EX-2.1 2 a2235540zex-2_1.htm EX-2.1

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CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS

Exhibit 2.1

April 30, 2018

THE BOEING COMPANY

KELLY MERGER SUB, INC.

and

KLX INC.



AGREEMENT AND PLAN OF MERGER





CONTENTS

CLAUSE
  PAGE  
 

Article I Definitions

    2  

 


Article II The Merger


 

 

12

 
 

2.01

 

The Merger

    12  
 

2.02

 

The Closing

    13  
 

2.03

 

Effective Time

    13  
 

2.04

 

Certificate of Incorporation; Bylaws

    13  
 

2.05

 

Board of Directors; Officers

    13  
 

2.06

 

ESG Sale Election

    13  

 


Article III Effect of the Merger on capital stock


 

 

14

 
 

3.01

 

Effect on Securities

    14  
 

3.02

 

Exchange of Certificates

    15  
 

3.03

 

Company Equity Awards

    17  
 

3.04

 

Lost Certificates

    18  
 

3.05

 

Dissenting Shares

    19  
 

3.06

 

Transfers; No Further Ownership Rights

    19  

 


Article IV Representations and warranties of the Company


 

 

19

 
 

4.01

 

Organization; Qualification

    20  
 

4.02

 

Capitalization; Subsidiaries

    20  
 

4.03

 

Authority Relative to Agreement

    22  
 

4.04

 

No Conflict; Required Filings and Consents

    23  
 

4.05

 

Company SEC Reports; Financial Statements

    23  
 

4.06

 

Absence of Certain Changes or Events

    25  
 

4.07

 

No Undisclosed Liabilities

    25  
 

4.08

 

Litigation

    26  
 

4.09

 

Permits; Compliance with Applicable Laws

    26  
 

4.10

 

Information Supplied

    26  
 

4.11

 

Employee Benefit Plans; Labor

    27  
 

4.12

 

Taxes

    30  
 

4.13

 

Material Contracts

    32  
 

4.14

 

Trademarks, Patents and Copyrights

    34  
 

4.15

 

Real Property; Personal Property; Sufficiency of Assets

    35  
 

4.16

 

Environmental Matters

    36  
 

4.17

 

Government Contracts

    36  
 

4.18

 

Insurance

    37  
 

4.19

 

Takeover Statutes

    37  
 

4.20

 

Brokers

    37  
 

4.21

 

Opinion of Financial Advisor

    38  
 

4.22

 

Relations with Governments

    38  
 

4.23

 

Customers and Suppliers

    39  
 

4.24

 

Affiliate Transactions

    39  
 

4.25

 

No Other Representations or Warranties

    39  

 


Article V Representations and warranties of Parent and Merger Sub


 

 

39

 
 

5.01

 

Organization; Qualification

    40  
 

5.02

 

Authority Relative to Agreement

    40  
 

5.03

 

No Conflict; Required Filings and Consents

    40  
 

5.04

 

Information Supplied

    41  

i


CLAUSE
  PAGE  
 

5.05

 

Brokers

    41  
 

5.06

 

Sufficient Funds

    41  
 

5.07

 

Share Ownership

    42  
 

5.08

 

No Other Representations or Warranties

    42  

 


Article VI Covenants and Agreements


 

 

42

 
 

6.01

 

Conduct of Business by the Company Pending the Merger

    42  
 

6.02

 

Preparation of Proxy Statement; Company Stockholder Meeting; ESG Registration Statement

    47  
 

6.03

 

Regulatory Authorizations and Consents; Efforts

    49  
 

6.04

 

Access to Information; Confidentiality

    50  
 

6.05

 

No Solicitation by the Company

    51  
 

6.06

 

Directors' and Officers' Indemnification and Insurance

    54  
 

6.07

 

Notification of Certain Matters

    55  
 

6.08

 

Public Disclosure

    55  
 

6.09

 

Employee Benefits; Labor

    56  
 

6.10

 

Merger Sub

    57  
 

6.11

 

Rule 16b-3 Matters

    57  
 

6.12

 

State Takeover Laws

    57  
 

6.13

 

Stockholder Litigation

    58  
 

6.14

 

Company Notes

    58  
 

6.15

 

Payoff Letter

    59  
 

6.16

 

Intercompany Arrangements

    59  
 

6.17

 

IT Monitoring

    59  
 

6.18

 

Post-Signing Date Tax Letter

    60  

 


Article VII Conditions to the Merger


 

 

60

 
 

7.01

 

Conditions to the Obligations of Each Party to Effect the Merger

    60  
 

7.02

 

Conditions to Obligations of Parent and Merger Sub to Effect the Merger

    60  
 

7.03

 

Conditions to Obligation of the Company to Effect the Merger

    61  
 

7.04

 

Frustration of Closing Conditions

    62  

 


Article VIII Termination, Amendment and Waiver


 

 

62

 
 

8.01

 

Termination

    62  
 

8.02

 

Effect of Termination

    64  
 

8.03

 

Termination Fees

    64  
 

8.04

 

Amendment

    66  
 

8.05

 

Extension; Waiver

    66  

 


Article IX General Provisions


 

 

67

 
 

9.01

 

Non-Survival of Representations and Warranties

    67  
 

9.02

 

Expenses

    67  
 

9.03

 

Notices

    67  
 

9.04

 

Interpretation; Certain Definitions

    68  
 

9.05

 

Severability

    69  
 

9.06

 

Assignment

    69  
 

9.07

 

Entire Agreement

    69  
 

9.08

 

No Third-Party Beneficiaries

    69  
 

9.09

 

Governing Law

    69  
 

9.10

 

Specific Performance

    69  
 

9.11

 

Consent to Jurisdiction

    70  
 

9.12

 

Counterparts

    70  
 

9.13

 

WAIVER OF JURY TRIAL

    70  

ii



AGREEMENT AND PLAN OF MERGER

        THIS AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2018 (this Agreement), is made by and among The Boeing Company, a Delaware corporation (Parent), Kelly Merger Sub, Inc., a Delaware corporation and a wholly owned Subsidiary of Parent (Merger Sub), and KLX Inc., a Delaware corporation (the Company). Parent, Merger Sub and the Company are referred to herein individually as a Party and collectively as the Parties.


RECITALS

        WHEREAS, the respective boards of directors of the Company (the Company Board), Parent (the Parent Board) and Merger Sub have unanimously approved and declared advisable this Agreement and the transactions contemplated by this Agreement, including the merger of Merger Sub with and into the Company, with the Company surviving as a direct or indirect wholly owned Subsidiary of Parent (the Merger), upon the terms and subject to the conditions and limitations set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the DGCL).

        WHEREAS, the Company Board has unanimously resolved to recommend that the Company's stockholders approve the adoption of this Agreement.

        WHEREAS, in connection with the transactions contemplated hereby, the Parties wish to effect the separation of the ASG Business (as hereinafter defined) and the ESG Business (as hereinafter defined) through either (i) a taxable spin-off of the ESG Business prior to the Effective Time into a separate, publicly traded company, or (ii) a sale of the entities comprising the ESG Business, in each case, in accordance with this Agreement and the ESG Documents.

        WHEREAS, each of Parent, Merger Sub and the Company desires to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

        WHEREAS, as a condition and inducement to Parent's and Merger Sub's willingness to enter into this Agreement and consummate the transactions contemplated hereby, certain members of Company management have accepted in writing an offer of employment from Parent and have not revoked such acceptance.

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual terms, conditions and other agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:

1



ARTICLE I
DEFINITIONS

        As used in this Agreement, the following terms shall have the following meanings:

        Affiliate means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.

        Agreed Form Spin-Off Agreements means the Distribution Agreement, Transition Services Agreement, IP Matters Agreement and Employee Matters Agreement, in each case, in the form attached hereto.

        Agreement has the meaning set forth in the Preamble.

        Alternative Acquisition Agreement has the meaning set forth in Section 6.05(c).

        Ancillary Spin-Off Agreements has the meaning set forth in the definition of Spin-Off Agreements.

        Antitrust Laws means any federal, state or foreign antitrust, competition or trade regulatory Applicable Law, including the Sherman Act; the Clayton Act; the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and the Federal Trade Commission Act.

        Applicable Law means any supra-national, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree or other requirement or rule of law or legal process (including common law), or any other Order of, or agreement issued, promulgated or entered into by, any Governmental Authority.

        ASG Business means all businesses of the Company and its Subsidiaries, other than the ESG Business.

        Bank Consent means the consent or waiver of the lenders under the Existing Credit Agreement in order to permit the consummation of the Spin-Off.

        B/E Aerospace means B/E Aerospace, Inc., a Delaware corporation.

        B/E Tax Agreement means the Tax Sharing and Indemnification Agreement between B/E Aerospace, Inc. and the Company, dated as of December 15, 2014.

        Book-Entry Shares has the meaning set forth in Section 3.01(a)(ii).

        Business Day means a day, other than a Saturday or Sunday or other day on which commercial banks are authorized or required by Applicable Law to close in New York City, New York.

        Bylaws has the meaning set forth in Section 4.01.

        Canceled Shares has the meaning set forth in Section 3.01(a)(i).

        Capitalization Date has the meaning set forth in Section 4.02(a).

        Certificate of Incorporation has the meaning set forth in Section 4.01.

        Certificate of Merger has the meaning set forth in Section 2.03.

        Certificates has the meaning set forth in Section 3.01(a)(ii).

        Closing has the meaning set forth in Section 2.02.

2


        Closing Date has the meaning set forth in Section 2.02.

        Code means the U.S. Internal Revenue Code of 1986, as amended.

        Company has the meaning set forth in the Preamble.

        Company Acquisition Proposal means any inquiry, indication of interest, proposal or offer from any Person (other than Parent, Merger Sub, or their Subsidiaries), relating to, or that would reasonably be expected to lead to, any (i) merger, consolidation, share exchange, business combination, recapitalization (including a leveraged recapitalization or extraordinary dividend), reorganization, equity investment, business combination, joint venture or similar transaction involving the Company or any of its Subsidiaries, pursuant to which any such Person would own or control, directly or indirectly, twenty percent (20%) or more of the voting power of the Company or any of its Subsidiaries, (ii) sale, lease, license, dissolution, liquidation or other disposition, directly or indirectly, of assets of the Company or any Subsidiary of the Company (excluding the sale of inventory held for sale in the ordinary course of business) representing twenty percent (20%) or more of the consolidated assets, revenues or net income of the Company and its Subsidiaries taken as a whole, or to which twenty percent (20%) or more of the Company's revenues, earnings or assets on a consolidated basis are attributable, taken as a whole, (iii) issuance or sale or other disposition of capital stock or other equity interests representing twenty percent (20%) or more of the voting power of the Company, (iv) tender offer (including self-tender), exchange offer or any other transaction or series of transactions in which any Person will acquire, directly or indirectly, beneficial ownership or the right to acquire beneficial ownership of capital stock or other equity interests representing twenty percent (20%) or more of the voting power of the Company or (v) any combination of the foregoing; provided that in no event shall the Distribution or any other proposal solely with respect to KLX Energy, the ESG Business or any of the assets or operations thereof constitute a Company Acquisition Proposal.

        Company Adverse Recommendation Change has the meaning set forth in Section 6.05(c).

        Company Alternative Termination Fee means $175,000,000.

        Company Benefit Plan has the meaning set forth in Section 4.11(a).

        Company Board has the meaning set forth in the Recitals.

        Company Common Stock has the meaning set forth in Section 3.01(a)(i).

        Company Data means all data and information (including sensitive and confidential information and other personally identifiable information) accessed, collected, used, processed, stored, shared, distributed, transferred or disclosed by the Ex-ESG Company.

        Company Disclosure Schedule means the disclosure schedule delivered by the Company to Parent simultaneously with the execution of this Agreement.

        Company Equity Awards means the Company Restricted Stock Awards, Company RSU Awards and Company PSU Awards.

        Company Equity Plan means the KLX Inc. Long-Term Incentive Plan, as amended from time to time, and any other equity or equity-based plan, program, or arrangement of the Company or any of its Subsidiaries or any predecessor thereof, other than the Company ESPP.

        Company ERISA Affiliate means any Person under common control with the Company within the meaning of Section 414(b), Section 414(c), Section 414(m) or Section 414(o) of the Code, and the regulations issued thereunder.

        Company ESPP means the KLX Inc. Employee Stock Purchase Plan, effective as of January 1, 2015, as amended from time to time.

3


        Company Government Bid means any offer, bid, quotation or proposal to sell products made or services provided by the Company or any Company Subsidiary that, if accepted or awarded, would lead to a Company Government Contract and for which an award has not been issued as of the date of this Agreement.

        Company Government Contracts means (i) any Contract, including an individual task order, delivery order, purchase order, basic ordering agreement, letter contract or blanket purchase agreement between the Company and any Governmental Authority, or (ii) any subcontract or other Contract by which the Company has agreed to provide goods or services through a prime contractor directly to a Governmental Authority that is expressly identified in such subcontract or other Contract as the ultimate consumer of such goods or services. For purposes hereof, a task, purchase, delivery, change or work order under a Company Government Contract will not constitute a separate Company Government Contract but will be part of the Company Government Contract to which it relates.

        Company Leased Real Property has the meaning set forth in Section 4.15(b).

        Company Material Adverse Effect means any event, change, circumstance, state of fact, condition, occurrence or effect that, individually or in the aggregate, (i) has or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of the Ex-ESG Company, taken as a whole or (ii) prevents or materially (x) interferes with, (y) hinders or (z) delays the consummation of the Transactions; provided, however, that none of the following, either alone or in combination, will constitute, or be considered in determining whether there has been, a Company Material Adverse Effect: any event, change, circumstance, state of fact, condition, occurrence or effect resulting from or related to (a) any acts of God, earthquakes, floods, hurricanes, tropical storms or other natural disasters, (b) any outbreak or escalation of war or major hostilities or any act of terrorism, (c) changes after the date hereof in Applicable Law or GAAP or the interpretation thereof, (d) changes that generally affect the industries and markets in which the Ex-ESG Company operates, (e) changes in general economic conditions or political or regulatory conditions in general, (f) changes in the credit, debt, financial or capital markets or in interest or exchange rates, in each case, in the United States or elsewhere in the world; (g) any failure, in and of itself, of the Company to meet any published or internally prepared projections, budgets, plans or forecasts of revenues, earnings predictions or other financial performance measures (it being agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded by this proviso may be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur), (h) any change in the price or trading volume of the Company's securities or other financial instruments or change in the Company's credit rating (it being agreed that the facts and circumstances giving rise to such change that are not otherwise excluded by this proviso may be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur); (i) any action specifically required to be taken pursuant to this Agreement or the ESG Documents, (j) any specific action taken or failed to be taken at the express written direction of, or with the express written consent of, Parent or Merger Sub, or (k) the Distribution, the public announcement or other disclosure with respect to the Transactions or the identity of Parent or Merger Sub or any of their Affiliates (including the impact of any of the foregoing on relationships with any customer, supplier, lender, or employee); provided, however, that any event, change, circumstance, state of fact, condition, occurrence, effect or other matter referred to in clauses (a), (b), (c), (d), (e) or (f) immediately above will be taken into account in determining whether a Company Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, change, circumstance, effect, state of fact, condition, occurrence or other matter has a disproportionate impact on the Ex-ESG Company taken as a whole, as compared to other participants in the industries and markets in which the Ex-ESG Company operates.

        Company Material Bid has the meaning set forth in Section 4.17(a).

4


        Company Material Contracts has the meaning set forth in Section 4.13(a).

        Company Material Government Contracts has the meaning set forth in Section 4.17(a).

        Company Notes means the Company's 5.875% Senior Notes due 2022 governed by the Indenture.

        Company Owned Real Property has the meaning set forth in Section 4.15(a).

        Company Permits has the meaning set forth in Section 4.09(a).

        Company Proxy Statement means the proxy statement to be sent to the Company's stockholders (together with all amendments and supplements thereto) relating to the Merger and this Agreement.

        Company PSU Award has the meaning set forth in Section 3.03(b).

        Company Recommendation means the recommendation of the Company Board that the stockholders of the Company adopt this Agreement and approve the Merger and the other transactions contemplated hereby.

        Company Restricted Stock Award has the meaning set forth in Section 3.03(a).

        Company RSU Award has the meaning set forth in Section 3.03(b).

        Company SEC Reports means the forms, documents, proxy or information statements and reports, schedules and registration statements filed with or furnished to the SEC prior to the date hereof by the Company since January 1, 2015 and publically available (as such reports and statements may have been amended since the date of their filing), together with all information incorporated therein by reference in accordance with applicable SEC regulations.

        Company Stockholder Approval means the adoption of this Agreement and the approval of the Merger by the holders of a majority of the outstanding shares of the Company Common Stock entitled to vote thereon at a stockholders meeting duly called and held for such purposes.

        Company Stockholder Meeting has the meaning set forth in Section 6.02(d).

        Company Systems means all of the following: computers, computer systems, servers, hardware, software, firmware, middleware, websites, databases, networks, servers, workstations, routers, hubs, switches, data communication equipment and lines, in each case solely to the extent owned or licensed to the Ex-ESG Company.

        Company Tail Fee means $70,000,000.

        Company Termination Fee means $105,000,000.

        Confidentiality Agreement means the confidentiality agreement, dated December 19, 2017, between Parent and the Company.

        Consent has the meaning set forth in Section 4.04(b).

        Continuation Period has the meaning set forth in Section 6.09(a).

        Contract means any written or oral arrangement, contract, agreement, instrument, lease, license, sublicense, sale or purchase order or commitment that, in each case, is binding on the Ex-ESG Company (and/or any of its Subsidiaries).

        Covered Employees has the meaning set forth in Section 6.09(a).

        D&O Indemnified Parties has the meaning set forth in Section 6.06(a).

        Delaware Secretary of State means the Secretary of State of the State of Delaware.

        DGCL has the meaning set forth in the Recitals.

5


        Dissenting Shares has the meaning set forth in Section 3.05.

        Distribution means either (i) the ESG Spin Distribution or (ii) the distribution of the ESG Sale Proceeds following the consummation of the transactions contemplated by an ESG Purchase Agreement.

        Distribution Agreement means that Distribution Agreement by and between ESG Spin Co. and the Company, in the form attached as Exhibit A hereto.

        Effective Time has the meaning set forth in Section 2.03.

        Election Date has the meaning set forth in Section 2.06.

        Employee Matters Agreement means that Employee Matters Agreement by and between ESG Spin Co. and the Company, in the form attached as Exhibit B hereto.

        Encumbrance means any security interest, pledge, hypothecation, mortgage, lien, right of first refusal, right of way, license, encroachment, claim, charge, mortgage or encumbrance of any kind.

        Environmental Laws means all Applicable Laws governing Environmental Matters.

        Environmental Matters means any matters arising out of or relating to pollution or protection of the environment or worker safety, including any of the foregoing relating to the use, generation, transport, treatment, storage, release, or disposal of any material defined as a "hazardous substance" or "hazardous waste" under any applicable Environmental Law.

        ERISA means the Employee Retirement Income Security Act of 1974, as amended.

        ESG Business means the business of providing technical services and related rental equipment to oil and gas exploration and production companies in remote oil and gas producing regions solely as conducted by KLX Energy and ESG Spin Co., as applicable, but does not include any other business operated or conducted by the Company or any of its other Subsidiaries.

        ESG Cash means an amount in cash equal to $50,000,000.

        ESG Documents means (i) the Spin-Off Agreements or, (ii) if the Company makes an ESG Sale Election in accordance with Section 2.06, the ESG Purchase Agreement.

        ESG Purchase Agreement means, collectively, all written Contracts entered into with respect to an ESG Sale and all other material instruments and documents delivered in connection therewith; provided that such Contracts, instruments and documents shall not constitute an "ESG Purchase Agreement" if (i) any of the terms contained in such Contracts, instruments or documents are or would reasonably be expected to be more adverse to Parent, the Surviving Corporation or any of their respective Subsidiaries in comparison to the most closely comparable corresponding terms individually, or in comparison to all terms taken as a whole, contained in the Agreed Form Spin-Off Agreements or (ii) any transactions contemplated thereby would (A) require any amendment, supplement or modification to the Company Proxy Statement or any Other Required Company Filing other than de minimis or solely ministerial amendments, supplements or modifications or (B) require a Company Stockholder Approval other than the Company Stockholder Approval first received in accordance with Section 6.05(d).

        ESG Registration Statement means the registration statement on Form 10 filed by KLX Energy or ESG Spin Co., as applicable, with the SEC relating to the Spin-Off, as amended or supplemented from time to time.

        ESG Sale means a transaction or series of related transactions in which the ESG Business is sold or transferred, directly or indirectly, whether structured as a sale of equity interests in KLX Energy, a merger, sale of assets or otherwise; provided that such transaction or transactions shall not constitute an "ESG Sale" if (i) any of the terms of such transaction or transactions are or would reasonably be

6


expected to be more adverse to Parent, the Surviving Corporation or any of their respective Subsidiaries in comparison to the most closely comparable corresponding terms individually, or in comparison to all terms taken as a whole, of the transactions contemplated by the Agreed Form Spin-Off Agreements, or (ii) any transactions contemplated thereby would (A) require any amendment, supplement or modification to the Company Proxy Statement or any Other Required Company Filing other than de minimis or solely ministerial amendments, supplements or modifications or (B) require a Company Stockholder Approval other than the Company Stockholder Approval first received in accordance with Section 6.05(d).

        ESG Sale Election has the meaning set forth in Section 2.06.

        ESG Sale Proceeds means (i) any cash proceeds received by the Company or any of its Affiliates for the sale of the ESG Business under the ESG Purchase Agreement plus (ii) an amount in cash equal to (A) the ESG Cash less (B) any cash on the balance sheet of KLX Energy as of the closing of the ESG Sale to the extent such cash was taken into account in determining the amount of net cash proceeds classified in clause (i) hereof.

        ESG Spin Co. means either KLX Energy, following conversion into a Delaware corporation, or a newly formed Delaware corporation into which the membership interests of KLX Energy are contributed.

        ESG Spin Co. Common Stock means the common stock of ESG Spin Co.

        ESG Spin Distribution means the distribution to the Company's stockholders of all of the issued and outstanding shares of ESG Spin Co. Common Stock, and the related treatment of Company Restricted Stock Awards, Company PSU Awards and Company RSU Awards, each in accordance with the Spin-Off Agreements.

        ESG Termination Date means January 11, 2019.

        Ex-ESG Company means the Company and its Subsidiaries, as of any given time prior to the Effective Time, assuming and having given effect to the consummation of the Distribution, whether or not the Distribution has actually occurred.

        Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

        Existing Credit Agreement has the meaning set forth in Section 6.15.

        Export Control Laws means the Arms Export Control Act (22 U.S.C. 2778), the International Traffic in Arms Regulations (22 C.F.R. §120, et. seq.), the Export Administration Regulations (15 C.F.R. §730, et. seq.) and all Applicable Laws implemented by the Office of Foreign Assets Controls of the U.S. Department of the Treasury.

        FCF Net Amount has the meaning set forth in the Distribution Agreement.

        Final Termination Date has the meaning set forth in Section 8.01(b)(i).

        Foreign Plan means Company Benefit Plans that are subject to any Applicable Law other than U.S., federal, state or local law.

        GAAP means the United States generally accepted accounting principles.

        Government Contract Laws means the United States False Claims Act, the Program Fraud Civil Remedies Act, the United States Procurement Integrity Act, the Federal Property and Administrative Services Act, the Armed Services Procurement Act or the United States Truth in Negotiations Act, the Federal Acquisition Regulation (and supplement thereto) and the cost principles and the Cost Accounting Standards thereunder and any other United States federal Applicable Law implementing regulations applicable to Company Government Contracts.

7


        Governmental Authority means any (a) nation, region, state, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental, agency, branch, department or other entity and any court, arbitrator, arbitration panel or other tribunal), (d) multinational or supra-national organization exercising judicial, legislative or regulatory power or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, fiscal, legislative, police, regulatory or taxing power of any nature of any federal, state, local, municipal, foreign or other government, in each case, anywhere throughout the world.

        HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

        Indebtedness means, with respect to a Person, all liabilities of such Person (i) for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money; (ii) to repay any amounts owed as evidenced by notes, debentures, bonds or other similar instruments reflecting indebtedness; (iii) under any conditional sale, title retention or similar arrangement, or with respect to any deferred purchase price of any assets or services, contingent or otherwise (including "earn-outs", indemnities, post-closing true-ups and "seller notes" payable with respect to the acquisition of any business, assets or securities, but excluding trade accounts payable arising in the ordinary course of business consistent with past practice); (iv) on any letter of credit or similar credit transaction securing obligations of any Person (to the extent drawn or outstanding); (v) to pay rent or other amounts under any lease of real or personal property, or other similar Contract, that is required to be classified or accounted for as a capital lease in accordance with GAAP; (vi) constituting a guarantee of any liabilities of any other Persons; (vii) for deferred rent or royalties under any lease, license, concession or other similar arrangement and (viii) secured by an Encumbrance (other than Permitted Encumbrances) on any of such Person's assets, including as may be applicable in connection with any of the forgoing clauses (i) through (viii) any unpaid principal, premium, accrued and unpaid interest, prepayment penalties, commitments and other fees payable in connection with the payoff or termination thereof, and (ix) any cash advances made by such Person to any of its customers or suppliers.

        Indenture means that certain Indenture, dated as of December 8, 2014, between the Company and the Indenture Trustee, as supplemented by the First Supplemental Indenture thereto, dated as of December 16, 2014, by and among the Company, the guarantors party thereto and the Indenture Trustee, as supplemented by the Second Supplemental Indenture thereto, dated as of August 2, 2016, by and among the Company, the additional guarantors party thereto and the Indenture Trustee, as such Indenture may be amended or supplemented subsequent to the date hereof in compliance with the terms of this Agreement.

        Indenture Trustee means Wilmington Trust, National Association, as Trustee.

        Initial Termination Date has the meaning set forth in Section 8.01(b)(i).

        Intellectual Property means all patents and patent applications; registered trademarks and trademark applications; design rights, trade names and service marks; trade dress; Internet domain names; copyrights; rights in inventions; trade secrets and know-how and any other proprietary or intellectual property right, subsisting now or in the future, having equivalent or similar effect to the rights referred to above; in each case, anywhere in the world.

        Intervening Event means any material change, event, effect, occurrence, consequence or development relating to the Company that (a) is unknown and not reasonably foreseeable as of the date of this Agreement, (b) does not relate to any Company Acquisition Proposal, any inquiry, indication of interest, proposal or offer that would reasonably be expected to lead to a Company Acquisition Proposal and (c) becomes known to the Company Board prior to the Stockholder Approval; provided that that in no event shall the following constitute an Intervening Event: any change, event, effect, occurrence, consequence or development relating to (i) Parent or Merger Sub or

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any of their Affiliates or any competitor of the Company or (ii) the market price or trading volume of the equity securities of the Company, the ratings or the ratings outlook for the Company or any of its Subsidiaries by any applicable rating agency or any analyst's recommendations or ratings with respect to the Company, except that the underlying reasons for such change, event, effect, occurrence, consequence or development may be considered in determining the existence of an Intervening Event to the extent not excluded by clause (i) of this proviso.

        IP Matters Agreement means that IP Matters Agreement by and between ESG Spin Co. and the Company, in the form attached as Exhibit C hereto.

        IRS means the United States Internal Revenue Service.

        KLX Energy means KLX Energy Services Holdings, Inc.

        Knowledge means the knowledge of any of the officers and employees of the Company or Parent, as applicable, set forth on Section 1.1(a) of the Company Disclosure Schedule, after reasonable inquiry by each such individual.

        Labor Agreement has the meaning set forth in Section 4.11(j).

        Liability or liability means any liability, debt, obligation, duty, deficiency, interest, Tax, penalty, fine, demand, judgment, cause of action or other damage or loss (including loss of benefit), cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, known or unknown, accrued or unaccrued, liquidated or unliquidated, whether or not foreseeable, and whether due or to become due and regardless of when asserted.

        Merger has the meaning set forth in the Recitals.

        Merger Consideration has the meaning set forth in Section 3.01(a)(ii).

        Merger Sub has the meaning set forth in the Preamble.

        NASDAQ means The NASDAQ Stock Market.

