<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------
SCHEDULE 13D
(Amendment No. 5)
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)
<TABLE>
<S> <C>
Dennis R. Washington Marvin Davis
c/o Washington Corporations Davis Companies
101 International Way 2121 Avenue of the Stars, Suite 2800
Missoula, Montana 59802 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
</TABLE>
-------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
COPY TO:
<TABLE>
<S> <C>
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
</TABLE>
September 20, 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: [ ]
1
<PAGE> 2
This Amendment No. 5 to Schedule 13D is being filed on behalf
of the undersigned Reporting Persons to amend the Schedule 13D filed June 29,
1995, as amended (the "Schedule 13D"), relating to the common stock, par value
$.01 per share, of MESA Inc., a Texas corporation (the "Company"). Unless
otherwise indicated, all capitalized terms used herein but not defined herein
shall have the same meanings as set forth in the Schedule 13D.
Item 4. Purpose of Transaction
Item 4 to the Schedule 13D is hereby amended, in pertinent
part, as follows:
On September 20, 1995, the Reporting Persons and certain
parties related to the Reporting Persons (the "WDB" Parties"), on the one hand,
and the Company, Boone Pickens and certain of the Company's present and former
directors, on the other (collectively, the "Mesa Parties"), entered into an
Agreement of Compromise and Settlement (the "Agreement").
In light of the Mesa Board's confirmation of its previously
announced commitment to explore all alternatives to maximize the value of Mesa
for all shareholders, including the possible sale or merger of Mesa, the
Reporting Persons have agreed not to seek to call the special meeting of
shareholders previously described in the Schedule 13D. The Company and Messrs.
Washington, Davis and Batchelder issued a joint press release announcing the
Agreement. A copy of the form of the joint press release is filed herewith as
Exhibit C to the Agreement and is incorporated by reference herein.
Certain plans or proposals of the Reporting Persons with
respect to the Company's securities are amended by the Agreement, a copy of
which is filed herewith as Exhibit 2 and is incorporated by reference herein.
Any plans or proposals which the Reporting Persons may have, including plans
or proposals which would result in or relate to any of the transactions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, and any
actions that the Reporting Persons may take with respect to the foregoing, will
be subject to the terms of the Agreement.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Item 6 to the Schedule 13D is hereby amended, in pertinent
part, as follows:
As described in Item 4 above, the WDB Parties (including the
Reporting Persons) and the Mesa Parties entered into the Agreement. The
Agreement, a copy of which
2
<PAGE> 3
is filed herewith as Exhibit 2, and the information contained in Item 4 above
are incorporated by reference herein.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Joint Filing Agreement (incorporated by reference to the
Schedule 13D filed June 29, 1995)
Exhibit 2 Agreement of Compromise and Settlement dated September 20,
1995
3
<PAGE> 4
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: September 21, 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
4
<PAGE> 5
EXHIBIT INDEX
Exhibit 1 Joint Filing Agreement (incorporated by reference to the
Schedule 13D filed June 29, 1995)
Exhibit 2 Agreement of Compromise and Settlement dated September 20,
1995
5
<PAGE> 1
EXHIBIT 2
AGREEMENT OF COMPROMISE AND SETTLEMENT
This AGREEMENT OF COMPROMISE AND SETTLEMENT dated September 20, 1995
(this "Settlement Agreement") is entered into by and among MESA Inc., a Texas
corporation ("Mesa") and Boone Pickens ("Pickens"), on the one hand, and Dennis
R. Washington ("Washington") and the other persons identified on Exhibit A
hereto as Washington Related Parties, Marvin Davis ("Davis") and the other
persons identified on Exhibit A hereto as Davis Related Parties, and David H.
Batchelder ("Batchelder") and the other persons identified on Exhibit A hereto
as Batchelder Related Parties, on the other hand. Mesa and Pickens are
sometimes collectively referred to herein as the "Mesa Parties." The
Washington Related Parties, the Davis Related Parties and the Batchelder
Related Parties are sometimes collectively referred to herein as the "WDB
Parties." The Mesa Parties and the WDB Parties are sometimes collectively
referred to herein as the "Parties."
