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Exhibit 99 (c)(3)
SHERIDAN ENERGY, INC.
0000 XXXXXXXXX, XXXXX 000
XXXXXXX, XXXXX 00000
June 15, 1999
PERSONAL AND CONFIDENTIAL
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Re: Confidentiality Agreement
Gentlemen:
In connection with the consideration by Calpine Corporation, a Delaware
corporation ("Calpine"), and Sheridan Energy, Inc., a Delaware corporation
("SEI") of a possible transaction involving the acquisition by Calpine of all of
the capital stock of SEI, SEI may disclose certain information relating to their
businesses which is proprietary, confidential and not otherwise publicly
available. Such proprietary and confidential information may include, but is not
limited to, financial data, business strategies, ideas, concepts, customer
lists, vendor lists, development plans for new or improved products or
processes, data, formulae, techniques, designs, know-how, photographs, plans,
drawings, specifications, samples, test specimens, reports, price lists,
findings, studies, inventions, reserves, oil and gas exploration and development
prospects, and product sales prices (the "Confidential Information").
In consideration of the furnishing of the information as contemplated
in this letter agreement (the "Agreement"), the parties hereto agree to the
following:
1. Calpine agrees to treat any Confidential Information concerning SEI
delivered in connection with this Agreement or otherwise obtained (whether in
written, oral or any other form and whether prepared by SEI, its advisors, or
otherwise) in accordance with the provisions of this Agreement, and Calpine
agrees to take or abstain from taking certain other actions as set forth herein.
Such Confidential Information, along with all analyses, compilations, data,
studies or other documents prepared by Calpine based in whole or in part on the
Confidential Information provided by SEI, is collectively referred to as the
"Evaluation Material." The term "Evaluation Material" shall not include
information that (i) is already in Calpine's possession as reflected by its
written records, provided that such information is not known by Calpine to be
subject to another confidentiality agreement with, or other obligation of
secrecy to, SEI or another party, or (ii) is or becomes generally available to
the public other than as a result of a
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June 15, 1999
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disclosure by Calpine or its directors, officers, employees, agents or advisors,
or (iii) becomes available to Calpine on a non-confidential basis from a source
other than SEI or its directors, officers, employees, agents or advisors,
provided that such source is not known by Calpine to be bound by a
confidentiality agreement with or other obligation of secrecy to Calpine or
another party.
2. Calpine agrees that the Evaluation Material made available to it
will be used solely for the purpose of evaluating a possible transaction between
SEI and Calpine, and that such information shall be kept confidential and shall
not be disclosed in whole or in part by Calpine or permitted by Calpine to be
used in any manner adverse or detrimental to SEI. Calpine further agrees not to,
directly or indirectly, use, sell, lease, license or otherwise commercially use
the Evaluation Material, unless express, prior written authorization is obtained
from the Board of Directors of SEI. Notwithstanding the foregoing, the
Evaluation Material may be disclosed to Calpine's directors, officers,
employees, agents, advisors and representatives of such advisors (the persons to
whom such disclosure is permissible being collectively called "Representatives")
who need to know such information for the sole purpose of evaluating any
possible transaction between SEI and Calpine (it being understood that prior to
the receipt of any Evaluation Material by Representatives of Calpine, such
Representatives shall be informed by Calpine of the confidential nature of such
information and directed by Calpine to treat such information confidentially,
and such Representatives shall agree, in writing, to comply with and be bound by
the confidentiality provisions of this Agreement), and are approved on behalf of
SEI by Xxxxxxx X. Xxxxxxxx (the "SEI Contact"). In addition, without the prior
written consent of SEI, Calpine will not, and will direct its Representatives
not to (i) copy or otherwise reproduce for, or distribute to, third parties
(except for copying or other reproduction for, or distribution to, those of its
Representatives directly involved in the confidential review of the Evaluation
Material) any Evaluation Material, and (ii) disclose to any person, other than
the foregoing Representatives, by any means (including but not limited to any
press release or other public dissemination) any of the following: the fact that
the Evaluation Material has been made available to it or that discussions or
negotiations are taking place concerning a possible transaction between SEI and
Calpine, or any of the terms, conditions or other facts with respect to any such
possible transaction, including the status thereof, except as may be required by
U.S. securities laws or other applicable laws. Calpine agrees to be responsible
for any breach of this Agreement by its Representatives. All requests by Calpine
or Calpine's Representatives for Evaluation Material, meetings with SEI
personnel, or inspection of SEI's properties shall be made to the SEI Contact.