        Order means any decree, order, judgment, injunction, temporary restraining order, writ, determination, ruling, settlement or stipulation or other order in any Proceeding or similar requirement by or with any Governmental Authority.

        Other ESG Required Company Filing has the meaning set forth in Section 6.02(b).

        Other Required Company Filing has the meaning set forth in Section 6.02(a).

        Owned Intellectual Property means all Intellectual Property owned by the Ex-ESG Company.

        Parent has the meaning set forth in the Preamble.

        Parent Board has the meaning set forth in the Recitals.

        Parent Disclosure Schedule means the disclosure schedule delivered by Parent to the Company simultaneously with the execution of this Agreement.

        Parent Organizational Documents means the certificate of incorporation and bylaws, each as amended as of the date of this Agreement, of each of Parent and Merger Sub.

        Parent Termination Fee means an amount equal to $175,000,000.

        Party has the meaning set forth in the Preamble.

        Paying Agent has the meaning set forth in Section 3.02(a).

        Payment Fund has the meaning set forth in Section 3.02(a).

        Payoff Amount has the meaning set forth in Section 6.15.

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        Payoff Letter has the meaning set forth in Section 6.15.

        Permitted Encumbrance means: (i) Encumbrances for Taxes, assessments and charges or levies of any Governmental Authority not yet due and payable or that are being contested in good faith by appropriate Proceedings and for which adequate accruals or reserves have been established in accordance with GAAP; (ii) Encumbrances imposed by Applicable Law that relate to materialmen's, mechanics', carriers', workmen's and repairmen's liens or other similar Encumbrances that, in the aggregate, do not materially interfere with the use or value of the properties or assets related thereto, (iii) Encumbrances which are listed on Section 1.1(b) of the Company Disclosure Schedule; (iv) pledges or deposits to secure obligations under Applicable Law relating to workers' compensation, unemployment insurance, pension programs and similar obligations; (v) liens, title retention arrangements or deposits to secure the performance of bids, trade contracts (other than for borrowed money), conditional sales contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (vi) in respect of real property: (A) easements, licenses, covenants, rights of way and other similar restrictions; (B) any conditions which may be shown by survey, title report or physical inspection of any such real property; (C) zoning, building and other similar restrictions with which the ASG Business is currently operating in material compliance; and (D) environmental restrictions and regulations; (vii) in the case of Intellectual Property, non-exclusive licenses and other non-exclusive rights granted to or by third parties in the ordinary course of business; and (viii) transfer restrictions imposed by federal or state securities laws.

        Person means any individual or any corporation, limited liability company, partnership, trust, association, joint venture, firm, Governmental Authority or other entity of any kind.

        Post-Signing Date Tax Letter means an executed letter substantially in the form attached hereto as Schedule 1.1(b).

        Proceedings means legal, administrative, arbitral, civil, criminal, investigative, appellate or other proceedings, suits, claims, charges, complaints, settlements, hearings, audits, examinations, or actions.

        Redemption Amount means the amount of cash required pursuant to the terms of the Indenture to effect the satisfaction and discharge of the Indenture at Closing, and the redemption of the Company Notes on the Redemption Date, including all accrued and unpaid interest up to the Redemption Date.

        Redemption Date means the date on which the Company Notes are to be redeemed as may be directed by Parent in accordance with Section 6.14. In no event may the Redemption Date be earlier than one (1) Business Day following the Closing Date.

        Representatives means, with respect to a Person, the directors, managers, officers, employees, agents or advisors (including attorneys, accountants, consultants, bankers and financial advisors) of such Person.

        Required Notifications has the meaning set forth in Section 6.03(a).

        Sarbanes-Oxley Act means the Sarbanes-Oxley Act of 2002, as amended.

        SEC means the United States Securities and Exchange Commission.

        SEC Clearance Date has the meaning set forth in Section 6.02(d).

        Securities Act means the Securities Act of 1933, as amended.

        Security Clearances means all personnel and facility security clearances required for access to information classified pursuant to Executive Order 13526 or similar Order that is necessary for operation of a Person's business as presently conducted.

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        Signing Date Tax Letter means the signed, executed letter from the Company to the Parent dated as of the Signing Date titled "Signing Date Tax Letter."

        Spin-Off means (i) the transactions contemplated by the Distribution Agreement and the ESG Registration Statement including the formation of, contribution of KLX Energy into, or conversion into, as applicable, ESG Spin Co. and (ii) the ESG Spin Distribution.

        Spin-Off Agreements means (i) the Agreed Form Spin-Off Agreements and (ii) all other written Contracts with unaffiliated third parties entered into with respect to the Spin-Off and all other material instruments and documents with unaffiliated third parties delivered in connection therewith other than the ESG Registration Statement and any Other ESG Required Company Filing (the Ancillary Spin-Off Agreements); provided that no Ancillary Spin-Off Agreement shall constitute a "Spin-Off Agreement" if (i) any of the terms contained in such Ancillary Spin-Off Agreements are or would reasonably be expected to be more adverse to Parent, the Surviving Corporation or any of their respective Subsidiaries in comparison to the most closely comparable corresponding terms individually, or in comparison to all terms taken as a whole, contained in the Agreed Form Spin-Off Agreements unless such Contracts, instruments or documents provide for no obligations of, or other effect on, the Surviving Corporation and its Subsidiaries, or (ii) any transactions contemplated thereby would (A) require any amendment, supplement or modification to the Company Proxy Statement or any Other Required Company Filing other than de minimis or solely ministerial amendments, supplements or modifications or (B) require a Company Stockholder Approval other than the Company Stockholder Approval first received in accordance with Section 6.05(d).

        Subsidiary of a Person means any other Person with respect to which the first Person (i) has the right to elect a majority of the board of directors or other Persons performing similar functions or (ii) beneficially owns more than fifty percent (50%) of the voting stock (or of any other form of voting or controlling equity interest in the case of a Person that is not a corporation), in each case, directly or indirectly through one or more other Persons.

        Superior Proposal means a bona fide written Company Acquisition Proposal (with all references to "twenty" and "20%" in the definition thereof deemed to be "a majority" for purposes of this definition) that (i) would be reasonably likely to be consummated if accepted, and (ii) is more favorable to the Company and its stockholders, solely in their capacity as such, from a financial point of view, than the transactions contemplated by this Agreement, taking into account (a) all financial considerations (including the form of consideration), (b) the identity of the third party making such Company Acquisition Proposal, (c) the anticipated timing, conditions (including any financing condition or the reliability of any debt or equity funding commitments) and prospects for completion of such Company Acquisition Proposal, (d) the legal and regulatory approvals, termination fee and expense reimbursement provisions reasonably deemed relevant by the Company Board or any committee thereof, and (e) any revisions to the terms of this Agreement and the Merger proposed by the Parent during the notice period set forth in Section 6.05(e); provided that, in no event will a Company Acquisition Proposal be deemed to be a Superior Proposal solely by excluding a condition to the consummation thereof relating to the ESG Business.

        Surviving Corporation has the meaning set forth in Section 2.01.

        Tax or Taxes means any and all national, federal, state, local municipal and foreign income, capital gains, profits, margin franchise, gross receipts, margin, capital, net worth, sales, use, withholding, payroll, estimated, goods and services, value added, ad valorem, alternative or add-on, registration, environmental, custom, general business, employment, social security (or similar), disability, workmen's compensation, business, occupation, unemployment, premium, real property, personal property (tangible and intangible), capital stock, stamp, customs, transfer (including real property transfer or gains), conveyance, severance, production, excise, environmental (including Code section 59A), windfall profits and other taxes, governmental fees, withholdings, duties, charges, fees, levies, imposts, license

11


and registration fees and other similar charges and assessments in lieu of, or in the nature of, a tax (including any and all fines, penalties, assessments, and additions attributable to or otherwise imposed on or with respect to any such taxes, fees, levies, duties, tariffs, imposts, and other similar charges or assessments (together with any and all interest, penalties and additions to tax)) computed on a separate or consolidated, unitary or combined basis, imposed by or on behalf of any Taxing Authority and (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, joint and several liability, or for being a member of an affiliated, consolidated, combined, unitary or other group (defined within the meaning of Section 1504(a) of the Code or any similar provision of foreign, state or local Applicable Law) for any period, or payable by reason of contract assumption, operation of Applicable Law, or otherwise, and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any Tax sharing, Tax indemnity or Tax allocation agreement or any other express agreement to pay or indemnify any other Person whether by contract or otherwise.

        Tax Returns means, with respect to any Tax, any information return for such Tax, and any return, report, statement, estimate, declaration, claim for refund, amended return, or other filing or document, including any schedule or attachment thereto, with respect to Taxes required to be submitted, filed or required to be filed with the IRS or any other Governmental Authority or Taxing Authority.

        Taxing Authority means any Governmental Authority having jurisdiction over the assessment, determination, collection or other imposition of any Tax.

        Termination Date means the Initial Termination Date or, if extended pursuant to the final proviso in Section 8.01(b)(i), the Final Termination Date.

        Top Customer has the meaning set forth in Section 4.23.

        Top Supplier has the meaning set forth in Section 4.23.

        Trading Day means any day on which the NASDAQ is open for trading; provided that a "Trading Day" only includes those days that have a scheduled closing time of 4:00 p.m. New York City time.

        Transactions means collectively, the transactions contemplated by this Agreement and by the ESG Documents.

        Transition Services Agreement means that transition services agreement by and between ESG Spin Co. and the Company, substantially in the form attached hereto as Exhibit D.

        Treasury Regulations means regulations promulgated by the IRS under the Code.

        WARN Act means the Worker Adjustment and Retraining Notification Act of 1988.

        Willful Breach means an action or failure to act by one of the Parties that constitutes a breach of this Agreement, and such action was taken or such failure occurred with such Party's actual knowledge or intention that such action or failure to act would, or could be expected to, constitute a breach of this Agreement.


ARTICLE II
THE MERGER

2.01
The Merger

        Upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, whereupon the separate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation of the Merger and a direct or indirect, wholly owned Subsidiary of Parent (the Surviving Corporation).

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2.02
The Closing

        Upon the terms and subject to the conditions set forth herein, the closing of the Merger (the Closing) and the consummation of the Distribution shall take place concurrently (unless the ESG Spin Distribution has been completed as of an earlier date) at 10:00 a.m. (local time) on a date to be specified by the Parties, but no later than the third (3rd) Business Day after the satisfaction or waiver of the conditions set forth in Article VII (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), unless another time, date or place is agreed to in writing by the Parties (such date being the Closing Date). The Closing shall take place at the offices of Freshfields Bruckhaus Deringer US LLP, 601 Lexington Avenue, 31st Floor, New York, NY 10022.

2.03
Effective Time

        Concurrently with the Closing, but in any event following the Distribution, the Company shall cause a certificate of merger with respect to the Merger substantially in the form attached hereto as Exhibit E (the Certificate of Merger) to be executed and filed with the Delaware Secretary of State as provided under the DGCL. The Merger shall become effective at the time the Certificate of Merger has been duly filed with the Delaware Secretary of State or at such other date and time as is agreed between Parent and the Company and specified in the Certificate of Merger (such date and time being hereinafter referred to as the Effective Time). The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

2.04
Certificate of Incorporation; Bylaws

(a)
The certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety as set forth in Exhibit F hereto and, as so amended, shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided by Applicable Law and such certificate of incorporation.

(b)
The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation, except as to the name of the Surviving Corporation, until thereafter amended as provided by Applicable Law, the certificate of incorporation of the Surviving Corporation and such bylaws.

2.05
Board of Directors; Officers

        The members of the board of directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the members of the board of directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time (or as otherwise designated by Parent) shall, from and after the Effective Time, be the officers of the Surviving Corporation, in each case to hold office in accordance with the certificate of incorporation and bylaws of the Surviving Corporation until the earlier of their death, resignation or removal or until their respective successors are duly elected, designated or qualified.

2.06
ESG Sale Election

        Within thirty (30) days after the date hereof (the Election Date), the Company may notify Parent in writing of its election to enter into an ESG Purchase Agreement on or prior to the Election Date (such election, an ESG Sale Election). In the event the Company delivers an ESG Sale Election, from and after such delivery the Company shall (a) use its reasonable best efforts to satisfy on a timely basis all conditions precedent to the transactions contemplated by the ESG Purchase Agreement, (b) keep Parent informed on a reasonably prompt basis and in reasonable detail of material developments in connection with the transactions contemplated by the ESG Purchase Agreement, including by

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(i) furnishing Parent with complete, correct and executed copies of the ESG Purchase Agreement and any and all amendments thereto, (ii) giving Parent prompt written notice of any material default or material breach (or any event that, with or without notice, lapse of time or both, would give rise to any material default or material breach) under the ESG Purchase Agreement of which the Company becomes aware that would reasonably be expected to result in termination of the ESG Purchase Agreement or a material liability or other material obligation of the Ex-ESG Company, and (iii) responding to Parent's reasonable requests for, and discussing, updates on the status of the transactions contemplated by the ESG Purchase Agreement, and (c) notwithstanding anything to the contrary contained in this Agreement, the Company shall not, and shall cause its Subsidiaries not to, without the prior written consent of Parent, take any actions with respect to the Spin-Off or the ESG Spin Distribution. If an ESG Sale Election is made in accordance with the first sentence of this Section 2.06, the Company shall be permitted to consummate a Spin-Off (in lieu of an ESG Sale) only with the prior written consent of Parent. If an ESG Sale Election is not made in accordance with the first sentence of this Section 2.06, then (x) the Company shall have elected to conduct the Spin-Off and may not thereafter enter into an ESG Purchase Agreement without the prior written consent of Parent, and (y) each of the Company and KLX Energy shall execute and enter into the Distribution Agreement within 75 days after the date hereof.


ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK

3.01
Effect on Securities

(a)
At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of any securities of the Company, Parent or Merger Sub:

(i)
Cancellation of Company Securities. Each share of common stock, par value $0.01 per share, of the Company (the Company Common Stock) held by the Company as treasury stock or held, directly or indirectly, by Parent or Merger Sub immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and no consideration or payment shall be delivered in exchange therefor or in respect thereof (such shares, Canceled Shares).

(ii)
Conversion of Company Securities. Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than Canceled Shares and Dissenting Shares) shall be converted into the right to receive from Parent, in accordance with the terms of this Agreement, $63.00 per share (the Merger Consideration). Each share of Company Common Stock to be converted into the right to receive the Merger Consideration as provided in this Section 3.01(a) shall no longer be outstanding and shall be automatically canceled and shall cease to exist, and the holders of certificates or book-entry shares that, immediately prior to the Effective Time, represented such Company Common Stock, (Certificates and Book Entry Shares, respectively) shall cease to have any rights with respect to such Company Common Stock other than the right to receive, upon surrender of such Certificates or Book-Entry Shares in accordance with Section 3.02, the Merger Consideration.

(iii)
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) fully paid, nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation and constitute the only outstanding shares of capital stock of the Surviving Corporation.

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(b)
Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Effective Time, any change in the number or type of outstanding shares of Company Common Stock shall occur as a result of a reclassification, recapitalization, exchange, stock split (including a reverse stock split) or combination or readjustment of shares or any stock dividend or stock distribution with a record date during such period, the Merger Consideration and any other similarly dependent items, as the case may be, shall be appropriately adjusted to provide the same economic effect as contemplated by this Agreement prior to such event. Nothing in this Section 3.01(b) shall be construed to permit any Party to take any action that is otherwise prohibited or restricted by any other provision of this Agreement.

3.02
Exchange of Certificates

(a)
Designation of Paying Agent; Deposit of Payment Fund

    Prior to the Closing, Parent shall enter into a customary paying agent agreement with a nationally recognized financial institution reasonably acceptable to the Company and Parent (the Paying Agent) for the payment of the Merger Consideration as provided in Section 3.01(a)(ii). At or prior to the Effective Time, Parent shall deposit or cause to be deposited with the Paying Agent, for payment in accordance with this Article III through the Paying Agent, cash in an aggregate amount necessary to pay the Merger Consideration (it being understood, for the avoidance of doubt, that such aggregate amount shall not include any amounts payable in respect of Company Restricted Stock Awards, Company RSU Awards or Company PSU Awards or any shares of Company Common Stock issuable pursuant thereto, which amounts Parent shall cause to be paid pursuant to Sections 3.03(a) and 3.03(b), as applicable) (the Payment Fund). In the event the Payment Fund shall at any time be insufficient for any reason (including losses) to make the payments contemplated by Section 3.01(a)(ii), Parent shall promptly deposit, or shall take all steps necessary to cause to be deposited, additional cash with the Paying Agent in an amount which is equal to the deficiency in the amount required to make all payments under this Agreement. The Payment Fund shall not be used for any purpose not contemplated by the terms of this Agreement. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the payment of the Merger Consideration for shares of the Company Common Stock.

(b)
Promptly following the Effective Time (and in any event, not later than the third (3rd) Business Day thereafter), Parent shall cause the Paying Agent to mail to each holder of record of a Certificate or Book-Entry Share that immediately prior to the Effective Time represented outstanding shares of Company Common Stock (i) a letter of transmittal (in form and substance reasonably acceptable to Parent) which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares, as applicable, shall pass only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares pursuant to this Section 3.02 to the Paying Agent, and which shall be in the form and have such other provisions as Parent may reasonably specify) and (ii) instructions (which instructions shall be in the form and have such other provisions as Parent may reasonably specify) for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for cash in an amount equal to the Merger Consideration multiplied by the number of shares of Company Common Stock previously represented by such Certificates or Book-Entry Shares.

(c)
Upon surrender of a Certificate (or affidavit of loss in lieu thereof) or Book-Entry Share for cancellation to the Paying Agent, together with a letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required or requested pursuant to such instructions (including receipt of an "agent's message" by the Paying Agent (or such other evidence as the Paying Agent may reasonably request) in respect of any Book-Entry Share), the holder of such Certificate or Book-Entry Share

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    shall be entitled to receive in exchange therefor, and Parent shall direct the Paying Agent to pay and deliver in exchange therefor as promptly as reasonably practicable, cash in an amount equal to the Merger Consideration multiplied by the number of shares of Company Common Stock previously represented by such Certificate or Book-Entry Shares. The Paying Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares upon compliance with such reasonable terms and conditions as the Paying Agent may impose. Subject to Section 3.02(f) and Section 3.05, without prejudice to any rights in respect of the Distribution, after the Effective Time and until so surrendered, each Certificate and Book-Entry Share shall represent only the right to receive the Merger Consideration payable in respect of the Company Common Stock represented thereby.

(d)
Payments to Non-Registered Holders

    In the event of a transfer of ownership of Company Common Stock that is not registered in the transfer records of the Company, payment of the appropriate amount of Merger Consideration may be made to a Person other than the Person in whose name the Certificate or Book-Entry Share so surrendered is registered, if such Certificate shall be properly endorsed or otherwise be in proper form for transfer (and accompanied by all documents reasonably required by the Paying Agent) or such Book-Entry Share shall be properly transferred and the Person requesting such payment shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of such Certificate or Book-Entry Share or establish to the satisfaction of Parent that such Tax has been paid or is not applicable.

(e)
Termination of Payment Fund

    Any portion of the Payment Fund which remains undistributed to the holders of the Certificates or Book-Entry Shares for six (6) months after the Effective Time shall be delivered to Parent or its designee upon demand, and any such holders who have not theretofore complied with this Article III shall thereafter look only to Parent or the Surviving Corporation (subject to abandoned property, escheat or similar Applicable Law) as general creditor thereof for payment of their claims for Merger Consideration.

(f)
No Liability

    None of Parent, Merger Sub, the Company or the Paying Agent shall be liable to any Person in respect of any cash held in the Payment Fund delivered to a Governmental Authority pursuant to any applicable abandoned property, escheat or similar Applicable Law. If any Certificate or Book-Entry Share shall not have been surrendered immediately prior to the date on which any Merger Consideration in respect of such Certificate or Book-Entry Share would otherwise escheat to or become the property of any Governmental Authority, any such Merger Consideration in respect of such Certificate or Book-Entry Share shall, to the extent permitted by Applicable Law, become the property of Parent free and clear of all claims or interest of any Person previously entitled thereto.

(g)
Investment of Payment Fund

    The Paying Agent shall invest any cash included in the Payment Fund as directed by Parent; provided that no such investment shall relieve Parent or the Paying Agent from making the payments required by this Article III, and following any losses resulting from such investment Parent shall promptly provide additional funds to the Paying Agent for the benefit of the holders of Company Common Stock in the amount of such losses. Any interest or income produced by such investments will be payable to Parent or its designee as directed by Parent.

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(h)
Withholding

    Notwithstanding anything herein to the contrary, each of Parent, the Company, the Surviving Corporation and the Paying Agent shall be entitled to, without duplication, (i) deduct and withhold from the Merger Consideration and any other amounts otherwise payable or distributable in cash or in kind (including, for the avoidance of doubt, as a result of the ESG Spin Distribution) pursuant to this Agreement such amounts as Parent, the Company, the Surviving Corporation or the Paying Agent are required to deduct and withhold with respect to the making of such payments under the Code or any provision of Applicable Tax Law and (ii) collect any forms required by Applicable Law to comply with withholding obligations with respect to payments made pursuant to clause (i). Any amounts so withheld shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made by Parent, the Company, the Surviving Corporation or the Paying Agent, as the case may be.

3.03
Company Equity Awards

(a)
Treatment of Company Restricted Stock Awards

    Parent shall not assume any award of Company Common Stock subject to time-based, performance or other vesting or lapse restrictions (each, a Company Restricted Stock Award). Without prejudice to any rights in respect of the Distribution, as of the Effective Time, (i) each Company Restricted Stock Award that is outstanding immediately prior to the Effective Time, shall, to the extent not vested, become fully vested; provided that to the extent that such award is subject to performance conditions, any performance conditions shall be deemed to have been satisfied at the maximum level and (ii) each Company Restricted Stock Award shall be canceled without any action on the part of any holder or beneficiary thereof in consideration for the right to receive, in accordance with the Surviving Company's general payroll practices, a lump sum cash payment with respect thereto equal to the product of (A) the Merger Consideration, and (B) the number of shares of Company Common Stock represented by such Company Restricted Stock Award, less any applicable withholding or other Taxes or other amounts required by Applicable Law to be withheld, without interest.

(b)
Treatment of Company PSU Awards and Company RSU Awards

    Parent shall not assume any performance stock unit awards, including any performance stock unit awards deferred under any of the Company's deferred compensation plans or otherwise (each a Company PSU Award) or any restricted stock unit awards, including any stock unit awards deferred under any of the Company's deferred compensation plans or otherwise (each a Company RSU Award). Without prejudice to any rights in respect of the Distribution, as of the Effective Time, each Company PSU Award and Company RSU Award, in each case, subject to time-based, performance or other vesting restrictions that is outstanding immediately prior to the Effective Time, shall, to the extent not vested, become fully vested; provided that to the extent that such award is subject to performance conditions, any performance conditions shall be deemed to have been satisfied at the maximum level and (ii) each Company PSU Award and Company RSU Award, in each case, whether payable in cash or shares of Company Common Stock, shall be canceled without any action of the part of any holder or beneficiary thereof in consideration for the right to receive, in accordance with the Surviving Company's general payroll practices, a lump sum cash payment with respect thereto equal to the product of (A) the Merger Consideration, and (B) the number of shares of Company Common Stock represented by such Company PSU Award or Company RSU Award, less any applicable withholding or other Taxes or other amounts required by Applicable Law to be withheld, without interest; provided, further, that notwithstanding anything to the contrary contained in this Agreement, any payment in respect of any Company PSU Award and Company RSU Award, in each case, which immediately prior to such cancellation

17


    was treated as "deferred compensation" subject to Section 409A of the Code shall be converted to the Merger Consideration and paid on the applicable settlement date for such Company RSU Award or Company PSU Award if required in order to comply with Section 409A of the Code.

(c)
Company ESPP

    As soon as practicable following the date of this Agreement, the Company Board (or, if applicable, any committee thereof administering the Company ESPP) shall adopt such resolutions and take all such other necessary actions such that (i) with respect to any Option Period(s) (as such term is defined in the Company ESPP) outstanding as of the date of this Agreement under the Company ESPP, such Option Period(s) shall terminate and each Option (as such term is defined in the Company ESPP) shall be deemed to have been exercised in accordance with the terms of the Company ESPP upon the earlier to occur of (A) the day that is four (4) complete Trading Days prior to the Effective Time or (B) the date on which such Option Period(s) would otherwise end, and no additional Option Period(s) shall commence under such Company ESPP after the date of this Agreement; (ii) no individual participating in the Company ESPP shall be permitted to (A) increase the amount of his, her or its rate of payroll contributions thereunder from the rate in effect as of the date of this Agreement, or (B) except to the extent required by Applicable Law, make separate non-payroll contributions to the Company ESPP on or following the date of this Agreement; (iii) no individual who is not participating in the Company ESPP as of the date of this Agreement may commence participation in the Company ESPP following the date of this Agreement; (iv) no new offerings will commence, nor will any existing offerings be extended, following the date hereof; and (v) subject to the consummation of the Merger, the Company ESPP shall terminate, effective immediately prior to the Effective Time.

(d)
Company Actions

    Prior to the Effective Time, the Company shall provide such notice, if any, to the extent required under the terms of the Company Equity Plan or the Company ESPP, obtain any necessary consents, adopt applicable resolutions, amend the terms of the Company Equity Plan, the Company ESPP or any outstanding awards, and take all other appropriate actions to (i) give effect to the Transactions; (ii) terminate the Company Equity Plan and the Company ESPP as of the Effective Time; (iii) ensure that after the Effective Time, no holder of a Company Equity Award, Option (as such term is defined in the Company ESPP), any beneficiary thereof or any other participant in the Company Equity Plan or the Company ESPP shall have any right thereunder to acquire any securities of the Company or to receive any payment or benefit with respect to any award previously granted under the Company Equity Plan or the Company ESPP, except as provided in this Section 3.03; and (iv) without prejudice to any rights in respect of the Distribution, ensure that as of the Effective Time, all or any portion of incentive or deferred compensation arrangements that (A) is payable following the Effective Time and (B) immediately prior to the Effective Time, was deemed invested or otherwise measured by a share of Company Stock, will be converted to an amount equal to the product of (1) the Merger Consideration and (2) the number of whole or partial shares of Company Stock by which such compensation arrangement is measured or deemed invested. The Company shall provide Parent with documentation evidencing the completion of the foregoing actions not later than the Business Day preceding the Effective Time.

3.04
Lost Certificates

        If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the posting by such Person of a bond, in such reasonable amount as Parent or the Paying Agent may determine is reasonably necessary, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration to which the holder thereof is entitled pursuant to this Article III.

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3.05
Dissenting Shares

        Notwithstanding anything in this Agreement to the contrary, to the extent that holders of Company Common Stock are entitled to appraisal rights under Section 262 of the DGCL, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the adoption of this Agreement or consented thereto in writing, has properly exercised and perfected his, her or its demand for appraisal rights under Section 262 of the DGCL and has not effectively withdrawn or lost such holder's rights to appraisal (the Dissenting Shares), shall not be converted into the right to receive the Merger Consideration, but the holders of such Dissenting Shares shall be entitled to receive such consideration as shall be determined pursuant to Section 262 of the DGCL (it being understood and acknowledged that at the Effective Time, such Dissenting Shares shall no longer be outstanding, shall automatically be canceled and shall cease to exist, and such holder shall cease to have any rights with respect thereto other than the right to receive the "fair value" of such Dissenting Shares as determined in accordance with Section 262 of the DGCL); provided, however, that if any such holder shall have failed to perfect or shall have effectively withdrawn or lost his, her or its right to appraisal and payment under the DGCL (whether occurring before, at or after the Effective Time), such holder's shares of Company Common Stock shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration, without any interest thereon and less any withholding Taxes, and such shares shall not be deemed to be Dissenting Shares. The Company shall give prompt written notice to Parent of (and in any event within three (3) Business Days after receiving) any demands for appraisal of any shares of Company Common Stock, withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company relating to appraisal demands, and Parent shall have the right to control and direct all negotiations and Proceedings with respect to such demands after the Effective Time, provided that, prior to the Effective Time, the Company will consult with Parent and consider in good faith Parent's advice with respect to such negotiations and Proceedings, and Parent will have the right to participate in such negotiations and Proceedings at its sole cost and expense prior to the Effective Time; provided further that, prior to the Effective Time, the Company will not settle, or agree to settle, any such appraisal demands that would require payment of any amounts or would impose obligations on Parent or the Surviving Corporation without Parent's prior written consent. Prior to the Effective Time, the Company shall not, without the prior written consent of Parent, make any payment with respect to or settle or compromise or offer to settle or compromise any such demand or Proceeding, or agree to do any of the foregoing.