RECITALS
WHEREAS, on July 6, 1995, in response to the manner in which they
believed the Board had determined to explore alternatives for maximizing
shareholder value, Washington, certain of the Davis Related Parties, Batchelder
and Dorn Parkinson (collectively, the "WDB Group") announced that they would
seek to call a special meeting of Mesa's shareholders for the purpose of
electing nominees of the WDB Group to a majority of the seats on the Board;
WHEREAS, the WDB Group has now concluded that the Board has
demonstrated that it is committed to exploring all alternatives to maximize the
value of Mesa for all shareholders, including the possible sale or merger of
Mesa; the process of exploring such alternatives is being and will continue to
be managed by and at the direction of the Board; and Lehman Brothers Inc. has
engaged and will continue to engage in an active solicitation of proposals
regarding possible Transactions;
WHEREAS, the Board has directed that Lehman Brothers Inc. coordinate
Mesa's solicitation process regarding possible Transactions, with the
assistance and full cooperation of the Mesa officers, acting under the
direction of the Board;
WHEREAS, the Board has directed Lehman Brothers, Inc. and the Mesa
officers to inform the Board (in meetings to occur not less frequently than
monthly and such other appropriate forms of communication) in reasonable detail
of any contact by any qualified person indicating that such person is
interested in exploring or pursuing a Transaction involving Mesa;
<PAGE> 2
WHEREAS, the Board in July 1995 directed Lehman Brothers Inc. to
proceed on a timetable with a goal of Mesa entering into a definitive agreement
for an Endorsed Major Transaction by December 31, 1995;
WHEREAS, the WDB Parties have determined that the best interests of
Mesa and its shareholders would be served by (i) the WDB Group not engaging in
a solicitation of proxies for purposes of electing its nominees to the Board (a
"Proxy Contest") at this time and (ii) the other arrangements set forth herein;
and
WHEREAS, the Mesa Parties have determined that the best interests of
Mesa and its shareholders would be served by (i) the WDB Group not engaging in
a Proxy Contest at this time, and (ii) the other arrangements set forth herein;
FOR AND IN CONSIDERATION of the mutual covenants contained herein, the
Parties, intending to be legally bound hereby, agree as follows:
1. Certain Defined Terms. As used in this Settlement Agreement,
the following terms (whether or not capitalized) shall have the following
meanings:
"1996 Annual Meeting" means the 1996 annual meeting of
shareholders of Mesa at which the election of directors shall be
considered.
"Acceptable Investment Banker" means Lehman Brothers Inc. or
such other investment banking firm of recognized national standing as
shall be selected by the Board, with the concurrence (not to be
unreasonably withheld) of Davis and Washington.
"Action" means MESA Inc. v. Batchelder, et al., Case Nos.
3:95-CV-1386-T and 3:95-CV-1386-X, filed in the United States District
Court for the Northern District of Texas, Dallas Division, including
all counterclaims made therein.
"Board" means the Board of Directors of Mesa.
"Common Stock" means the common stock, par value $.01 per
share, of Mesa.
"Effective Date" means September 20, 1995.
"Endorsed" means, with respect to a Transaction, a Transaction
as to which the Board has received (at the time the Board approves
such Transaction and at the time, if any, that Mesa issues any proxy
or information statement with respect to such Transaction) a written
opinion of an Acceptable Investment Banker that such Transaction is
fair from a financial point of view to the shareholders of Mesa (or to
Mesa, in the case of a transaction of the nature described in clause
(ii), (iii) or (iv) of the definition of "Major Transaction," whether
or not it satisfies the dollar amount stated in such clause);
provided, that such opinion shall state that the Acceptable
2
<PAGE> 3
Investment Banker has, in reaching its conclusions, considered (i) all
proposals then available to Mesa for alternative Transactions, (ii)
all substantive discussions such Banker has had, and all substantive
discussions that to its knowledge Mesa has had, with qualified persons
who have made bona fide offers, proposals or expressions of interest
for alternative Transactions and (iii) if such Transaction is of the
nature described in Clause (ii), (iii) or (iv) of the definition of
the term "Major Transaction", the impact, if any, of the terms of such
Transaction on future proposals by third parties for, and consummation
of, alternative Transactions of the nature described in clause (i) of
such definition with respect to Mesa after giving effect to
consummation of the Transaction being opined upon.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Major Transaction" means (i) any business combination
transaction involving Mesa, including without limitation a merger,
consolidation, tender offer, share exchange or exchange offer, upon
consummation of which the holders of Common Stock immediately prior to
the consummation of such transaction hold not more than 50% of the
equity or voting power of the combined entity or persons who are
directors of Mesa immediately prior to consummation of such
transaction constitute not more than 50% of the directors of the
combined entity, (ii) any sale of assets of Mesa or any subsidiary
(including, without limitation, any sale or transfer of a production
payment even if it is treated as debt for tax or accounting purposes)
that results in Net Proceeds to Mesa or such subsidiary of $640
million or more, (iii) any issuance or sale of equity securities of
Mesa resulting in Net Proceeds to Mesa of $250 million or more; (iv)
any sale of an equity interest in any subsidiary of Mesa, or any
formation of a joint venture, partnership or similar entity involving
any such subsidiary, that results in Net Proceeds to Mesa of $350
million or more; or (v) any combination of separate or related asset
sales, equity security sales or other transactions referenced in any
of clauses (ii) through (iv) of this definition with respect to which
the sum of X% plus Y% plus Z% is equal to or greater than 100%
(provided that if the sum of Y% plus Z% is less than 100%, then X%
shall not be less than 75%), where X% is the percentage that the net
proceeds of any such asset sale(s) referenced in clause (ii)
constitute of the dollar amount stated in clause (ii), Y% is the
percentage that the net proceeds any of such issuance(s) or sale(s) of
equity securities referenced in clause (iii) constitute of the dollar
amount stated in clause (iii), and Z% is the percentage that the net
proceeds of any transaction(s) referenced in clause (iv) constitute of
the dollar amount stated in clause (iv). If any asset sale, equity
security sale or other transaction referenced in clauses (ii) through
(iv) above would, taken in the aggregate with any separate or related
such asset sale(s), equity security sale(s) or other such
transaction(s) theretofore consummated after the Effective Date,
constitute a Major Transaction, then such asset sale, equity security
sale or other transaction shall be deemed to constitute a Major
Transaction.