As used herein, the Calpine "Contact" shall be the President of Calpine.
3. In the event that Calpine or any of its Representatives is requested
or required as part of a legal or administrative proceeding by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demands or similar processes to disclose any Evaluation Material
or any of the matters set forth herein (to the extent such matters are not
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then publicly known or available), it is agreed that Calpine will (a) provide
SEI with prompt written notice of such request(s) and the documents or
information requested so that SEI may seek an appropriate protective order at
its expense and/or waive Calpine's compliance with the provisions of this
Agreement, and (b) consult with SEI as to the advisability of taking legally
available steps to resist or narrow such request. It is further agreed that if
in the absence of a protective order or the receipt of a written waiver from
SEI, Calpine is nonetheless compelled to disclose any of the Evaluation Material
or others matters set forth in this Agreement to any tribunal or else stand
liable for contempt or suffer other censure or penalty, Calpine agrees to
disclose to such tribunal only such Evaluation Material as is legally required,
which disclosure shall be without liability hereunder; provided however, that
Calpine shall give written notice of the Evaluation Material or other matters to
be so disclosed as far in advance of its disclosure as is practicable and shall
use reasonable efforts to obtain an order or other reliable assurance that
confidential treatment will be given to such portion of the Evaluation Material
or other matters required to be disclosed.
4. Calpine acknowledges that neither SEI nor any of its Representatives
has made or are making any representation or warranty as to the accuracy or
completeness of the Evaluation Material provided, and Calpine acknowledges that
only those specific representations and warranties that may be expressly made in
a definitive agreement regarding the contemplated transaction (when, as and if
any is executed, and subject to such limitations and restrictions as may be
specified in such definitive agreement) shall have any legal effect. Calpine
understands and agrees that neither SEI nor any of its Representatives shall
have any liabilities to Calpine or any of its Representatives pursuant to this
Agreement based on any inaccuracies, omissions or misstatements contained in, or
inadequacies of, the Evaluation Material.
5. SEI and Calpine each agrees that either party shall have the right,
at any time, in its sole discretion without giving any reason therefor, to
terminate discussions with the other concerning a possible transaction. In the
event of such termination or upon SEI's request, as may be indicated in a
writing (a "Request") delivered by SEI to Calpine, Calpine shall promptly
collect from all of its Representatives all written Evaluation Material
regarding SEI and either (1) deliver such materials to SEI, or (2) destroy such
materials, without retaining any copies, extracts or other reproductions in
whole or in part of such written material, and further, shall cause written
certification by an authorized officer of Calpine of the delivery or destruction
of the materials to be delivered to SEI no later than ten (10) business days
following delivery of the Request by SEI. In addition to the foregoing, all
documents, memoranda, notes and other writings whatsoever prepared by Calpine or
its Representatives based on the information in the Evaluation Material provided
to Calpine shall be destroyed, and such destruction shall be certified in
writing to SEI by an authorized officer of Calpine supervising such destruction.
6. SEI and Calpine each agrees that unless and until a definitive
agreement between
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SEI and Calpine regarding any transaction has been executed and delivered, the
parties hereto will be under no legal obligation of any kind whatsoever with
respect to such a transaction by virtue of this or other written or oral
expression by them or by any of their directors, officers, employees, agents or
any other Representatives thereof except, in the case of this Agreement, for the
matters specifically agreed to herein.