3.06
Transfers; No Further Ownership Rights

        At the Effective Time, the stock transfer books of the Company shall be closed with respect to all shares of Company Common Stock outstanding immediately prior to the Effective Time, and there shall be no registration of transfers on the stock transfer books of the Company of shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If Certificates or Book-Entry Shares are presented to the Surviving Corporation, Parent or the Paying Agent for transfer following the Effective Time, they shall be canceled against delivery of the Merger Consideration, as provided for in Section 3.01(a)(ii), for each share of Company Common Stock formerly represented by such Certificates or Book-Entry Shares.


ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except (i) as set forth in the Company SEC Reports (excluding any information set forth in (a) risk factor disclosures contained under the heading "Risk Factors" or any disclosure of risks including in any "forward-looking statements" disclaimers in such Company SEC Reports or any other statements in the Company SEC Reports to the extent that such statements are cautionary, predictive

19


or forward-looking in nature or (b) any exhibits or other documents appended thereto), it being acknowledged that nothing disclosed in the Company SEC Reports shall be deemed to be a qualification of, or modification to, the representations and warranties set forth in Sections 4.01, 4.02(a), 4.03, 4.04, or 4.10, or (ii) as set forth in the Company Disclosure Schedule (it being understood and agreed that any information set forth in one section or subsection of the Company Disclosure Schedule also shall be deemed to apply to each other section and subsection of this Agreement to which its applicability is reasonably apparent on its face), the Company hereby represents and warrants to Parent and Merger Sub as follows:

4.01
Organization; Qualification

        Each of the Company and its Subsidiaries is duly organized and validly existing under the laws of the jurisdiction of its incorporation, formation or organization, as applicable, and has the requisite corporate or similar power and authority to conduct its business as it is now being conducted and to own, lease and operate its properties and assets in the manner in which its properties and assets are currently operated, except with respect to the Subsidiaries of the Company, only where the failure to be so organized or existing, or to have such power and authority would not have a Company Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed to do business and, to the extent applicable, is in good standing in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing would not have a Company Material Adverse Effect. The Company's Amended and Restated Certificate of Incorporation (the Certificate of Incorporation) and Amended and Restated Bylaws (the Bylaws), each as amended as of the date of this Agreement, have been made available to Parent and are in full force and effect, and the Company is not in material violation of any of the provisions thereof.

4.02
Capitalization; Subsidiaries

(a)
The authorized capital stock of the Company consists solely of (i) 250,000,000 shares of Company Common Stock 50,732,724 of which were issued and outstanding as of the close of business on April 30, 2018 (the Capitalization Date) and 3,834,400 of which were held by the Company as treasury stock as of the close of business on the Capitalization Date, and (ii) 1,000,000 shares of preferred stock of the Company, par value $0.01 per share, no shares of which were outstanding as of the close of business on the Capitalization Date. There are no other classes of capital stock of the Company and no bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which holders of capital stock of the Company may vote authorized, issued or outstanding. As of the close of business on the Capitalization Date, there were (A) outstanding Company Restricted Stock Awards representing 593,143 shares of Company Common Stock; (B) outstanding Company RSU Awards of up to 410,628 shares of Company Common Stock (including deferred stock unit and RSU Awards of up to 24,253 shares of Company Common Stock under the Company's non-qualified deferred compensation plans); (C) outstanding Company PSU Awards of up to 617,045 shares of Company Common Stock; (D) 158,605 shares of Company Common Stock reserved for future issuance under the Company ESPP; and (E) 2,770,633 shares of Company Common Stock reserved for future issuance under the Company Equity Plan. Since the Capitalization Date through the date of this Agreement, neither the Company nor any of its Subsidiaries has issued any of the foregoing, or incurred any obligation to make any payments to any Person based on the price or value of any of the foregoing or established a record date for, declared, set aside for payment or paid any dividend on or made any other distribution (whether in cash or otherwise) in respect of, any of the foregoing.

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(b)
All of the issued and outstanding shares of Company Common Stock have been, and all of the shares of Company Common Stock that may be issued pursuant to the Company Equity Awards, the Company Equity Plan or the Company ESPP are or will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued and granted in accordance with the Company Equity Plan or the Company ESPP, if applicable, and are, or will be when issued, fully paid, nonassessable and free of preemptive rights. The Company has made available to Parent or its counsel accurate and complete copies of the Company Equity Plan and the forms of restricted stock and restricted stock unit agreements evidencing the Company Equity Awards and, other than differences with respect to the number of shares of Company Common Stock covered thereby, the grant date, the exercise price, regular vesting schedule and expiration date applicable thereto, no such stock option, restricted stock or restricted stock unit agreement contains material terms that are not consistent with, or in addition to, such forms. Section 4.02(b) of the Company Disclosure Schedule sets forth, as of the close of business on the Capitalization Date, each outstanding Company Equity Award, the number of shares of Company Common Stock issuable thereunder, the expiration date, the exercise or conversion price relating thereto, the grant date, the name of the holder, and the amount unvested. The Company Restricted Stock Awards, Company RSU Awards, Company PSU Awards and rights under the Company ESPP may be, by and in accordance with their existing terms, be treated in accordance with Section 3.03. The Company Equity Awards set forth on Section 4.02(b) of the Company Disclosure Schedule are the only plans or programs the Company or any of its Subsidiaries maintain under which stock options, restricted stock awards, restricted stock units, stock appreciation rights or other compensatory equity-based awards or profit participation or similar rights are outstanding.

(c)
As of the date of this Agreement, other than as set forth in Section 4.02(a), there are no (i) existing options, warrants, calls, preemptive rights, anti-dilutive rights, rights of first refusal, subscriptions or other rights, restricted stock awards, restricted stock unit awards, "phantom" stock, convertible securities, agreements, arrangements or commitments of any kind obligating the Company or any of its Subsidiaries to issue, transfer, register or sell, or cause to be issued, transferred, registered or sold, any shares of capital stock of, or other equity interests or securities in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or other equity interests, or obligating the Company to grant, extend or enter into such options, warrants, calls, preemptive, subscriptions or other rights, restricted stock awards, restricted stock unit awards, convertible securities, agreements, arrangements or commitments, (ii) outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock or other equity interests or securities of the Company or any of its Subsidiaries, or any securities representing the right to purchase or otherwise receive any capital stock or other equity interests of the Company or any of its Subsidiaries, (iii) voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock or other equity interests of the Company or its Subsidiaries or (iv) other than the Company's obligations under the Company Equity Plan or Company ESPP there are no outstanding obligations of the Company or any of its Subsidiaries to accelerate the vesting of any capital stock of the Company.

(d)
Each Subsidiary of the Company existing on the date of this Agreement is listed on Section 4.02(d) of the Company Disclosure Schedule. The Company owns, beneficially and of record, directly or indirectly, all of the issued and outstanding company, partnership, corporate or similar (as applicable) ownership, voting or similar interests in each such Subsidiary, free and clear of all Encumbrances, and all company, partnership, corporate or similar (as applicable) ownership, voting or similar interests of each such Subsidiary are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, voting restrictions, transfer restrictions and are not subject to or issued in violation of any purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right, commitment, understanding, restriction or

21


    arrangement under Applicable Law, the organizational documents of such Subsidiary or any Contract to which such Subsidiary is a party or otherwise bound. Except as would not reasonably be expected to be material to the Company, (i) each such Subsidiary's certificate of incorporation, certificate of formation, bylaws, limited liability company agreement, operating agreement or similar document, each as amended as of the date of this Agreement, has been made available to Parent and are in full force and effect, and (ii) no Subsidiary of the Company is in material violation of any of the provisions thereof. Except as set forth in the Spin-Off Agreements, all assets, properties and operations of KLX Energy relate, and have always related, solely to the ESG Business, and neither KLX Energy, nor any of its assets, operations or properties, is used or has ever been used in the ASG Business.

(e)
Except for the capital stock and voting securities of, and other equity interests in, the Subsidiaries listed on Section 4.02(d) of the Company Disclosure Schedule, none of the Company or any of its Subsidiaries owns, directly or indirectly, any capital stock or voting securities of, or other equity interests in, or any interest convertible into or exchangeable or exercisable for, any capital stock or voting securities of, or other equity interests in, any Person. Neither the Company nor any of its Subsidiaries has agreed to or is obligated to make, or is bound by any Contract under which it is or may be obligated to make, any material future investment in or capital contribution to any other Person.

4.03
Authority Relative to Agreement

(a)
The Company has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement and, subject to obtaining the Company Stockholder Approval, to consummate the Transactions. The Company Stockholder Approval is the only vote of the holders of any securities of the Company that is required in connection with the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the Transactions, have been duly and validly authorized by all necessary corporate action by the Company, and, except for the receipt of the Company Stockholder Approval, no other corporate action or proceeding on the part of the Company or any vote of the stockholders of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery of this Agreement by the other Parties, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to Applicable Law (a) relating to bankruptcy, insolvency and the relief of debtors and (b) governing specific performance, injunctive relief and other equitable remedies.

(b)
The Company Board has, by resolutions unanimously adopted by the Company Board in accordance with the Certificate of Incorporation and the Bylaws, (i) approved the execution, delivery and performance by the Company of this Agreement and the Transactions, (ii) determined that this Agreement and the Transactions are advisable and in the best interests of the Company and the Company's stockholders, (iii) directed that the adoption of this Agreement be submitted to a vote of the stockholders at the Company Stockholder Meeting and (iv) resolved to make the Company Recommendation.

(c)
The Company has all necessary corporate power and authority to execute and deliver the ESG Documents. Prior to the consummation by the Company of the Distribution, the Distribution will have been duly and validly authorized by all necessary corporate action by the Company. When executed, the ESG Documents will be legal, valid and binding obligations of the Company and ESG Spin Co., as the case may be, and, to the Knowledge of the Company, the other parties thereto, enforceable against such parties in accordance with their respective terms, subject to Applicable Law (i) relating to bankruptcy, insolvency and the relief of debtors and (ii) governing

22


    specific performance, injunctive relief and other equitable remedies. As of the date hereof, there are no Contracts to which the Company or any of its Subsidiaries is a party relating to the Spin-Off. There are no conditions precedent or other contingencies between the Company or any of its Subsidiary, on the one hand, and any other party to the ESG Documents or any of their respective Affiliates, on the other hand, related to the Spin-Off or the transactions contemplated by the ESG Purchase Agreement, other than as expressly set forth in the ESG Documents.

4.04
No Conflict; Required Filings and Consents

(a)
Neither the execution and delivery of this Agreement or the ESG Documents by the Company nor the consummation by the Company of the Transactions will: (i) contravene, conflict with or violate any provision of the Company's Certificate of Incorporation or Bylaws or the certificate of incorporation or bylaws (or equivalent organizational documents) of any Subsidiary of the Company, (ii) assuming that the Consents, registrations, declarations, filings and notices specifically identified in this Section 4.04 have been obtained or made, violate any Applicable Law applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected or (iii) violate, conflict with or result in any breach of any provision of, or loss of any benefit, or constitute a default (with or without notice or lapse of time, or both) under, give rise to any right of termination, acceleration or cancellation of or require the Consent of, notice to or filing with any third party pursuant to any of the terms or provisions of (A) any Contract to which the Company or any of its Subsidiaries is a party or by which any of their assets or properties are bound or (B) any Company Material Contract, or result in the creation of an Encumbrance, other than any Permitted Encumbrance, upon any of the property or assets of the Company or any of its Subsidiaries, other than, in the case of clauses (ii) and (iii)(A), any such conflict, violation, breach, default, termination, acceleration, cancellation or Encumbrance that would not have, individually or in the aggregate, a Company Material Adverse Effect or impair in any material respect the ability of the Company to perform its obligations under this Agreement or to consummate the Merger.

(b)
Assuming the accuracy of the representations and warranties of Parent and Merger Sub set forth in Article V hereof, no consent, approval, license, permit, order, action or authorization (a Consent) of, registration, declaration or filing with or notice to, any Governmental Authority is required to be obtained or made by or with respect to the Company or any of its Subsidiaries in connection with the execution, delivery and performance of this Agreement or the consummation of the Transactions, other than (i) applicable requirements of and filings with the SEC under the Exchange Act or the Securities Act, (ii) the filing of the Certificate of Merger with the Delaware Secretary of State, (iii) the Required Notifications, (iv) compliance with applicable rules and regulations of NASDAQ and (v) such other Consents, registrations, declarations, filings or notices the failure of which to be obtained or made would not have, individually or in the aggregate, a Company Material Adverse Effect.

4.05
Company SEC Reports; Financial Statements

(a)
Since January 1, 2015, the Company has timely filed with or furnished to the SEC each report, statement, schedule, form or other document or filing required by Applicable Law to be filed with or furnished to the SEC by the Company at or prior to the time so required. As of its filing (or furnishing) date or, if amended prior to the date of this Agreement, as of the date of the last such amendment, each Company SEC Report complied in all material respects with the applicable requirements of the Exchange Act, the Sarbanes-Oxley Act and the Securities Act, as the case may be. As of its filing date or, if amended prior to the date of this Agreement, as of the date of the last such amendment, each Company SEC Report filed pursuant to the Exchange Act did not contain any untrue statement of a material fact or omit to state a material fact required to be

23


    stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each Company SEC Report that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the Securities Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. No Subsidiary of the Company is subject to the periodic reporting requirements of the Exchange Act or is required to file or furnish any report, statement, schedule, form or other document with the SEC.

(b)
All of the consolidated financial statements of the Company included in the Company SEC Reports (i) comply in all material respects with the applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; (ii) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except, as may be indicated in the notes thereto and except, in the case of the unaudited interim statements, for the absence of footnotes as may be permitted under the Exchange Act; and (iii) were prepared using the books, records and accounts of the Company and its Subsidiaries and fairly present, in all material respects, the consolidated financial position, the stockholders' equity, the results of operations and cash flows of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal and recurring year-end adjustments). As of the date hereof, except as set forth on Section 4.05(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has any Indebtedness in excess of $5,000,000.

(c)
There are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to any of the Company SEC Reports, and the Company has not received any written or, to the Knowledge of the Company, notice that any of the Company SEC Reports are subject to ongoing SEC review, outstanding comment or outstanding investigation.

(d)
The Company is, and each of its officers are, and since January 1, 2016 have been, in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act and the applicable listing and governance rules and regulations of NASDAQ.

(e)
The Company maintains internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) to provide reasonable assurance (i) that transactions are recorded as necessary to permit preparation of the consolidated financial statements in conformity with GAAP, (ii) that receipts and expenditures are executed in accordance with the authorization of Company management, and (iii) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company's or its Subsidiaries assets that would materially affect the Company's financial statements. The Company has evaluated the effectiveness of the Company's internal control over financial reporting and, except as publicly disclosed in the Company SEC Reports and as disclosed in Section 4.05(e) of the Company Disclosure Schedules, since January 1, 2015, there have not been any (i) "significant deficiencies" or "material weaknesses" (as such terms are defined in Auditing Standard No. 5 of the Public Company Accounting Oversight Board, as currently in effect) in the design or operation of internal control over financial reporting that, individually or in the aggregate, would be reasonably expected to adversely affect the Company's ability to record, process, summarize and report financial information or amount to a material weakness, (ii) fraud or illegal acts, whether or not material, that involve management or other employees of the Company or (iii) claims or allegations relating to any of the foregoing. The Company has not identified any material weaknesses in the design or operation of the Company's internal controls over financial reporting.

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(f)
The Company maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) reasonably designed to ensure that all financial and non-financial information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported to the individuals responsible for preparing such reports within the time periods specified in the rules and forms of the SEC, and that all such information is accumulated and communicated to the Company's chief executive officer, chief financial officer and other members of management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the chief executive officer and chief financial officer of the Company required under the Exchange Act with respect to such reports.

(g)
Each of the principal executive officer of the Company and the principal financial officer of the Company has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the Company SEC Reports and, to the Knowledge of the Company, the statements contained in such certifications are true and accurate. For purposes of this Agreement, "principal executive officer" and "principal financial officer" shall have the meanings given to such terms in the Sarbanes-Oxley Act. None of the Company, any current executive officer of the Company or, to the Knowledge of the Company, any former executive officer of the Company or any of its Subsidiaries has received written notice from any Governmental Authority challenging or questioning the accuracy, completeness form or manner of filing of such certifications made with respect to the Company SEC Reports.

(h)
Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (including any Contract relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, on the other hand), including any structured finance, special purpose or limited purpose entity or Person, or any "off-balance sheet arrangements" (as defined in Item 303(a) of Regulation S-K under the Securities Act), where the result, purpose or intended effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company SEC Reports (including any audited financial statements and unaudited interim financial statements of the Company included therein).

4.06
Absence of Certain Changes or Events

        Since January 31, 2018 through the date of this Agreement, there has not been any Company Material Adverse Effect. Since January 31, 2018 except for matters in connection with the Transactions, the businesses of the Ex-ESG Company have been conducted in the ordinary course of business consistent with past practice in all material respects, and there has not been any action or event of a type that would require the consent of Parent pursuant to Section 6.01(a)(y) if such action or event occurred after the date hereof prior to the Closing.

4.07
No Undisclosed Liabilities

        Except for Liabilities (a) as reflected, disclosed or reserved against in the consolidated balance sheet of the Company and its Subsidiaries as of January 31, 2018 (or the notes thereto) included in the Company's annual report on Form 10-K for the fiscal year ended January 31, 2018, (b) incurred in the ordinary course of business consistent with past practice since January 31, 2018, (c) arising out of this Agreement or the ESG Documents or (d) that are not expected to be material to the Ex-ESG Company, the Ex-ESG Company does not have any liabilities of any nature, whether or not accrued, contingent, absolute or otherwise.

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4.08
Litigation

        Since January 31, 2015, (a) there are and have been no Proceedings pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or any present or former director, manager or employee of the Company or any of its Subsidiaries (in such individual's capacity as such and for which they are or have been entitled to indemnification by the Company or its Subsidiaries) or any asset or property of the Ex-ESG Company that involves an amount in excess of $5,000,000, and (b) there are and have been no Orders outstanding against, or involving, the Company or any of its Subsidiaries or any present or former director, manager or employee of the Ex-ESG Company (in such individual's capacity as such and for which they are or have been entitled to indemnification by the Company or its Subsidiaries) or any asset or property of the Ex-ESG Company that involves an amount in excess of $5,000,000. As of the date of this Agreement, there is no pending Proceeding or outstanding Order that challenges the validity or propriety, or seeks to prevent, materially impair or materially delay, or would reasonably be expected to have the effect of preventing, impairing or materially delaying the consummation of the Merger.

4.09
Permits; Compliance with Applicable Laws

(a)
(i) The Ex-ESG Company is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, exemptions, consents, certificates, approvals, registrations, clearances, orders and other authorizations necessary for the Ex-ESG Company to own, lease and operate their respective properties and assets and to carry on its business as now being conducted, under and pursuant to Applicable Laws (the Company Permits), (ii) all such Company Permits are in full force and effect and (iii) as of the date of this Agreement, with or without notice or the passage of time, no amendment, suspension, cancellation, withdrawal, default or revocation thereof exists or is pending or, to the Knowledge of the Company, threatened and no Company Permits will cease to be effective as a result of the Transactions, except where the failure to be in possession of, failure to be in full force and effect or the suspension, cancellation, withdrawal or revocation thereof, or the ceasing thereof to be effective, has not had and would not be reasonably expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b)
Since January 31, 2015, the Ex-ESG Company has been and is in compliance with (i) Applicable Laws, and (ii) all Company Permits, except where any failure to be in such compliance has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(c)
The Ex-ESG Company is in compliance with all Export Control Laws and has not received any written communication within the last three (3) years that alleges that the Ex-ESG Company is not in compliance with, or is the subject to, any Proceeding under any Export Control Law, except for such failure to be in compliance that has not and would not reasonably be expected to have a Company Material Adverse Effect.

4.10
Information Supplied

(a)
None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the Company Proxy Statement will, on the date the Company Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders of the Company or at the time of the Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except, in each case, that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference therein. The

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    Company Proxy Statement will comply in all material respects with the requirements of the Exchange Act.

(b)
None of the information supplied or to be supplied by or on behalf of the Company for inclusion or incorporation by reference in the ESG Registration Statement will, on the date the ESG Registration Statement (or any amendment or supplement thereto) is first declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except, in each case, that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference therein. The ESG Registration Statement will comply in all material respects with the requirements of the Exchange Act.

4.11
Employee Benefit Plans; Labor

(a)
Section 4.11(a) of the Company Disclosure Schedule sets forth a true and complete list, as of the date of this Agreement, of (i) each material "employee benefit plan" (as such term is defined in Section 3(3) of ERISA), whether written or unwritten, that the Ex-ESG Company adopted, maintains, sponsors, participates in, is a party or contributes to or with respect to which the Ex-ESG Company could reasonably be expected to have any liability; and (ii) each other material employment or employee benefit plan, program, practice, policy, arrangement or agreement, whether written or unwritten, including any equity option, equity purchase, equity appreciation right or other equity or equity-based incentive, cash bonus or incentive compensation, employment, change in control, retention, retirement or supplemental retirement, deferred compensation, profit-sharing, unemployment, severance, termination pay, welfare, hospitalization or medical, life, accidental death and dismemberment, long- or short-term disability, fringe benefit or other similar compensation or employee benefit plan, program, practice, policy, arrangement or agreement for any current or former employee or director of, or other individual service provider to, the Ex-ESG Company that does not constitute an "employee benefit plan" (as defined in Section 3(3) of ERISA, whether or not ERISA applies), that the Ex-ESG Company adopted, maintains, sponsors, participates in, is a party or contributes to, or with respect to which the Ex-ESG Company could reasonably be expected to have any liability (each arrangement described in this Section 4.11(a), without regard to any materiality qualifier, a Company Benefit Plan). With respect to each Company Benefit Plan, the Company has made available to Parent a true and complete copy of (i) such Company Benefit Plan and all material amendments thereto (including a written description of the material provisions of each unwritten Company Benefit Plan), (ii) each trust, insurance, annuity or other funding Contract, (iii) the most recent financial statements and actuarial or other valuation reports, (iv) the three most recent annual reports on Form 5500, (v) the most recent determination letter (or, if applicable, advisory or opinion letter) from the IRS, (vi) the most recent summary plan description and any material modification and (vii) all material notices given to such Company Benefit Plan, the Company or any Company ERISA Affiliate by the IRS, United States Department of Labor, Pension Benefit Guarantee Corporation or other Governmental Authority.

(b)
Except as set forth on Section 4.11(b) of the Company Disclosure Schedule, (i) each of the Company Benefit Plans has been established, adopted, operated, maintained and administered in all material respects in accordance with its terms and Applicable Laws, including ERISA and the Code and each filing required by any Governmental Authority with respect to each Company Benefit Plan (if required by ERISA or the Code) has been filed, (ii) all payments and contributions required to be made under the terms of any Company Benefit Plan and Applicable Laws have been timely made or accrued or otherwise adequately reserved to the extent required by and in accordance with GAAP and (iii) none of the Ex-ESG Company or, to the Knowledge of

27


    the Company, any third party, has engaged in any non-exempt "prohibited transaction" (within the meaning of Section 4975 of the Code or Section 406 of ERISA) with respect to any Company Benefit Plan that would result in the imposition of any liability to the Ex-ESG Company.

(c)
Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code has either received a favorable determination letter from the IRS with respect to such Company Benefit Plan as to its qualified status under the Code, or with respect to a prototype Company Benefit Plan, the prototype sponsor has received a favorable IRS opinion letter, or the Company Benefit Plan or prototype sponsor has remaining a period of time under applicable Code regulations or pronouncements of the IRS in which to apply for such a letter and make any amendments necessary to obtain a favorable determination or opinion as to the qualified status of each such Company Benefit Plan. To the Knowledge of the Company, no event has occurred since the most recent determination or opinion letter or application therefor relating to any such Company Benefit Plan and no condition exists that has been or would reasonably be expected to adversely affect the qualified status of any such Company Benefit Plan or result in the imposition of any material liability, penalty or tax under ERISA or the Code.

(d)
None of the Ex-ESG Company or any Company ERISA Affiliate, in the past three (3) years, has contributed to, been required to contribute to, or otherwise participated in or in any way, directly or indirectly, had any liability with respect to (i) any plan subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA, or (ii) any "multiemployer plan" as defined in Section 3(37) of ERISA or any "multiple employer welfare arrangement" as defined in Section 3(40) of ERISA.

(e)
As of the date of this Agreement there are no material Proceedings pending, or, to the Knowledge of the Company, threatened against or affecting any Company Benefit Plan, by any employee or beneficiary covered under such Company Benefit Plan, as applicable, or otherwise involving such Company Benefit Plan.

(f)
Except as set forth on Section 4.11(f) of the Company Disclosure Schedule, neither the execution or delivery of nor performance of the Company's obligations under this Agreement nor the consummation of the Merger will, either alone or in conjunction with any other event (where such other event would not alone have an effect described in this sentence), (i) entitle any current or former director or employee of, or individual service provider to, the Ex-ESG Company to any payment or benefit (or result in the funding of any such payment or benefit) under any Company Benefit Plan, except as expressly provided in this Agreement, (ii) increase the amount or value of any benefit or compensation otherwise payable or required to be provided to any such director, employee or individual service provider under any Company Benefit Plan, (iii) accelerate the time of payment, funding or vesting of amounts due any such director, employee or individual service provider under any Company Benefit Plan, except as provided for in this Agreement, or (iv) limit or restrict the right of Parent, the Surviving Corporation, the Company or any of its Subsidiaries to merge, amend or terminate any Company Benefit Plan.

(g)
No compensatory amount that could be received (whether in cash or property or the vesting of property), as a result of the consummation of the Merger, by any employee, director or other individual service provider of the Ex-ESG Company under any Company Benefit Plan or otherwise would not be deductible by reason of Section 280G of the Code or would be subject to an excise tax under Section 4999 of the Code.

(h)
Except as set forth in Section 4.11(h) of the Company Disclosure Schedule, the Ex-ESG Company has no material obligations for post-termination health, welfare or life insurance benefits under any Company Benefit Plan (other than for continuation coverage required to be provided pursuant to Section 4980B of the Code) or coverage in which the full cost of such benefit is borne entirely by the former employee (or such former employee's eligible dependents or beneficiaries).

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(i)
Each Foreign Plan (i) has been established, operated, maintained and administered in all material respects in compliance with its terms and operated in compliance with all Applicable Laws; (ii) if required to be registered or approved by a non-U.S. Governmental Authority, has been registered or approved and has been maintained in good standing with applicable Governmental Authorities, and, to the Knowledge of the Company, no event has occurred since the date of the most recent approval or application therefor relating to any such Foreign Plan that would reasonably be expected to adversely affect any such approval or good standing; (iii) that is intended to qualify for special Tax treatment meets all material requirements for such treatment; and (iv) is not subject to any material pending or, to the Knowledge of the Company, threatened claims by or on behalf of any participant in any Foreign Plan, or otherwise involving any such Foreign Plan or the assets of any Foreign Plan, other than routine claims for benefits

(j)
Except as set forth on Section 4.11(j) of the Company Disclosure Schedule, the Ex-ESG Company is not a party to or otherwise bound by any collective bargaining Contract or other labor-related Contract with a labor or trade union, or labor organization or works council (each a Labor Agreement), nor is any such Labor Agreement presently being negotiated, nor, to the Knowledge of the Company, are there any employees of the Ex-ESG Company represented by a labor or trade union, labor organization or works council. The Company has made available to Parent a true and complete copy of each Labor Agreement and all material amendments thereto. There are no organizing activities, representation campaigns, certification proceedings or petitions seeking a representation proceeding pending or, to the Knowledge of the Company, threatened by or with respect to any of the employees of the Ex-ESG Company. Since January 1, 2016, there has not been any, and there are no pending or, to the Knowledge of the Company, threatened strikes, walkouts, lockouts, slowdowns or other labor stoppages against or affecting the Ex-ESG Company. To the Knowledge of the Company, there is no material unfair labor practice claim against the Ex-ESG Company pending, or threatened, before the National Labor Relations Board or any similar Governmental Authority.

