Item 1.01 Entry into a Material Definitive Agreement.
Transaction Agreement for the JV
On February 28, 2019, BHGE LLC, GE and
GE Aero Power LLC entered into a Transaction Agreement (the “Aero Transaction Agreement”), which sets forth, among
other things, the terms on and conditions subject to which BHGE LLC and GE will form and contribute certain aero-derivative gas
turbine related assets and liabilities to the JV. The JV will acquire aero-derivative gas turbine engines, parts and services and
will develop certain new product introductions related thereto.
In addition to the contributions to the
JV by BHGE LLC and GE, BHGE LLC agreed to pay $60 million to GE, in order to equalize each party’s interests in the JV at
50%. The parties also agreed to a customary post-closing adjustment for contributed working capital. At the closing of the transactions
contemplated by the Aero Transaction Agreement (the “JV Closing”), BHGE LLC and GE will enter into an amended and restated
limited liability company agreement that will govern the JV (the “Aero LLC Agreement”). A description of the material
terms of the Aero LLC Agreement is set forth below under the heading “LLC Agreement for the JV”. At the JV Closing,
BHGE
LLC, GE and GE Aero Power LLC, as applicable, will enter into
various ancillary agreements relating to the operation of the JV including services agreements, distribution agreements, a development
and supply agreement for certain aero-derivative engines, an agreement regarding the JV's equipment lease pool and an intellectual
property license agreement.
BHGE LLC and GE have made customary representations,
warranties and covenants in the Aero Transaction Agreement, including covenants regarding (i) the operation of the contributed
assets by BHGE LLC and GE prior to the JV Closing and (ii) the use of commercially reasonable efforts to cause the conditions to
the transactions contemplated by the Aero Transaction Agreement to be satisfied. Completion of the transactions contemplated by
the Aero Transaction Agreement is subject to customary closing conditions, including the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain other regulatory and competition
law approvals. Each of BHGE LLC and GE have agreed to indemnify the JV for breaches of their respective representations, warranties
and covenants and their respective excluded assets and liabilities under the Aero Transaction Agreement (subject to customary limitations).
The Aero Transaction Agreement provides BHGE LLC and GE with certain limited termination rights, including in the event that there
is a breach by either BHGE LLC or GE of any of its covenants, representations or warranties, which breach prevents the closing
conditions from being satisfied and is not timely cured. Subject to receipt of necessary regulatory approvals, the transactions
are expected to close on the first business day of the month after which the “trigger date” occurs. The “trigger
date” is the later of July 3, 2019 and the date that GE and its affiliates cease to beneficially own more than 50% of the
outstanding voting power of BHGE’s common stock. The transactions cannot close prior to the trigger date without both parties’
consent.
The foregoing description of the Aero Transaction
Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text of such agreement,
which is filed as Exhibit 10.1 hereto, and incorporated herein by reference. A copy of the Aero Transaction Agreement has been
included to provide investors and stockholders with information regarding its terms and is not intended to provide any factual
information about BHGE, BHGE LLC, GE or any of their respective subsidiaries or affiliates. The representations, warranties and
covenants contained in the Aero Transaction Agreement have been made solely for the purposes of the Aero Transaction Agreement
and as of specific dates; were solely for the benefit of the parties to the Aero Transaction Agreement; are not intended as statements
of fact to be relied upon by BHGE’s, BHGE LLC’s or GE’s investors or stockholders, but rather as a way of allocating
contractual risk and governing the contractual rights and relationships between the parties to the Aero Transaction Agreement;
have been modified or qualified by certain confidential disclosures that were made between the parties in connection with the negotiation
of the Aero Transaction Agreement, which disclosures are not reflected in the Aero Transaction Agreement itself; and may no longer
be true as of a given date; and may apply standards of materiality in a way that is different from what may be viewed as material
by investors or stockholders. BHGE’s, BHGE LLC’s and GE’s investors and stockholders are not third party beneficiaries
under the Aero Transaction Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof
as characterizations of the actual state of facts or condition of BHGE, BHGE LLC, GE or any of their respective subsidiaries or
affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date
of the Aero Transaction Agreement, which subsequent information may or may not be fully reflected in BHGE’s, BHGE LLC’s
or GE’s public disclosures. BHGE and BHGE LLC acknowledge that, notwithstanding the inclusion of the foregoing cautionary
statements, it is responsible for considering whether additional specific disclosures of material information regarding material
contractual provisions are required to make the statements in this Form 8-K not misleading.