7. Without the prior written consent of the other party's Contact, for
a period of six months from the date of this Agreement, no party will employ the
other party's employees; provided, that neither party shall be prohibited from
(i) employing any such person who is engaged in secretarial or clerical work or
(ii) conducting generalized solicitations for employees and hiring such person
(except persons employed by SEI in executive endeavors) identified through such
means.
8. Calpine hereby acknowledge that it is aware, and it will advise its
Representatives who are informed as to the matters which are the subject of this
Agreement, that the United States securities laws prohibit any person who has
received from an issuer material, non-public information concerning the matters
which are the subject of this Agreement from purchasing or selling the
securities of such issuer or from communicating such information to any other
person under circumstances in which it is reasonably foreseeable that such
person is likely to purchase or sell such securities.
9. Calpine agrees that for a period of two years from the date hereof,
neither it nor any Affiliate (as that term is defined in Rule 405 under the
Securities Act of 1933) of Calpine (regardless of whether such person or entity
is an Affiliate on the date hereof) will (i) acquire, offer to acquire, or agree
to acquire, directly or indirectly, by purchase or otherwise, any voting
securities or direct or indirect rights or options to acquire any voting
securities of SEI, (ii) make, or in any way participate, directly or indirectly,
in any "solicitation" of "proxies" to vote (as such terms are used in the proxy
rules of the Securities and Exchange Commission), or seek to advise or influence
any person or entity with respect to the voting of any voting securities of SEI,
(iii) form, join or in any way participate in a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934 with respect to any
voting securities of SEI, or (iv) otherwise act, alone or in the concert with
others, to seek to control or influence the management, board of directors or
policies of SEI. Notwithstanding the foregoing, Calpine may take any and all
actions in connection with its rights associated with the interests it holds in
Sheridan California Energy, Inc. ("SCEI"). Nothing in this Agreement is intended
to modify such rights or interests in SCEI.
10. Calpine agrees to indemnify and hold SEI harmless for any damages,
loss, cost or liability (including legal fees and the cost of enforcing this
indemnity) arising out of or resulting from any unauthorized use or disclosure
by Calpine or its Representatives of Evaluation Material
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or other violation of this Agreement. In addition, because an award of money
damages (whether pursuant to the foregoing sentence or otherwise) would be
inadequate for any breach of this Agreement by Calpine or its Representatives
and any such breach would cause SEI irreparable harm, Calpine agrees that in the
event of any breach or threatened breach of this Agreement, SEI shall also be
entitled, without the requirements of posting a bond or other security, to
equitable relief, including injunctive relief and specific performance. Such
remedies shall not be the exclusive remedies for any breach of this Agreement
but shall be in addition to all other remedies available at law or equity to the
non-breaching party.
11. If any provision of this Agreement is held to be illegal, invalid,
or unenforceable under any applicable laws, the legality, validity, and
enforceability of the remaining provisions of this Agreement shall not be
affected thereby, and in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable. This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and no provision hereof may be amended, modified or waived
except by a written agreement signed by the party against whom enforcement or
any amendment, modification or waiver is sought. This Agreement may be executed
in any number of counterparts, all of which shall be considered one and the same
instrument.
12. All notices required or permitted to be given hereunder shall be
personally delivered, sent by overnight courier or delivery service, or by
telefax to the parties as follows, or to such other address or telefax number as
may be subsequently provided:
If to SEI: Sheridan Energy, Inc.
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
If to Calpine: Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: General Counsel
13. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to conflict of laws.
EFFECTIVE AS OF THE DATE FIRST WRITTEN ABOVE.
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SHERIDAN ENERGY, INC.
By: /s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
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Title: Chairman of the Board
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ACCEPTED AND AGREED:
CALPINE CORPORATION
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
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Title: Vice-President - Business Development
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