"Mesa Securities" means any securities issued by Mesa or any
of its direct or indirect subsidiaries, including the Common Stock and
any other debt or equity
3
<PAGE> 4
securities of Mesa or any of its direct or indirect subsidiaries that
are outstanding as of the date hereof or may hereafter be issued.
"Net Proceeds" of any Transaction means gross proceeds thereof
less transaction expenses thereof and any other amount of gross
proceeds not immediately available to reduce existing indebtedness of
Mesa or its subsidiaries (provided that Net Proceeds shall include
amounts used to pay prepayment penalties or premiums on indebtedness
being repaid and amounts used to fund cash reserves required in
connection with such Transaction).
"Other Transaction" means any business combination
transaction, asset sale, equity security sale or other transaction of
the nature described in any of clauses (i) through (iv) of the
definition of "Major Transaction" that (1) does not meet the
percentage or dollar criteria set forth therein, (2) in the case of a
transaction of the nature described in such clause (ii), results in
Net Proceeds of $50 million or more, (3) in the case of a transaction
of the nature described in such clause (iii) or (iv), results in Net
Proceeds of $20 million or more and (4) is not in the ordinary course
of business.
"Person" means any individual, corporation, association,
general or limited partnership, limited liability company, limited
liability partnership, joint venture, trust, estate, other entity or
organization or group.
"Schedule 13D" means the Statement on Schedule 13D filed with
the SEC on June 29, 1995 by the WDB Group, as amended through
Amendment 4 thereto dated August 30, 1995.
"SEC" means the Untied States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Solicitation Action" with respect to a shareholders meeting
means any of the following: (i) if such meeting is the 1996 Annual
Meeting, giving notice pursuant to Mesa's Bylaws of an intention to
nominate directors at such meeting; (ii) filing with the SEC any proxy
solicitation materials (whether preliminary, definitive or as
described in Rule 14a-11 or 14a-12 under the Exchange Act) with
respect to such meeting; (iii) mailing or otherwise disseminating to
shareholders any such solicitation materials; (iv) otherwise engaging
in a solicitation of proxies with respect to such meeting; (v) if such
meeting is the 1996 Annual Meeting, nominating at such meeting
candidates for election as directors; or (vi) casting votes or ballots
at such meeting pursuant to proxies so solicited (but the term
"Solicitation Action" shall not include the casting of votes or
ballots by the WDB Parties with respect to shares of Common Stock
beneficially owned by them).
"Transaction" means a Major Transaction or an Other
Transaction.
4
<PAGE> 5
The terms "participant," "proxy" and "solicitation" shall be used as defined in
Regulation 14A under the Exchange Act (whether or not the pertinent securities
are subject to Regulation 14A). The terms "beneficial ownership" and "group"
shall be used as defined in Regulation 13D-G under the Exchange Act. The terms
"affiliate" and "associate" shall be used as defined in Rule 12b-2 under the
Exchange Act.
2. Representations and Warranties of the WDB Parties. Each WDB
Party, severally and not jointly, represents and warrants to Mesa and Pickens
as follows:
(a) Such WDB Party has the requisite legal power and
authority to execute, deliver and carry out this Settlement Agreement
and has taken all necessary legal action to authorize the execution,
delivery and performance of this Settlement Agreement and the
transactions contemplated hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by such WDB Party and constitutes a
valid and binding obligation, enforceable against such WDB party in
accordance with its terms.
(c) Neither such WDB Party nor any of its affiliates
beneficially owns, or has any direct, indirect or contingent pecuniary
interest in, any Mesa Securities other than as disclosed in the
Schedule 13D.
(d) Neither such WDB Party nor any of its affiliates is a
member of any group with respect to Mesa Securities and there are no
other persons who are part of such a group with it or any of its
affiliates except as disclosed in the Schedule 13D and except insofar
as any of the persons named under the heading "Other Investors and
Third Parties" on Exhibit A may be deemed to be part of the group
identified in Schedule 13D (it being understood that Mesa has alleged
in the Action that some or all of such persons are part of such group
and that the WDB Parties have denied such allegation).
3. Representations and Warranties of Mesa and Pickens. Mesa and
Pickens, severally and not jointly, represent and warrant to the WDB Parties as
follows:
(a) Mesa 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
Settlement Agreement and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Settlement
Agreement and the transactions contemplated hereby.
(b) This Settlement Agreement has been duly and validly
authorized, executed and delivered by Mesa and Pickens and constitutes
a valid and binding obligation, enforceable against Mesa and Pickens
in accordance with its terms.
(c) The Mesa Parties are authorized to execute and
deliver this Settlement Agreement on behalf of all of the persons
identified on Exhibit A hereto as Mesa
5
<PAGE> 6
Related Parties (the "Mesa Related Parties") and the provisions of
this Settlement Agreement shall be a valid and binding obligation,
enforceable against the Mesa Related Parties in accordance with its
terms.
(d) Mesa's management and Lehman Brothers have informed
the Board (including Batchelder and/or Parkinson) of any written
offers or proposals they have received for any potential Transaction
with respect to which either Mesa or Lehman Brothers Inc. is having
ongoing negotiations with the party or parties making such offer or
proposal.
