EXHIBIT 2
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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;
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
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following terms (whether or not capitalized) shall have the following meanings:
"1996 Annual Meeting" means the 1996 annual meeting of shareholders of
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Mesa at which the election of directors shall be considered.
"Acceptable Investment Banker" means Lehman Brothers Inc. or such
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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.
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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.
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"Common Stock" means the common stock, par value $.01 per share, of
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Mesa.
"Effective Date" means September 20, 1995.
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"Endorsed" means, with respect to a Transaction, a Transaction as to
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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 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,
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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.
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"Major Transaction" means (i) any business combination transaction
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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 of any 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
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direct or indirect subsidiaries, including the Common Stock and any other
debt or equity 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
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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
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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
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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
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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
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on June 29, 1995 by the WDB Group, as amended through Amendment 4 thereto
dated August 30, 1995.
"SEC" means the United States Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended.
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"Solicitation Action" with respect to a shareholders meeting means any
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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.
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The terms "participant," "proxy" and "solicitation" shall be used as defined in
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Regulation 14A under the Exchange Act (whether or not the pertinent securities
are subject to Regulation 14A). The terms "beneficial ownership" and "group"
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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
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Exchange Act.
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2. Representations and Warranties of the WDB Parties. Each WDB Party,
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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 the 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,
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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 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.
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(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
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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,
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;
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(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.
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(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 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
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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 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
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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.
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(a) Press Release. Upon the effectiveness of this Agreement, Mesa,
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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
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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
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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
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shareholders meeting to elect directors in 1996 in lieu of the 1996 Annual
Meeting.
(e) Charter and Bylaw Amendments. Mesa shall not prior to December
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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
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herein, the Parties hereto release one another as follows:
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(a) WDB Parties. Each of the WDB Parties, on behalf of itself and of
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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
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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 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
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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
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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 United States District Court
for the Northern District of Texas.
9. Miscellaneous.
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(a) No Admission of Liability or Wrongdoing. This Settlement
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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.
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(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. 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
-12-
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.
(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.
-13-
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:
Its:
-14-
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
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Marvin and Barbara Davis Revocable Trust
By:________________________________________
Name: Marvin Davis
Its: Trustee
BATCHELDER RELATED PARTIES:
___________________________________________
David H. Batchelder
Batchelder & Partners, Inc.
By:________________________________________
Name:
Its:
DHB Partners, L.P.
By:________________________________________
Name:
Its: General Partner
___________________________________________
Joel L. Reed
-16-
Whitworth and Associates
By:________________________________________
Name:
Its:
___________________________________________
Ralph V. Whitworth
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
-17-
EXHIBIT A
Davis Related Parties
---------------------
Marvin Davis
John A. Davis
Davis Acquisition, L.P.
Davis Companies
Marvin and Barbara Davis
Revocable Trust
Washington Related Parties
--------------------------
Dennis R. Washington
Dorn Parkinson
Washington Corporations
Batchelder Related Parties
--------------------------
David H. Batchelder
Batchelder & Partners, Inc.
DHB Partners, L.P.
Batchelder Co.
Joel L. Reed
Whitworth and Associates
Ralph V. Whitworth
Other Investors and Third Parties
---------------------------------
The Anschutz Corporation
E.N. Investment Company
Philip F. Anschutz
The Dixon Company
ADDCO, Inc.
Edward Dixon
Carol D. Dixon
David E. Dixon
Rainbow Trust
Paul L. Deutz, Jr.
Allen Paulson
Theodore J. Roth
Totem Enterprises
Mesa Related Parties
--------------------
Mesa Inc.
Boone Pickens
Paul W. Cain
John Cox
John Herrington
Wales H. Madden
Fayez Sarofim
Robert L. Stillwell
J.R. Walsh
-1-
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
-1-
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
-2-
EXHIBIT C
PRESS RELEASE
MESA INC. AND DAVIS, WASHINGTON AND BATCHELDER REACH SETTLEMENT
IRVING, TEXAS, LOS ANGELES, CALIFORNIA & MISSOULA, MONTANA --
SEPTEMBER 20, 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.
-1-
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.
###
-2-
EXHIBIT D
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
MESA INC. (S)
(S)
V. (S)
(S)
DAVID H. BATCHELDER, (S)
BATCHELDER & PARTNERS, INC., (S)
DENNIS R. WASHINGTON, MARVIN (S) NO. 3:95-CV-1386-T
DAVIS, INDIVIDUALLY AND AS (S) NO. 3:95-CV-1386-X
TRUSTEE FOR THE MARVIN DAVIS (S)
AND BARBARA DAVIS REVOCABLE (S)
TRUST, DAVIS ACQUISITION, L.P., (S)
DAVIS COMPANIES, JOHN DAVIS, (S)
DORN PARKINSON, PAUL L. (S)
DEUTZ, JR., INDIVIDUALLY AND (S)
AS TRUSTEE U/A DTD 3-22-88 (S)
FOR RAINBOW TRUST (S)
(S)
V. (S)
(S)
T. BOONE PICKENS, JOHN L. COX, (S)
FAYEZ S. SAROFIM, ROBERT L. (S)
STILLWELL, J. R. WALSH, JR., (S)
PAUL W. CAIN, JOHN S. HERRINGTON (S)
WALES H. MADDEN, JR. AND MESA (S)
INC. (S)
STIPULATION OF DISMISSAL
Pursuant to Rule 41(a)(1) of the Federal Rules of Civil Procedure,
Plaintiff Mesa Inc., Defendants David H. Batchelder, Batchelder & Partners, Inc.
