<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D/A
Under the Securities Exchange Act of 1934 (Amendment No. 2)*
MESA Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
590911103
(CUSIP Number)
Kenneth A. Hersh
777 Main Street, Suite 2700
Fort Worth, Texas 76102
(817) 820-6600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 6, 1997
(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
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of the cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 590911103 SCHEDULE 13D
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(1) Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above
Persons
DNR-MESA HOLDINGS, L.P.
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(2) Check the Appropriate Box if a Member of a Group
(See Instructions) (a) [ ]
(b) [ ]
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) OO (See Item 3)
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
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(6) Citizenship or Place of Organization DNR-MESA HOLDINGS, L.P. IS A
LIMITED PARTNERSHIP FORMED UNDER
THE LAWS OF THE STATE OF TEXAS.
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(7) Sole Voting Power 62,424,436 (1)
Number of -----------------------------------------------------------
Shares
Beneficially (8) Shared Voting Power 0
Owned by -----------------------------------------------------------
Each
Reporting (9) Sole Dispositive Power 62,424,436 (1)
Person With: -----------------------------------------------------------
(10) Shared Dispositive Power 0
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person 62,424,436
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ ]
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(13) Percent of Class Represented by Amount in Row (11) 49.3% (2)
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(14) Type of Reporting Person (See Instructions) PN
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(1) As exercised through its sole general partner, Rainwater, Inc., a
Texas corporation.
(2) Based on the 64,279,568 shares of Common Stock outstanding as of
December 31, 1996, plus the 62,424,436 additional shares of Common Stock
issuable upon the conversion of all of the Partnership's shares of Series B 8%
Cumulative Convertible Preferred Stock of the Issuer.
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The Schedule 13D filed by the Reporting Person with the Securities and
Exchange Commission on July 11, 1996, as amended on November 27, 1996, is
hereby amended as follows:
ITEM 1. SECURITY AND ISSUER.
No modification.
ITEM 2. IDENTITY AND BACKGROUND.
No modification.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
No modification.
ITEM 4. PURPOSE OF TRANSACTION.
By virtue of the right of each share of Series B Preferred Stock to
convert into one share of the Common Stock, the Partnership currently has
beneficial ownership of 62,424,436 shares, or 49.3%, of the outstanding shares
of the Common Stock.(3)
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Partnership. The Partnership is the beneficial owner of
62,424,436 shares of Common Stock. Based on the number of shares of Common
Stock issued and outstanding as of December 31, 1996, as contained in the
Issuer's most recently available filing with the Securities and Exchange
Commission, the Partnership is the beneficial owner of approximately 49.3% of
the outstanding shares of Common Stock.
Rainwater, Inc. Rainwater, Inc. may, as the sole general partner of the
Partnership, be deemed to be the beneficial owner of all 62,424,436 shares of
Common Stock beneficially owned by the Partnership which constitute (based on
the number of shares of Common Stock issued and outstanding) approximately
49.3% of the outstanding shares of Common Stock.
Richard E. Rainwater. Richard E. Rainwater may, as sole shareholder of
Rainwater, Inc., be deemed to be the beneficial owner of all 62,424,436 shares
of Common Stock beneficially owned by the Partnership, of which Rainwater, Inc.
is the sole general partner. Such
(3) To comply with Rule 13d-3(d)(1)(i), promulgated by the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of
1934, the Partnership has calculated its 49.3% beneficial ownership interest by
dividing: (1) 62,424,436 shares of Series B Preferred Stock, which includes the
shares initially acquired by the Partnership plus all shares previously
received as regular quarterly PIK Dividends on the Series B Preferred Stock, by
(2) 62,424,436 shares of Common Stock issuable upon conversion of the
Partnership's Series B Preferred Stock plus the 64,279,568 shares of Common
Stock outstanding as of December 31, 1996. Please note that this required
method of calculation may differ from the basis for calculating the percentage
ownership of the Issuer's securities represented by the Series B Preferred
Stock as set forth in other public filings relating to the transactions
described herein.
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62,424,436 shares of Common Stock constitute approximately 49.3% of the
outstanding shares of Common Stock.
(b) The Partnership. Through Rainwater, Inc., its general partner,
the Partnership has the sole power (and no shared power) to vote or direct the
vote or to dispose or direct the disposition of 62,424,436 shares of Common
Stock.