4. Restrictions on Ownership of Mesa Securities and Certain Other
Actions. Each of the WDB Parties agrees that it and its respective affiliates
shall not, without the prior written consent of Mesa, at any time on or prior
to December 31, 1996:
(a) acquire, offer to acquire or agree to acquire,
directly or indirectly, by purchase or otherwise, beneficial ownership
of any Mesa Securities (or any direct or indirect rights, options or
warrants for any Mesa Securities, except as may be employed through
hedging or similar risk management strategies), other than the Mesa
Securities that such Person beneficially owns as of the date hereof as
referenced in Section 2(c) of this Settlement Agreement, or encourage
any Person to acquire, or advise any Person with respect to the
acquisition or proposed acquisition of, Mesa Securities other than
attempts to dispose of such aforementioned Mesa Securities that such
Person beneficially owns as of the date hereof; provided, however,
that this paragraph (a) shall not apply to acquisitions resulting from
stock splits, reverse stock splits or other reclassifications
affecting outstanding Mesa Securities or stock dividends or other pro
rata distributions by Mesa or its direct or indirect subsidiaries to
holders of Mesa Securities (or a class or classes thereof) or from
exercise of any rights so distributed, nor shall it prohibit the WDB
Parties or their affiliates from acquiring Mesa Securities from Mesa
on terms generally available to all Mesa shareholders;
(b) solicit, or encourage any other Person to solicit, or
advise any Person with respect to the solicitation of, proxies or
consents with respect to any Mesa Securities, or become a participant
or otherwise engage in any solicitation of proxies or consents (A)
with respect to any matter submitted or to be submitted to the vote of
the holders of any Mesa Securities at any annual or special meeting or
by written consent, including, without limitation, with respect to the
election of directors of Mesa in opposition to the nominees
recommended by the Board or otherwise for the purpose of acquiring
control of the management of Mesa, or (B) for the purpose of calling a
special meeting of Mesa's shareholders or the holders of any Mesa
Securities; or advise or seek to advise any Person with respect to the
voting of any Mesa Securities; or submit, or encourage any other
Person to submit, or advise or assist any Person with respect to the
submission of, any nominations or proposals to Mesa or to the holders
of Mesa Securities for consideration by its shareholders or the
holders of any Mesa Securities at any annual or special meeting of
such holders or in any action to be taken by written consent pursuant
to Mesa's charter or bylaws,
6
<PAGE> 7
Rule 14a-8 under the Exchange Act, the provisions of any document
governing the terms of any such Mesa Securities or governing the
rights of the holders thereof, or otherwise; or otherwise take any
action to request a special meeting of the holders of any Mesa
Securities; provided, however, that this paragraph (b) shall not
prohibit any action that is specifically permitted by the provisions
of Section 5 of this Settlement Agreement;
(c) deposit any Mesa Securities in a voting trust or
subject them to a voting agreement or other agreement or arrangement
of similar effect or otherwise join or form a partnership, limited
partnership, syndicate or other group (except insofar as a group
consisting solely of WDB Parties shall be deemed to exist at the date
hereof) for the purpose of acquiring, holding, voting or disposing of
any Mesa Securities or encourage, advise or, for the purpose of
circumventing or avoiding any of the provisions of this Settlement
Agreement, assist any Person to do any of the foregoing;
(d) engage in, or offer, agree or propose to engage in,
any Transaction (other than to participate therein as a shareholder on
terms generally available to all of Mesa's shareholders); or arrange,
or in any way participate, directly or indirectly, in any financing
for any Transaction or for the purchase by any person of any Mesa
Securities or any assets of Mesa;
(e) except as permitted under Section 5 hereof, otherwise
act alone or in concert with others to seek representation on the
Board or to acquire control of Mesa or any of its securities or
assets; or
(f) assist or advise, or enter into any agreement or
arrangement to assist or advise, in return for compensation, any other
person in taking any action referenced in any of paragraphs (a)
through (e) above;
provided that, nothing contained in this Section 4 shall prohibit Dorn
Parkinson or Joel L. Reed from taking actions in his capacity as member of the
Board. Notwithstanding anything herein to the contrary, the restrictions set
forth above in this Section 4 shall terminate if, prior to consummation of an
Endorsed Major Transaction, Mesa abandons or terminates its program for
analyzing and pursuing strategic alternatives that would constitute a Major
Transaction, including the possible sale or merger of Mesa, or takes any other
action that materially contravenes such program (but any extension of the
program beyond December 31, 1995 shall not be deemed an abandonment,
termination or contravention).
5. Permitted Solicitations and Related Matters.
(a) Any Davis Related Party and/or Washington Related
Party may take a Solicitation Action regarding the 1996 Annual Meeting (whether
or not such Party has previously taken another Solicitation Action regarding
such meeting) if, but only if, at the time such Party takes such Solicitation
Action (i) either no Endorsed Major Transaction has
7
<PAGE> 8
been consummated prior to the time such Solicitation Action is taken or a
Transaction that is not an Endorsed Transaction has been consummated prior to
such time and (ii) such Party complies with the applicable provisions of
Sections 9 and 10 of Article II of Mesa's Bylaws; provided, that, no such Party
may take any such Solicitation Action regarding the 1996 Annual Meeting if all
or a part of any Endorsed Major Transaction (x) shall have been presented to a
vote of the shareholders at a special meeting held prior to the time such
Solicitation Action is taken, (y) shall not have been approved by the
shareholders and (z) would have been so approved if the shares beneficially
owned by the WDB Parties had been voted proportionately in accordance with the
votes cast (for, against and abstain) by all other shareholders. The Parties
agree that Mesa and the WDB Parties shall be entitled to review all appropriate
records, including records in the possession of any confidential voting agent,
for such meeting to determine whether the provisions of clause (z) have been
met.