(k)
No individual classified as a non-employee, including any independent contractor, leased employee or consultant, for purposes of receiving employee benefits, regardless of treatment for other purposes, is eligible to participate in, or receive benefits under, any Company Benefit Plan.

(l)
The Ex-ESG Company is in compliance in all material respects with all Applicable Laws relating to employment, labor and the workplace, including Applicable Laws relating to wages, hours, collective bargaining, occupational safety and health, work authorization, equal employment opportunity, discrimination in employment, terms and conditions of employment, worker classification, immigration, unemployment compensation, workers' compensation, employee privacy and right-to-know. The Ex-ESG Company (i) has no material liability for any payment to any trust or other fund or to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits for employees and (ii) has no liability under, or has failed to comply with, the WARN Act.

(m)
Except as set forth in Section 4.11(m) of the Company Disclosure Schedule, as of the date of this Agreement and for the past three (3) years, there are and have been no material Proceedings pending or, to the Knowledge of the Company, threatened against the Ex-ESG Company by any current or former employees of the Ex-ESG Company.

(n)
Neither the Company nor any of its Subsidiaries has any material Liability under any such arrangement that fails to meet the requirements of Sections 409A(2), (3), or (4) of the Code (or that has at any time since January 1, 2009, not been operated in accordance with such requirements), or to which Section 409A(b)(1) of the Code applies (including any "gross up" or similar payment to any Person with respect to Taxes imposed under Sections 409A or 4999 of the Code).

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(o)
The Company has made available to Parent a document (anonymized to the extent required by Applicable Law) which, as of the date of this Agreement, lists all Employees actively employed by the Ex-ESG Company, employee identification numbers (where applicable), current annual compensation (including, where applicable, target bonus compensation eligibility), work location and job title. The document also lists, as of the date of this Agreement, (i) all inactive Employees of the Ex-ESG Company and (ii) the names of any material independent contractors, as well as any leased employees and the name of the agency providing such leased employees, (iii) each individual who is not an Employee as of the date of this Agreement (i.e., is a pending hire) and has either accepted or has received an outstanding offer of employment from the Ex-ESG Company, or to whom the Ex-ESG Company intends to offer employment prior to Closing and such individual's prospective or proposed date of hire, work location, title and rate of compensation. The document also identifies, as of the date of this Agreement, all Employees on short-term or long-term disability leave, maternity leave, parental leave, family medical leave, military leave, extended absence, protected leave or any other leave and provides an estimate of when such Employee is expected to return from leave.

4.12
Taxes

(a)
The Company and/or each of its Subsidiaries have (i) timely filed or caused to be timely filed (taking into account any extension of time within which to file) all material Tax Returns required to be filed by any of them and all such filed Tax Returns (taking into account all amendments thereto) are true, correct and complete in all material respects and (ii) paid all material Taxes due and owing (whether or not shown on such Tax Returns), except, in the case of clause (ii) hereof, with respect to Taxes contested in good faith by appropriate Proceedings and for which adequate reserves or accruals have been established in accordance with GAAP.

(b)
As of the date of this Agreement, neither the Company nor any of its Subsidiaries have received any written notice of any pending, threatened, or ongoing audits, examinations, investigations or other Proceedings by any Governmental Authority (including in jurisdictions where the Company and its Subsidiaries have not filed Tax Returns) in respect of material Taxes of or with respect to the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries has waived any statute of limitations with respect to material Taxes or agreed to any extension of time with respect to a material Tax assessment or deficiency other than in the ordinary course of business. As of the date of this Agreement, no written claim has been made by any Governmental Authority in a jurisdiction where the Company or any of its Subsidiaries does not currently file a Tax Return that it is or may be subject to taxation by that jurisdiction in respect of Taxes that would be covered by or the subject of such Tax Return, nor has any such assertion been threatened or proposed in writing and received by the Company or any of its Subsidiaries.

(c)
All Taxes that the Company or any of its Subsidiaries are or were required by Applicable Law to withhold or collect have been duly and timely withheld or collected in all material respects on behalf of its respective employees, independent contractors or other third parties and, have been timely paid to the proper Governmental Authority or other Person or properly set aside in accounts for this purpose.

(d)
None of the Company or any of its Subsidiaries has ever been a member of a consolidated, combined or unitary Tax group (other than such a group the common parent of which is the Company, any of its Subsidiaries or B/E Aerospace), and none of the Company or any of its Subsidiaries has any liability for Taxes of any other Person (other than Taxes of the Company, any Subsidiary or B/E Aerospace (for the period during which the Company and applicable Subsidiaries were members of the B/E Aerospace consolidated group)) under Treasury Regulation Section 1.1502-6 (or any similar provision of foreign, state or local law), as a transferee or successor, by Contract or otherwise.

30


(e)
None of the Company or any of its Subsidiaries is a party to or is bound by any Tax sharing, Tax allocation or Tax indemnification agreement or arrangement or any other similar Contract or arrangement (other than (i) such an agreement or arrangement exclusively between or among the Company and its Subsidiaries and (ii) customary commercial Contracts entered into in the ordinary course of business, the principle subject matter of which is not Taxes, and (iii) B/E Tax Agreement) that will not be terminated on or before the Closing Date without any future liability to the Company or its Subsidiaries.

(f)
There are no Encumbrances for Taxes on any of the assets of the Company or any of its Subsidiaries other than Permitted Encumbrances.

(g)
None of the Company or any of its Subsidiaries has participated in or been a party to a transaction that, as of the date of this Agreement, constitutes a "listed transaction" that is required to be reported to the IRS pursuant to Section 6011 of the Code and applicable Treasury Regulations thereunder.

(h)
Within the last two (2) years, none of the Company or any of its Subsidiaries has been a party to any transaction intended to qualify under Section 355 of the Code.

(i)
The Company is not a "United States Real Property Holding Corporation" within the meaning of Section 897(c)(2) of the Code.

(j)
The accrual or reserves for Taxes with respect to the Company and each of its Subsidiaries for any Tax period ending on or before the Closing Date (excluding any provision for deferred income Taxes) reflected on the Company's financial statements (or the notes thereto) included in the Company SEC Reports are adequate, in accordance with GAAP, to cover all material Taxes that are not yet due and payable.

(k)
None of the Company or any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign law) executed on or prior to the Closing Date; (iii) installment sale or open transaction disposition made on or prior to the Closing Date; (iv) election under Section 108(i) of the Code; (v) intercompany transaction or excess loss account described in the Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law) or (vi) the application of Section 965 of the Code. No power of attorney that will be in force at Closing has been granted with respect to any matter relating to material Taxes that could affect the Company or any of its Subsidiaries.

(l)
Neither the Company nor any of its Subsidiaries has breached any of its representations or obligations under the B/E Tax Agreement or any officers' certificate referred to therein and no such breach will result from the transactions contemplated by this Agreement. All amounts required to be paid by the Company or any of its Subsidiaries under the B/E Tax Agreement have been fully and timely paid.

(m)
None of the Company or any of its Subsidiaries has requested or received any closing agreement, technical advice memoranda, private letter ruling or similar agreements or rulings from, or entered into any Contract or arrangement with, any Taxing Authority that (i) requires Company or any of its Subsidiaries to take any action or to refrain from taking any action after the Closing Date or (ii) would affect any amount of Tax payable by a Company or any of its Subsidiaries after the Closing Date. None of the Company or any of its Subsidiaries is a party to any Contract or arrangement with any Taxing Authority that would be terminated or adversely affected as a result of the Transactions.

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(n)
The Company and each Subsidiary are in compliance in all material respects with all applicable transfer pricing laws and regulations, including the execution and maintenance of contemporaneous documentation substantiating its transfer pricing practices and methodology. The prices for any property or services (or for the use of any property) provided by or to the Company or any of its Subsidiaries are arm's length prices for purposes of the relevant transfer pricing Applicable Law, including Treasury Regulations promulgated under Section 482 of the Code.

4.13
Material Contracts

(a)
Except as set forth on Section 4.13(a) of the Company Disclosure Schedule, the Ex-ESG Company is not a party to nor bound by, and none of its assets or properties are bound by, any:

(i)
Contract where total costs exceed total revenues by more than $5,000,000;

(ii)
Contract, excluding any sale or purchase orders entered into in the ordinary course of business consistent with past practice, with any of the top ten (10) customers of the Ex-ESG Company, as determined by total revenue paid to the Ex-ESG Company by such customer during the one-year period ended January 31, 2018;

(iii)
Contract for the sale of any asset (other than sales in the ordinary course of business), pursuant to which the Ex-ESG Company derived revenue in an amount exceeding $15,000,000 in the twelve (12) months ended January 31, 2018, or any Contract including the grant of any preferential rights to purchase any asset, pursuant to which the Ex-ESG Company derived revenue in an amount exceeding $15,000,000 in the twelve (12) months ended January 31, 2018;

(iv)
Contract, pursuant to which the Ex-ESG Company paid an amount exceeding $15,000,000 in the twelve (12) months ended January 31, 2018, pursuant to which the Ex-ESG Company agrees to purchase all of its requirements for any goods or services exclusively from any Person or to sell to any Person all of such Person's requirements for any goods or services;

(v)
Contract, excluding any sale or purchase orders entered into in the ordinary course of business consistent with past practice, pursuant to which the Ex-ESG Company agrees to purchase all of its requirements for any goods or services exclusively from any Person or to sell to any Person all of such Person's requirements for any goods or services;

(vi)
Contract that (A) would impose a non-competition or material exclusivity obligation on the Surviving Corporation, Parent or any of their respective Subsidiaries or Affiliates after the Effective Time or limits in any material respect the ability of the Ex-ESG Company or would limit in any material respect the ability of Parent or any of its Affiliates after the Effective Time, to operate its business in any geographic area, or (B) would, after the Effective Time, restrict the Ex-ESG Company, Parent or any of their respective Affiliates or Subsidiaries from soliciting, hiring, engaging, retaining or employing any Person's current or former employees in any material respect (other than customary non-solicitation obligations undertaken in the ordinary course of business consistent with past practice) or (C) other than the Indenture, restricts the ability of the Ex-ESG Company or its Affiliates to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or businesses;

(vii)
Contract concerning any partnership, joint venture, joint development, strategic alliance or similar arrangement or any other equity investment;

(viii)
Contract relating to any Proceeding or any Order relating to or directly affecting the Ex-ESG Company constituting any settlement agreement pursuant to which the Ex-ESG Company has outstanding payment obligations in excess of $1,000,000 individually or $5,000,000 in the

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      aggregate or which otherwise includes any covenants that impact the operation of the business of the Ex-ESG Company;

    (ix)
    Contract concerning (A) any material license of Intellectual Property of the Ex-ESG Company to any Person (other than the Ex-ESG Company), or (B) any material license of the Intellectual Property of any Person (other than the Ex-ESG Company) to the Ex-ESG Company;

    (x)
    Contract, excluding any sale or purchase orders entered into in the ordinary course of business consistent with past practice, with any Top Supplier;

    (xi)
    Contract for the employment or engagement of any officer, employee or other individual on a full time, part-time or consulting basis and provides for annual base salary in excess of $250,000;

    (xii)
    Contract which obligates the Ex-ESG Company to make any future capital commitment or capital expenditure in excess of $5,000,000 individually or $10,000,000 in the aggregate;

    (xiii)
    each acquisition or divestiture Contract that contains "earn-out: or other contingent payment obligations;

    (xiv)
    except for Contracts related to employment, each Contract between the Ex-ESG Company, on the one hand, and any officer, director, stockholder or Affiliate of the Ex-ESG Company, on the other hand or Contracts between the Ex-ESG Company and KLX Energy or ESG Spin Co.

    (xv)
    other than the B/E Tax Agreement, any Contract with B/E Aerospace or any of its Subsidiaries, Affiliates or direct or indirect equityholders that could reasonably be expected to result in any material Tax liability for the Ex-ESG Company;

    (xvi)
    each Contract that contains any indemnification, guarantee or similar obligation of the Ex-ESG Company that would reasonably be expected to result in liability to the Surviving Corporation or any of its Subsidiaries in excess of $25,000,000; or

    (xvii)
    any Contract that is a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the Exchange Act).

    The Contracts disclosed or required to be disclosed at Section 4.13(a) of the Company Disclosure Schedule are referred to as the Company Material Contracts.

(b)
None of the Company or any of its Subsidiaries has received any written or, to the Knowledge of the Company, oral notice from any Person that such Person intends to terminate, or not renew, any Company Material Contract. All of the Company Material Contracts are (A) valid and binding on the Ex-ESG Company and, to the Knowledge of the Company, each other party thereto and (B) in full force and effect, except as may be limited by bankruptcy, insolvency, moratorium and other similar Applicable Law affecting creditors' rights generally and by general principles of equity. Neither the Company nor any of its Subsidiaries have, and to the Knowledge of the Company, none of the other parties thereto have, violated any provision of, or committed or failed to perform any act, and no event or condition exists, which with or without notice, lapse of time or both would constitute a default under the provisions of any Company Material Contract, except in each case for those violations and defaults which, individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect. To the Knowledge of the Company, no Person is challenging the validity or enforceability of any Company Material Contract, except in each case for those challenges which, individually or in the aggregate, would not reasonably be expected to result in a Company Material Adverse Effect and neither the Company nor any of its Subsidiaries has received written notice of any of the foregoing.

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4.14
Trademarks, Patents and Copyrights

(a)
Section 4.14(a) of the Company Disclosure Schedule identifies all: (i) issued patents and pending patent applications; (ii) registered trademarks and pending applications therefor; (iii) copyright registrations and pending applications therefor; and (iv) Internet domain name registrations, in each case that are Owned Intellectual Property and material to the business of the Ex-ESG Company. With respect to each such Intellectual Property right identified on Section 4.14(a) of the Company Disclosure Schedule, no Proceeding is pending or, to the Knowledge of the Company, threatened, which challenges the legality, validity, enforceability, use or ownership of any such Intellectual Property right that, if determined adversely, would have a Company Material Adverse Effect.

(b)
The Ex-ESG Company owns, free and clear of any Encumbrances other than Permitted Encumbrances, or has the right to use all Intellectual Property used in the operation of their businesses as presently conducted, except where the failure to own or have the right to use such Intellectual Property would not have a Company Material Adverse Effect.

(c)
To the Knowledge of the Company, the Ex-ESG Company is not materially infringing, misappropriating or otherwise violating any third party's material Intellectual Property. Neither the Company nor its Subsidiaries have received in the last two (2) years any written notice or written communication alleging that the operation of Company or any of its Subsidiaries infringes, misappropriates or otherwise violates any third party's Intellectual Property. To the Knowledge of the Company, no third party has infringed upon, misappropriated or otherwise violated any Owned Intellectual Property rights, except for any such infringement, misappropriation or other violation that would not have a Company Material Adverse Effect.

(d)
The Ex-ESG Company has not used any open source software (or any other software that is subject to any "open source", "free", or similar license) in a manner or relation that has or would obligate the Ex-ESG Company to make available to any third party any source code owned by the Ex-ESG Company and maintained by the Ex-ESG Company as a material trade secret, except for any such use that would not have a Company Material Adverse Effect.

(e)
The Company Systems are (i) sufficient for the current needs of the Ex-ESG Company, and (ii) in sufficiently good working condition to effectively perform all information technology operations necessary for the conduct of the business of the Ex-ESG Company as presently conducted. The Ex-ESG Company has implemented all physical, technical and other measures meeting, and in material compliance with, industry standards applicable to the industries in which they respectively operate to protect the confidentiality, integrity and security of the Company Systems, the transactions executed thereby, and all Company Data, including from any theft, corruption, loss or unauthorized use, access, interruption or modification thereof by any third party.

(f)
To the Knowledge of the Company, all of the Company Systems are free from any material malicious or disabling code or instructions, timer, copy protection device, clock, counter or other limiting design or routing or any "back-door," "time bomb," "Trojan horse," "worm," "drop dead device," "virus," "material bug," corruptant, malware, "spyware" or other similar programs, software routines or hardware components, including those that could permit unauthorized access or the unauthorized disablement or erasure of any of the Company Systems, Company Data, or software or data of any third party, or otherwise render the Company Systems incapable of being used in the full manner for which they were designed. The Ex-ESG Company is in the process of implementing commercially reasonable disaster recovery procedures and facilities for the business.

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4.15
Real Property; Personal Property; Sufficiency of Assets

(a)
Section 4.15(a) of the Company Disclosure Schedule sets forth a complete and accurate list of all real property owned by the Ex-ESG Company (collectively, the Company Owned Real Property). Except as would not have a Company Material Adverse Effect, the Ex-ESG Company has good and marketable fee simple title to the Company Owned Real Property free and clear of any Encumbrances other than the Permitted Encumbrances. As of the date hereof, neither the Company nor any of its Subsidiaries has received written notice of any pending, and to the Knowledge of the Company there is no threatened, condemnation, eminent domain, or similar Proceeding with respect to any of the Company Owned Real Property.

(b)
Section 4.15(b) of the Company Disclosure Schedule sets forth a complete and accurate list of each lease pursuant to which Ex-ESG Company leases, subleases or licenses an interest in real property from any other Person (whether as a tenant, subtenant or pursuant to other occupancy arrangements) (collectively, the Company Leased Real Property). Except as would not have a Company Material Adverse Effect, the Ex-ESG Company has a valid and subsisting leasehold estate in each parcel of Company Leased Real Property for the full term of the respective lease, free and clear of any Encumbrances other than Permitted Encumbrances. Except as would not have a Company Material Adverse Effect, (x) all the leases for each parcel of Company Leased Real Property are valid and in full force and effect except to the extent they have previously expired or terminated in accordance with their terms, and (y) neither the Ex-ESG Company nor, to the Knowledge of the Company, any third party, is in default or breach in any material respect under any lease for Company Leased Real Property.

(c)
Except as would not have or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect: (i) the Ex-ESG Company is in possession of and has good and marketable title to, or valid leasehold interests in or valid rights under contract to use, the machinery, equipment, furniture, fixtures, and other tangible personal property and assets owned, leased or used by the Ex-ESG Company, free and clear of all Encumbrances other than Permitted Encumbrances; and (ii) all such tangible property and assets are free from defects (patent and latent), are in good operating condition and repair (subject to normal wear and tear), and are suitable for the purposes for which such property and assets are presently used.

(d)
The Ex-ESG Company has and, after the Distribution the Surviving Corporation and its Subsidiaries will have, good and marketable title to, or a valid and enforceable interest in, free and clear of all Encumbrances (other than Permitted Encumbrances), all buildings, machinery, furniture, fixtures, equipment and other tangible and intangible assets and rights necessary to permit Parent (without regard to the characteristics of Parent or its Affiliates) to operate, as of the Closing and immediately after the Closing, the ASG Business in all material respects in the same manner as the ASG Business is currently being conducted. From and after the Closing, except as expressly set forth in the ESG Documents, all liabilities and obligations of the Ex-ESG Company will relate exclusively to the ASG Business and the Company has not caused the Ex-ESG Company to incur, assume, guarantee or otherwise become subject to any liability or obligation that related exclusively to or was incurred in connection with the ESG Business that will survive the Closing.

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4.16
Environmental Matters

To the Knowledge of the Company, as of the date of this Agreement,

(a)
the Ex-ESG Company is in compliance with all applicable Environmental Laws;

(b)
there are no pending claims or Proceedings against the Ex-ESG Company alleging any breach of Environmental Laws or asserting any claim for damages regarding Environmental Matters in relation to the Ex-ESG Company's business;

(c)
the Ex-ESG Company has not treated, stored, disposed of, arranged for disposal of, transported, handled or released any hazardous substance, or owned occupied or operated any facility or property, in a manner that would reasonably be expected to result in the Ex-ESG Company having any liability related to hazardous substances under any Environmental Law; and

(d)
the Ex-ESG Company holds and is in compliance with all Company Permits required under applicable Environmental Laws to permit the Ex-ESG Company to operate the Ex-ESG Company's business as currently conducted,

except in each of the foregoing clauses (a), (b), (c) and (d) as would not reasonably be expected to have a Company Material Adverse Effect. This Section 4.16 provides the sole and exclusive representations and warranties of the Company in respect of Environmental Matters, including any and all matters arising under Environmental Laws.

4.17
Government Contracts

(a)
Each current and active Company Government Contract pursuant to which the Company derived revenue exceeding $5,000,000 in the twelve (12) months ended January 31, 2018 to which the Company or a Company Subsidiary is a party, and with a period of performance that has not expired or terminated, is listed on Section 4.17(a)(i) of the Company Disclosure Schedule (the Company Material Government Contracts); provided that with respect to indefinite delivery, indefinite quantity Contracts, only those generating in excess of $5,000,000 in sales for the twelve (12) months ended January 31, 2018 to such United States Federal Governmental Authority (either directly or to a prime contractor for direct sale to such United States Federal Governmental Authority) shall be deemed a Company Material Government Contract. Section 4.17(a)(ii) of the Company Disclosure Schedule lists and identifies each outstanding Company Government Bid pursuant to which the Company reasonably expects to derive annual revenue in excess of $5,000,000 (each a Company Material Bid).

(b)
Except as would not result in a Company Material Adverse Effect, each Company Government Contract is in full force and effect and not subject to any Proceedings, other than audits in the ordinary course of business by the Defense Contract Audit Agency and the Defense Contract Management Agency or their non-US equivalent, none of which have a Company Material Adverse Effect.

(c)
The execution and delivery hereof, the performance of the Company's and its obligations hereunder and the consummation by the Company of the Transactions will not result in, any material violation, breach or default in any material respect of any term or provision of any Company Material Government Contract or non-compliance in any material respect with any Applicable Laws applicable thereto.

(d)
The Company and its Subsidiaries are, and since January 31, 2015 have been, in compliance with all Government Contract Laws pertaining to the Company Material Government Contracts and Company Material Bids, except as would not have a Company Material Adverse Effect.

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(e)
The Company and its Subsidiaries are, and since January 31, 2015 have been, in compliance with all terms and conditions, including all clauses, provisions, specifications, and quality assurance, testing and inspection requirements, of the Company Material Government Contracts, except as would not have a Company Material Adverse Effect.

(f)
To the Knowledge of the Company, as of the date of this Agreement, neither the Company nor any of its Subsidiaries is under or identified in any administrative, civil or criminal investigation or indictment, nor is it a party to any administrative or civil litigation, involving alleged false statements, false claims or other misconduct or any other Proceeding, relating to any of the Company Government Contracts or Company Government Bids that has been communicated in writing to the Company or any of its Subsidiaries.

(g)
As of the date of this Agreement, neither the Company, nor, to the Knowledge of the Company, any director, officer, employee, consultant, or Affiliate of the Company, has been or is suspended, debarred or, to the Knowledge of the Company, proposed for suspension or debarment from government contracting. Since January 31, 2016, no Company Government Contract to which the Company or any of its Subsidiaries is or was a party has been terminated for default and, to the Knowledge of the Company, no such termination for default has been threatened.

(h)
The Company and its Subsidiaries have complied in all material respects with all requirements of the Company Government Contracts and any Applicable Law relating to the safeguarding of, and access to, information classified pursuant to Executive Order 13526 or similar Order.

(i)
The Company, its Subsidiaries and their respective Affiliates and each of their respective employees hold such Security Clearances as are required, in all material respects, to perform the Company Government Contracts currently being performed by it.

(j)
This Section 4.17 provides the sole and exclusive representations and warranties of the Company in respect of matters relating to any Company Government Contract.

4.18
Insurance

        The Company and each of its Subsidiaries currently maintains policies of insurance with reputable insurance carriers of the types and in the amounts that is adequate and necessary to protect the business, properties and assets of the Ex-ESG Company (taking into account the costs and availability of such insurance) against all risks of a character as are usually insured against by similarly situated companies in similar businesses and as required to comply with Applicable Law. All insurance policies maintained by the Ex-ESG Company are in full force and effect and all premiums due and payable thereon have been paid and neither the Company nor any of its Subsidiaries is in breach of or default under any of such insurance policies, except as would not be material to the Ex-ESG Company. Since January 1, 2018, the neither the Company nor any of its Subsidiaries has received any notice of termination or cancelation or denial of coverage with respect to any insurance policy. There is no material claim by the Ex-ESG Company pending under any such policies that has been denied or disputed by the insurer except for denials or disputes which would not, individually or in the aggregate, be reasonably expected to have a Company Material Adverse Effect.

4.19
Takeover Statutes

        The Company Board has taken such actions and votes as are necessary to, and no action by the by the stockholders of the Company is required to, render the provisions of Section 203 of the DGCL inapplicable to this Agreement, the Merger or any other Transaction.

4.20
Brokers

        No investment banker, broker or finder other than Goldman, Sachs & Co., the fees and expenses of each of which will be paid by the Company and a copy of whose engagement Contract (and all indemnification and other Contracts related to such engagement) has been made available to Parent, is entitled to any investment banking, brokerage, finder's or similar fee or commission in connection with this Agreement or the Transactions.

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4.21
Opinion of Financial Advisor

        The Company has received the written opinion of Goldman, Sachs & Co., dated as of the date of this Agreement, to the effect that, as of the date of this Agreement, and based upon and subject to the various qualifications, limitations, assumptions and other matters set forth in such opinion, the Merger Consideration to be paid to the holders of shares of Company Common Stock (other than Parent and its Affiliates) pursuant to this Agreement is fair from a financial point of view to such holders. A true, correct and complete copy of such opinion will be delivered to Parent for informational purposes after delivery thereof to the Company.

4.22
Relations with Governments

(a)
The Company and each of its Subsidiaries is in compliance with, to the extent applicable, (i) the Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.), (ii) the Organization for Economic Cooperation and Development Convention Against Bribery of Foreign Public Officials in International Business Transactions and legislation implementing such convention and (iii) all international anti-bribery conventions and other anti-corruption and anti-bribery Applicable Laws (collectively, the Anti-Bribery Laws).

(b)
The Ex-ESG Company has not received any written or, to the Knowledge of the Company, oral communication from a Governmental Authority within the last five (5) years that alleges that the Ex-ESG Company or, to the Knowledge of the Company any of their respective Representatives, distributors, resellers or sales consultants has any material Liability under any Anti-Bribery Laws.

(c)
Within the last three (3) years, neither the Company nor any of its Subsidiaries, nor, to the Knowledge of the Company, any of their respective employees, representatives, agents, consultants, independent contractors, subcontractors, leased employees, volunteers, or temporary workers (during the period of such employment or engagement within the last three (3) years), has, in violation of applicable Anti-Bribery Laws, (i) in order to obtain or retain business for the Company or any of its Subsidiaries, directly or indirectly, offered, paid or promised to pay, or authorized the payment of, any money or other thing of value (including any fee, gift, sample, travel expense or entertainment with a value in excess of one hundred dollars ($100.00) in the aggregate to any one individual in any year) or any commission payment payable, to: (A) any person who is an official, officer, agent, employee or representative of any Governmental Authority or of any existing or prospective customer (whether government owned or non government owned); (B) any political party or official thereof; (C) any candidate for political or political party office; or (D) any other individual or entity; while, in each such case, knowing or having reason to believe that all or any portion of such money or thing of value would be offered, given, or promised, directly or indirectly, for purposes not allowable under the Anti Bribery Laws, to any such official, officer, agent, employee, representative, political party, political party official, candidate, individual, or any entity affiliated with such customer, political party or official or political office, (iii) has been the recipient of a subpoena, warning letter, finding of violation letter, charging letter, draft charging letter, or other document from a Governmental Authority alleging a violation, or possible violation, of any Anti Bribery Laws; (iv) been the subject of an indictment for a violation or violations of any Anti Bribery Laws, convicted of violating any Anti-Bribery Laws, or barred or suspended, even temporarily, from doing business with any agency of the U.S. government as a result of a violation of any Anti-Bribery Laws; (v) entered into a settlement, plea agreement, or deferred prosecution agreement with any Governmental Authority for alleged violations of any Anti-Bribery Laws; or (vi) been officially reprimanded or terminated in whole or in part due to their violation of Company policies and procedures related to Anti Bribery Laws.