Rainwater, Inc. As the sole general partner of the Partnership,
Rainwater, Inc. has the sole power (and no shared power) to vote or direct the
vote or to dispose or direct the disposition of 62,424,436 shares of Common
Stock.
Richard E. Rainwater. As the sole shareholder of Rainwater, Inc.,
Richard E. Rainwater has the sole power (and no shared power) to vote or direct
the vote or dispose or direct the disposition of 62,424,436 shares of Common
Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER.
The Partnership and the Issuer have entered into a Shareholders
Agreement dated as of April 6, 1997 (the "Shareholders Agreement") pursuant to
which the Partnership has agreed to vote its shares of Series B Preferred Stock
in approval of proposed transactions consisting of (i) the merger of Issuer
with and into its newly-formed subsidiary (the "Reincorporation Sub") and (ii)
the merger of Parker & Parsley Petroleum Company, a Delaware corporation
("Parker & Parsley") with and into Mesa Operating Co., a subsidiary of
Reincorporation Sub (collectively, the "Mergers"). The Shareholders Agreement
also restricts dispositions of the Class B Preferred Stock by the Partnership
until the earlier to occur of the consummation of the Mergers or the
termination of the Agreement and Plan of Merger executed in connection with the
Mergers. See Exhibit 10.4 attached hereto for a complete copy of the
Shareholders Agreement.
On April 6, 1997, the Partnership entered into a letter agreement with
Parker & Parsley by which the Partnership agreed that prior to the earlier of
(i) the first anniversary of such letter agreement or (ii) the termination of
the Agreement and Plan of Merger executed in connection with the Mergers, the
Partnership will not, without the prior written consent of Parker and Parsley,
offer, sell, contract to sell or make any other distribution of any shares of
its Series B Preferred Stock, subject to certain exceptions. Furthermore, the
Partnership agreed to submit to future transfer restrictions if within the 90
day period following the closing of the Mergers, the surviving corporation
shall file a registration statement with the Securities and Exchange Commission
pertaining to the issuance and sale of common stock for its own account,
provided that such restrictions shall not exceed 180 days from the
effectiveness of such registration statement. See Exhibit 10.5 attached hereto
for a complete copy of this letter agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 10.4 - Shareholders Agreement dated April 6, 1997, by and
between DNR-MESA Holdings, L.P. and MESA Inc.
Exhibit 10.5 - Letter agreement dated April 6, 1997, by and
between DNR-MESA Holdings, L.P. and Parker &
Parsley Petroleum Company
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: April 11, 1997 DNR-MESA HOLDINGS, L.P.
By: Rainwater, Inc., its Sole
General Partner
By: /s/ Kenneth A. Hersh
------------------------------
Kenneth A. Hersh,
Vice President
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
Exhibit 10.4 Shareholders Agreement dated April 6, 1997, by and
between DNR-MESA Holdings, L.P. and MESA Inc.
Exhibit 10.5 Letter agreement dated April 6, 1997, by and
between DNR-MESA Holdings, L.P. and Parker &
Parsley Petroleum Company
</TABLE>
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EXHIBIT 10.4
Shareholders Agreement dated April 6, 1997
by and between DNR-MESA Holdings, L.P. and MESA Inc.
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SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of April 6, 1997 (this "Agreement"),
by and between MESA Inc., a Texas corporation ("Mesa"), and DNR-MESA Holdings,
L.P., a Texas limited partnership (the "Shareholder").
WHEREAS, Mesa, Mesa Operating Co., a Delaware corporation and a wholly
owned subsidiary of Mesa ("MOC") and MXP Reincorporation Corp., a Delaware
corporation and a wholly owned subsidiary of Mesa ("Reincorporation Sub"), have
entered into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"; capitalized terms not defined in this Agreement have the
meanings ascribed to them in the Merger Agreement) with Parker & Parsley
Petroleum Company, a Delaware corporation ("Parker & Parsley"), which provides,
among other things, upon the terms and subject to the conditions thereof, for
(a) the merger of Mesa with and into Reincorporation Sub (the "Reincorporation
Merger") pursuant to which, among other things, the outstanding shares of (x)
MXP Common Stock will be converted into shares of New Common Stock of
Reincorporation Sub, as the surviving company in the Reincorporation Merger,
and (y) MXP Series A Preferred Stock and MXP Series B Preferred Stock shall
have the right to receive, at the holders' election, either shares of New
Common Stock or New Series A Preferred Stock of Reincorporation Sub, subject to
certain conditions; and (b) the merger of Parker & Parsley with and into MOC,
with MOC being the surviving corporation, pursuant to which, among other
things, the shareholders of Parker & Parsley will receive shares of MXP Common
Stock of Reincorporation Sub in exchange for the outstanding Parker & Parsley
Common Stock.