(b) If a meeting of shareholders of Mesa is called by
Mesa to consider and vote upon a proposal to approve a pending Transaction that
is not an Endorsed Transaction, any Davis Related Party and/or Washington
Related Party may take a Solicitation Action regarding such meeting in
opposition to the approval of such Transaction provided, that (i) if such
meeting is a special meeting and is held after the 1996 Annual Meeting, no
Davis Related Party or Washington Related Party shall have taken any
Solicitation Action (other than a Solicitation Action described in clause (i),
(ii) or (iv) of the definition thereof) with respect to the 1996 Annual Meeting
and (ii) such Party complies with the applicable provisions of Sections 9 and
10 of Article II of Mesa's Bylaws.
(c) If a Transaction that is not an Endorsed Transaction
is consummated (with or without shareholder approval), any Davis Related Party
and/or Washington Related Party may thereafter take a Solicitation Action
regarding any special meeting of shareholders called for any purpose (whether
or not such Party has previously taken another Solicitation Action regarding
such meeting) provided, that (i) if such meeting is a special meeting and is
held after the 1996 Annual Meeting, no Davis Related Party or Washington
Related Party shall have taken any Solicitation Action (other than a
Solicitation Action described in clause (i), (ii) or (iv) of the definition
thereof) with respect to the 1996 Annual Meeting, and (ii) such Party complies
with the applicable provisions of Sections 9 and 10 of Article II of Mesa's
Bylaws.
(d) The Batchelder Related Parties may join with the
Davis Related Parties and/or Washington Related Parties in taking any
Solicitation Action permitted by Section 5(a), 5(b) or 5(c) to be taken by the
Davis Related Parties and/or Washington Related Parties, but the Batchelder
Related Parties shall not otherwise be entitled by this Section 5 to take any
such Solicitation Action.
(e) On or before February 29, 1996, the Board will set
and publicly announce in accordance with Mesa's Bylaws a date for the 1996
Annual Meeting, which date shall not be later than May 31, 1996; provided, that
the Board may extend such dates (or, after February 29, 1996, may extend the
May 31, 1996 date) for up to 60 days if at the
8
<PAGE> 9
time of such extension either (i) Mesa has entered into a definitive agreement
with respect to an Endorsed Major Transaction or has filed proxy materials with
respect to a pending Endorsed Major Transaction, or (ii) an Acceptable
Investment Banker has informed the Board in writing that discussions or
negotiations are in process with one or more third parties that appear
reasonably likely to result, prior to the date to which the date of the 1996
Annual Meeting is to be extended, in Mesa's entering into a definitive
agreement for an Endorsed Major Transaction. No Solicitation Action
contemplated by this Section 5 with respect to a shareholders meeting (other
than actions to call a special meeting, as contemplated by Section 5(c)) may be
taken by any WDB Party until the Board has publicly announced the date of the
shareholders meeting with respect to which the Solicitation Action is to be
taken.
6. Additional Agreements.
(a) Press Release. Upon the effectiveness of this
Agreement, Mesa, Washington, Batchelder and Davis shall issue a joint press
release in the form of Exhibit C hereto. No Party to this Settlement Agreement
nor any of their respective 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 press
release. Other than in the context of a proxy solicitation regarding a meeting
of shareholders as to which Davis Related Parties and/or Washington Related
Parties have exercised their rights pursuant to Section 5, until the
termination of the restrictions set forth in Section 4, none of the Parties
shall publicly make any negative statements regarding any other Party, the
Board, the process by which Mesa is exploring alternatives to maximize
shareholder value, or any proposed, pending or consummated Transaction.
(b) Resignation of Director. David H. Batchelder hereby
resigns from the Board (and from every committee thereof on which he serves)
effective as of the date the Board elects Joel L. Reed to replace Batchelder as
a director and as a member of each such committee. If Dorn Parkinson or Joel
L. Reed dies or becomes incapacitated prior to the expiration of his term as a
director, Washington and Davis, jointly, may propose a person to fill his
unexpired term, and the Board shall elect such person as a director and member
of such committee, provided such person is reasonably acceptable to the Board.
(c) Non-Interference. Each of the Parties hereto agrees
that, subject to his or its absolute right to pursue his or its own legitimate
business objectives independently and in good faith, he or it will not, and
will not permit any related party controlled by him or it, directly or
indirectly to, take any action or encourage any other Person to take any
action, the intent or direct foreseeable result of which is to interfere with
or adversely affect the business activities, contractual relationships or
business opportunities of any other Party or such other Party's affiliates and
associates.
(d) No Meeting in Lieu of Annual Meeting. Mesa shall not
call a shareholders meeting to elect directors in 1996 in lieu of the 1996
Annual Meeting.
