
notice of the other party at any time and without liability or continuing
obligation to you or to us (except for any compensation theretofore earned
hereunder and expenses theretofore incurred and except that if you terminate our
services and Acquiror realizes a Profit with respect to the Securities, then we
shall be entitled to compensation pursuant to subparagraph (a) and the fourth
paragraph hereof to the same extent as if our services had not been terminated).
Notwithstanding the foregoing, the indemnity provisions described in the
preceding paragraph shall survive such termination.
Except as required by law, any advice (written or oral) rendered by us
pursuant to this letter may not be disclosed publicly without our prior written
consent, which consent shall not be unreasonably withheld.
We acknowledge that your interest in the Company is confidential.
Accordingly, we agree not to discuss your identity or the fact of your interest
in the Company to any third party without your prior consent. It is understood
that Batchelder & Partners, Inc. does not possess or have any knowledge of
confidential information regarding the Company. Further, Batchelder & Partners,
Inc. has no knowledge of any pending or future third party efforts to merge or
acquire any of the Company.
<PAGE>
-3-
Mr. John Davis July 18, 1994
Please confirm that the foregoing is in accordance with your understanding by
signing and returning the duplicate of this letter attached hereto, which shall
thereupon constitute a binding agreement.
Very truly yours,
BATCHELDER & PARTNERS, INC.
By: /s/ David H. Batchelder
-----------------------
David H. Batchelder, President
Confirmed:
DAVIS COMPANIES
By: /s/ John Davis
--------------
John Davis
Title: Vice President
--------------
Date: September 2, 1994
<PAGE>
July 18, 1994
Batchelder & Partners, Inc.
4180 La Jolla Village Drive
Suite 560
La Jolla, California 92037
Gentlemen:
In connection with your engagement to consult with the undersigned with
respect to the matters contemplated by the letter from you to us of even date
herewith, we hereby agree to indemnify and hold harmless you and your
affiliates, the respective directors, officers, partners, agents, and employees
of you and your affiliates and each other person, if any, controlling you or any
of your affiliates, to the full extent lawful, from and against all losses,
claims, damages, liabilities and expenses incurred by you and such other persons
(including fees and disbursements of counsel) which (A) are related to or arise
out of (i) actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by us or (ii) actions taken or
omitted to be taken by an indemnified person with our consent or in conformity
with our instructions or (B) are otherwise related to or arise out of your
activities on our behalf pursuant to the terms of your engagement, and we will
reimburse you and any other person indemnified hereunder for all expenses
(including reasonable fees and disbursements of counsel) as they are incurred by
you or such other indemnified person in connection with investigating, preparing
or defending any such action or claim, whether or not in connection with pending
or threatened litigation in which you or any other indemnified person is a
party. We will not be responsible, however, for any losses, claims, damages,
liabilities or expenses pursuant to clause (A) or (B) of the preceding sentence
which are finally judicially determined to have resulted primarily from the bad
faith or gross negligence of the person seeking indemnification hereunder
(although it is expressly intended that we will be responsible for any thereof
that result from the negligence, other than gross negligence, of such person).
We also agree that neither you, nor any of your affiliates, nor any
director, officer, partner, agent or employee of you or any of your affiliates,
nor any person controlling you or any of your affiliates, shall have any
liability to us for or in connection with such engagement except for such
liability for losses, claims, damages, liabilities or expenses incurred by us
which is finally judicially determined to have resulted primarily from your bad
faith or gross negligence or your disclosure of our identity or the fact of our
interest in the Company to any third party without our prior consent. The
foregoing agreement shall be in addition to any rights that you or any
indemnified person may have at common law or otherwise, including, but not
limited to, any right to contribution. We hereby consent to personal
jurisdiction and service and venue in any court in which any claim which is
subject to this agreement is brought against you or any other indemnified
person. You agree to notify us promptly of the assertion against you of any
claim or the commencement
<PAGE>
-2-
Batchelder & Partners, Inc. July 18, 1994
of any action or proceeding with respect to which indemnity will be sought under
this agreement.
It is understood that, in connection with your engagement, you may also be
engaged to act for us in one or more additional capacities, and that the terms
of the original engagement or any such additional engagement may be embodied in
one or more separate written agreements. This indemnification shall apply to the
original engagement, any such additional engagement and any modification of the
original engagement or such additional engagement and shall remain in full force
and effect following the completion or termination of your engagement(s).
Very truly yours,
DAVIS COMPANIES
/s/ John Davis
--------------
Title: Vice President
--------------
Accepted:
BATCHELDER & PARTNERS, INC.