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4.23
Customers and Suppliers

        Section 4.23 of the Company Disclosure Schedule lists the 20 largest customers of the Ex-ESG Company (determined on the basis of gross revenues recognized by the Company and its Subsidiaries for the fiscal year 2017) (each, a Top Customer) and the 20 largest suppliers of the Ex-ESG Company (determined on the basis of gross spend by the Company and its Subsidiaries for the fiscal year 2017) (each, a Top Supplier). Since January 31, 2018, there has not been (i) any material adverse change in the business relationship of the Company and any Top Customer or Top Supplier, or (ii) any material adverse change in any material term of the agreements or related arrangements with any Top Customer or Top Supplier. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has received any notice, whether written or otherwise communicated to a director or executive officer, from any Top Customer or Top Supplier that such Top Customer or Top Supplier intends to terminate or not renew, its relationship with the Company or any of its Subsidiaries.

4.24
Affiliate Transactions

        Except as set forth on Section 4.24 of the Company Disclosure Schedule, no director or Employee of the Ex-ESG Company, to the Knowledge of the Company, (a) owns or holds any enforceable interest in, directly or indirectly, in whole or in part, any asset that is associated with the Ex-ESG Company or that is used or held for use in connection with business of the Ex-ESG Company or necessary for the conduct of the business of the Ex-ESG Company; (b) has filed any application with respect to any Intellectual Property that arises out of or relates to the business of the Ex-ESG Company and its Subsidiaries; (c) has any right to use any of the Owned Intellectual Property or any of the Intellectual Property used in the operation of the business of the Ex-ESG Company; (d) is a party to any transaction or Contract to which the Ex-ESG Company is a party or any of its assets are bound providing for any loans or advances by or to, or the lease of assets from or to, any such Person; or (e) is an officer or employee of, or owns, directly or indirectly, any material, non-passive interest in, any competitor, franchisee, vendor, supplier or customer of the Ex-ESG Company.

4.25
No Other Representations or Warranties

        Except for the representations and warranties contained in this Article IV, any certificate provided hereunder or any Contract entered into in connection with the transactions contemplated hereby, neither the Company nor any other Person on behalf of the Company makes any express or implied representation or warranty with respect to the Company or any of its Subsidiaries or any other information provided to Parent or Merger Sub in connection with the transactions contemplated by this Agreement, including information conveyed at management presentations, in virtual data rooms or in due diligence sessions, and without limiting the foregoing, including any estimates, projections, predictions or other forward-looking information. The Company acknowledges and agrees that, except as explicitly set forth in Article V, any certificate provided hereunder or any Contract entered into in connection with the transactions contemplated hereby, neither the Parent nor Merger Sub (or any of their respective officers, directors, employees or agents) make or have made any other representation or warranty, express or implied, at law or in equity with respect to the Parent or Merger Sub.


ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

        Except as set forth in the Parent Disclosure Schedule (it being understood and agreed that any information set forth in one section or subsection of the Parent Disclosure Schedule also shall be deemed to apply to each other section and subsection of this Agreement to which its applicability is reasonably apparent on its face), Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company as follows:

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5.01
Organization; Qualification

        Each of Parent and Merger Sub is a corporation duly organized and validly existing under the laws of Delaware and has the requisite corporate power and authority to conduct its business as it is now being conducted and to own, lease and operate its properties and assets in the manner in which its properties and assets are currently operated. Each of Parent and Merger Sub is duly qualified or licensed to do business and, to the extent applicable, is in good standing in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing has not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Parent's and Merger Sub's ability to consummate the transactions contemplated hereby, taken as a whole. The Parent Organizational Documents have been made available to the Company and are in full force and effect, and neither Parent nor Merger Sub, as applicable, is in violation of any of the provisions thereof, except where such failure or violation has not had, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Parent's and Merger Sub's ability to consummate the transactions contemplated hereby.

5.02
Authority Relative to Agreement

(a)
Each of Parent and Merger Sub has all necessary corporate power and authority to execute, deliver and perform its respective obligations under this Agreement to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement by Parent and Merger Sub, and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement, have been duly and validly authorized by all necessary corporate action by Parent and Merger Sub, and no other corporate action or proceeding on the part of Parent or Merger Sub is necessary to authorize the execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due authorization, execution and delivery of this Agreement by the Parties, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to Applicable Law (a) relating to bankruptcy, insolvency and the relief of debtors and (b) governing specific performance, injunctive relief and other equitable remedies

(b)
The Parent Board and the board of directors of Merger Sub have, by resolutions unanimously adopted thereby in accordance with the Parent's Certificate of Incorporation and Bylaws, (i) approved the execution, delivery and performance by the Parent and Merger Sub, as applicable of this Agreement and the transactions contemplated by this Agreement and (ii) determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of Parent and Merger Sub and their respective stockholders, as applicable. Parent, acting in its capacity as the sole stockholder of Merger Sub, has approved and adopted this Agreement.

5.03
No Conflict; Required Filings and Consents

(a)
Neither the execution and delivery of this Agreement by Parent and Merger Sub nor the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement will: (i) contravene, conflict with or violate any provision of the Parent Organizational Documents, (ii) assuming that the Consents, registrations, declarations, filings and notices specifically identified in this Section 5.03 have been obtained or made, conflict with or violate any Applicable Law applicable to Parent or Merger Sub or by which any property or asset of Parent or Merger Sub is bound or affected or (iii) violate, conflict with or result in any breach of any provision of, or loss of any benefit, or constitute a default (with or without notice or lapse of time, or both) under, give

40


    rise to any right of termination, acceleration or cancellation of or require the Consent of, notice to or filing with any third party pursuant to any of the terms or provisions of any Contract to which Parent or Merger Sub is a party or to or by which any property or asset of Parent or Merger Sub is bound or affected, or result in the creation of an Encumbrance upon any of the property or assets of Parent or Merger Sub, other than, in the case of clause (iii), any such conflict, violation, breach, default, termination, acceleration, cancellation or Encumbrance that would not reasonably be expected to, individually or in the aggregate, have a material adverse effect on Parent's or Merger Sub's ability to consummate the transactions contemplated by this Agreement.

(b)
No Consent of, registration, declaration or filing with or notice to any Governmental Authority is required to be obtained or made by or with respect to Parent or Merger Sub in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement, other than (i) applicable requirements of and filings with the SEC under the Exchange Act or the Securities Act, (ii) the filing of the Certificate of Merger with the Delaware Secretary of State, (iii) the Required Notifications, (iv) compliance with applicable rules and regulations of NASDAQ, and (v) such other Consents, registrations, declarations, filings or notices the failure of which to be obtained or made would not reasonably be expected to, individually or in the aggregate have a material adverse effect on Parent's or Merger Sub's ability to consummate the transactions contemplated by this Agreement.

(c)
There is no pending Proceeding or outstanding Order to which Parent, Merger Sub or any of their Affiliates is a party or by which Parent, Merger Sub or any of their Affiliates are bound that challenges the validity or propriety, or seeks to prevent, materially impair or materially delay, or would reasonably be expected to have the effect of preventing, impairing or materially delaying the consummation of the Merger.

5.04
Information Supplied

        None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub for inclusion or incorporation by reference in the Proxy Statement will, on the date the Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders of the Company or at the time of the Company Stockholder Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except, in each case, that no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference therein based on information supplied by or on behalf of the Company for inclusion or incorporation by reference therein.

5.05
Brokers

        No investment banker, broker or finder other than Citigroup Global Markets Inc., the fees and expenses of which will be paid or caused to be paid by Parent, is entitled to any investment banking, brokerage, finder's or similar fee or commission in connection with this Agreement or the transactions contemplated by this Agreement.

5.06
Sufficient Funds

        Parent has, and as of the Closing, will have sufficient funds to consummate the Merger, to pay the aggregate Merger Consideration and all fees and expenses related to the transactions contemplated by this Agreement and to pay all costs, fees and expenses related to the refinancing of any indebtedness of the Ex-ESG Company. The obligations of Parent and Merger Sub hereunder are not subject to any condition regarding Parent's, Merger Sub's or any other Person's ability to obtain financing for the Merger, the aggregate Merger Consideration or the other transactions contemplated by this Agreement.

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5.07
Share Ownership

        None of Parent, Merger Sub or any of their Affiliates has been, at any time during the three (3) years preceding the date of this Agreement, an "interested stockholder" of the Company, as defined in Section 203 of the DGCL. As of the date of this Agreement, none of Parent, Merger Sub or their respective Affiliates owns (directly or indirectly, beneficially or of record) any Company Common Stock and none of Parent, Merger Sub or any of their respective Affiliates holds any rights to acquire any Company Common Stock except pursuant to this Agreement.

5.08
No Other Representations or Warranties

        Except for the representations and warranties contained in this Article V, any certificate provided hereunder or any Contract entered into in connection with the transactions contemplated hereby, neither the Parent nor any Merger Sub nor any other Person on behalf of the Parent or any Merger Sub makes any express or implied representation or warranty with respect to the Parent or any of its Subsidiaries or any other information provided to the Company in connection with the transactions contemplated by this Agreement, including information conveyed at management presentations, in virtual data rooms or in due diligence sessions, and without limiting the foregoing, including any estimates, projections, predictions or other forward-looking information. The Parent acknowledges and agrees that, except as explicitly set forth in Article IV, any certificate provided hereunder or any Contract entered into in connection with the transactions contemplated hereby, neither the Company nor its Subsidiaries (or any of their respective officers, directors, employees or agents) make or have made any other representation or warranty, express or implied, at law or in equity with respect to the Company or its Subsidiaries.


ARTICLE VI
COVENANTS AND AGREEMENTS

6.01
Conduct of Business by the Company Pending the Merger

(a)
Between the date of this Agreement and the earlier of the Effective Time and the date on which this Agreement is terminated pursuant to Section 8.01, except (A) as may be required by Applicable Law, (B) as may be agreed in writing by Parent (which consent shall not be unreasonably withheld, delayed or conditioned), (C) as expressly required or expressly permitted pursuant to this Agreement or the ESG Documents, or (D) as set forth on Section 6.01(a) of the Company Disclosure Schedule, (x) subject to the restrictions set forth in clause (y) below, the Company shall, and shall cause its Subsidiaries to, conduct the business of the Company and its Subsidiaries in the ordinary course of business and in a manner consistent with past practice and, to the extent consistent therewith, use its reasonable best efforts to preserve its assets and business organization and maintain satisfactory relationships with material customers, suppliers, distributors, regulators, landlords and other business partners and (y) the Company shall not, and shall cause its Subsidiaries (other than, subject to Section 6.01(b) or as set forth below, KLX Energy and ESG Spin Co. and their Subsidiaries, as applicable) not to, directly or indirectly:

(i)
amend or otherwise change the Certificate of Incorporation or the Bylaws of the Company (or such equivalent organizational or governing documents of any of its Subsidiaries (other than KLX Energy and ESG Spin Co. and their Subsidiaries);

(ii)
adjust, split, combine, subdivide, reclassify, redeem, repurchase or otherwise acquire or amend the terms of the Company's or any of its Subsidiaries' (other than KLX Energy and ESG Spin Co. and their Subsidiaries) capital stock or other equity interests or any options, equity or equity-based compensation, warrants, convertible securities or other rights of any kind to acquire any shares of the Company's or any of its Subsidiaries' capital stock or other equity interests;

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    (iii)
    issue, sell, pledge, dispose, encumber or subject to any Encumbrance, grant, announce, transfer, deliver, dispose or authorize the same with respect to, any shares of its or the Company's or its Subsidiaries' (other than KLX Energy and ESG Spin Co. and their Subsidiaries) capital stock or other equity interests or other securities (including "phantom" equity), or any options, equity or equity-based compensation, warrants, convertible securities or other rights of any kind to acquire any shares of the Company's or any of its Subsidiaries' (other than KLX Energy and ESG Spin Co. and their Subsidiaries) capital stock or other equity interests or other securities; provided, however, that the Company may issue shares upon the settlement of any Company RSU Award or Company PSU Award outstanding as of the date of this Agreement and in accordance with this Agreement and the applicable Company RSU Award or Company PSU Award, as made available to Parent;

    (iv)
    establish a record date for, declare, set aside, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise or enter into any voting agreement, with respect to the Company's or any of its Subsidiaries' capital stock or other equity interests, other than cash dividends and distributions paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary (other than KLX Energy, ESG Spin Co. and their respective Subsidiaries) of the Company; provided, however, for the avoidance of doubt, that nothing in this Section 6.01(a)(iv) shall prohibit the Company from consummating the Distribution;

    (v)
    (A) except to the extent required by Applicable Law or (1) in accordance with the terms of existing employment or other compensation agreements as in effect as of the date hereof or made available to Parent and (2) not more in the aggregate for all such increases than the aggregate level of average merit compensation increase for the years 2015 through 2017, grant or announce any increase in the salaries, bonuses, severance, termination pay or other compensation and benefits payable by the Company or any of its Subsidiaries to any of the current or former employees, directors or other individual service providers of the Company or any of its Subsidiaries; (B) hire any new employees or terminate any existing employees (other than for cause) except in the ordinary course of business consistent with past practice, with respect to employees with an annual base salary not to exceed $250,000 (or who would receive such base salary if hired), (C) except as required to ensure that any Company Benefit Plan is not then out of compliance with Applicable Law or as part of the Company's annual health and welfare plan enrollment process, enter into or adopt any new, or increase benefits under or renew, amend or terminate any existing, Company Benefit Plan (including any plan that would be a Company Benefit Plan if in effect as of the date hereof);

    (vi)
    (A) acquire (including by merger, consolidation or acquisition of stock or assets or otherwise) any business or Person or any division thereof unless (x) such acquisition is from an unaffiliated third party and is solely for the benefit of the Ex-ESG Company (and not KLX Energy or ESG Spin Co. or any of the respective Subsidiaries or the ESG Business), and (y) the value of such stock, assets, business, Person or such division does not exceed $35,000,000 individually or $50,000,000 in the aggregate, or (B) enter into or acquire any interest in any joint venture or similar agreement or arrangement with an unaffiliated third party, unless (x) such interest or similar agreement or arrangement is solely for the benefit of the Ex-ESG Company or, to the extent that any such agreement or arrangement is entered into by KLX Energy or ESG Spin Co. or any of their respective Subsidiaries or the ESG Business, such agreement or arrangement does not involve the acquisition by the Company of equity interests in any Person, and (y) the value of such interest does not exceed $35,000,000 individually or $50,000,000 in the aggregate;

    (vii)
    sell, transfer, lease, sell and lease back, license, mortgage, incur any Encumbrance (other than Permitted Encumbrances) on or otherwise transfer or abandon any material portion of the

43


      assets, business, properties or rights of the Company or any of its Subsidiaries, except (A) sales of inventory in the ordinary course of business and consistent with past practice, (B) transfers among the Company and its Subsidiaries (other than non-cash transfers to KLX Energy, ESG Spin Co. or any of their respective Subsidiaries) or (C) disposition of obsolete assets or expired inventory in the ordinary course of business and consistent with past practice;

    (viii)
    (A) other than drawings on existing credit facilities pursuant to the terms of such facilities as in effect on the date hereof, incur or otherwise become liable for any Indebtedness or guarantee, assume or endorse any Indebtedness or other obligations of any Person (except for indebtedness for cash borrowed from the Company or its wholly owned Subsidiaries) for an amount in excess of $1,000,000, or (B) make any loans, advances, capital contributions to, or investments in, any other Person (other than in the form of cash to or in the Company or any direct or indirect wholly owned Subsidiary of the Company) in excess of $1,000,000;

    (ix)
    terminate, agree to any material amendment or modification of, renew (other than in the ordinary course of business, consistent with past practice in a manner that is not materially adverse to the Ex-ESG Company) or waive any material rights under any Company Material Contract or Company Material Government Contract or enter into or agree to enter into any Contract that, if entered into prior to the date hereof, would be a Company Material Contract or Company Material Government Contract; provided that the foregoing shall not limit the Company's ability to (A) renew any Company Material Contract that is on terms that are not materially less favorable to the Company than the current Company Material Contract, (B) accept and agree to any modification to a Company Government Contract independently proposed by any Governmental Authority (or higher-tier contractor as a result of a modification proposed to such higher-tier contractor by any Governmental Authority) or (C) enter into a Company Material Government Contract issued as a result of a Company Government Bid in the ordinary course of business consistent with past practice;

    (x)
    make any material change to its methods of accounting, except as required by GAAP (or any interpretation thereof), Regulation S-X of the Exchange Act or a Governmental Authority or quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization);

    (xi)
    make, authorize or enter into any capital expenditure outside of the ordinary course of business consistent with past practice;

    (xii)
    write up, write down or write off the book value of any material assets, except to the extent required by GAAP applied in a manner consistent with the Company's audited financial statements for the year ended January 31, 2018;

    (xiii)
    commence, compromise, settle or agree to settle any claim, investigation or Proceeding, other than settlements that result solely in (x) monetary obligations involving payment by the Company or any of its Subsidiaries of the amounts reserved in accordance with GAAP with respect to such claim, investigation or Proceeding on the Company's consolidated financial statements for the year ending January 31, 2018, (y) obligations of KLX Energy or ESG Spin Co., or (z) as permitted pursuant to Section 6.13;

    (xiv)
    except as required pursuant to the terms of the B/E Tax Agreement, (A) make, rescind or change any material Tax election or change any annual Tax accounting period or method of Tax accounting; (B) file any amended material Tax Return; (C) settle or compromise any audit or Proceeding relating to a material amount of Taxes; (D) agree to an extension or waiver of the statute of limitations with respect to a material amount of Taxes; (E) enter into any "closing agreement" within the meaning of Section 7121 of the Code (or any similar provision

44


      of state, local or non-U.S. Law) with respect to any material Tax; or (G) surrender any right to claim a material Tax refund;

    (xv)
    adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;

    (xvi)
    agree to any provision that (A) would impose a non-competition or exclusivity obligation on the Surviving Corporation, Parent or any of their respective Affiliates or Subsidiaries after the Effective Time or limits in any respect the ability of the Ex-ESG Company or would limit in any respect the ability of Parent or any of its Affiliates after the Effective Time, to operate its business in any geographic area, (B) would, after the Effective Time, restrict the Company, Parent or any of their respective Affiliates or Subsidiaries from soliciting, hiring, engaging, retaining or employing any Person's current or former employees in any respect (other than customary non-solicitation obligations undertaken in the ordinary course of business consistent with past practice) or (C) restricts the ability of the Ex-ESG Company or its Affiliates to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or businesses;

    (xvii)
    fail to keep in force any material insurance policy or replacement providing insurance coverage with respect to the assets, operations and activities of the Company and its Subsidiaries as are currently in effect;

    (xviii)
    enter into any new line of business outside its existing business segments;

    (xix)
    enter into, materially amend or terminate any Contract that would reasonably be expected to involve annual payments by the Company or its Subsidiaries in excess of $25,000,000 in the twelve months ended January 31, 2019;

    (xx)
    engage in any promotional sale, discount or other activity with customers outside the ordinary course of business consistent with past practice designed to accelerate to pre-Closing periods material sales that, based on past practice, would otherwise occur in post-Closing periods;

    (xxi)
    materially amend or terminate the Company ESPP or any Company Equity Plan;

    (xxii)
    make, or cause or permit to be made, any election under Section 965(h) of the Code; or

    (xxiii)
    agree or commit to, enter into any agreement to do, or adopt any resolutions in support of, any of the foregoing.

(b)
The Company and its Subsidiaries shall cause KLX Energy, ESG Spin Co., their respective Subsidiaries and, in the event an ESG Sale Election is made, use reasonable best efforts to cause the purchaser of the ESG Business under the ESG Purchase Agreement to (i) comply with their respective reimbursement obligations under the Distribution Agreement, or the applicable ESG Purchase Agreement, as the case may be, in respect of a negative balance in the FCF Net Amount and (ii) not permit any of the terms of the ESG Sale to be or reasonably expected to be more adverse to Parent or the Surviving Corporation or any of their respective Subsidiaries in comparison to the most closely comparable corresponding terms individually, or in comparison to all terms taken as a whole, of the transactions contemplated by the Agreed Form Spin-Off Agreements.

(c)
No earlier than three Business Days prior to the ESG Spin Distribution, the Company shall contribute, transfer or otherwise pay to ESG Spin Co. the ESG Cash.

(d)
The Company shall not, and shall cause its Subsidiaries, KLX Energy, ESG Spin Co. and their respective Subsidiaries not to, terminate, amend, modify or waive any provision of any Agreed Form Spin-Off Agreements without the prior written consent of Parent; provided that such consent shall not be unreasonably withheld, conditioned or delayed so long as (i) any such termination,

45


    amendment, modification or waiver is not more adverse to KLX Energy, ESG Spin Co., the Surviving Corporation or any of their respective Subsidiaries in comparison to the most closely comparable corresponding terms individually, or in comparison to all terms taken as a whole, contained in the Agreed Form Spin-Off Agreements, and (ii) no transactions contemplated thereby would (A) require any amendment, supplement or modification to the Company Proxy Statement or any Other Required Company Filing other than de minimis or solely ministerial amendments, supplements or modifications or other than amendments to cure any ambiguity, omission, mistake, defect or inconsistency or (B) require a Company Stockholder Approval other than the Company Stockholder Approval first received in accordance with Section 6.05(d).

(e)
The Company shall be permitted to enter into, terminate, amend, modify or waive any provision of any of the Ancillary Spin-Off Agreements so long as (i) such termination, amendment, modification or waiver, as applicable, is not adverse to Parent, the Surviving Corporation or any of their respective Subsidiaries and (ii) any transactions contemplated thereby would (A) not require any amendment, supplement or modification to the Company Proxy Statement or any Other Required Company Filing other than de minimis or solely ministerial amendments, supplements or modifications other than amendments to cure any ambiguity, omission, mistake, defect or inconsistency or (B) not require a Company Stockholder Approval other than the Company Stockholder Approval first received in accordance with Section 6.05(d).

(f)
The Company shall, and shall cause its Subsidiaries to, comply in all material respects with all obligations and covenants under the Spin-Off Agreements. At all times prior to the ESG Termination Date and, if directed by Parent, thereafter until termination of this Agreement in accordance with Section 8.01, the Company shall, and shall cause its Subsidiaries to, use reasonable best efforts to cause the Spin-Off to occur as promptly as reasonably practicable, in accordance with the terms of the Agreed Form Spin-Off Agreements, including (A) complying with all obligations pursuant to Section 6.02, and (B) using reasonable best efforts to satisfy on a timely basis all conditions precedent to the obligations to effect the Spin-Off and (C) at the reasonable request of Parent, fully enforcing rights and obligations under the Spin-Off Agreements and not taking any action (other than any action expressly required hereunder or by the Spin-Off Agreements) that would or would reasonably be expected to increase the time required for, or reduce the Company's ability to cause, the Spin-Off to occur in any material respect. The Company shall, and shall cause its Representatives to, keep Parent reasonably informed on a reasonably prompt basis and in reasonable detail of material developments in connection with the Spin-Off, including by (i) furnishing Parent with complete, correct and executed copies of the Agreed Form Spin-Off Agreements and any material Ancillary Spin-Off Agreement, (ii) giving Parent prompt written notice of any material default or material breach (or any event that, with or without notice, lapse of time or both, would give rise to any material default or material breach) under the Agreed Form Spin-Off Agreements which the Company becomes aware, and (iii) responding to Parent's reasonable requests for updates on the status of the Spin-Off. To the extent requested by the Company, Parent and Merger Sub shall use reasonable best efforts to cooperate with the Company in its efforts to cause the consummation of the Distribution.

(g)
Notwithstanding anything to the contrary in this Section 6.01, the Parties hereto acknowledge and agree that nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company's operations (including for purposes of the HSR Act and any other applicable Antitrust Laws) prior to the consummation of the Merger. Prior to the Effective Time, the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision over its operations.

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6.02
Preparation of Proxy Statement; Company Stockholder Meeting; ESG Registration Statement

(a)
In connection with the Company Stockholder Meeting, as soon as reasonably practicable following the date of this Agreement (and in any event no later than 20 Business Days thereafter), the Company shall prepare and file the Company Proxy Statement with the SEC. If the Company determines that it is required, pursuant to Applicable Law, to file any document other than the Proxy Statement with the SEC in connection with the Merger (such document, as amended or supplemented, an Other Required Company Filing), then the Company shall promptly prepare and file such Other Required Company Filing with the SEC. Each of Parent and Merger Sub will furnish the Company the information relating to it that is required to be set forth in the Company Proxy Statement so that the Company Proxy Statement, at the date it is first mailed to the Company's stockholders or at the time of the Company Stockholder Meeting, shall not contain any misstatement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case, in respect of statements related to Parent and Merger Sub. The Company shall use its reasonable best efforts to cause the Company Proxy Statement and any Other Required Company Filing at the date that it (and any amendment or supplement thereto) is first published, sent or given to the stockholders of the Company and at the time of the Company Stockholder Meeting, to comply as to form and substance in all material respects with the requirements of the Exchange Act and, the rules and regulations promulgated thereunder and the rules of the SEC and NASDAQ and, on each such applicable date, neither the Company Proxy Statement nor any Other Required Company Filing will contain any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that no covenant or representation is made with respect to any information provided by Parent, Merger Sub, or any of their affiliates for inclusion or incorporation by reference in the Proxy Statement or any Other Required Company Filings. The Company shall use its reasonable best efforts to resolve, and each Party agrees to consult and cooperate with the other Party in resolving, all SEC comments with respect to the Company Proxy Statement and any Other Required Company Filing as promptly as reasonably practicable after receipt thereof and to cause the Company Proxy Statement and any Other Required Company Filing in definitive form to be cleared by the SEC and mailed to the Company's stockholders as promptly as reasonably practicable following filing with the SEC. Each of Parent, Merger Sub, and the Company agrees to correct any information (and to notify the other Parties of any fact, change, or event underlying such correction) provided by it for use in the Company Proxy Statement and any Other Required Company Filing so that the Company Proxy Statement and any Other Required Company Filing would not include a misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and the Company shall promptly prepare and mail to its stockholders, with Parent's written approval, which approval shall not be unreasonably withheld, conditioned or delayed, an amendment or supplement setting forth such correction and promptly file any required amendment of, or supplement to, such correction with the SEC and, as required by Applicable Law, disseminate the information contained in such amendment or supplement to the Company's stockholders.

(b)
As soon as reasonably practicable following the date of this Agreement, the Company shall prepare and file the ESG Registration Statement with the SEC. If the Company determines that it is required, pursuant to Applicable Law, to file any document other than (or in addition to) the ESG Registration Statement with the SEC in connection with the Spin-Off (such document, as amended or supplemented, an Other ESG Required Company Filing), then the Company shall promptly prepare and file such Other ESG Required Company Filing with the SEC. The Company shall cause the ESG Registration Statement and any Other ESG Required Company Filing at the date that it (and any amendment or supplement thereto) is first declared effective by the SEC,

47


    (i) to comply as to form and substance in all material respects with the requirements of the Exchange Act and, the rules and regulations promulgated thereunder and the rules of the SEC and NASDAQ and (ii) not to contain any untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company shall use its reasonable best efforts to resolve all SEC comments with respect to the ESG Registration Statement and any Other ESG Required Company Filing and to cause the ESG Registration Statement and any Other ESG Required Company Filing in definitive form to be cleared by the SEC, in each case as promptly as reasonably practicable. Notwithstanding anything to the contrary in this Agreement, the Company has the sole right to control and direct all filings with the SEC relating to the Spin-Off (including the ESG Registration Statement) and all strategy, communications and correspondence in connection with the review by the SEC of the ESG Registration Statement and the Other ESG Required Company Filings.

(c)
The Company shall as soon as reasonably practicable: (i) notify Parent of the receipt of any comments from the SEC for any amendment to the Company Proxy Statement, any Other Required Company Filing, the ESG Registration Statement or any Other ESG Required Company Filing, or for additional information; and (ii) provide Parent with copies of all written correspondence between the Company and its Subsidiaries and its and their Representatives, on the one hand, and the SEC, on the other hand, with respect to the Company Proxy Statement or any Other ESG Required Company Filing. Notwithstanding the foregoing, prior to filing or mailing the Company Proxy Statement, any Other Required Company Filing, the ESG Registration Statement or any Other ESG Required Company Filing (or any amendments thereto) or responding to any comments of the SEC with respect thereto, the Company shall, to the extent reasonably practicable, (x) provide Parent a reasonable opportunity to review the Company Proxy Statement, Other Required Company Filing, the ESG Registration Statement or any Other ESG Required Company Filing or any response thereto (including the proposed final version of the Company Proxy Statement, Other Required Company Filing, the ESG Registration Statement or any Other ESG Required Company Filing) and (y) shall consider in good faith all comments thereto reasonably proposed by Parent.