9
<PAGE> 10
(e) Charter and Bylaw Amendments. Mesa shall not prior
to December 31, 1996 amend any provision of its articles of incorporation
(other than in connection with the creation or issuance of a class or series of
preferred stock or an increase in authorized number of shares of preferred or
common stock) relating to shareholder meetings or voting of stock or amend any
provision of its Bylaws relating to shareholder meetings or voting of stock.
7. Mutual Releases. For and in consideration of the agreements
contained herein, the Parties hereto release one another as follows:
(a) WDB Parties. Each of the WDB Parties, on behalf of
itself and of all its affiliates, successors and assigns ("related
parties"), hereby releases, acquits and forever discharges the Mesa
Related Parties, together with their respective present and former
affiliates, officers, directors, employees, agents, attorneys,
successors and assigns, of and from any and all claims, causes of
action (whether at law or equity), demands, expenses and damages which
such WDB Party or its related parties may have had, or may now have,
or may hereafter have (whether through operation of law, assignment or
subrogation), from the beginning of time to the Effective Date, real
or suspected, known or unknown, actual or contingent, direct or
derivative, including but not limited to any such claims, causes of
action, demands, expenses and damages relating to or arising out of
the Action or any of the matters claimed, asserted or alleged, or that
could have been claimed, asserted or alleged, in the Action, excepting
only (i) any action, cause of action or suit arising by virtue of the
breach of this Settlement Agreement, (ii) any claims which Batchelder
or Dorn Parkinson may have with respect to director fees or
reimbursements, (iii) any claims Batchelder may have for compensation
or reimbursement under any agreement between him and Mesa entered into
in connection with his employment by Mesa or the termination thereof,
or (iv) any action (other than public statements, actions taken in
connection with or relating to the Action or the Proxy Contest,
actions which are publicly known and contacts made with the SEC)
which, if taken after the date hereof, would violate Section 6(c).
(b) Mesa Related Parties. Each of the Mesa Related
Parties, on behalf of itself and all of its affiliates, successors and
assigns ("related parties"), hereby releases, acquits and forever
discharges the WDB Parties and the persons named under the heading
"Other Investors and Third Parties" on Exhibit A, together with their
respective present and former affiliates, officers, directors,
employees, agents, attorneys, successors and assigns, of and from any
and all claims, causes of action (whether at law or equity), demands,
expenses and damages which such Mesa Related Party or its related
parties may have had, or may now have, or may hereafter have (whether
through operation of law, assignment or subrogation), from the
beginning of time to the Effective Date, real or suspected, known or
unknown, actual or contingent, direct or derivative, including but not
limited to any such claims, causes of action, demands, expenses and
damages relating to or arising out of the Action or any of the matters
claimed, asserted or alleged, or that could have been claimed,
asserted or alleged, in the Action, excepting only (i) any action,
cause
10
<PAGE> 11
of action or suit arising by virtue of the breach of this Settlement
Agreement and (ii) any action (other than public statements, actions
taken in connection with or relating to the Action or the Proxy
Contest, actions which are publicly known and contacts made with the
SEC) which, if taken after the date hereof, would violate Section
6(c).
With respect to each of the releases set forth above, each person or entity
granting or receiving such a release (i) agrees that such releases do not
preclude any Party hereto from seeking to enforce any undertaking or promise
contained in this Settlement Agreement or from seeking redress for the breach
of any representation or warranty contained in this Settlement Agreement; (ii)
agrees not to directly or indirectly encourage or pursue with or before any
federal, state or other governmental agency, authority or court any claim or
complaint against any of the persons or entities released in subparagraph (a)
or (b) above, including but not limited to any such claim or complaint relating
to matters covered by this Settlement Agreement (other than the enforcement of
any undertaking or promise contained herein), the Action, or any of the matters
claimed, asserted or alleged, or that could have been claimed, asserted or
alleged in the Action; (iii) agrees not to challenge, 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 Settlement Agreement; and
(iv) expressly waives all rights and benefits each may have under and by virtue
of the terms of Section 1542 of the California Civil Code, which provides as
follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
Except as may be otherwise required by law, the WDB Parties will not encourage
or cooperate with plaintiffs in any pending or subsequently initiated
derivative, class action or shareholder litigation related to Mesa or its
directors. Except as may be otherwise required by law, the Mesa Parties will
not encourage or cooperate with plaintiffs in any pending or subsequently
initiated derivative, class action or shareholder litigation related to Mesa to
which any of the WDB Parties is a party. In the event that any part of this
Settlement Agreement 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.
8. Dismissal. Promptly following the execution of this
Agreement, a stipulation of dismissal with prejudice of the Action as to all
parties to the Action, in the form attached hereto as Exhibit D (the
"Stipulation of Dismissal"), shall be executed and filed with the Untied States
District Court for the Northern District of Texas.
11
<PAGE> 12
9. Miscellaneous.
(a) No Admission of Liability or Wrongdoing. This
Settlement Agreement and any proceedings taken hereunder are not and shall not
in any way be construed as or deemed to be evidence of (i) any admission or
concession on the part of any Party of the merits or lack of merits of any
claim or counterclaim asserted in the Action, or (ii) any admission or
concession on the part of any Party of any liability or wrongdoing whatsoever,
which liability and wrongdoing are hereby expressly denied and disclaimed by
each of the Parties. Notwithstanding the foregoing, the Parties have
determined that further prosecution of the Action is not warranted.