By: /s/ David H. Batchelder
-----------------------
Date: July 18, 1994
<PAGE>
Batchelder & Partners, Inc.
4180 La Jolla Village Drive, Suite 560
La Jolla, California 92037
David H. Batchelder telephone: (619) 456-6655
President telecopier: (619) 456-7969
May 8, 1995
Mr. John Davis
Davis Companies
2121 Avenue of the Stars
Suite 2900
Los Angeles, CA 90067
Dear John:
Pursuant to an agreement dated April 1, 1995 between Mesa Inc. and
Dennis R. Washington, the Board of Directors of Mesa nominated David H.
Batchelder and Dorn Parkinson for election to Mesa's board as Mr. Washington's
representatives. Therefore, I will become a Director of Mesa on May 17, 1995.
Batchelder & Partners believes that its agreement with you dated July
18, 1994 should be amended so that such agreement would not apply to any shares
of common stock of Mesa purchased on or after May 17, 1995. Therefore, please
confirm that your agreement with Batchelder & Partners is hereby amended to
exclude any shares, warrants or other securities of Mesa purchased by Acquiror,
as defined, on or after May 17, 1995, by signing and returning the duplicate of
this letter attached hereto.
Please call me if you have any questions regarding the amendment.
Yours truly,
BATCHELDER & PARTNERS, INC.
By: /s/ David H. Batchelder
------------------------
David H. Batchelder
CONFIRMED:
THE DAVIS COMPANIES
By: /s/ John Davis
--------------
John Davis
Date: May 17, 1995
------------
<PAGE>
EXHIBIT 6
AGREEMENT
THIS AGREEMENT is made as of April 1, 1995 (the "Agreement"), by and
between MESA Inc., a Texas corporation (the "Company"), on the one hand, and
Dennis R. Washington, an individual residing in Missoula, Montana
("Washington"), on the other hand.
WHEREAS, Washington has notified the Company that he wishes to nominate for
election to the Company's Board of Directors (the "Board of Directors" or the
"Board") at the Company's Annual Meeting of Stockholders scheduled to be held on
May 17, 1995 (the "Annual Meeting") certain persons; and
WHEREAS, Washington has determined that his and the Company's best
interests would be served by (i) Washington not engaging in a solicitation of
proxies for the Annual Meeting for the election of Washington's nominees in
opposition to nominees of the Board of Directors (a "Proxy Contest"), (ii) the
nomination of Washington's representatives to the Board of Directors as provided
herein and (iii) the other arrangements set forth herein; and
WHEREAS, the Company has determined that the best interests of the Company
and its stockholders would be served by (i) Washington not engaging in a Proxy
Contest for the Annual Meeting, (ii) the nomination of Washington's
representatives to the Board of Directors as provided herein and (iii) the other
arrangements set forth herein.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, and intending to be legally bound hereby, each of the parties hereby
agrees as follows:
SECTION 1
REPRESENTATIONS
---------------
1.1 Representations and Warranties of Washington. Washington represents
--------------------------------------------
and warrants to the Company as follows:
(a) Washington has the requisite legal power and authority to execute,
deliver and carry out this Agreement and has taken all necessary legal action to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized, executed and
delivered by Washington and constitutes a valid and binding obligation of
Washington, enforceable in accordance with its terms.
(c) Washington and his affiliates beneficially own an aggregate of
2,854,900 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"). Washington and his affiliates do not beneficially own any
equity or debt securities
<PAGE>
of the Company or any subsidiary, other than the foregoing.
1.2 Representations and Warrants of the Company. The Company represents
-------------------------------------------
and warrants to Washington as follows:
(a) The Company is duly organized and validly existing and in good
standing under the laws of the State of Texas, has the requisite corporate power
and authority to execute, deliver and carry out this Agreement and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and the transactions contemplated hereby.
(b) This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms.
(c) The Company is not aware of any matter other than the election of
directors and the appointment of independent public accountants to be acted upon
at the Annual Meeting and shall not propose any other matter without the consent
of Washington, which consent shall not be unreasonably withheld.
SECTION 2
BOARD OF DIRECTORS AND MANAGEMENT
---------------------------------
2.1 Annual Meeting.
--------------
(a) The Annual Meeting shall be held on May 17, 1995, or such later
date as the Board of Directors may determine.
(b) The parties hereby agree that the slate of the nominees for
election to the Board of Directors at the Annual Meeting to be proposed by the
Board of Directors shall be each of the current members of the Board of
Directors, namely Paul W. Cain, John L. Cox, John S. Herrington, Wales H.
Madden, Jr., Boone Pickens, Fayez S. Sarofim, Robert L. Stillwell and Jerry R.