WHEREAS, as of the date hereof, Shareholder owns (beneficially or of
record) all of the issued and outstanding shares of MXP Series B Preferred
Stock; and
WHEREAS, as a condition to the willingness of Mesa to enter into the
Merger Agreement, Mesa has required that the Shareholder agree, and in order to
induce Mesa and Parker & Parsley to enter into the Merger Agreement, the
Shareholder has agreed, to vote, in accordance with the terms of this
Agreement, all the shares of MXP Series B Preferred Stock now owned
(beneficially or of record) and any and all shares of MXP Series A Preferred
Stock and MXP Common Stock which may hereafter be acquired by the Shareholder
(the "Shares").
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
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ARTICLE I
COVENANTS OF THE SHAREHOLDER
SECTION 1.1. No Disposition or Encumbrance of Shares. Except as
contemplated by Section 1.07 hereof, Shareholder hereby covenants and agrees
that Shareholder shall not, and shall not offer or agree to, sell, transfer,
tender, assign, hypothecate or otherwise dispose of, or create any security
interest, lien, claim, pledge, option, right of first refusal, agreement,
limitation on Shareholder's voting rights, charge or other encumbrance of any
nature whatsoever with respect to the Shares now owned or that may hereafter be
acquired by Shareholder.
SECTION 1.2. No Solicitation of Transactions. (a) From and after the
date hereof, Shareholder will not, and will not authorize or (to the extent
within its control) permit any of its partners, officers, employees, agents,
Affiliates and other representatives or those of any of its subsidiaries
(collectively, "Shareholder Representatives") to, directly or indirectly,
solicit or encourage (including by way of providing information) any
prospective acquiror or the invitation or submission of any inquiries,
proposals or offers or any other efforts or attempts that constitute, or may
reasonably be expected to lead to, any MXP Acquisition Proposal from any person
or engage in any discussions or negotiations with respect thereto or otherwise
cooperate with or assist or participate in, or facilitate any such proposal;
provided, however, that, notwithstanding any other provision of this Agreement
or the Merger Agreement, any Shareholder Representative serving as a member of
the Board of Directors of Mesa may take and disclose to the Board of Directors
of Mesa a position contemplated by Rule 14e-2(a) promulgated under the Exchange
Act (and the Board of Directors may disclose such position to the shareholders
pursuant to Section 4.3 of the Merger Agreement) and may take any other action
specifically permitted to be taken by representatives of Mesa pursuant to the
Merger Agreement.
(b) Shareholder shall, and shall cause its Shareholder
Representative to, immediately cease and cause to be terminated any existing
solicitation, initiation, encouragement, activity, discussion or negotiation
with any parties conducted heretofore by Shareholder or any Shareholder
Representatives with respect to any MXP Acquisition Proposal existing on the
date hereof.
(c) Shareholder will promptly notify Mesa and Parker &
Parsley of any inquiries it receives for information covered by clause (a)
above or the receipt by Shareholder or any Shareholder Representative of any
MXP Acquisition Proposal, including the identity of the person or group
engaging in such discussions or negotiations, requesting such information or
making such MXP Acquisition Proposal, and the material terms and conditions of
any MXP Acquisition Proposal it receives.
SECTION 1.3. Marketable Title. Shareholder represents and warrants
to Mesa that Shareholder has good and marketable title to the Shares, free and
clear of all liens, claims, charges and encumbrances (other than those arising
pursuant to the terms of the Agreement of
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Limited Partnership of Shareholder, as amended to the date hereof) and has full
power and authority to exercise all voting rights in respect thereof.
SECTION 1.4. Revocation of Proxies. Shareholder hereby revokes any
and all previous proxies granted with respect to the Shares.
SECTION 1.5. Waiver of Appraisal Rights. Shareholder hereby
irrevocably waives any appraisal rights Shareholder may have pursuant to
Article 5.11 of the Texas Business Corporation Act ("TBCA") by reason of the
Mergers and agrees that Shareholder shall not attempt to perfect any such
appraisal right pursuant to Articles 5.11 through 5.13 of the TBCA.