(b) No Duress, Etc. The Parties agree that this
Settlement Agreement is entered into without duress, in good faith and for
sufficient consideration, and that it is fair, just and reasonable to all
Parties.
(c) Full Knowledge; Independent Advice, Etc. This
Settlement Agreement is entered into with full knowledge of any and all rights
which the Parties may have by reason of the pending litigation. All Parties
have received or have had made available to them all financial and other
information they or their counsel considered necessary to an informed judgment
concerning the Settlement Agreement. Each Party has received independent legal
advice, has conducted such investigation as he or his counsel thought
appropriate, and has consulted with such other independent advisors as each of
them and their counsel deemed appropriate, regarding the Action, this
Settlement Agreement and their rights and asserted rights in connection
therewith. None of the Parties is relying upon any representations or
statements made by any other Party, or such other Party's employees, agents,
representatives or attorneys, regarding this Settlement Agreement or its
preparation except to the extent such representations are expressly set forth
herein.
(d) Reasonable Efforts. All Parties hereto agree to
exercise all reasonable efforts and to take all reasonable steps necessary to
effectuate the settlement set forth in this Settlement Agreement.
(e) Successors. This Settlement Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their
respective heirs, successors and assigns, and upon any corporation or other
entity into or with which any Party hereto may merge, combine or consolidate
(provided that the Party is the survivor in such merger, combination or
consolidation).
(f) Governing Law. This Settlement Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas, without reference to the conflict of laws principles thereof.
(g) Amendments. Any provision of Section 5, 6(d) or 6(e)
of this Settlement Agreement, or any term defined in Section 1 of this
Settlement Agreement as used in Section 5, may be amended or waived by an
instrument in writing signed by Mesa, Washington and Davis, and any such
amendment or waiver shall be binding on all Parties.
12
<PAGE> 13
No amendment to or waiver of any other provision hereof shall be effective as
against any Party unless such Party agrees to such amendment or waiver in
writing.
(h) Authority. Each person executing this Settlement
Agreement represents that he or it has read and fully understands this
Settlement Agreement and that he or it has the authority to execute this
Settlement Agreement in his individual capacity or in the capacity identified
on the signature page below.
(i) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by courier service, by telecopy or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
addresses set forth on Exhibit B (or at such other address for a party as shall
be specified in a notice given in accordance with this paragraph). Each such
notice, request, claim, demand or other communication shall be effective (i) if
given by telecopy transmission, when such transmission to the telecopy number
specified in Exhibit B has been made and the appropriate electronic
confirmation that the entire communication has been received by the recipient
equipment has been received by the sender or (ii) if given by any other means,
when actually received at the address specified in this paragraph; provided, in
each case, that a notice given other than during normal business hours or on a
day other than on a business day at the place of receipt shall not be effective
until the opening of business on the next business day at the place of receipt.
(j) Specific Performance. Each of the Parties
acknowledges and agrees that irreparable harm would occur if any provision of
this Settlement Agreement were not performed in accordance with the terms
thereof, or were otherwise breached, and that such harm could not be remedied
by an award of money damages. Accordingly, the Parties hereto agree that any
non-breaching party shall be entitled to an injunction to prevent breaches of
this Settlement Agreement and to enforce specifically the terms and provisions
hereof. More specifically, each of the Parties hereto hereby agrees that any
action or proceeding brought under or to enforce any provision of this
Settlement Agreement shall be commenced in the United States District Court for
the Northern District of Texas, Dallas Division, and each Party hereto hereby
consents to the personal jurisdiction of and venue in such United States
District Court and agrees further that service of process or notice in any such
action or proceeding shall be effective if given in the manner set forth in
Section 9(i) hereof.
(k) Counterparts. This Settlement Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument.
(l) Effectiveness. This Settlement Agreement shall
become effective on the Effective Date.
13
<PAGE> 14
(m) Severability. If this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable as against any
Mesa Party or any WDB Party, such holding shall in no way render the Agreement
invalid, void or unenforceable against any other Mesa Party or WDB Party,
respectively, and the Agreement shall continue in full force and effect as to
all such other Mesa Parties and WDB Parties, respectively.
14
<PAGE> 15
IN WITNESS WHEREOF, the Parties hereto have caused this
Settlement Agreement to be executed as of the date first above written.
MESA PARTIES:
MESA Inc.
By:
--------------------------------
Name:
Its:
---------------------------------------
Boone Pickens
WASHINGTON RELATED PARTIES:
---------------------------------------
Dennis R. Washington
---------------------------------------
Dorn Parkinson
Washington Corporations
By:
--------------------------------
Name: Dorn Parkinson
Its: President
15
<PAGE> 16
DAVIS RELATED PARTIES:
---------------------------------------
Marvin Davis
---------------------------------------
John A. Davis
Davis Acquisition, L.P.
By: Davis Companies
Its: General Partner
By:
--------------------------------
Name: Marvin Davis
Its: President
Davis Companies
By:
--------------------------------
Name: Marvin Davis
Its: President
Marvin and Barbara Davis Revocable Trust
By:
--------------------------------
Name: Marvin Davis
Its: Trustee
16
<PAGE> 17
BATCHELDER RELATED PARTIES:
---------------------------------------
David H. Batchelder
Batchelder & Partners, Inc.
