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EXHIBIT 10.31
BAYARD DRILLING TECHNOLOGIES, INC.
0000 XXXXXXXXX XXXXXXXXXX, XXXXX 000X
XXXXXXXX XXXX, XXXXXXXX 00000
October 3, 1997
The CIT Group/Equipment Financing, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx XxXxxxx
Gentlemen:
This letter (this "Letter"), when executed and delivered by
The CIT Group/Equipment Financing, Inc. ("CIT" or "you") will constitute a
binding agreement between CIT and Bayard Drilling Technologies, Inc. ("Bayard")
to consummate the transactions hereinafter described.
1. Exercise of Warrant. At the Closing (as hereinafter
defined), CIT shall exercise in full the Warrant issued to CIT on December 13,
1996 representing the current right to purchase up to 300,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), of Bayard at a purchase price
per share of $8.00. Notwithstanding any provisions of the Warrant to the
contrary, at the Closing, in order to exercise the Warrant in full, CIT shall
surrender to Bayard the original instrument representing the Warrant, together
with the completed subscription form attached thereto, and, in consideration
therefor, Bayard shall deliver to CIT certificates representing an aggregate of
150,000 shares of Common Stock (the "Warrant Shares").
2. Sale of Warrant Shares in IPO. CIT hereby agrees to
sell, and Bayard hereby agrees to include, all of the Warrant Shares in any
registration by Bayard of an initial public offering of shares of Common Stock
in which any other holders of Common Stock of Bayard sell shares of Common
Stock (an "IPO"). CIT hereby agrees to enter into appropriate custody
arrangements and to grant appropriate powers of attorney as are customary in
connection with offerings by stockholders of companies registering shares of
capital stock for sale to the public. Notwithstanding anything to the contrary
set forth in this Letter, if the initial public offering price in the IPO is
less than $14.00 per share, CIT may, in its sole discretion, elect to not sell
its shares in the IPO.
3. Cash Payment Based on IPO Price. In order to account
for any difference in the value of (a) the number of shares of Common Stock
that would have been received by CIT upon exercise of the Warrant under the
"net exercise" provisions thereof based on a "current market value" per share
value equal to the initial public offering price in the IPO, net of underwriting
discounts and commissions (the "IPO Price"), and (b) the number of shares of
Common Stock actually received by CIT upon exercise of the Warrant pursuant to
this Letter, immediately upon the consummation of the first IPO in which CIT is
entitled to sell the Warrant Shares, Bayard shall make a cash payment to
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The CIT Group/Equipment
Financing, Inc. Page 2 October 3, 1997
CIT (if the IPO Price exceeds $16.00 per share), or CIT shall make a cash
payment to Bayard (if the IPO Price is less than $16.00 per share), in an
amount equal to the "Value Differential" in accordance with this paragraph 2.
The "Value Differential" shall be an amount equal to the product obtained by
multiplying (i) 150,000 by (ii) the absolute value of the difference between
the IPO Price and $16.00. Unless otherwise agreed in writing by Bayard and
CIT, such amount shall be paid to the recipient by wire transfer of immediately
available funds to an account designated in writing by the recipient.
4. The Closing. The closing of the exercise contemplated
by paragraph 1 of this Letter (the "Closing") shall be held at 10:00 a.m. on the
business day next following the date of acceptance hereof by CIT, at the offices
of Xxxxx & Xxxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, or at such
other time, date or place as Bayard and CIT shall mutually agree.
5. Survival of Registration Rights. Notwithstanding the
surrender of the Warrant by CIT at the Closing, in the event that the initial
public offering price in the IPO is less than $14.00 per share and CIT elects
not to sell the Warrant Shares in the IPO, then the registration rights
provisions contained in Section 4 of the Warrant shall continue to apply to the
Warrant Shares and Bayard and CIT shall retain all rights and comply with all
obligations provided by such Section 4 with respect to the registration of the
Warrant Shares.
6. Amendments. The provisions of this Letter shall not
be amended or waived except by the written agreement of CIT and Bayard.
7. Governing Law. This Letter shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to any choice of law principles that would require the application of
the laws of any other jurisdiction.
8. Counterparts. This Letter may be executed in
multiple counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which together shall constitute one and
the same instrument.
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The CIT Group/Equipment
Financing, Inc. Page 3 October 3, 1997
If you agree with the foregoing, please execute and return one
copy of this Letter.
Very truly yours,
BAYARD DRILLING TECHNOLOGIES, INC.
By: /s/ XXXXX X. XXXXX
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Xxxxx X. Xxxxx
President
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The CIT Group/Equipment
Financing, Inc. Page 4 October 3, 1997
Accepted and agreed this
9th day of October, 1997:
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ XXXXXX XXXXXXX
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Name: X. X. XxXxxxx
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Title: Executive Vice President
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