(d)
The Company shall, as soon as reasonably practicable after the date on which the SEC confirms that it has no further comments on the Company Proxy Statement (the SEC Clearance Date), in accordance with Applicable Law and the Bylaws, establish a record date for, duly call, give notice of, convene and hold a special meeting of the Company's stockholders (including any adjournment or postponement thereof, the Company Stockholder Meeting) for the purpose of obtaining the Company Stockholder Approval. The Company Stockholder Approval shall, without the prior written consent of Parent (which shall not be unreasonably withheld, conditioned or delayed), be the only non-procedural matter proposed to be acted on by the Company's stockholders at the Company Stockholder Meeting. The Company shall file the definitive Company Proxy Statement with the SEC and cause the definitive Company Proxy Statement to be mailed to the holders of the Company stock as of the record date established for the Company Stockholder Meeting as promptly as practicable (and in any event within ten (10) Business Days) after the SEC Clearance Date and in advance of such meeting; provided that if the SEC has failed to affirmatively notify the Company by the date that is ten (10) calendar days after the initial filing of the Company Proxy Statement with the SEC that it will or will not be reviewing the Company Proxy Statement, then such date shall be the SEC Clearance Date. Except to the extent that the Company Board shall have effected a Company Adverse Recommendation Change as expressly permitted by Section 6.05, the Company Proxy Statement shall include the Company Recommendation. Subject to Section 6.05, the Company shall use reasonable best efforts to solicit the Company's stockholders' proxies in favor of the adoption of this Agreement and approval of the Merger and the other Transactions. The Company shall keep Parent and Merger Sub updated with respect to proxy

48


    solicitation results as and when requested by Parent or Merger Sub. Once the Company Stockholder Meeting has been called and noticed, the Company shall not postpone or adjourn the Company Stockholder Meeting without the written consent of Parent (other than: (A) in order to obtain a quorum of its stockholders, (B) to allow reasonable additional time after the filing and mailing of any supplemental or amended disclosures to the Company Proxy Statement, or (C) for compliance with Applicable Law or an Order from the SEC), and in no event more than twice (without the written consent of Parent, which shall not be unreasonably withheld, delayed or conditioned). In the event that the Company Stockholder Meeting as originally called is for any reason adjourned or postponed or otherwise delayed, the Company agrees that unless Parent shall have otherwise approved in writing, it shall implement such postponement or adjournment or other delay in such a way that the Company does not establish a new record date for the Company Stockholder Meeting, as so adjourned, postponed or delayed, except as required by Applicable Law. If the Company Board makes a Company Adverse Recommendation Change as expressly permitted pursuant to Section 6.05, it will not alter the obligation of the Company to submit the Company Stockholder Approval to Company's stockholders at the Company Stockholder Meeting to consider and vote upon, unless this Agreement shall have been terminated in accordance with its terms prior to the Company Stockholder Meeting.

6.03
Regulatory Authorizations and Consents; Efforts

(a)
The Company and Parent agree that, as of the date hereof, the only notifications and approvals required to be filed and obtained under Antitrust Laws in connection with the Merger and the other transactions contemplated hereby are the filings and corresponding approvals in the jurisdictions set out in Annex 6.03(a) (such notifications and approvals, together with any such notifications and approvals arising after the date hereof (it being understood that such notifications and approvals arising after the date hereof shall not be deemed to be a condition to any Party's obligations to consummate the transactions contemplated hereby), the Required Notifications).

(b)
Subject to clause (d) below, each of the Parties will use its reasonable best efforts to cooperate with each other and to take, or cause to be taken, or do, or cause to be done, all things necessary, proper or advisable to satisfy, or cause to be satisfied, all conditions to the obligations of the Parties under this Agreement over which it has control or influence, to obtain all other necessary actions, waivers, consents, licenses, permits and registrations (or transfers of the foregoing) and approvals from Governmental Authorities or any other Person (it being understood that such actions, waivers, consents, licenses, permits and registrations shall not be deemed to be a condition to any Party's obligations to consummate the transactions contemplated hereby unless otherwise set forth in Article VII), and to cause the Merger to be consummated as promptly as practicable in accordance with the terms hereof. In addition, each of the Parties shall use its reasonable best efforts to defend through litigation on the merits any claim asserted in court by any Party in order to avoid entry of, or to have vacated or terminated, any Order of any Governmental Authority (whether temporary, preliminary or permanent) that would prevent or materially delay the consummation of the Closing.

(c)
The Company and Parent shall prepare and file any filing required under the HSR Act as promptly as practicable, but in any event no later than ten (10) Business Days after the date of this Agreement, and Parent shall prepare and file all other Required Notifications as soon as reasonably practicable after the date of this Agreement. In no event will any Party request or otherwise seek early termination of any applicable waiting periods under applicable Antitrust Law without the other Party's prior written consent.

(d)
Notwithstanding Parent's covenants otherwise set out in this Section 6.03, Parent will not be required to propose, negotiate, commit to or effect, by consent decree, hold separate orders, or otherwise regarding, (i) the sale, divestiture, license or disposition, in whole or in part of, or suffer any restriction on the operation of, Parent's or its Subsidiaries' assets, properties or businesses; or

49


    (ii) the sale, divestiture, license, or disposition, in whole or part of the assets, properties or businesses to be acquired by Parent pursuant hereto.

(e)
To the extent permitted by Applicable Law, each Party shall promptly notify the other of any material communication (including oral communications) it or any of its Affiliates receives from any Governmental Authority to the extent relating to this Agreement and the Transactions and permit the other to review in advance any proposed material communication by such Party to any Governmental Authority. Neither of the Parties shall participate in or agree to participate in any material meeting with any Governmental Authority in respect of any filings, investigation (including any settlement of any such investigation), litigation or other inquiry related to the Required Notifications unless it consults with the other in advance and, to the extent permitted by such Governmental Authority, gives the other the opportunity to attend and participate at such meeting. To the extent permitted by Applicable Law, each Party will coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other may reasonably request in connection with the Required Notifications; provided that the disclosing Party may, where appropriate, limit disclosure of any information to those individuals acting as outside counsel for the other Parties, and such counsel will not disclose such information to such other Parties without the knowledge and consent of Parent or the Company, as applicable). Notwithstanding anything to the contrary in this Agreement, Parent has the sole right to control and direct all antitrust filings and antitrust strategy in connection with review of the Merger and other transactions contemplated hereby by any Governmental Authority, or any litigation by, or negotiations with, any antitrust authority or other Person relating to the transaction under the HSR Act or any other Antitrust Law and will take the lead in all meetings, discussions, and communications with any Governmental Authority relating to obtaining antitrust approval for the Transaction, provided that Parent will consult with and consider in good faith the comments of the Company in connection with any filing, communication, defense, litigation, negotiation, or strategy. Subject to this Section 6.03(e) and the confidentiality provisions of the Confidentiality Agreement, the Parties will provide each other with copies of all material correspondence, filings or communications between them or any of their Representatives, on the one hand, and any Governmental Authority or members of its staff, on the other hand, with respect to this Agreement and the Transactions; provided that materials may be redacted by any Party: (i) as necessary to comply with Applicable Law, or (ii) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.

6.04
Access to Information; Confidentiality

        Until the Closing and upon reasonable advance written notice from Parent, the Company will allow Parent and its Representatives reasonable access, at Parent's expense, during normal business hours, under the supervision of personnel of the Company, its Affiliates or their respective Representatives and in such a manner as not to unreasonably interfere with the normal operations of the business of the Company to (a) such materials and information (including Contracts, properties, books, Tax Returns, work papers and records) about the Ex-ESG Company as Parent may reasonably request and (b) specified members of management of the business of the Ex-ESG Company as the Parties may reasonably agree, and which shall in any event include the individuals set forth on Schedule 6.04; provided, however, that except as required by Applicable Law, Parent shall not initiate any one-on-one discussion with any employee of the Company or its Subsidiaries regarding such employees potential compensation following the Closing without the prior written consent of the Company (not to be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, the Company will not be required to disclose any information to Parent or its Representatives if such disclosure would be reasonably likely, after consultation with counsel, to: (i) result in the loss of any attorney-client or other legal privilege (it being agreed that the Company will notify Parent of the fact that it is withholding such information on such basis and will provide a description of such information,

50


and shall use reasonable best efforts to allow disclosure of such information in a manner that does not result in the loss of any such privilege, including entering into a joint defense agreement or other agreements or arrangements) or (ii) contravene any Applicable Law (including Antitrust Laws). In no event shall Parent be permitted to conduct any invasive testing of the Company Owned Real Property or the Company Leased Real Property or the building, or improvements thereon, including sampling of soil, sediment, groundwater, surface water or building material. Parent will, and will cause its Representatives to, hold all information so obtained in accordance with the terms of the Confidentiality Agreement. No investigation or access permitted pursuant to this Section 6.04 shall affect or be deemed to modify or cure any breach of, or inaccuracy in, any representation or warranty made by the Company hereunder.

6.05
No Solicitation by the Company

(a)
From the date of this Agreement until the earlier of the Effective Time and the termination of this Agreement in accordance with Section 8.01, except as expressly permitted by Section 6.05(b) or Section 6.05(d) and except as related solely to the Spin-Off, the transactions contemplated by the ESG Purchase Agreement or the ESG Business or any of the assets or operations thereof, (i) the Company shall cease, shall cause its Subsidiaries to cease and shall instruct and cause its officers, directors and other Representatives to cease, and cause to be terminated all existing discussions, negotiations, solicitations, encouragement and communications with any Persons with respect to any Company Acquisition Proposal (other than the transactions contemplated by this Agreement with Parent and Merger Sub); (ii) the Company shall not, and shall not authorize or permit any of its Representatives to, directly or indirectly through another Person, (A) engage in any communication or initiate, solicit, facilitate or encourage any action that would constitute or would reasonably be expected to lead to a Company Acquisition Proposal, (B) engage in or continue negotiations or discussions with, or provide any information or data to, any Person (other than Parent or any of its Affiliates or Representatives) relating to or that would reasonably be expected to lead to any Company Acquisition Proposal, (C) approve, endorse, recommend, execute or enter into any Alternative Acquisition Agreement or (D) resolve or agree to do any of the foregoing and (iii) the Company shall, within one (1) Business Day of the date of this Agreement and thereafter, terminate all access by third parties to any data room (virtual or actual) containing any of the Company's information relating to the Ex-ESG Company and request the destruction or return of all non-public information previously provided by or on behalf of the Company, any of its Subsidiaries or their Representatives to any and all such third parties.

(b)
Notwithstanding the foregoing, at any time prior to receiving the Company Stockholder Approval, if the Company receives a bona fide written Company Acquisition Proposal that did not result directly or indirectly from a breach of Section 6.05(a) (other than breaches thereof that are inadvertent, de minimis and not intended to result in a Company Acquisition Proposal), then the Company may: (i) contact the Person who has made such Company Acquisition Proposal in order to clarify the terms of such Company Acquisition Proposal so that the Company Board (or any committee thereof) may inform itself about such Company Acquisition Proposal, (ii) furnish information concerning its business, properties or assets to such Person, but only pursuant to a confidentiality agreement with confidentiality terms that are not less favorable to the Company than those contained in the Confidentiality Agreement and (iii) negotiate and participate in discussions and negotiations with such Person concerning such Company Acquisition Proposal, in the case of clauses (i), (ii) and (iii), if (x) the Company Board determines in good faith (after consultation with outside financial advisors and legal counsel) that such Company Acquisition Proposal constitutes, or could reasonably be expected to lead to or result in, a Superior Proposal and (y) the Company Board determines in good faith (after consultation with outside financial advisors and legal counsel) that the failure to take such action would be inconsistent with its fiduciary duties under Applicable Law. The Company (A) shall promptly (and in any case within

51


    twenty-four (24) hours) provide Parent notice of the receipt of any Company Acquisition Proposal and any confidentiality agreement entered into with any third party, and shall disclose the identity of the third party (or parties) and the terms of such Company Acquisition Proposal (including, in the case of written terms, copies of any Alternative Acquisition Agreement and materials containing the material terms of such Alternative Acquisition Agreement and, in the case of oral terms, a reasonable description of the material terms thereof), (B) shall promptly (and in any case within twenty-four (24) hours) make available to Parent copies of all information of the Company and the same access provided by the Company to such third party but not previously made available to Parent, and (C) shall keep Parent informed on a reasonably prompt (and at Parent's request, which shall not be more frequently than daily) basis of the status and material details of (including amendments and proposed amendments to and the negotiations or discussion of) any such Company Acquisition Proposal, or such other inquiry, offer or proposal. Notwithstanding the foregoing, the Company shall not, shall cause its Subsidiaries not to and shall instruct and cause its officers, directors and other Representatives not to, provide any commercially sensitive non-public information to any competitor of the Company in connection with the actions permitted by this Section 6.05, except in a manner consistent with the Company's past practices in dealing with the disclosure of such information in the context of considering Company Acquisition Proposals prior to the date of this Agreement.

(c)
Except as expressly permitted by Section 6.05(d) or Section 6.05(e), neither the Company Board nor any committee thereof shall (i) withdraw, qualify, withhold or modify, fail to make, or publicly propose to withdraw, qualify, withhold or modify, the Company Recommendation (ii) adopt, approve or recommend or publicly propose to adopt, approve or recommend any Company Acquisition Proposal, Alternative Acquisition Agreement or Superior Proposal, (iii) fail to recommend against any tender offer or exchange offer for shares of Company Common Stock within ten (10) Business Days after commencement of such offer, (iv) approve or recommend or publicly propose to adopt or recommend any Company Acquisition Proposal or Superior Proposal or fail to include the Company Recommendation in the Company Proxy Statement, (v) fail to publicly reaffirm the Company Recommendation within three (3) Business Days after receipt of a written request by Parent to provide such affirmation, or (vi) adopt or approve, or publicly propose to adopt or approve, or allow the Company to execute or enter into, any Contract, arrangement or understanding that reflects, or would reasonably be expected to lead to, a Company Acquisition Proposal or would require the Company to abandon or terminate the Merger or the other transactions contemplated hereby (an Alternative Acquisition Agreement) (any action described in clauses (i) through (vi) of this sentence being referred to as a Company Adverse Recommendation Change).

(d)
If, at any time after the date of this Agreement and prior to the receipt of the Company Stockholder Approval, the Company Board first receives a Company Acquisition Proposal that did not result directly or indirectly from a breach of Section 6.05(a) (other than breaches thereof that are inadvertent, de minimis and not intended to result in a Company Acquisition Proposal), that is not withdrawn, and that the Company Board determines in good faith (after consultation with outside financial advisors and legal counsel) constitutes a Superior Proposal, the Company Board may cause the Company to terminate this Agreement pursuant to Section 8.01(c)(ii) and simultaneously enter into a definitive Alternative Acquisition Agreement in respect of such Superior Proposal if: (A) the Company Board has determined in good faith (after consultation with outside financial advisors and legal counsel) that the failure to take such action would be inconsistent with its fiduciary duties under Applicable Law; (B) the Company has previously notified Parent in writing that it intends to terminate this Agreement and provided Parent an unredacted copy of the proposed definitive Alternative Acquisition Agreement between the Company and the Person making such Superior Proposal; (C) for a period of four (4) Business Days following its compliance with clause (B) of this Section 6.05(d), the Company shall have

52


    discussed and negotiated in good faith and made the Company's Representatives available to discuss and negotiate in good faith (in each case to the extent Parent desires to negotiate) with Parent's Representatives any proposed modifications to the terms and conditions of this Agreement or the transactions contemplated by this Agreement so that the failure to take such action would no longer be inconsistent with the Company Board's fiduciary duties under Applicable Law (it being understood and agreed that any amendment to any material term or condition of any Superior Proposal shall require a new notice and a new negotiation period that shall expire on the later to occur of (1) three (3) Business Days following delivery of such new notice from the Company to Parent and (2) the expiration of the original four (4) Business Day period described in this clause (C); and (D) no earlier than the end of such negotiation period, the Company Board shall have determined in good faith, after considering the terms of any proposed amendment or modification to this Agreement, that the Company Acquisition Proposal that is the subject of the notice described in clause (B) above still constitutes a Superior Proposal.

(e)
Other than in connection with a Superior Proposal (which shall be subject to Section 6.05(d) and shall not be subject to this Section 6.05(e)), prior to obtaining the Company Stockholder Approval, the Company Board may take any action in response to an Intervening Event prohibited by clause (i) of Section 6.05(c), only if (i) the Company Board determines in good faith (after consultation with outside financial advisors and legal counsel) that the failure to take such action would be inconsistent with its fiduciary duties under Applicable Law, (ii) the Company has notified Parent in writing that it intends to effect such a Company Adverse Recommendation Change pursuant to this Section 6.05(e) and the facts underlying the Company Board's determination that an Intervening Event has occurred and the facts underlying the reason for the Company Adverse Recommendation Change, (iii) for a period of four (4) Business Days following the notice delivered pursuant to clause (ii) of Section 6.05(e), the Company shall have discussed and negotiated in good faith and made the Company's Representatives available to discuss and negotiate in good faith (in each case to the extent Parent desires to negotiate), with Parent's Representatives any proposed modifications to the terms and conditions of this Agreement or the transactions contemplated by this Agreement so that the failure to take such action would no longer be inconsistent with the Company Board's fiduciary duties under Applicable Law (it being understood and agreed that any material change to the facts and circumstances relating to an Intervening Event shall require a new notice and a new negotiation period that shall expire on the later to occur of (1) three (3) Business Days following delivery of such new notice from the Company to Parent and (2) the expiration of the original four (4) Business Days period described in this clause (iii) above) and (iv) no earlier than the end of such negotiation period, the Company Board shall have determined in good faith (after consultation with outside financial advisors and legal counsel), after considering the terms of any proposed amendment or modification to this Agreement, that the failure to take such action would still be inconsistent with its fiduciary duties under Applicable Law.

(f)
Nothing contained in this Agreement shall prohibit the Company or the Company Board from (i) disclosing to its stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, or from issuing a "stop, look and listen" statement pursuant to Rule 14d-9(f) of the Exchange Act pending disclosure of its position thereunder or (ii) making any disclosure to its stockholders if the Company Board determines in good faith (after consultation with outside legal counsel) that the failure of the Company Board to make such disclosure would be inconsistent with its fiduciary duties under Applicable Law; provided, however, that (A) in no event shall this Section 6.05(f) affect the obligations specified in Section 6.05(d) or Section 6.05(e) and (B) any such disclosure (other than issuance by the Company of a "stop, look and listen" pursuant to Rule 14d-9(f) of the Exchange Act or similar communication to the stockholders of the Company or a factually accurate public statement by the Company that only describes the Company's receipt of a Company Acquisition Proposal and the operation of this Agreement with

53


    respect thereto) that addresses or relates to the approval, recommendation or declaration of advisability by the Company Board with respect to this Agreement or a Company Acquisition Proposal shall be deemed to be a Company Adverse Recommendation Change.

(g)
Notwithstanding the foregoing, nothing in this Section 6.05 shall in any way limit or prohibit any action taken by the Company in furtherance of its efforts to consummate the Distribution, including holding discussions, negotiations and communications with, or providing non-public information unrelated to the Ex-ESG Company to, any Persons in connection with the Distribution (including to potential financing sources) and in connection with the solicitation of offers for an ESG Sale prior to the ESG Election Date.

(h)
The Company agrees (i) not to release or permit the release of any Person from, or to waive or permit the waiver or termination of any provision of, any confidentiality, standstill or similar agreement (or any standstill or confidentiality provision of any other contract or agreement) to which any of the Company or any Subsidiary of the Company is a party or any "moratorium," "control share acquisition," "fair price," "interested stockholder," "affiliate transaction," "business combination," or other antitakeover Contract or Applicable Law, and the Company will use its reasonable best efforts to enforce or cause to be enforced to the fullest extent permitted by Applicable Law each such agreement or Applicable Law and (ii) any breach of the provisions of this Section 6.05 by any Subsidiary or Representative of the Company will be deemed to be a breach of such provisions by the Company; provided, however, that nothing in this Section 6.05(h) shall apply to standstill or similar provisions contained in any agreements that are terminated, released or waived in accordance with their terms without any action by the Company.

6.06
Directors' and Officers' Indemnification and Insurance

(a)
Parent and Merger Sub agree that all rights to indemnification and exculpation from liabilities, including advancement of expenses, for acts or omissions occurring at or prior to the Effective Time now existing in favor of the current or former directors or officers of the Company (the D&O Indemnified Parties) as provided in the Certificate of Incorporation and the Bylaws (in each case, as in effect on the date of this Agreement) shall survive the Merger and shall continue in full force and effect. For a period of six (6) years from the Effective Time, the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, maintain in effect the exculpation, indemnification and advancement of expenses equivalent to the provisions of the Certificate of Incorporation and Bylaws as in effect immediately prior to the Effective Time with respect to acts or omissions occurring prior to the Effective Time and shall not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any D&O Indemnified Parties; provided, however, that all rights to indemnification in respect of any action pending or asserted or any claim made within such period shall continue until the disposition of such action or resolution of such claim.

(b)
Prior to the Effective Time, the Company shall (or, if the Company is unable to, after the Effective Time, Parent shall cause the Surviving Corporation to) purchase a six (6)-year prepaid "tail" policy, with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under the Company's existing policies of directors' and officers' liability insurance and fiduciary liability insurance, with respect to matters arising on or before the Effective Time (including in connection with this Agreement and the transactions or actions contemplated by this Agreement), and Parent shall cause such policy to be maintained in full force and effect, for its full term, and cause all obligations thereunder to be honored by the Surviving Corporation, and no other party shall have any further obligation to purchase or pay for insurance hereunder; provided, however, (i) that the Company shall not pay, and the Surviving Corporation shall not be required to pay, in excess of 300% of the last annual premium paid by the Company prior to the date of this Agreement in respect of such "tail" policy and (ii) the material terms of such prepaid policies (including coverage and amount) are no more favorable in the aggregate to

54


    such D&O Indemnified Parties than the insurance coverage otherwise required under Section 6.06(a). If the Company or the Surviving Corporation for any reason fails to obtain such "tail" insurance policies prior to, as of or after the Effective Time, Parent shall, for a period of six (6) years from the Effective Time, cause the Surviving Corporation to maintain in effect the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by the Company with respect to matters arising on or before the Effective Time; provided further, however, that after the Effective Time, neither the Surviving Corporation nor Parent shall be required to pay annual premiums in excess of 300% of the last annual premium paid by the Company prior to the date of this Agreement in respect of the coverage required to be obtained pursuant hereto, but in such case shall purchase as much coverage as reasonably practicable for such amount.

(c)
The covenants contained in this Section 6.06 are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Parties and their respective heirs only if the Merger is consummated and shall not be deemed exclusive of any other rights to which any such Person is entitled, whether pursuant to Applicable Law, contract or otherwise.

(d)
In the event that Parent or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, reasonable provision shall be made so that the successors or assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 6.06.

6.07
Notification of Certain Matters

        Subject to Applicable Law, from and after the date hereof until the earlier to occur of the Effective Time and the termination of this Agreement pursuant to Section 8.01, the Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company (and each will subsequently keep the other informed, on a reasonably current basis, of any material developments related to such notice), of (i) any notice or other communication received by such Party or its Subsidiaries from any Governmental Authority in connection with this Agreement, the Merger or the other Transactions, or from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the other Transactions (ii) any claims, investigations or Proceedings commenced, threatened in writing or, to such Party's Knowledge, threatened orally against, relating to or involving or otherwise affecting such Party or any of its Subsidiaries that relate to this Agreement, the Merger or the other Transactions, (iii) any inaccuracy in or breach of any representation or warranty or breach of covenant or agreement contained in this Agreement that would reasonably be expected to cause, in the case of the Company, any of the conditions set forth in Sections 7.01 or 7.02 not to be satisfied or any conditions of the Company, its Subsidiaries, or, in the case of Parent or Merger Sub, any of the conditions set forth in Sections 7.01 or 7.03 not to be satisfied. Notwithstanding anything in this Agreement to the contrary, no such notification shall cure any breach of, or inaccuracy in the representations, warranties, covenants or agreements of the Parties or cure any failure of the conditions to the obligations of the Parties or otherwise limit or affect the remedies available hereunder to the Party receiving such notice.

6.08
Public Disclosure

        So long as this Agreement is in effect, Parent and Merger Sub and their respective Affiliates, on the one hand, and the Company and its Affiliates, on the other hand, shall consult with each other before making, and give each other a reasonable opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Merger and the other Transactions, and shall not issue any such press release or make any such public statement prior to obtaining the other Party's prior consent (which shall not be unreasonably withheld, conditioned or

55


delayed) except (a) as may be required by Applicable Law or the rules of a national securities exchange or (b) that Parent may, without such consultation, make such statements as are not inconsistent with the disclosure in the joint press release announcing the execution of this Agreement and the ESG Purchase Agreement or as may be required by Applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange. The text of the joint press release announcing the execution of this Agreement and the Spin-Off will be as previously agreed to by the Parties. Notwithstanding any other provision of this Agreement, the requirements of this Section 6.08 shall not apply to (i) any such press release or public announcement if the Company Board has effected any Company Adverse Recommendation Change and (ii) any statements, filings and other communications with respect to the ESG Business, the Spin-Off, the ESG Sale or the Distribution, including participation in meetings, investor calls and presentations, due diligence sessions, drafting sessions and "roadshow" presentations and ratings agency meetings; provided that the Company will not be permitted to make any statements to the extent relating to the Transactions (and not the business or operations of ESG Spin Co.) without first providing Parent with a reasonable opportunity to review and comment upon such statements, except to the extent such statement (A) is included in the Company's SEC reports, (B) is not inconsistent with or does not contain more substantive information than statements filed by the Parties with the SEC as required, or (C) is contained in communications approved by the Parties pursuant to this Section 6.08.

6.09
Employee Benefits; Labor

(a)
For purposes of this Section 6.09, (i) the term Covered Employees means employees who are actively employed by the Company or any of its Subsidiaries immediately prior to the Effective Time; and (ii) the term Continuation Period means the period beginning at the Effective Time and ending on December 31st of the year following the year in which the Effective Time occurs or December 31, 2019, if earlier.

(b)
During the Continuation Period, Parent shall, or shall cause a Subsidiary of Parent to, provide to each Covered Employee for so long as such Covered Employee remains an employee of Parent or any of its Subsidiaries during the Continuation Period, compensation that is comparable in the aggregate (as determined by Parent. including taking into consideration compensation that is accelerated under the terms of this Agreement) to the compensation provided to such Covered Employee by the Company and its Subsidiaries immediately prior to the Effective Time. In addition to the foregoing, Parent agrees to cause the Company to pay outstanding annual incentive awards to Covered Employees for the fiscal year in which the Effective Time occurs (and any preceding fiscal year to the extent awards are earned but remain unpaid) in accordance with the terms and conditions of the applicable annual cash incentive plans under which such awards were granted as in effect as of the Effective Time, to the extent and as disclosed to Parent.

(c)
In the event any Covered Employee first becomes eligible to participate under any Parent employee benefit plan following the Effective Time, Parent shall, or shall cause a Subsidiary of Parent to, for Covered Employees who become eligible during the calendar year including the Effective Time, use reasonable best efforts to (i) waive any preexisting condition exclusions and waiting periods with respect to participation and coverage requirements applicable to any Covered Employee under any Parent employee benefit plan providing medical, dental or vision benefits to the same extent such limitation would have been waived or satisfied under any similar Company Benefit Plan the Covered Employee participated in immediately prior to coverage under the Parent employee benefit plan; and (ii) provide each Covered Employee with credit for any copayments and deductibles paid prior to the Covered Employee's coverage under any Parent employee benefit plan during the plan year in which the Effective Time occurs, to the same extent such credit was given under any similar Company Benefit Plan that Covered Employee participated in immediately prior to coverage under the Parent employee benefit plan, in satisfying any applicable deductible or out-of-pocket requirements under the Parent employee benefit plan for the plan year in which the Effective Time occurs.