SECTION 1.6. Agreement to Vote the Shares for the Merger.
Shareholder agrees that it will attend (either in person or by proxy) any
meeting of the shareholders of Mesa to be held for the purpose of obtaining
shareholder approval of the Reincorporation Merger and related matters, and
that Shareholder will vote in favor of the Reincorporation Merger and each of
the related matters recommended by the Board of Directors (the "Related
Matters") all the Shares now owned (beneficially or of record) or that may
hereafter be acquired by Shareholder.
SECTION 1.7. Election. Shareholder agrees that it will elect to
receive New Common Stock upon conversion of the Shares as contemplated by
Section 2.2 and 2.4 of the Merger Agreement.
SECTION 1.8. Further Assurances. Each party hereto shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of such party's obligations under this Agreement, including
without limitation any actions reasonably requested by Mesa in connection with
obtaining any required consents or approvals to the actions contemplated hereby
under the HSR Act or the Exchange Act. Without limiting the generality of the
foregoing, none of the parties hereto shall enter into any agreement or
arrangement (or alter, amend or terminate any existing agreement or
arrangement) if such action would materially impair the ability of any party to
effectuate, carry out or comply with all of the terms of this Agreement.
ARTICLE II
MISCELLANEOUS
SECTION 2.1. Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
SECTION 2.2. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance or injunctive relief
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<PAGE> 5
in respect of the terms hereof. The parties further agree that specific
performance or injunctive relief shall be the sole and exclusive remedies for
any breach of Section 1.02 or 1.08 hereof.
SECTION 2.3. Entire Agreement. This Agreement constitutes the entire
agreement between Mesa and Shareholder with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, between Mesa and Shareholder with respect to the subject matter hereof.
SECTION 2.4. Assignment. This Agreement shall not be assigned except
in accordance with the terms of the Merger Agreement.
SECTION 2.5. Third Party Beneficiary. Mesa and Shareholder agree and
acknowledge that the obligations and rights created hereby are material and
important to Parker & Parsley and that Parker & Parsley is a third party
beneficiary of this Agreement and, as such, shall have the right to enforce the
obligations of the Shareholder set forth herein.
SECTION 2.6. Parties in Interest. This Agreement shall inure to the
benefit of, and be enforceable by, the parties hereto, Parker & Parsley and
their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
the parties hereto and Parker & Parsley any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 2.7. Amendment; Waiver. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto containing the
express written consent of Parker & Parsley. Any party hereto may (i) extend
the time for the performance of any obligation or other act of any other party
hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby and containing
Parker & Parsley's written consent thereto.
SECTION 2.8. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the terms of this Agreement remain as originally contemplated to the
fullest extent possible.
SECTION 2.9. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or
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certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 2.09):
if to Parker & Parsley:
303 West Wall, Suite 101
Midland, Texas 79701
Facsimile No.: (915) 571-5050
Attention: Mark Withrow
with a copy to:
Vinson & Elkins, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2980
Facsimile No.: (214) 220-7716
Attention: Jeffrey A. Chapman
if to Mesa:
1400 Williams Square West
5205 North O'Connor Boulevard
Irving, Texas 75039
Facsimile No.: (972) 402-7028
Attention: Stephen K. Gardner
with a copy to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201-2980
Facsimile No.: (214) 953-6503
Attention: Carlos A. Fierro
if to Shareholder:
777 Main Street
Suite 2700
Fort Worth, Texas 76102
Facsimile No.: (817) 820-6650
Attention: Kenneth A. Hersh
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SECTION 2.10. Termination. This Agreement shall terminate upon the
Effective Time or upon the termination of the Merger Agreement in accordance
with the termination provisions provided therein; provided that Section 1.07
shall survive the Effective Time.
SECTION 2.11. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas applicable to
contracts executed in and to be performed in that State. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any Texas State or federal court sitting in the City of Dallas.
SECTION 2.12. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
SECTION 2.13. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of Mesa and Shareholder have caused this
Agreement to be executed by its respective officer thereunto duly authorized,
each as of the date first written above.
MESA INC.
By: /s/ Garrett Smith
-------------------------------------
Name: Garrett Smith
-------------------------------
Title: Vice President
-----------------------------
DNR-MESA HOLDINGS, L.P.