IST Sale Agreement
On February 25, 2019, BHGE LLC and GE entered
into the IST Sale Agreement, which sets forth, among other things, the terms and conditions on which BHGE LLC will transfer certain
of its assets, liabilities and employees that are related to the Industrial Steam Turbine Business to an affiliate of GE (the “IST
Business Transfer”). In connection with the IST Business Transfer, the IST Sale Agreement provides that BHGE LLC will make
a cash payment of $13 million to an affiliate of GE at the closing of the transactions contemplated by the IST Sale Agreement (the
“IST Closing”), which amount is subject to an upward adjustment if the working capital of the Industrial Steam Turbine
Business on the date of the IST Closing is negative. If the working capital of the Industrial Steam Turbine Business is positive
on the date of the IST Closing, then an affiliate of GE will make quarterly payments to BHGE LLC for one year after the IST Closing
of any receivables of the Industrial Steam Turbine Business that were included in the calculation of the working capital of the
Industrial Steam Turbine Business on the date of the IST Closing and that are collected by such affiliate of GE in the ordinary
course of business up to a cap equal to the lesser of (a) the positive value of the working capital of the Industrial Steam Turbine
Business on the date of the IST Closing or (b) the value of such receivables that were a component of the calculation of such working
capital as of such date.
BHGE LLC has made representations, warranties
and covenants in the IST Sale Agreement, including agreeing to covenants regarding the conduct of the Industrial Steam Turbine
Business prior to the IST Closing, and has agreed to indemnify GE for certain matters (subject to customary limitations). Completion
of the transactions contemplated by the IST Sale Agreement is subject to customary closing conditions, and the transactions are
expected to close in the second quarter of 2019. The IST Sale Agreement provides BHGE LLC and GE with certain limited termination
rights, including in the event that there is a breach by either BHGE LLC or GE of any of its covenants, representations or warranties,
which breach prevents the closing conditions from being satisfied and is not timely cured, or if the IST Closing does not occur
within one year of the trigger date (as defined above). The IST Sale Agreement also contains certain non-compete restrictions that
apply to BHGE LLC and its affiliates for two years after the IST Closing with respect to the servicing of a specified installed
base of steam turbines.
The foregoing description of the IST Sale
Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text of such agreement,
which is filed as Exhibit 10.2 hereto, and incorporated herein by reference. A copy of the IST Sale Agreement has been included
to provide investors and stockholders with information regarding its terms and is not intended to provide any factual information
about BHGE, BHGE LLC, GE or any of their respective subsidiaries or affiliates. The representations, warranties and covenants contained
in the IST Sale Agreement have been made solely for the purposes of the IST Sale Agreement and as of specific dates; were solely
for the benefit of the parties to the IST Sale Agreement; are not intended as statements of fact to be relied upon by BHGE’s,
BHGE LLC’s or GE’s investors or stockholders, but rather as a way of allocating contractual risk and governing the
contractual rights and relationships between the parties to the IST Sale Agreement; have been modified or qualified by certain
confidential disclosures that were made between the parties in connection with the negotiation of the IST Sale Agreement, which
disclosures are not reflected in the IST Sale Agreement itself; and may no longer be true as of a given date; and may apply standards
of materiality in a way that is different from what may be viewed as material by investors or stockholders. BHGE’s, BHGE
LLC’s and GE’s investors and stockholders are not third party beneficiaries under the IST Sale Agreement and should
not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of BHGE, BHGE LLC, GE or any of their respective subsidiaries or affiliates. Moreover, information concerning
the subject matter of the representations and warranties may change after the date of the IST Sale Agreement, which subsequent
information may or may not be fully reflected in BHGE’s, BHGE LLC’s or GE’s public disclosures. BHGE and BHGE
LLC acknowledge that, notwithstanding the inclusion of the foregoing
cautionary statements, it is responsible for considering whether
additional specific disclosures of material information regarding material contractual provisions are required to make the statements
in this Form 8-K not misleading.