56


(d)
As of the Effective Time, Parent shall recognize, or shall cause a Subsidiary of Parent to recognize, all service of each Covered Employee prior to the Effective Time, to the Company (or any predecessor entities of the Company or any of its Subsidiaries) for vesting and eligibility purposes (but not for benefit accrual purposes under any defined benefit pension plan) and for purposes of determining future vacation accruals and severance amounts to the same extent as such Covered Employee received, immediately before the Effective Time, credit for such service under any similar Company Benefit Plan in which such Covered Employee participated immediately prior to the Effective Time; provided that service of each Covered Employee prior to the Effective Times shall not be recognized to the extent that such service credit would result in a duplication of benefits for the same period of service.

(e)
Nothing set forth in this Section 6.09 shall (i) confer upon any Person any right to continue in the employ or service of Parent, the Ex-ESG Company or any of their respective Affiliates, or interfere with or restrict in any way the rights of Parent, the Ex-ESG Company or any of their respective Affiliates to discharge or terminate the services of any employee at any time for any reason whatsoever, with or without cause, (ii) restrict Parent's, the Ex-ESG Company's or any of their respective Affiliates' right to amend, modify or terminate any benefit or compensation plan, program, agreement, contract, policy or arrangement.

(f)
The Parties acknowledge and agree that all provisions contained in this Section 6.09 with respect to employees of the Company and its Subsidiaries are included for the sole benefit of the respective Parties and shall not create any right (i) in any other Person, including employees, former employees, any participant or any beneficiary thereof, in any Company Benefit Plan, or (ii) to continued employment with the Company, Parent or their respective Subsidiaries or Affiliates. Notwithstanding anything in this Section 6.09 to the contrary, nothing in this Agreement, whether express or implied, shall be treated as an amendment or other modification of any Company Benefit Plan or any other employee benefit plans of the Company, Parent or any of their respective Subsidiaries or Affiliates or shall prohibit Parent or any of its Subsidiaries or Affiliates from amending or terminating any employee benefit plan.

6.10
Merger Sub

        Parent will take all actions necessary to (a) cause Merger Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and subject to the conditions set forth in this Agreement and (b) ensure that Merger Sub prior to the Effective Time shall not conduct any business, incur or guarantee any indebtedness or make any investments, other than as specifically contemplated by this Agreement.

6.11
Rule 16b-3 Matters

        Prior to the Effective Time, the Company shall take all such steps as may be reasonably necessary or advisable (to the extent permitted under Applicable Law and no-action letters issued by the SEC) to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act, to the extent permitted by Applicable Law.

6.12
State Takeover Laws

        If any state takeover statute or other similar Applicable Law becomes or is deemed to become applicable to the Company or the Merger or the other Transactions, then the Company Board shall

57


take any and all reasonable actions necessary and sufficient to render such statutes inapplicable to the foregoing.

6.13
Stockholder Litigation

        The Company shall, as promptly as practicable (and in any event within two (2) Business Days), notify Parent in writing of, and give Parent the opportunity, at Parent's sole cost and expense, to review and comment on all filings and responses to be made by the Company in connection with (which comments will be considered in good faith by the Company) and to participate and consult in the defense or settlement of any stockholder litigation against the Company and/or its directors or executive officers relating to the Merger and the other Transactions, whether commenced prior to or after the execution and delivery of this Agreement. The Company agrees that it shall not settle or enter into any other arrangement to mitigate or resolve or offer to settle or enter into any other arrangement to mitigate or resolve any litigation commenced prior to or after the date of this Agreement against the Company or any of its directors or executive officers by any stockholder of the Company relating to this Agreement, the Merger, any other transaction contemplated by this Agreement or otherwise, without the prior written consent of Parent.

6.14
Company Notes

(a)
Unless the Company makes an ESG Sale Election in accordance with Section 2.06, the Company shall use its reasonable best efforts to, as promptly as reasonably practicable, effect a consent solicitation seeking the consent of the holders of the Company Notes to amendments or waivers to the Indenture governing the Company Notes, which would permit the consummation of the Spin-Off prior to the Closing (the Consent); provided that the Company shall not agree to a consent fee in connection with the Consent without the prior written consent of Parent, such consent not to be unreasonably withheld, conditioned or delayed. The Company shall, and shall cause its Representatives to, (A) keep Parent informed on a reasonably prompt basis and in reasonable detail of material developments in connection with the Consent, (B) allow Parent and its Representatives to review and comment on the terms and conditions and form of the Consent, (C) give Parent prompt notice of any material and substantive communications to or from the holders of the Company Notes, and (D) promptly respond to Parent's requests for updates on the status of the Consent. With respect to any actions taken with respect to the Spin-Off, the Company shall comply with and shall not breach or otherwise violate any of its covenants or obligations pursuant to the Indenture or the Company Notes. Notwithstanding anything to the contrary in this Agreement, the Company shall not consummate the Spin-Off prior to obtaining the Consent and the Bank Consent if the Spin-Off occurs other than substantially concurrently with the Closing, and the Company shall not be obligated to consummate the Spin-Off prior to obtaining the Consent and the Bank Consent unless the Spin-Off occurs substantially concurrently with the Closing and Parent provides a sufficient amount of cash on the Closing Date in order to enable the Company to satisfy and discharge the Company Notes and to pay the Payoff Amount with respect to the Existing Credit Agreement. Parent's right to terminate this Agreement pursuant to Section 8.01(d)(iv) shall not be available from the ESG Termination Date to the Termination Date (on which date such right to terminate shall once again be available) if either the Consent or Bank Consent have not been obtained by the ESG Termination Date due only to Parent's failure to provide its consent to the consent fee referenced in the proviso to the first sentence of this Section 6.14(a). Except as set forth in this Section 6.14 , the Company may not otherwise amend, modify or waive any provisions of the Indenture or the Company Notes in a manner adverse to the Company or its Subsidiaries.

(b)
Whether or not the Consent is obtained, with respect to the Company Notes, (i) on a date that is within ten (10) Business Days of receiving written notice from Parent instructing the Company to

58


    issue or cause to be issued the Conditional Redemption Notice, the Company shall issue a conditional notice of redemption of the Company Notes in accordance with the Indenture and in a form reasonably acceptable to the Company and Parent (such notice, the Conditional Redemption Notice) for all of the outstanding aggregate principal amount of the Company Notes pursuant to the Indenture, (ii) Parent shall, upon the Closing, be responsible for the payment of the Redemption Amount, (iii) the Company shall (A) deliver to the Indenture Trustee such "Officer's Certificates," "Opinions of Counsel," and other documents and certificates in form and substance reasonably satisfactory to the Indenture Trustee and Parent and (B) take such other reasonable actions that are necessary or customary to, in each case, effect the satisfaction and discharge of the Indenture and the redemption of the Company Notes on the Redemption Date pursuant to the applicable provisions of the Indenture, (iv) the Company shall provide Parent with a reasonable opportunity to review and comment on drafts of the documents to be delivered in connection with the satisfaction and discharge of the Indenture and the redemption of the Company Notes, and (v) the Company shall satisfy and discharge the Indenture in accordance with the Indenture and redeem the Company Notes in accordance with the Indenture on the Redemption Date; provided, that prior to the Closing Date, within six (6) Business Days of receiving written notice from Parent instructing the Company to delay the Redemption Date to a subsequent redemption date, the Company shall amend the Conditional Redemption Notice setting forth such new subsequent redemption date.

6.15
Payoff Letter

        At least two (2) Business Days prior to the Closing Date, the Company shall cause the agent under the Amended and Restated Credit Agreement, dated as of May 19, 2015 (the Existing Credit Agreement), among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, to provide a copy of an executed payoff letter (the Payoff Letter) with respect to the Existing Credit Agreement, in customary form, which shall (a) indicate the total amount required to be paid to fully satisfy all principal, interest, prepayment premiums, penalties, breakage costs and any other monetary obligations then due and payable (and not contingent or unasserted) under the Existing Credit Agreement as of the anticipated Closing Date (and the daily accrual thereafter) (the Payoff Amount), (b) state that upon receipt of Payoff Amount under the Payoff Letter, the Existing Credit Agreement and all related loan documents shall be terminated, as applicable and (c) provide that all Encumbrances and all guarantees (if any) in connection therewith relating to the assets and properties of the Company or any of its Subsidiaries securing such obligations shall be released and terminated upon the payment of the Payoff Amount; provided that the effectiveness of such repayment, termination or release may be contingent upon the occurrence of the Closing unless otherwise agreed by the Company.

6.16
Intercompany Arrangements

        Except as set forth on Schedule 6.16, the Company will cause any intercompany Contracts, arrangements, financing agreements or intercompany loans between KLX Energy or ESG Spin Co., as applicable, on the one hand, and the Company and any of its Affiliates or Subsidiaries (other than KLX Energy), on the other hand, to be terminated, effective no later than Closing.

6.17
IT Monitoring

        Beginning as of the date hereof and until the Effective Time, the Company shall: (a) maintain the monitoring, alerting, and auditing of log files on the Company Systems; (b) implement, maintain, and comply with an end user communication protocol and procedure regarding targeted phishing and threats relating to viruses, worms, Trojan horses, or similar disabling code or programs; (c) provide to Parent evidence of compliance with the foregoing prior to the Effective Time and (d) for any malicious

59


or suspicious activity detected by monitoring, provide evidence that a response occurred in a reasonable time and that steps were taken to identify root cause and close within a reasonable time (suggested evidence would include a record of date and time for detection, initial response, closure along with steps taken and root cause).

6.18 Post-Signing Date Tax Letter

        Within five (5) Business Days after the date that is thirty (30) days after the date hereof, the Company will deliver to Parent the Post-Signing Date Tax Letter.


ARTICLE VII
CONDITIONS TO THE MERGER

7.01
Conditions to the Obligations of Each Party to Effect the Merger

        The respective obligations of each Party to consummate the Merger are subject to the satisfaction or (to the extent permitted by Applicable Law) written waiver by the Company, Parent and Merger Sub at or prior to the Closing of the following conditions:

(a)
The Company shall have obtained the Company Stockholder Approval.

(b)
The ESG Registration Statement shall have been declared effective by the SEC and shall not be the subject of any stop order or proceedings seeking a stop order, all necessary permits and authorizations under the Securities Act and the Exchange Act relating to the issuance and trading of shares of ESG Spin Co. Common Stock shall have been obtained and be in effect, and such shares of ESG Spin Co. Common Stock shall have been approved for listing on the NASDAQ and the period of time specified by Applicable Law for the mailing of an information statement in connection with the Spin-Off shall have expired (assuming the information statement in connection with the Spin-Off is mailed immediately after the ESG Registration Statement is declared effective by the SEC, whether or not the information statement in connection with the Spin-Off has in fact been mailed); provided that the condition set forth in this Section 7.01(b) shall not apply in the event the Company has made an ESG Sale Election in accordance with Section 2.06.

(c)
Any waiting period (and any extension thereof) under the HSR Act relating to the consummation of the Merger shall have expired and no temporary restraining order or preliminary or permanent injunction preventing the consummation of the Merger shall have been issued by any U.S. federal court, and any authorization or consent from a Governmental Authority required to be obtained with respect to the Merger under any Antitrust Law as set forth on Annex 6.03(a) hereto shall have been obtained.

(d)
No Governmental Authority having jurisdiction over the Company shall have issued or entered any Order after the date of this Agreement, and no Applicable Law shall have been enacted or promulgated after the date of this Agreement, in each case, that is then in effect and has the effect of permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger or the other Transactions.

7.02 Conditions to Obligations of Parent and Merger Sub to Effect the Merger

        The obligations of Parent and Merger Sub to effect the Merger are subject to the satisfaction or (to the extent permitted by Applicable Law) written waiver by Parent at or prior to the Closing of the following additional conditions:

(a)
Each of the representations and warranties of the Company:

(i)
contained in Section 4.02(a) shall be true and correct in all respects (other than de minimis inaccuracies) as of the date of this Agreement and the Closing Date as though made on and

60


      as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only);

    (ii)
    contained in Sections 4.01, 4.02 (other than Sections 4.02(a) and 4.02(d) ), 4.03 and 4.20 shall be true and correct in all material respects without giving effect to any materiality or "Company Material Adverse Effect" qualifications therein as of the date of this Agreement and the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only);

    (iii)
    set forth on Schedule 7.02(a)(iii) shall be true and correct as set forth on such schedule; and

    (iv)
    contained in Article IV of this Agreement (other than Sections 4.01, 4.02(a), 4.02(b), 4.02(c), 4.02(e), 4.03, 4.20, and those representations and warranties set forth on Schedule 7.02(a)(iii)), without giving effect to any materiality or "Company Material Adverse Effect" qualifications therein, shall be true and correct as of the date of this Agreement and the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only), except where the failure of such representations and warranties identified in this clause (iv) to be true and correct, would not have a Company Material Adverse Effect.

(b)
The Company shall have performed or complied in all material respects with its obligations required under this Agreement to be performed or complied with on or prior to the Closing.

(c)
Parent shall have received at the Closing a certificate signed by an executive officer of the Company certifying as to the matters set forth in Sections 7.02(a), 7.02(b) and 7.02(d).

(d)
Since the date of this Agreement, there shall not have occurred any Company Material Adverse Effect.

(e)
The Company shall have filed all forms, reports and documents that contain financial statements and that are required to be filed with the SEC prior to the Closing.

(f)
The Distribution shall have been (i) duly and validly authorized by all necessary corporate action by the Company and ESG Spin Co., (ii) approved by the Company Board by resolutions adopted in accordance with the DGCL, the Certificate of Incorporation and the Bylaws, and (iii) consummated or shall be, contemporaneously with the Merger becoming effective at the Effective Time.

(g)
Solely in the event an ESG Sale Election has been made, the consummation of the transactions contemplated by the ESG Purchase Agreement shall have occurred.

7.03 Conditions to Obligation of the Company to Effect the Merger

        The obligation of the Company to effect the Merger is subject to the satisfaction or (to the extent permitted by Applicable Law) written waiver by the Company at or prior to the Closing of the following additional conditions:

(a)
Each of the representations and warranties of Parent and Merger Sub contained in Article V of this Agreement, without giving effect to any materiality or "material adverse effect" qualifications therein, shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are expressly made as of a specific date, in which case such representations and warranties shall be so true and correct as of such specific date only), except where the failure of such representations and warranties to be so true

61


    and correct would not, individually or in the aggregate, prevent, materially delay or materially impair Parent's or Merger Sub's ability to consummate the transactions contemplated by this Agreement.

(b)
Parent and Merger Sub shall have performed or complied in all material respects with each of their respective obligations required under this Agreement to be performed or complied with on or prior to the Closing.

(c)
The Company shall have received at the Closing a certificate signed by an executive officer of Parent certifying as to the matters set forth in Sections 7.03(a) and 7.03(b) .

7.04 Frustration of Closing Conditions

        Neither Parent nor Merger Sub may rely on the failure of any condition set forth in Section 7.01 or Section 7.02 to be satisfied if such failure was proximately caused by the failure of Parent or Merger Sub to perform any of their respective material obligations under this Agreement. The Company may not rely on the failure of any condition set forth in Section 7.01 or Section 7.03 to be satisfied if such failure was proximately caused by its failure to perform any of its material obligations under this Agreement.


ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER

8.01
Termination

        Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Effective Time as follows:

(a)
by mutual written consent of each of Parent and the Company; or

(b)
by either Parent or the Company, if:

(i)
the Merger shall not have been consummated on or before 5:00 p.m. (New York time) on April 30, 2019 (the Initial Termination Date); provided that the right to terminate this Agreement pursuant to this Section 8.01(b)(i) shall not be available to any Party if the inaccuracy of such Party's representations or warranties or the failure of such Party to perform or comply with any of its obligations under this Agreement has been the proximate cause of the failure of the Closing to have occurred on or before the Termination Date, provided, further, that if as of the Initial Termination Date, (A) the condition set forth in Section 7.01(c) is the only condition set forth in Article VII that remains unsatisfied or which has not been waived by the Party then entitled to give such waiver (other than (x) the conditions set forth in Sections 7.01(b), 7.02(f) or 7.02(g) and (y) those conditions that by their terms are to be satisfied at the Closing, but that are capable of being satisfied as of the Initial Termination Date (assuming the Closing were to occur on the Initial Termination Date)) or (B) with respect to the Required Notifications, the applicable waiting periods have not expired, the applicable authorizations or consents have not been obtained or there shall have been issued by any U.S. federal court a temporary restraining order or preliminary or permanent injunction preventing the consummation of the Merger, then the Termination Date may be extended by either Parent or the Company until 5:00 p.m. (New York time) on July 30, 2019 (the Final Termination Date);

(ii)
any United States Governmental Authority shall have issued or entered any Order or any Applicable Law shall have been enacted or promulgated that has the effect of permanently restraining, enjoining or otherwise prohibiting the Merger or the Transactions, and in the case of such an Order, such Order shall have become final and non-appealable; provided that the right to terminate this Agreement pursuant to this Section 8.01(b)(ii) shall not be available to

62


      a Party if the issuance of such Order was proximately caused by the failure of such Party, and in the case of Parent, including the failure of Merger Sub, to perform or comply with any of its obligations under this Agreement (including Section 6.03); or

    (iii)
    the Company Stockholder Approval shall not have been obtained upon a vote taken thereon at the Company Stockholder Meeting duly convened therefor or at any adjournment or postponement thereof.

(c)
by the Company if:

(i)
the inaccuracy of any of Parent's or Merger Sub's respective representations or warranties or the breach or failure to perform any of Parent's or Merger Sub's covenants or other obligations set forth in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in Section 7.03 and (B) is not capable of being cured by Parent or Merger Sub, as applicable, by the Termination Date or, if capable of being cured, shall not have been cured by Parent or Merger Sub on or before the earlier of (x) the Termination Date and (y) the date that is thirty (30) calendar days following the Company's delivery of written notice to Parent of such inaccuracy, breach or failure to perform; provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.01(c)(i) if the Company is then in material breach of any of its representations, warranties, covenants or other obligations set forth in this Agreement; or

(ii)
at any time prior to receipt of the Company Stockholder Approval and upon the substantially concurrent payment of the Company Termination Fee pursuant to Section 8.03(a) (it being understood that any purported termination pursuant to this Section 8.01(c)(ii) shall be null and void if the Company does not timely pay the Company Termination Fee), the Company shall have made a Company Adverse Recommendation Change and entered into a definitive agreement with respect to a Superior Proposal in compliance with Section 6.05(d); provided that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.01(c)(ii) unless the Company has complied in all material respects with Section 6.05.

(d)
by Parent if:

(i)
the inaccuracy of any of the Company's representations or warranties, or the breach or failure to perform any of the Company's covenants or other obligations set forth in this Agreement, which breach or failure to perform (A) would result in the failure of a condition set forth in Section 7.02(a) or Section 7.02(b) and (B) is not capable of being cured by the Company by the Termination Date or, if capable of being cured, shall not have been cured by the Company on or before the earlier of (x) the Termination Date and (y) the date that is thirty (30) calendar days following Parent's delivery of written notice to the Company of such inaccuracy, breach or failure to perform; provided that Parent shall not have the right to terminate this Agreement pursuant to this Section 8.01(d)(i) if Parent or Merger Sub is then in material breach of any of its representations, warranties, covenants or other obligations set forth in this Agreement;

(ii)
at any time prior to the receipt of the Company Stockholder Approval, the Company Board shall have made a Company Adverse Recommendation Change or the Company shall have failed to include in the Company Proxy Statement the Company Recommendation;

(iii)
if the Company shall have breached in any material respect any of its obligations pursuant to Section 6.05; or

(iv)
at any time after 5:00 p.m. (New York time) on the ESG Termination Date if (x) any or all of the conditions set forth in Sections 7.01(b), 7.02(f) and 7.02(g) are the only conditions set forth in Article VII that remain unsatisfied or that have not been waived by the Party then entitled to give such waiver (other than those conditions that by their terms are to be satisfied at the

63


      Closing, but that are capable of being satisfied as of such time (assuming the Closing were to occur as of such time)); provided that the right to terminate this Agreement pursuant to this Section 8.01(d)(iv) shall not be available to Parent if the inaccuracy of Parent's representations or warranties or the failure of Parent to perform or comply with any of its obligations under this Agreement is the proximate cause of the failure of the conditions set forth in Sections 7.01(b), 7.02(f) and 7.02(g), as applicable.

8.02
Effect of Termination

        In the event that this Agreement is terminated and the Merger and the other transactions contemplated hereby are abandoned pursuant to Section 8.01, written notice thereof shall be given by the terminating Party to the other Party, specifying the provisions hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void and of no effect, without liability on the part of any Party, and all rights and obligations of any Party shall cease; provided, however, that no such termination shall relieve any Party of any liability or damages resulting from (a) fraud, or (b) except as provided in Section 8.03, any Willful Breach prior to such termination, and in each such case, the aggrieved Party shall be entitled to all remedies available at law or in equity; and provided, further, that the Confidentiality Agreement, this Section 8.02, Section 8.03, and Article IX shall survive any termination of this Agreement pursuant to Section 8.01.

8.03
Termination Fees

(a)
If this Agreement is terminated by:

(i)
Parent or the Company pursuant to Section 8.01(b)(iii) or by Parent pursuant to Section 8.01(d)(i) (where the Company's breach or failure to perform its covenants or other obligations set forth in this Agreement gave rise to such termination right), and in each case, within nine (9) months after such termination, the Company enters into a definitive agreement with a Person that made a Company Acquisition Proposal (provided, that (x) the references to "twenty percent (20%)" in the definition of Company Acquisition Proposal shall be deemed to be references to "fifty percent (50%)" and (y) in no event shall a definitive agreement involving solely the ESG Business or KLX Energy or any of its Subsidiaries, assets or businesses be deemed a Company Acquisition Proposal as contemplated by this Section 8.03(a)(i));

(ii)
the Company pursuant to Section 8.01(c)(ii); or

(iii)
Parent pursuant to Sections 8.01(d)(ii) or 8.01(d)(iii);

    then, in the case of a termination pursuant to (A) Section 8.03(a)(i), the Company shall pay, or cause to be paid, to Parent the Company Tail Fee or (B) either Section 8.03(a)(ii) or Section 8.03(a)(iii), the Company shall pay, or cause to be paid, to Parent the Company Termination Fee.

(b)
If this Agreement is terminated by Parent pursuant to Section 8.01(d)(iv), then the Company shall pay, or cause to be paid, to Parent the Company Alternative Termination Fee. Notwithstanding anything to the contrary in this Agreement, the Company shall not be relieved of any of its obligations to comply with the covenants and obligations set forth in Section 2.06, Section 6.01 or Section 6.02 until the earlier of the consummation of the Distribution in accordance with the terms hereof and the termination of this Agreement.

(c)
If this Agreement is terminated by Parent or the Company, as applicable, pursuant to: (i) Section 8.01(b)(i), and at the time of such termination, the only condition in Article VII (except for those conditions that by their nature are to be satisfied at the Closing) not satisfied or waived (to the extent such waiver is permitted under Applicable Law) is the condition set forth in

64


    Section 7.01(c) or the condition set forth in Section 7.01(d) (to the extent such Order or Applicable Law is issued, enacted or promulgated under applicable Antitrust Laws) or (ii) pursuant to Section 8.01(b)(ii), in the event such Order or Applicable Law prevents the satisfaction of the condition set forth in Section 7.01(c) or the condition set forth in Section 7.01(d) (to the extent such Order or Applicable Law is issued, enacted or promulgated under applicable Antitrust Laws), then, in each of the foregoing clauses (i) and (ii), the Parent shall pay, or caused to be paid, to the Company the Parent Termination Fee.

(d)
Any payments required to be made under this Section 8.03 shall be made by wire transfer of same day funds to the account or accounts designated by Parent or the Company, as applicable (x) in the case of clause (a)(i) above, on the same day as the consummation of such Company Acquisition Proposal contemplated therein, (y) in the case of clause (a)(ii) above, concurrently with such termination and (z) in the case of clauses (a)(iii), clause (b) or clause (c) above, within three (3) Business Days of the date of such termination.

(e)
Notwithstanding anything to the contrary set forth in this Agreement, the Parties agree that in no event shall the Company or Parent, as applicable, be required to pay the Company Termination Fee or the Company Alternative Termination Fee, as applicable, or the Parent Termination Fee, as applicable, on more than one occasion.

(f)
Notwithstanding anything in this Agreement to the contrary, (i) if the Company has paid to Parent the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, in accordance with this Section 8.03, the payment of such Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, shall be the sole and exclusive remedy of Parent, its Subsidiaries, stockholders, Affiliates, and Representatives against the Company, its Subsidiaries, stockholders, Affiliates and Representatives, and (ii) in no event where the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, has been paid will Parent seek or be entitled to recover any other money damages or any other remedy based on a claim in law or equity with respect to, (A) any loss suffered, directly or indirectly, as a result of the failure of the Merger to be consummated, (B) the termination of this Agreement, (C) any liabilities or obligations arising under this Agreement, or (D) any claims or actions arising out of or relating to any breach, termination or failure of or under this Agreement, in each case other than for payment of the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, and (iii) upon the payment of the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, in accordance with this Section 8.03, neither the Company nor any of its Subsidiaries or Affiliates or Representatives shall have any further liability or obligation to Parent or Merger Sub relating to or arising out of this Agreement or the transactions contemplated by this Agreement, other than in the event of fraud or in the event this Agreement is terminated pursuant to Section 8.01(d)(i) (where the Company's breach or failure to perform its covenants or other obligations set forth in this Agreement gave rise to such termination right). If the Company fails to fulfill its obligation to pay the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, when required to do so pursuant to this Section 8.03, and Parent and/or Merger Sub commences a Proceeding that results in a final judgment against the Company for the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, or any portion thereof, then the Company shall pay Parent and Merger Sub their reasonable, documented out-of-pocket costs and expenses (including reasonable legal fees) in connection with such suit, together with interest on the Company Termination Fee, the Company Tail Fee or the Company Alternative Termination Fee, as applicable, at the "prime rate" as published in the Wall Street Journal, Eastern Edition, in effect on the date such payment was required to be made through the actual date of payment (calculated on the basis of a year of 365 days and the actual number of days elapsed).

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(g)
Notwithstanding anything in this Agreement to the contrary, (i) if the Parent has paid to the Company the Parent Termination Fee in accordance with this Section 8.03, the payment of such Parent Termination Fee shall be the sole and exclusive remedy of the Company, its Subsidiaries, stockholders, Affiliates, and Representatives against the Parent, its Subsidiaries, stockholders, Affiliates and Representatives, and (ii) in no event where the Parent Termination Fee has been paid will the Company seek or be entitled to recover any other money damages or any other remedy based on a claim in law or equity with respect to, (A) any loss suffered, directly or indirectly, as a result of the failure of the Merger to be consummated, (B) the termination of this Agreement, (C) any liabilities or obligations arising under this Agreement, or (D) any claims or actions arising out of or relating to any breach, termination or failure of or under this Agreement, and (iii) upon the payment of the Parent Termination Fee in accordance with this Section 8.03, neither the Parent nor any of its Subsidiaries or Affiliates or Representatives shall have any further liability or obligation to the Company relating to or arising out of this Agreement or the transactions contemplated by this Agreement. If the Parent fails to fulfill its obligation to pay the Parent Termination Fee when required to do so pursuant to this Section 8.03, and the Company commences a Proceeding that results in a final judgment against the Parent for the Parent Termination Fee, then the Parent shall pay the Company its reasonable, documented out-of-pocket costs and expenses (including reasonable legal fees) in connection with such suit, together with interest on the Parent Termination Fee at the "prime rate" as published in the Wall Street Journal, Eastern Edition, in effect on the date such payment was required to be made through the actual date of payment (calculated on the basis of a year of 365 days and the actual number of days elapsed).

(h)
The Parties acknowledge and agree that the agreements contained in this Section 8.03 are an integral part of transactions contemplated by this Agreement and that, without these agreements, the Parties would not enter into this Agreement.