Walsh, Jr., and two representatives of Washington (the "Washington Designees"),
namely David H. Batchelder and Dorn Parkinson, and the parties hereto further
agree that they shall nominate, recommend and support such slate at the Annual
Meeting and shall vote, and shall cause their affiliates to vote, all shares of
Common Stock or proxies which they are entitled to vote in favor of the election
of such nominees at the Annual Meeting.
(c) At the first meeting of the Board of Directors of the Company
following the election of the Washington Designees, one Washington Designee
shall be elected to serve on the Compensation Committee of the Board of
Directors and one Washington Designee shall be elected to serve on the Audit
Committee of the Board of Directors. One Washington Designee shall be elected to
each other Board committee, if any, provided that such Washington Designee meets
any reasonable eligibility requirements that may be
2
<PAGE>
established for membership on such committee. Washington shall determine which
Washington Designee shall serve on each such committee.
(d) In the event that the Annual Meeting shall not have been held on
or before May 17, 1995, then at any time prior to the date of the Annual
Meeting, Washington, at his option, may notify the Company that he desires to
have the Board elect the Washington Designees to the Board, and promptly upon
receipt of such notice, the Board shall take all requisite action to elect the
Washington Designees to the Board.
(e) While serving as director, each Washington Designee shall have the
same legal duties and responsibilities and the same rights and privileges as the
other nonemployee directors of the Company, including without limitation, with
respect to expense reimbursement, director compensation, notice, indemnification
and access to Company information and personnel.
2.1 Other Obligations.
-----------------
(a) Washington shall not engage in any solicitation of proxies in
connection with the Annual Meeting. Washington shall not nominate candidates
for election as directors or engage in any solicitation of proxies in connection
with the annual meeting of stockholders of the Company to be held in 1996 if
Washington and his affiliates beneficially own less than 1,300,000 shares of
Common Stock at any time on or after the date hereof.
(b) If, at any time after the date hereof, Washington and his
affiliates beneficially own less than 2,800,000 shares of Common Stock, at the
Company's option, Washington shall cause one Washington Designee to immediately
thereafter resign from the Board of Directors. If, at any time after the date
hereof, Washington and his affiliates beneficially own less than 1,300,000
shares of Common Stock, at the Company's option, Washington shall cause the
remaining Washington Designee to immediately thereafter resign from the Board of
Directors.
(c) Washington agrees to provide the Company with reasonable evidence
of the number of shares of Common Stock and other securities of the Company and
its subsidiaries beneficially owned by him, upon request of the Company from
time to time following the election of the Washington Designees to the Board.
(d) The Company shall not, prior to the Annual Meeting, amend its
articles of incorporation or bylaws or grant any waiver under Section 9 or 10 of
Article II of such bylaws.
SECTION 3
ADDITIONAL AGREEMENTS
---------------------
3.1 Press Release. Upon the effectiveness of this Agreement, the Company
-------------
3
<PAGE>
shall issue a press release in a form that shall have been previously approved
by Washington, such approval not to be unreasonably withheld. Neither the
Company nor Washington nor any of their affiliates, associates or
representatives shall issue any other press release or other publicly available
document that is inconsistent with, or is otherwise contrary to, the statements
in such Company press release.
3.2 Withdrawal of Notices. Washington hereby withdraws his request made
---------------------
by letter dated February 17, 1995 giving notice to the Company of (a)
Washington's wish to nominate directors at the Annual Meeting and (b) his intent
to cumulate votes in the election of directors at the Annual Meeting.
3.3 Challenges to Agreement. Each party hereto shall not, and shall use
-----------------------
its best efforts to cause each of its affiliates, associates and representatives
not to, challenge the validity of any provisions of this Agreement. In the
event that any part of this Agreement or any transaction contemplated hereby is
temporarily, preliminarily or permanently enjoined or restrained by a court of
competent jurisdiction, the parties hereto shall use their reasonable best
efforts to cause any such injunction or restraining order to be vacated or
dissolved or otherwise declared or determined to be of no further force or
effect.
3.4 Specific Performance. The Company and Washington acknowledge and
--------------------
agree that in the event of any breach of this Agreement, the non-breaching party
would be irreparably harmed and could not be made whole by monetary damages. It
is accordingly agreed that the Company and Washington, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and/or to
compel specific performance of this Agreement in any action instituted in any
Federal court of the United States having subject matter jurisdiction.