Amended and Restated HDGT Distribution and Supply Agreement
On February 27, 2019, in connection with
the Master Agreement, GE and BHGE LLC entered into an amended and restated form of that certain supply agreement for heavy duty
gas turbine units and associated services (including parts and components), previously entered into by BHGE LLC and GE on November
13, 2018 (as amended, the “Amended and Restated HDGT Distribution and Supply Agreement”). The Amended and Restated
HDGT Distribution and Supply Agreement amends and restates the original supply agreement to appoint BHGE LLC as GE’s exclusive
distributor (with limited exceptions) within the oil and gas industry with respect to the heavy duty gas turbine units (the “Exclusive
Products Distribution Appointment”), and associated services (including parts and components) (the “Exclusive Services
Distribution Appointment”), purchased by BHGE LLC pursuant to the Amended and Restated HDGT Distribution and Supply Agreement.
The initial term of the Exclusive Products Distribution Appointment is five years and the initial term of the Exclusive Services
Distribution Appointment is the later of 20 years and the operating service life of the relevant heavy duty gas turbine. Six months
prior to the expiration of each of the foregoing terms, GE and BHGE LLC shall commence good faith discussions for a written extension
of such terms. The Amended and Restated HDGT Distribution and Supply Agreement also includes a perpetual license (with limited
termination rights) to certain GE intellectual property related to Frame 3 and Frame 5 gas turbines for use in the oil and gas
industry. This license is exclusive for a 20 year period (subject to certain conditions being met) and is non-exclusive thereafter.
The foregoing description of the Amended
and Restated HDGT Distribution and Supply Agreement is not a complete description thereof and is qualified in its entirety by reference
to the full text of such agreement, which is filed as Exhibit 10.3 hereto, and incorporated herein by reference.
Controls Tools List Letter Agreement
On February 28, 2019, BHGE LLC and GE entered
into the Controls Tools List Letter Agreement, which sets forth a list of controls tools owned by GE that may be accessed by certain
BHGE personnel until the fourth anniversary of the trigger date as originally contemplated by the Amended and Restated Intercompany
Services Agreement (the “Amended and Restated Intercompany Services Agreement”), dated as of November 13, 2018, between
GE and BHGE LLC, entered into in connection with the Master Agreement.
The foregoing description of the Controls
Tools List Letter Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text
of such agreement, which is filed as Exhibit 10.4 hereto, and incorporated herein by reference.
GE Additive Letter Agreement
On February 28, 2019, BHGE LLC and GE entered
into the GE Additive Letter Agreement, which includes GE Additive in certain exclusivity and confidentiality provisions of that
certain Supply and Technology Development Agreement (the “Supply and Technology Development Agreement”), dated as of
November 13, 2018, between GE and BHGE LLC, entered into in connection with the Master Agreement.
The foregoing description of the GE Additive
Letter Agreement is not a complete description thereof and is qualified in its entirety by reference to the full text of such agreement,
which is filed as Exhibit 10.5 hereto, and incorporated herein by reference.
Amendment No. 2 to the Master Agreement
On February 22, 2019, BHGE, BHGE LLC and
GE entered into Amendment No. 2, which (i) extended until March 1, 2019, the period of time the parties had to negotiate the other
Agreements. As described above, the parties (or their applicable affiliates) have entered into the other Agreements.
The foregoing description of Amendment
No. 2 is not a complete description thereof and is qualified in its entirety by reference to the full text of such agreement, which
is filed as Exhibit 10.6 hereto, and incorporated herein by reference. Other than as expressly modified pursuant to Amendment No.
2, the Master Agreement, as modified pursuant to Amendment No. 1, remains in full force and effect.
Item 9.01 Exhibits.
(d) Exhibits.
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10.2
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Stock and Asset Purchase Agreement, dated February 25, 2019, among Baker Hughes, a GE company, LLC, GE Energy Switzerland GmbH and, for the limited purpose of the last sentence of Section 11.06, GE, and for the limited purpose of Section 11.15(b) and the last sentence of Section 11.06, Baker Hughes, a GE company
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