By:
--------------------------------
Name:
Its:
DHB Partners, L.P.
By: Batchelder Co.
Its: General Partner
By:
--------------------------------
Name:
Its:
---------------------------------------
Joel L. Reed
Whitworth and Associates
By:
--------------------------------
Name: Ralph V. Whitworth
Its: President
---------------------------------------
Ralph V. Whitworth
17
<PAGE> 18
MESA RELATED PARTIES:
Paul W. Cain
John Cox
John Herrington
Wales H. Madden
Fayez Sarofim
Robert L. Stillwell
J.R. Walsh
By:
----------------------------------
Duly Authorized Representative
18
<PAGE> 19
EXHIBIT A
<TABLE>
<CAPTION>
Davis Related Parties Other Investors and Third Partie
--------------------- --------------------------------
<S> <C>
Marvin Davis The Anschutz Corporation
John A. Davis E.N. Investment Company
Davis Acquisition, L.P. Philip F. Anschutz
Davis Companies The Dixon Company
Marvin and Barbara Davis ADDCO, Inc.
Revocable Trust Edward Dixon
Carol D. Dixon
David E. Dixon
Washington Related Parties Rainbow Trust
-------------------------- Paul L. Deutz, Jr.
Allen Paulson
Dennis R. Washington Theodore J. Roth
Dorn Parkinson Totem Enterprises
Washington Corporations
Batchelder Related Parties Mesa Related Parties
-------------------------- --------------------
David H. Batchelder Mesa Inc.
Batchelder & Partners, Inc. Boone Pickens
DHB Partners, L.P. Paul W. Cain
Batchelder Co. John Cox
Joel L. Reed John Herrington
Whitworth and Associates Wales H. Madden
Ralph V. Whitworth Fayez Sarofim
Robert L. Stillwell
J.R. Walsh
</TABLE>
A-1
<PAGE> 20
EXHIBIT B
Notice to Washington or any Washington Related Party 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, California 94111
Attn: Scott R. Haber
Fax: (415) 395-8095
Notice to Davis or any Davis Related Party at:
Marvin Davis
2121 Avenue of the Stars
Suite 2800
Los Angeles, California 90067
Fax: (310) 286-9359
with a copy, which shall not constitute notice, to
O'Melveny & Myers
1999 Avenue of the Stars, 7th Floor
Los Angeles, California 90067
Attn: Kendall R. Bishop
Fax: (310) 246-6779
Notice to Batchelder or any Batchelder Related Party to:
David H. Batchelder
4330 La Jolla Village Drive
Suite 200
San Diego, California 92122
Fax: (619) 456-7969
B-1
<PAGE> 21
Notice to Mesa or to Pickens:
MESA Inc.
5205 North O'Connor Boulevard
Suite 1400
Irving, Texas 75039-3746
Attn: Stephen K. Gardner
Fax: (214) 402-7028
with a copy, which shall not constitute notice, to:
Baker & Botts, L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, Texas 77002-4995
Attn: Stephen A. Massad
Fax: (713) 229-1522
B-2
<PAGE> 22
EXHIBIT C
PRESS RELEASE
MESA INC. AND DAVIS, WASHINGTON AND BATCHELDER REACH SETTLEMENT
IRVING, TEXAS, LOS ANGELES, CALIFORNIA & MISSOULA, MONTANA--SEPTEMBER 21,
1995-- Mesa Inc. and representatives of Dennis R. Washington, Marvin Davis and
David Batchelder today announced that they have entered into a settlement
agreement with regard to their various disputes.
In light of the Mesa Board's confirmation of its previously announced
commitment to explore all alternatives to maximize the value of Mesa for all
shareholders, including the possible sale or merger of Mesa, Messrs.
Washington, Davis and Batchelder have agreed not to seek to call a special
meeting of Mesa shareholders, as previously announced.
The agreement provides that if Mesa has previously effected a business
combination, sale of assets or equity or similar transaction that meets certain
agreed upon size and other criteria, including receipt of a fairness opinion
from Lehman Brothers Inc., Messrs. Washington, Davis and Batchelder will not
conduct any proxy solicitation with respect to Mesa's 1996 annual meeting. If
Mesa has not effected such a transaction by its 1996 annual meeting or if Mesa
submits to a special meeting of shareholders a transaction that does not meet
agreed upon criteria, Messrs. Washington, Davis and Batchelder may solicit
proxies.
Additionally, the agreement provides that Joel L. Reed, a principal of
Batchelder & Partners, Inc. will succeed Mr. Batchelder on the Board of
Directors of Mesa. Dorn Parkinson, Mr. Washington's representative, will
continue as a member of the Board.
C-1
<PAGE> 23
The parties stated that they have also agreed to dismiss with
prejudice pending litigation between them in the United States District Court
in Dallas, Texas. They noted that the respective parties deny any liability or
wrongdoing claimed or alleged by the other and have determined that further
prosecution of their respective claims is not warranted.
The entire agreement is being filed with the Securities and Exchange
Commission on a Form 8-K.
C-2