3.5 Release. To the fullest extent permitted by law, each party hereto
-------
hereby releases and discharges the other party hereto (and such other party's
affiliates, associates and representatives) from all manner of claims, actions,
causes of action or suits, at law or in equity, which it has or may have by
reason of any matter, cause or thing whatsoever, from the beginning of time to
the date of this Agreement, arising out of, in connection with, or in any way
related to Washington's investment in the Company, any actions taken by the
Company in response thereto, the execution and delivery of this Agreement, or
the business and affairs of the Company, other than a breach of this Agreement,
and each party hereto hereby agrees not to initiate, encourage or join in any
claim, litigation or legal action against any other party (or its affiliates,
associates or representatives) arising out of or related to any such matter,
cause or thing, other than a breach of this Agreement.
SECTION 4
MISCELLANEOUS
-------------
4.1 Entire Agreement. This Agreement constitutes the entire understanding
----------------
of the parties with respect to the subject matter hereof and may be amended only
by an
4
<PAGE>
agreement in writing executed by all the parties hereto.
4.2 Headings. Descriptive headings are for convenience only and shall not
--------
control or affect the meaning or construction of any provision of this
Agreement.
4.3 Counterparts. For the convenience of the parties, any number of
------------
counterparts of this Agreement may be executed by the parties, and each such
executed counterpart shall be an original instrument.
4.4 Notices. All notices, consents, requests, instructions, approvals and
-------
other communications provided for in this Agreement and all legal processes in
regard to this Agreement shall be validly given, made or served, if in writing
and delivered personally, by hand or by telecopy, or sent by registered mail
postage paid, if to the Company to it at:
MESA Inc.
2001 Ross Avenue
Suite 2600
Dallas, Texas 75201
Attn: Stephen K. Gardner
Fax: (214) 969-2228
with a copy, which shall not constitute notice, to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attn: Robert L. Stillwell
Fax: (713) 229-1522
and if to Washington at:
Dennis R. Washington
101 International Way
P.O. Box 8182
Missoula, Montana 59807
Fax: (406) 523-1399
with a copy, which shall not constitute notice, to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, CA 94111
Attn: Scott R. Haber
Fax: (415) 395-8095
5
<PAGE>
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice given by hand or
by telecopy shall be deemed given on the date on which so hand delivered or
telecopied. Notice given by mail as set out above shall be deemed delivered
five business days after the date the same is postmarked.
4.5 Successors and Assigns. This Agreement shall bind the successors and
----------------------
assigns of the parties, and inure to the benefit of any successor or assign of
any of the parties; provided, however, that no party may assign this Agreement
------------------
without the other party's prior written consent.
4.6 Governing Law. This Agreement shall be governed by and constructed
-------------
and enforced in accordance with the internal laws of the State of Texas, without
giving effect to the conflict of the laws principles thereof.
4.7 Certain Terms. As used herein, (i) the terms "affiliate" and
-------------
"associate" shall have the meanings set forth in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended, and (ii) "beneficial ownership" shall mean
beneficial ownership as determined under Rule 13d-3 under the Securities
Exchange Act of 1934, as amended.
4.8 Survival of Representations. All representations, warranties and
---------------------------
agreements made by Washington and the Company in this Agreement or pursuant
hereto shall survive the date hereof through the term of this Agreement.
4.9 Consent to Service. Each of the parties hereto hereby consents to the
------------------
personal jurisdiction of the United States District Court for the Northern
District of Texas in any action, suit or proceeding arising under this Agreement
and each agrees further that service of process or notice in any action, suit or
proceeding shall be effective if given in the manner set forth in Section 4.4
hereof.
4.10 No Waiver. Any waiver by any party of a breach of any provision of
---------
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
MESA INC.
By /s/ Stephen K. Gardner /s/ Dennis R. Washington
---------------------- ------------------------
Stephen K. Gardner Dennis R. Washington
Vice President and Chief
------------------------
Financial Officer
-----------------
7
<PAGE>
EXHIBIT 7
June 27, 1995
Mr. Marvin Davis
Davis Acquisition, L.P.
2121 Avenue of the Stars, Suite 2800
Los Angeles, California 90067
Dear Mr. Davis:
This letter confirms our conversations on June 19, 1995 whereby we agreed,
as shareholders of MESA Inc. ("MESA"), to form a group for the purpose of
influencing the Board of Directors of MESA to consider all available
alternatives to maximize the value of the Company for all shareholders. Each of
us will reimburse the other for one-half of all out-of-pocket expenses (in
excess of $25,000) that may be incurred by either or both of us in connection
with actions that either or both of us (or our representatives) may take in
furtherance of the group's purpose after June 19, 1995. We also will use our
best efforts to notify each other in the event either of us intends to engage in
any transaction with respect to the securities of MESA, including purchases or
sales of the MESA common stock. Notice to either John Davis or Marvin Davis will
constitute notification to Davis Acquisition, L.P., and notice to Dennis R.
