Baker Hughes 2015 Annual Report Download - page 27

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The following lawsuits have been filed in Delaware in connection with our pending Merger with Halliburton:
• On November 24, 2014, Gary Molenda, a purported shareholder of the Company, filed a class action
lawsuit in the Court of Chancery of the State of Delaware ("Delaware Chancery Court") against Baker
Hughes, the Company’s Board of Directors, Halliburton, and Red Tiger LLC, a wholly owned subsidiary of
Halliburton (“Red Tiger” and together with all defendants, “Defendants”) styled Gary R. Molenda v. Baker
Hughes, Inc., et al., Case No. 10390-CB.
• On November 26, 2014, a second purported shareholder of the Company, Booth Family Trust, filed a
substantially similar class action lawsuit in Delaware Chancery Court.
• On December 1, 2014, New Jersey Building Laborers Annuity Fund and James Rice, two additional
purported shareholders of the Company, filed substantially similar class action lawsuits in Delaware
Chancery Court.
• On December 10, 2014, a fifth purported shareholder of the Company, Iron Workers Mid-South Pension
Fund, filed another substantially similar class action lawsuit in the Delaware Chancery Court.
• On December 24, 2014, a sixth purported shareholder of the Company, Annette Shipp, filed another
substantially similar class action lawsuit in the Delaware Chancery Court.
All of the lawsuits make substantially similar claims. The plaintiffs generally allege that the members of the
Company’s Board of Directors breached their fiduciary duties to our shareholders in connection with the Merger
negotiations by entering into the Merger Agreement and by approving the Merger, and that the Company,
Halliburton, and Red Tiger aided and abetted the purported breaches of fiduciary duties. More specifically, the
lawsuits allege that the Merger Agreement provides inadequate consideration to our shareholders, that the process
resulting in the Merger Agreement was flawed, that the Company’s directors engaged in self-dealing, and that
certain provisions of the Merger Agreement improperly favor Halliburton and Red Tiger, precluding or impeding third
parties from submitting potentially superior proposals, among other things. The lawsuit filed by Annettee Shipp also
alleges that our Board of Directors failed to disclose material information concerning the proposed Merger in the
preliminary registration statement on Form S-4. On January 7, 2015, James Rice amended his complaint, adding
similar allegations regarding the disclosures in the preliminary registration statement on Form S-4. The lawsuits
seek unspecified damages, injunctive relief enjoining the Merger, and rescission of the Merger Agreement, among
other relief. On January 23, 2015, the Delaware lawsuits were consolidated under the caption In re Baker Hughes
Inc. Stockholders Litigation, Consolidated C.A. No. 10390-CB (the "Consolidated Case"). Pursuant to the Court’s
consolidation order, plaintiffs filed a consolidated complaint on February 4, 2015, which alleges substantially similar
claims and seeks substantially similar relief to that raised in the six individual complaints, except that while Baker
Hughes is named as a defendant, no claims are asserted against the Company.
On March 18, 2015, the parties reached an agreement in principle to settle the Consolidated Case in exchange
for the Company making certain additional disclosures. Those disclosures were contained in a Form 8-K filed with
the SEC on March 18, 2015. The settlement remains subject to certain conditions, including consummation of the
Merger, final documentation, and court approval.
On November 26, 2014, a seventh class action challenging the Merger was filed by a purported shareholder of
the Company in the United States District Court for the Southern District of Texas (Houston Division). The lawsuit,
styled Marc Rovner v. Baker Hughes Inc., et al., Cause No. 4:14-cv-03416 (the "Rovner lawsuit"), asserts claims
against the Company, most of our current Board of Directors, Halliburton, and Red Tiger. The lawsuit asserts
substantially similar claims and seeks substantially similar relief as that sought in the Delaware lawsuits. On March
20, 2015, counsel for Mr. Rovner filed a notice of voluntary dismissal, and on March 23, 2015, the Court entered an
order dismissing the Rovner lawsuit without prejudice.
On October 9, 2014, our subsidiary filed a Request for Arbitration against a customer before the London Court
of International Arbitration, pursuing claims for the non-payment of invoices for goods and services provided in an
amount provisionally quantified to exceed $67.9 million. In our Request for Arbitration, we also noted that invoices
in an amount exceeding $57 million had been issued to the customer, and would be added to the claim in the event
that they became overdue. The due date for payment of all of these invoices has passed. On November 6, 2014,
the customer filed its Response and Counterclaim, denying liability and counterclaiming damages for breach of
contract of approximately $182 million. We deny any liability to the customer and intend to pursue our claims
against the customer and defend the claims made under the counterclaim. The Parties have applied to the
arbitration tribunal to extend the suspension of the arbitral proceedings to March 31, 2016, pending ongoing
settlement discussions. No timetable for the conduct of the arbitration has yet been established.