Dennis R. Washington, Marvin Davis, Individually and as Trustee for the Marvin
Davis and Barbara Davis Revocable Trust, Davis Acquisition, L.P., Davis
Companies, John Davis, Dorn Parkinson, Paul L. Deutz, Jr., Individually and as
Trustee U/A DTD 3-22-88 for Rainbow Trust, Counter-Plaintiffs Dennis R.
Washington, Davis Companies, and Davis Acquisition, and Counter-Defendants T.
Boone Pickens, John L. Cox, Fayez S. Sarofim, Robert L. Stillwell, J. R. Walsh,
Jr., Paul W. Cain, John S. Herrington, Wales H. Madden, Jr. and Mesa Inc. hereby
stipulate the dismissal of all claims and counter-claims asserted
-1-
herein with prejudice. Each party to this stipulation has agreed to pay its own
respective attorneys' fees, expenses, and costs.
DATED: September 19, 1995 Respectfully submitted,
_____________________________________
OF COUNSEL James Edward Maloney
State Bar No. 12881500
David D. Sterling BAKER & BOTTS, L.L.P.
State Bar No. 19170000 One Shell Plaza
Paul R. Elliott 910 Louisiana
State Bar No. 06547500 Houston, Texas 77002
BAKER & BOTTS, L.L.P. Telephone: (713) 229-1250
One Shell Plaza Facsimile: (713) 225-1522
910 Louisiana
Houston, Texas 77002
(713) 229-1234
(713) 229-1522 (Facsimile)
Fletcher L. Yarbrough
State Bar No. 22137000
Ken Carroll
State Bar No. 03888500
Tod B. Edel
State Bar No. 06411500
CARRINGTON, COLEMAN,
SLOMAN & BLUMENTHAL, L.L.P.
200 Crescent Court, Suite 1500
Dallas, Texas 75201
(214) 855-3000
(214) 855-1333 (Facsimile)
Attorneys for Plaintiff
Mesa Inc. and for Counter-defendants
T. Boone Pickens, Robert L. Stillwell,
J. R. Walsh, Jr. Paul W. Cain
John S. Herrington, Wales H.
Madden, Jr. and Mesa Inc.
-2-
_________________________________
Ernest E. Figari, Jr.
State Bar No. 06983000
Donald Colleluori
State Bar No. 04581950
FIGARI & DAVENPORT, L.L.P.
4800 NationsBank Plaza
901 Main Street
Dallas, Texas 75202
Telephone: (214) 939-2000
Facsimile: (214) 939-2090
and
---
Hugh S. Wilson
William J. Meeske
Kirk Wilkinson
David M. Chernek
LATHAM & WATKINS
633 West Fifth Street
Suite 4000
Los Angeles, California 90071-2007
Telephone: (213) 485-1234
Facsimile: (213) 891-8763
OF COUNSEL:
Fredric J. Zepp
LATHAM & WATKINS
505 South Montgomery Street
San Francisco, California 94111-2562
Telephone: (415) 391-0600
Facsimile: (415) 395-8095
Attorneys for Defendants
David H. Batchelder, Batchelder
& Partners, Inc., Dennis R. Washington;
Marvin Davis, Individually and as
trustee for the Marvin Davis and Barbara
Davis Revocable Trust, Davis
Acquisition, L.P.; Davis Companies; John
Davis, Dorn Parkinson and for Counter-
Plaintiffs Dennis R. Washington, Davis
Companies and Davis Acquisition, L.P.
-3-
________________________________
John Timmons
PILLSBURY, MADISON & SUTRO
101 West Broadway, Suite 1800
San Diego, CA 92101-8201
Telephone: (619) 234-5000
Facsimile: (619) 236-1995
Attorney for Defendant Paul L. Deutz,
Jr. Individually and as Trustee U/A DTD
3-22-88 for Rainbow Trust
_________________________________
Dee J. Kelly
State Bar No. 11217000
Dee J. Kelly, Jr.
State Bar No. 11217250
KELLY, HART & HALLMAN, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Telephone: (817) 332-2500
Facsimile: (817) 878-9280
Attorneys for Counter-Defendant
John L. Cox
_________________________________
Richard P. Keeton
State Bar No. 11175000
MAYOR, DAY, CALDWELL
& KEETON, L.L.P.
1900 NationsBank Center
700 Louisiana Street
Houston, Texas 77002
Telephone: (713) 225-7000
Facsimile: (713) 225-7047
Lee Kaplan
SMYSER, KAPLAN & VESELKA
One Allen Center, 500 Dallas
Suite 2950
Telephone: (713) 654-1525
Facsimile: (713) 654-1520
-4-
Attorneys for Fayez S. Sarofim
CERTIFICATE OF SERVICE
----------------------
I certify that on this ___ day of September 1995, I sent a true and
correct copy of the Stipulation of Dismissal by facsimile and certified mail,
return receipt requested, to all counsel of record.
_____________________________________
James Edward Maloney
-5-