Washington, David H. Batchelder or Dorn Parkinson will constitute notification
to Dennis R. Washington. In the event that we determine as a result of such
notification that we both intend either to purchase or sell MESA common stock,
we will use our best efforts to coordinate such transactions in a manner that
will result in the least detriment to our respective interests as shareholders
of MESA, which may include using the same securities broker to effect the
transactions on a pro-rata basis. All decisions to purchase, sell, hold or vote
the Company's securities will be made by each of us independently and, subject
to the foregoing, neither of us will have any power or right with respect to
purchasing, selling, holding or voting any securities of the Company held by the
other. Either party may terminate this agreement at any time by notifying the
other party in writing, in which case all obligations hereunder (other than
reimbursement obligations which have accrued through the date of such
termination) will terminate. Davis Companies and Dennis R. Washington will
continue to be responsible for their respective fees payable to Batchelder &
Partners, Inc. ("BPI") under their respective fee agreements with BPI, as
amended.
If the agreement outlined above is satisfactory to you, please so indicate
by signing the enclosed copy of this letter in the place provided and returning
it to me.
Very truly yours,
/s/ Dennis R. Washington
------------------------
Dennis R. Washington
Agreed and Accepted as of the
date first above written:
Davis Acquisition, L.P.
By: Davis Companies
Its: General Partner
By: /s/ Marvin Davis
--------------------
Its: President
<PAGE>
EXHIBIT 8
Contact: Michael Sitrick
Michael Kolbenschlag
Sitrick and Company
(310) 788-2850
DENNIS WASHINGTON AND MARVIN DAVIS FORM GROUP TO MAXIMIZE MESA INC. SHAREHOLDER
VALUE; CALL FOR BOARD TO EXPLORE ALL OPTIONS, INCLUDING MERGER OR SALE OF
COMPANY
Los Angeles, CA and Missoula, MT -- June 29, 1995 -- Dennis R. Washington
and Marvin Davis today announced that they have formed a group for the purpose
of maximizing shareholder value of MESA Inc.
In a letter to MESA Inc.'s Board of Directors, Messrs. Washington and
Davis, who together own 9.4% of MESA Inc.'s common stock, said, "As significant
shareholders, we believe that the Board must evaluate all alternatives available
to the company to maximize value for all shareholders . . . including a possible
sale of the company or merger or other business combination."
Messrs. Davis and Washington continued, "In light of the current financial
distress of the company, we respectfully request that the Board of Directors
promptly form a committee consisting of all of the independent directors, with
independent financial and legal advisors, to explore all alternatives to enhance
the value of the company for shareholders."
Messrs. Washington and Davis said that, if the board does not promptly form
the independent committee, the group intends to seek to call a special meeting
of shareholders for the purpose of electing a majority of the board of directors
who would be committed to exploring all alternatives for maximizing shareholder
value.
Shareholders aggregating 20% of the outstanding shares can call a special
meeting to remove and elect directors.
<PAGE>
A spokesman said the group may communicate with other shareholders to
determine if they share the same concerns regarding what they view as the
board's fiduciary responsibility to consider all alternatives to maximize
shareholder value.
"As shareholders of MESA Inc. since the summer of 1994," Messrs. Washington
and Davis continued in their letter, "we have closely monitored the events
occurring at the company, including the recent failed auction of the Hugoton
Field properties. We supported your decision to conduct an auction of the
Hugoton Field properties, although we do not understand why you did not engage
independent financial advisors to assist management on such a material
transaction. We are, of course, disappointed with the failed auction process
especially given the disclosure that management did not permit partial bids nor
solicit foreign buyers. Most distressing to us, however, is the Board of
Directors' response to the failed auction. We are specifically referring to the
Board's decision to accept management's proposal which narrowly focuses on only
refinancing and partial property sale alternatives."
Mr. Washington stated, "Management is pursuing a very narrow path of debt
refinancing and partial asset sales. Boone Pickens, MESA's chairman, appears
unwilling to consider any potential change of control transactions. I believe
that a vast majority of the shareholders would like the Board to consider all
alternatives for enhancing shareholder value, even if it results in a change of
control."
The group is being advised by Batchelder & Partners, Inc., a San Diego-
based financial advisory and consulting firm.
As disclosed in a Schedule 13D filing, Dennis Washington owns 3.5 million
shares or 5.5% of MESA's common stock and Marvin Davis owns 2.5 million shares
or 3.9% of MESA's stock. The group purchased 1,145,100 of those shares since
June 20, 1995. In the filing, the group said that it reserves the right to
modify its plans at any time.