By: /s/ Kenneth A. Hersh
------------------------------------------
Name: Kenneth A. Hersh
-------------------------------
Title: Vice President
------------------------------
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<PAGE> 1
EXHIBIT 10.5
Letter agreement dated April 6, 1997, by and between
DNR-MESA Holdings, L.P. and Parker & Parsley Petroleum Company
<PAGE> 2
DNR MESA HOLDINGS, L.P.
777 Main Street, Suite 2700
Fort Worth, Texas 76102
April 6, 1997
Parker & Parsley Petroleum Company
303 W. Wall, Suite 101
Midland, Texas 79701
Gentlemen:
The undersigned serves as the sole general partner of DNR-MESA
Holdings, L.P. (the "Partnership"), and the Partnership is the owner of all
outstanding shares of the Series B 8% Cumulative Convertible Preferred Stock
(the "Series B Preferred Stock") of MESA, Inc. ("MXP"). This letter is
provided to you in connection with the execution and delivery of the Agreement
and Plan of Merger dated as of the date hereof (the "Merger Agreement"), among
you, MXP, Mesa Operating Co. and MXP Reincorporation Corp. Capitalized terms
used herein which are not otherwise defined have the meanings set forth in the
Merger Agreement.
In consideration of the execution and delivery of the Merger Agreement
and the consummation of the Mergers and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Partnership agrees
as follows:
1. During the period commencing on the date hereof and ending on
the earlier of (i) the first anniversary of the date hereof, or (ii) the date
of abandonment of the Mergers and termination of the Merger Agreement pursuant
to Section 7.1 thereof (the "Lock-Up Period"), the Partnership will not offer,
sell, contract to sell or make any other distribution (collectively, a
"Transfer") of any shares of the Series B Preferred Stock or any securities of
RM Surviving Corporation received by the Partnership in exchange for shares of
the Series B Preferred Stock in connection with the Mergers (collectively,
"Securities"), except with your prior written consent (or after the Closing,
that of RM Surviving Corporation); provided that, the Partnership may Transfer
Securities to its partners at any time if prior to making such Transfer, the
Partnership receives the written agreement (which shall be for the benefit of
and enforceable by RM Surviving Corporation) of (i) each partner to enter into
an "Underwriting Lock-Up" (as defined in paragraph 2 below) with respect to the
Securities distributed to such partner under the circumstances set forth in
paragraph 2 hereof, and (ii) Richard E. Rainwater and each other partner which
is an Affiliate of Richard E. Rainwater (which for the purposes hereof includes
any trust established for the benefit of any member of his family), not to make
any Transfer of the Securities distributed to such partner during the remainder
of the Lock-Up Period.
2. If within the 90 day period following the date of Closing of
the Mergers, RM Surviving Corporation shall file a registration statement with
the Securities and Exchange Commission pertaining to the issuance and sale of
common stock for its own account, the Partnership agrees that upon the written
request of RM Surviving Corporation and the managing
<PAGE> 3
underwriter for such offering, the Partnership will enter into an agreement (an
"Underwriting Lock-Up") not to make Transfers of the Securities for such period
of time after the closing of such offering that RM Surviving Corporation deems
reasonably necessary (based upon the advice of such managing underwriter), but
in no event to be longer than a period of 180 days. The obligations arising
under this paragraph 2 are independent of those under paragraph 1.
This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas applicable to contracts
executed in and to be performed in that State. The undersigned agrees that
irreparable damage would occur in the event that any provision of this letter
agreement was not performed in accordance with the terms hereof and that you
and RM Surviving Corporation shall be entitled to specific performance of the
terms hereof.
This letter agreement and all obligations hereunder shall terminate if
the Mergers are abandoned and the Merger Agreement is terminated pursuant to
Section 7.1 thereof. The undersigned understands that you will rely upon the
representations set forth in this letter agreement in proceeding with the
Mergers. The undersigned confirms that this letter agreement is irrevocable and
shall be binding upon the undersigned's successors and assigns.
Sincerely,
DNR-MESA HOLDINGS, L.P
By: Rainwater, Inc., general partner
By: /s/ Kenneth A. Hersh
-------------------------------------
Kenneth A. Hersh, Vice President
Acknowledged and Accepted
Parker & Parsley Petroleum Company
By: /s/ Scott D. Sheffield
-----------------------------------
Name: Scott D. Sheffield
---------------------------------
Title: President
--------------------------------