8.04
Amendment

        This Agreement may be amended by mutual agreement of the Parties in writing at any time before or after receipt of the Company Stockholder Approval; provided, however, that after the Company Stockholder Approval has been obtained, there shall not be any amendment that by Applicable Law or in accordance with the applicable rules of any stock exchange requires further approval by the stockholders of the Company without such further approval of such stockholders nor any amendment or change not permitted under Applicable Law.

8.05
Extension; Waiver

        At any time prior to the Effective Time, subject to Applicable Law, any Party may (a) extend the time for the performance of any obligation or other act of any other Party, (b) waive any inaccuracy in the representations and warranties of the other Party contained herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall only be valid if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by the Company, Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party.

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ARTICLE IX
GENERAL PROVISIONS

9.01
Non-Survival of Representations and Warranties

        The representations and warranties in this Agreement and any certificate delivered pursuant hereto by any Person shall terminate at the Effective Time.

9.02
Expenses

        Except as expressly set forth herein, all expenses incurred in connection with this Agreement and the Transactions shall be paid by the Party incurring such expenses, whether or not the Merger is consummated; provided, however, Parent, on the one hand, and the Company, on the other hand, shall share equally (i) filing and other fees and expenses in connection with the Required Notifications and (ii) all SEC filing fees.

9.03
Notices

        All notices, consents, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by e-mail or facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.03):

      if to Parent or Merger Sub:

      The Boeing Company
      100 N. Riverside Plaza
      Chicago, IL 60606
      Phone: (312) 544 2820
      Fax: (312) 544 2829
      Email:        Edward.J.Neveril@boeing.com
      Attention: Edward J. Neveril, Chief Counsel of Mergers and Acquisitions

      with a copy (which shall not constitute notice) to:

      Kirkland & Ellis LLP
      300 North LaSalle
      Chicago, IL 60654
      Phone: (312) 862-2000
      Fax: (312) 862 2200
      Email:      scott.falk@kirkland.com

                       michael.weed@kirkland.com
                       joydeep.dasmunshi@kirkland.com
      Attention: R. Scott Falk, P.C.
                        Michael H. Weed, P.C.
                        Joydeep Dasmunshi

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      if to the Company:

      KLX Inc.
      1300 Corporate Center Way
      Wellington, FL 33414
      Phone: (561) 383-5100
      Fax: (561) 791-5479
      Email: Roger.Franks@klx.com
      Attention: General Counsel

        with a copy (which shall not constitute notice) to:

      Freshfields Bruckhaus Deringer US LLP
      601 Lexington Avenue, 31st Floor
      New York, NY 10022
      Phone: (212) 277-4000
      Fax: (212) 277-4001
      Email:      Valerie.Jacob@freshfields.com
                       Omar.Pringle@freshfields.com
      Attention: Valerie Ford Jacob, Esq.
                        Omar Pringle, Esq.

9.04
Interpretation; Certain Definitions

(a)
The Parties have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted collectively by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(b)
The words "hereof," "herein," "hereby," "hereunder" and "herewith" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs, exhibits, annexes and schedules are to the articles, sections and paragraphs of, and exhibits, annexes and schedules to, this Agreement, unless otherwise specified, and the table of contents and headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the phrase "without limitation." Words describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns. The phrases "the date of this Agreement" and "the date hereof" and terms or phrases of similar import shall be deemed to refer to April 30, 2018, unless the context requires otherwise. References to any information or document being "made available" or "furnished" and words of similar import shall include such information or document having been posted to the Merrill "Project Kiawah" virtual data room (other than in a "clean team only" or other folder with limited access rights) hosted on behalf of the Company at least two Business Days prior to the date of this Agreement. Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. All references to "dollars" or "$" refer to currency of the United States.

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9.05
Severability

        If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated as originally contemplated to the fullest extent possible.

9.06
Assignment

        Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Applicable Law or otherwise) without the prior written consent of the other Parties, except that any Merger Sub may assign any or all of its rights, interests and obligations hereunder to one or more direct or indirect wholly owned Subsidiaries of Parent, or a combination thereof so long as such assignment would not materially delay, impair or prevent consummation of the Merger and so long as Parent remains primarily liable for Merger Sub's obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns. Any attempted assignment in violation of this Section 9.06 shall be null and void.

9.07
Entire Agreement

        This Agreement (including the exhibits, annexes and appendices hereto and any other agreement entered into among Parent and/or Merger Sub, on the one hand, and the Company, on the other hand, in connection herewith) constitutes, together with the Confidentiality Agreement, the Company Disclosure Schedule and the Parent Disclosure Schedule, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof.

9.08
No Third-Party Beneficiaries

        This Agreement is not intended to and shall not confer upon any Person other than the Parties any rights or remedies hereunder; provided, however, that it is specifically intended that the D&O Indemnified Parties (with respect to Section 6.06 and this Section 9.08 from and after the Effective Time) are intended third-party beneficiaries of such provisions.

9.09
Governing Law

        This Agreement and all Proceedings (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of Parent, Merger Sub or the Company in the negotiation, administration, performance and enforcement thereof, shall be governed by, and construed in accordance with, the Applicable Laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Applicable Laws of any jurisdiction other than the State of Delaware.

9.10
Specific Performance

        Each Party agrees that that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that any Party does not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to

69


consummate the Transactions) in accordance with its specified terms or otherwise breach such provisions. Accordingly, the Parties acknowledge and agree that, prior to any termination of this Agreement in accordance with Section 8.01, the Parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Each of the Parties agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief on the basis that any other Party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.

9.11
Consent to Jurisdiction

(a)
Each of the Parties hereby, with respect to any legal claim or Proceeding arising out of this Agreement or the transactions contemplated by this Agreement, (i) expressly and irrevocably submits, for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the Delaware Court of Chancery and any appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such courts, (iii) agrees that it will not bring any claim or Proceeding relating to this Agreement or the transactions contemplated by this Agreement except in such courts and (iv) waives, to the fullest extent it may legally and effectively do so, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any objection which it may now or hereafter have to the laying of venue of any claim or Proceeding arising out of or relating to this Agreement. Notwithstanding the foregoing, each of Parent, Merger Sub and the Company agrees that a final and nonappealable judgment in any Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(b)
Each Party irrevocably consents to the service of process in any claim or Proceeding with respect to this Agreement and the transactions contemplated by this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other Party may be made by mailing copies thereof by registered or certified United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 9.03 and such service of process shall be sufficient to confer personal jurisdiction over such Party in such claim or Proceeding and shall otherwise constitute effective and binding service in every respect.

9.12
Counterparts

        This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement. Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

9.13
WAIVER OF JURY TRIAL

        EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) BETWEEN ANY OF THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

[Remainder of page intentionally left blank; signature page follows.]

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        IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

THE BOEING COMPANY

By:

 

/s/ ANTHONY K. FISHER


 

 
Name:   Anthony K. Fisher    
Title:   Vice President, Corporate Development    

KELLY MERGER SUB, INC.

By:

 

/s/ DENISE MCKINNEY


 

 
Name:   Denise McKinney    
Title:   Vice President    

KLX INC.

By:

 

/s/ AMIN J. KHOURY


 

 
Name:   Amin J. Khoury    
Title:   Chief Executive Officer    

   

[Signature Page—Agreement and Plan of Merger]



EXHIBIT A

                             , 2018

KLX INC.

and

KLX ENERGY SERVICES HOLDINGS, INC.



DISTRIBUTION AGREEMENT





CONTENTS

 
   
  PAGE  

ARTICLE

       


ARTICLE I DEFINITIONS


 

 


A-1

 


ARTICLE II THE DISTRIBUTION


 

 


A-9

 

2.01

 

The Distribution

   
A-9
 

2.02

 

Fractional Shares

   
A-9
 

2.03

 

Distribution Date

   
A-10
 

2.04

 

Conditions to the Distribution

   
A-10
 


ARTICLE III COVENANTS


 

 


A-11

 

3.01

 

ESG Funding Adjustment

   
A-11
 

3.02

 

Credit and Performance Support Obligations

   
A-12
 

3.03

 

Certificate of Incorporation; Bylaws; Directors and Officers

   
A-13
 

3.04

 

Transfer of Business Assets and Liabilities after the Distribution Date

   
A-13
 

3.05

 

Former Directors, Managers and Officers

   
A-14
 

3.06

 

Insurance Matters

   
A-15
 

3.07

 

Auditors and Audit; Annual Financial Statements and Accounting; Tax Cooperation

   
A-15
 

3.08

 

Further Assurances

   
A-17
 

3.09

 

Non-Competition

   
A-18
 

3.10

 

Transfer of Permits

   
A-18
 


ARTICLE IV INDEMNIFICATION


 

 


A-19

 

4.01

 

Release of Pre-Distribution Claims

   
A-19
 

4.02

 

Tax Matters

   
A-20
 

4.03

 

Indemnification by KLX

   
A-20
 

4.04

 

Indemnification by ESG SpinCo

   
A-20
 

4.05

 

Distribution Gain Tax Indemnification

   
A-21
 

4.06

 

Tax Elections

   
A-22
 

4.07

 

Third Party Claims; Notice of Direct Claims

   
A-22
 

4.08

 

Additional Matters

   
A-24
 

4.09

 

Survival

   
A-25
 

4.10

 

Registration Rights

   
A-25
 


ARTICLE V ACCESS TO RECORDS; ACCESS TO INFORMATION; LEGAL AND OTHER MATTERS


 

 


A-26

 

5.01

 

Provision of Corporate Records

   
A-26
 

5.02

 

Access to Information

   
A-26
 

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  PAGE  

5.03

 

Disposition of Information

    A-27  

5.04

 

Witness Services

   
A-27
 

5.05

 

Reimbursement

   
A-28
 

5.06

 

Confidentiality

   
A-28
 

5.07

 

Privileged Matters

   
A-29
 

5.08

 

Ownership of Information

   
A-30
 

5.09

 

Control of Legal Matters

   
A-31
 


ARTICLE VI TERMINATION


 

 


A-33

 

6.01

 

Termination

   
A-33
 

6.02

 

Effect of Termination

   
A-33
 

6.03

 

Amendment

   
A-33
 

6.04

 

Waiver

   
A-33
 


ARTICLE VII DISPUTE RESOLUTION


 

 


A-33

 

7.01

 

Disputes

   
A-33
 

7.02

 

Dispute Resolution

   
A-33
 


ARTICLE VIII MISCELLANEOUS


 

 


A-35

 

8.01

 

Transition Services Agreements

   
A-35
 

8.02

 

Employee Matters

   
A-35
 

8.03

 

Intellectual Property Matters

   
A-35
 

8.04

 

No Representation and Warranties

   
A-35
 

8.05

 

Limitation of Liability

   
A-35
 

8.06

 

Expenses

   
A-35
 

8.07

 

Notices

   
A-36
 

8.08

 

Interpretation; Certain Definitions

   
A-37
 

8.09

 

Public Announcements

   
A-37
 

8.10

 

Severability

   
A-37
 

8.11

 

Assignment

   
A-37
 

8.12

 

Entire Agreement

   
A-38
 

8.13

 

No Third-Party Beneficiaries

   
A-38
 

8.14

 

Governing Law

   
A-38
 

8.15

 

Consent to Jurisdiction

   
A-38
 

8.16

 

Counterparts

   
A-39
 

8.17

 

Waiver of Jury Trial

   
A-39
 

A-ii


 
   
  PAGE  

EXHIBIT 8.01 TRANSITION SERVICES AGREEMENT

       


EXHIBIT 8.02 EMPLOYEE MATTERS AGREEMENT


 

 

 

 


EXHIBIT 8.03 IP MATTERS AGREEMENT


 

 

 

 

A-iii



DISTRIBUTION AGREEMENT

        THIS DISTRIBUTION AGREEMENT (this Agreement), dated as of [    ·    ], 2018, is entered into by and between KLX Inc., a corporation formed under the laws of the State of Delaware (KLX), and KLX Energy Services Holdings, Inc., a corporation formed under the laws of the State of Delaware (ESG SpinCo). KLX and ESG SpinCo are referred to herein individually as a Party and collectively as the Parties.


RECITALS

        WHEREAS, the KLX Group currently conducts the ASG Business, and, through the ESG Group, KLX also currently conducts the ESG Business;

        WHEREAS, the board of directors of KLX (the Board) has determined that it is appropriate, desirable and in the best interests of KLX and its shareholders to separate the ASG Business and the ESG Business through a taxable spin-off of the ESG Business into a separate publicly traded company (the Spin-Off);

        WHEREAS, [ESG SpinCo has been converted into a Delaware corporation] / [the membership interests in KLX Energy Services LLC have been contributed into ESG SpinCo prior to the date hereof] (the Pre-Spin Transaction) and KLX owns all of the issued and outstanding shares of common stock, par value $[    ·    ] per share, of ESG SpinCo (the ESG SpinCo Common Stock);

        WHEREAS, in order to effect the Spin-Off, KLX wishes to distribute all of the ESG SpinCo Common Stock to the holders of issued and outstanding shares of common stock, par value $0.01 per share, of KLX (KLX Common Stock) as of the Record Date (the Distribution) in accordance with this Agreement, and to provide for, among other things, the treatment of restricted stock, RSU and PSU awards of KLX in connection with the Spin-Off in accordance with the Employee Matters Agreement;

        WHEREAS, KLX and The Boeing Company (the ASG Buyer) entered into an Agreement and Plan of Merger on April 30, 2018 (the ASG Merger Agreement), pursuant to which a wholly owned subsidiary of the ASG Buyer (Merger Sub) will be merged with and into KLX, whereupon the separate existence of the Merger Sub shall cease, and KLX will continue as the surviving corporation and as a direct or indirect wholly owned subsidiary of the ASG Buyer (the ASG Merger); and

        WHEREAS, it is a condition to the consummation of the ASG Merger Agreement that the Distribution shall have occurred.

        NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual terms, conditions and other agreements set forth herein, and intending to be legally bound hereby, the Parties agree as follows:


ARTICLE I
DEFINITIONS

        As used herein, the following terms have the following meanings:

        336 Election has the meaning set forth in Section 4.06(a).

        Agent means the distribution agent appointed by KLX (who shall be a reputable, nationally recognized agent, reasonably acceptable to the ASG Buyer) to distribute to the Record Holders, pursuant to the Distribution, the shares of ESG SpinCo Common Stock held by KLX.

        Affiliate means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under

A-1


common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.

        Agreement has the meaning set forth in the Preamble.

        Agreement Disputes has the meaning set forth in Section 7.01.

        Ancillary Agreements means the agreements entered into by the Parties and their Subsidiaries in connection with the Spin-Off and the Distribution (other than the ASG Merger Agreement), including the Transition Services Agreement, the IP Matters Agreement and the Employee Matters Agreement.

        Applicable Law means any supra-national, federal, national, state, municipal or local statute, law, ordinance, regulation, rule, code, order (whether executive, legislative, judicial or otherwise), judgment, injunction, notice, decree or other requirement or rule of law or legal process (including common law), or any other Order of, or agreement issued, promulgated or entered into by, any Governmental Authority.

        ASG Business means all businesses of KLX and its Subsidiaries, other than the ESG Business.

        ASG Buyer has the meaning set forth in the Recitals.

        ASG Merger has the meaning set forth in the Recitals.

        ASG Merger Agreement has the meaning set forth in the Recitals.

        Asset means, with respect to any Person, all assets, properties, claims and rights (including goodwill and rights pursuant to Contracts), wherever located (including in the possession of vendors or other Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible or intangible, or accrued or contingent, in each case, whether or not recorded or reflected or required to be recorded or reflected on the Records or financial statements of such Person.

        Audit Firm means an internationally recognized accounting firm experienced in resolving disputes of a type contemplated by Section 3.01(b).

        Audited Party has the meaning set forth in Section 3.07(b).

        Business Day means a day, other than a Saturday or Sunday or other day on which commercial banks are authorized or required by Applicable Law to close in New York City, New York.

        Carry-Over Basis Election has the meaning set forth in Section 4.06(a).

        Closing Date has the meaning set forth in the ASG Merger Agreement.

        Code means the U.S. Internal Revenue Code of 1986, as amended.

        Confidential Information means confidential or proprietary information concerning a Party and/or any other member of such Party's Group which, prior to or following the Effective Time, has been disclosed by a Party or any other member of such Party's Group to another Party or any other member of such Party's Group, in written, oral (including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other Party or any other member of such Party's Group, including pursuant to any provision of this Agreement (except to the extent that such information can be shown to have been (i) in the public domain through no fault of such Party or any other member of such Party's Group, (ii) lawfully acquired from other sources (other than the other Group) by such Party or any other member of such Party's Group to which it was furnished or (iii) independently developed or generated without reference to or use of the respective proprietary or confidential information of the other Party or any of its subsidiaries; provided, however, in the case of clause (ii) that, to the knowledge of the Party or other member of such Party's Group to which such

A-2


information was furnished, such sources did not provide such information in breach of any confidentiality obligations).

        Contract means any written or oral arrangement, contract, agreement, instrument, lease, license, sublicense, or commitment that, in each case, is binding on any member of the KLX Group or the ESG Group, as applicable.

        Disclosure Documents means any registration statement (including any registration statement on Form 10) or other document filed with the SEC by or on behalf of any Party or any of its controlled Affiliates, and also includes any information statement, prospectus, offering memorandum, offering circular or similar disclosure document, whether or not filed with the SEC or any other Governmental Authority, in each case which offers for sale or registers the transfer or distribution of any security of such Party or any of its controlled Affiliates.

        Disputed Items has the meaning set forth in Section 3.01(b).

        Distribution has the meaning set forth in the Recitals.

        Distribution Date means the date on which the Distribution occurs.

        Effective Time means 11:59 pm Eastern Time on the Distribution Date.

        Employee Matters Agreement has the meaning set forth in Section 8.02.

        Encumbrance means any security interest, pledge, hypothecation, lien, right of first refusal, right of way, license, encroachment, claim, charge, mortgage or encumbrance of any kind.

        Escalation Notice has the meaning set forth in Section 7.02(a).

        ESG Assets means all Assets of the KLX Group or the ESG Group (other than any inter-Group Contracts or arrangements) that are (i) primarily used by a member of the ESG Group in support of the ESG Business, but excluding any Asset without which the ASG Business would not have all Assets necessary to operate in the same manner in which the ASG Business operated as of prior to the execution of the ASG Merger Agreement and (ii) set forth in Exhibit A.

        ESG Business means the business of providing technical services and related rental equipment to oil and gas exploration and production companies in remote oil and gas producing regions solely as conducted by the ESG Group but does not include any other business operated or conducted by any member of the KLX Group.

        ESG Business Employee means (a) any employee of any member of the ESG Group and (b) those employees of the KLX Group set forth on Schedule I—Part A.

        ESG SpinCo has the meaning set forth in the Recitals.

        ESG SpinCo Common Stock has the meaning set forth in the Recitals.

        ESG D&O Indemnified Parties has the meaning set forth in Section 3.05(a).

        ESG D&O Release has the meaning set forth in Section 3.05(b).

        ESG Group means ESG SpinCo, KLX RE Holdings LLC and each Person that becomes a Subsidiary of ESG SpinCo after the Distribution, including in each case any Person that is merged or consolidated with and into ESG SpinCo or any Subsidiary of ESG SpinCo.

        ESG Indemnitees means each member of the ESG Group and each of their respective Affiliates and their respective directors, officers, employees, managers and agents and each of the heirs, executors, successors and assigns of any of the foregoing, other than the KLX Indemnitees.

A-3


        ESG Liability means any and all Liabilities to the extent relating to, arising out of or resulting from (whether or not such Liabilities arise under "successor liability," "piercing the corporate veil," or similar legal theories): (A) the operation or conduct of the ESG Business prior to, on or after the Effective Time; (B) the operation or conduct of any business conducted by any member of the ESG Group at any time after the Effective Time; (C) any ESG Assets, whether arising before, on or after the Effective Time; (D) any Indebtedness to the extent relating to or incurred by, in support of or in connection with the ESG Business or to the extent secured by any of the ESG Assets (including any Liabilities relating to, arising out of or resulting from a claim by a holder of any such Indebtedness, in its capacity as such); (E) any ESG Litigation Matter, Future ESG Litigation Matter and, and solely to the extent relating to the ESG Business or ESG Assets, any Future Joint Litigation Matter; and (F) activities of any member of the KLX Group or their Representatives acting on behalf of or in support of the ESG Business at any time prior to the Effective Time; provided that (i) in no event shall any Transaction Expenses be an ESG Liability (without prejudice to any reimbursement of Spin Costs pursuant to Section 3.01(c)) and (ii) for purposes of this definition of "ESG Liability", Indebtedness shall exclude (x) all amounts taken into in the calculation of the FCF Net Amount and (y) all Indebtedness set forth on Section 4.04(b) of the Company Disclosure Schedule to the ASG Merger Agreement.

        ESG Litigation Matters means the Proceedings set forth in Schedule I- Part B and any other Proceedings to the extent related to ESG Assets or to ESG Liabilities.

        ESG Names and Marks means, collectively, any Trademark included in ESG SpinCo's Intellectual Property and/or ESG Assets, any variation or acronym thereof, or any Trademark or other identifier of source or goodwill containing, incorporating or associated with any such Trademark.

        Expiration Time has the meaning set forth in Section 3.01(b).

        FCF Net Amount means the amount of "Business Free Cash Flows, Net" of the ESG Group measured for the period beginning on May 1, 2018 through the Effective Time, calculated in accordance with the statement of cash flows of the ESG Group attached as Schedule I—Part C and consisting of the line items set forth thereon, in each case as derived from the books and records of the KLX Group and calculated in a manner consistent with the accounting practices and principles applied by KLX in the preparation of its financial statements filed with the SEC; provided, however, that (i) Transaction Expenses and (ii) the ESG Cash (as defined in the ASG Merger Agreement) contributed to ESG in connection with the Distribution, shall be excluded from the calculation of Business Free Cash Flows Net.

        Final Funding Statement has the meaning set forth in Section 3.01(b).

        Form 10 means the Registration Statement on Form 10, including the Information Statement, filed in connection with the Distribution, as amended from time to time, in the form in which it is declared effective by the SEC.

        Funding Statement has the meaning set forth in Section 3.01(a).

        Future ESG Litigation Matter has the meaning set forth in Section 5.09(b)(ii).

        Future Joint Litigation Matter has the meaning set forth in Section 5.09(b)(iii).

        Future KLX Litigation Matter has the meaning set forth in Section 5.09(b)(i).

        GAAP shall mean United States generally accepted accounting principles.

        Governing Documents means the charter, organizational and other documents by which any Person other than an individual establishes its legal existence or which govern its internal affairs, and shall include: (i) in respect of a corporation, its certificate or articles of incorporation or association and its bylaws; (ii) in respect of a partnership, its certificate of partnership and its partnership agreement; and

A-4


(iii) in respect of a limited liability company, its certificate of formation and operating or limited liability company agreement.

        Governmental Authority means any (a) nation, region, state, county, city, town, village, district or other jurisdiction, (b) federal, state, local, municipal, foreign or other government, (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other entity and any court or other tribunal), (d) multinational or supra-national organization exercising judicial, legislative or regulatory power or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, fiscal, legislative, police, regulatory or taxing power of any nature of any federal, state, local, municipal, foreign or other government, in each case, anywhere throughout the world.

        Group means the KLX Group or the ESG Group, as the context may require.

        Indebtedness shall mean, with respect to a Person, all Liabilities of such Person (i) for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money; (ii) to repay any amounts owed as evidenced by notes, debentures, bonds or other similar instruments reflecting indebtedness; (iii) under any conditional sale, title retention or similar arrangement, or with respect to any deferred purchase price of any assets or services, contingent or otherwise (including "earn-outs", indemnities, post-closing true-ups and "seller notes" payable with respect to the acquisition of any business, assets or securities, but excluding trade accounts payable arising in the ordinary course of business consistent with past practice); (iv) on any letter of credit or similar credit transaction securing obligations of any Person (to the extent drawn or outstanding); (v) to pay rent or other amounts under any lease of real or personal property, or other similar Contract, that is required to be classified or accounted for as a capital lease in accordance with GAAP; (vi) constituting a guarantee of any liabilities of any other Persons; (vii) for deferred rent or royalties under any lease, license, concession or other similar arrangement; and (viii) secured by an encumbrance on any of such Person's assets, including as may be applicable in connection with any of the forgoing clauses (i) through (viii) any unpaid principal, premium, accrued and unpaid interest, prepayment penalties, commitments and other fees payable in connection with the payoff or termination thereof, and (ix) any cash advances made by such Person to any of its customers or suppliers.

        Indemnified Party has the meaning set forth in Section 4.07(a).

        Indemnifying Party has the meaning set forth in Section 4.07(a).

        Indemnitees means the KLX Indemnitees or the ESG Indemnitees, as the case may be.

        Information Statement means the Information Statement attached as an exhibit to the Form 10 to be sent to the holders of KLX Common Stock in connection with the Distribution, as such Information Statement may be amended from time to time.

        Intercompany Balances means all intercompany receivables, payables, loans and other accounts or transactions between any member of the KLX Group, on the one hand, and any member of the ESG Group, on the other hand, in existence as of the end of the Distribution Date.

        Intellectual Property means all intellectual property rights of any type in any jurisdiction, including patents and patent applications; registered trademarks and trademark applications; design rights, trade names and service marks; trade dress; Internet domain names; copyrights; rights in computer software (including source code and object code) data, databases, and documentation thereof; rights in inventions; trade secrets and know-how; and any other intellectual property right having equivalent or similar effect to the rights referred to above; in each case, anywhere in the world.

        Internal Control Audit has the meaning set forth in Section 3.07(a).

        IP Matters Agreement has the meaning set forth in Section 8.03.

A-5


        KLX Assets means all Assets of the KLX Group or the ESG Group (other than any inter-Group Contracts or arrangements) owned or leased by any member of the KLX Group or that is not an ESG Asset.

        KLX Combined Income Tax Return means any consolidated, combined unitary or other similar Tax Return with respect to any profit and/or loss sharing group, group payment or similar group or fiscal unity that actually includes, by election or otherwise, one or more members of the KLX Group together with one or more members of the ESG Group.

        KLX D&O Indemnified Parties has the meaning set forth in Section 3.05(c).

        KLX D&O Release has the meaning set forth in Section 3.05(d).

        KLX Group means KLX, each Person that will be a Subsidiary of KLX (other than the members of the ESG Group) immediately following the Distribution, and each Person that becomes a Subsidiary of KLX after the Distribution, including in each case any Person that is merged or consolidated with and into KLX or any Subsidiary of KLX after the Distribution.

        KLX Indemnitees means each member of the KLX Group and each of their respective Affiliates and their respective directors, officers, employees, managers and agents and each of the heirs, executors, successors and assigns of any of the foregoing, other than the ESG Indemnitees.

        KLX Liability means any and all Liabilities to the extent relating to, arising out of or resulting from (whether or not such Liabilities arise under "successor liability," "piercing the corporate veil," or similar legal theories): (A) the operation or conduct of the ASG Business prior to, on or after the Effective Time; (B) the operation or conduct of any business conducted by any member of the KLX Group at any time after the Effective Time; (C) any KLX Assets, whether arising before, on or after the Effective Time; (D) any Indebtedness other than Indebtedness that is an ESG Liability pursuant to clause (E) of the definition thereof; (F) any KLX Litigation Matter, Future KLX Litigation Matter and, to the extent relating to the ASG Business, any Future Joint Litigation Matter; (G) activities of any member of the ESG Group or their Representatives acting on behalf of or in support of the ASG Business at any time prior to the Effective Time; and (H) any Transaction Expenses (without prejudice to any reimbursement of Spin Costs pursuant to Section 3.01(c)).

        KLX Litigation Matters means the Proceedings set forth in Schedule I—Part D, any Proceedings by any shareholders by or on behalf of shareholders of KLX in their capacity as such (including any derivative Proceeding) and any other Proceedings related to the KLX Assets or KLX Liabilities.

        KLX Names and Marks means, collectively, any Trademark included in the KLX Intellectual Property and/or KLX assets, any variation or acronym thereof, or any Trademark or other identifier of source or goodwill containing, incorporating or associated with any such Trademark.

        Liability means any liability, debt, obligation, duty, deficiency, interest, Tax, penalty, fine, demand, judgment, cause of action or other damage or loss (including loss of benefit), cost or expense of any kind or nature whatsoever, whether asserted or unasserted, absolute or contingent, known or unknown, accrued or unaccrued, liquidated or unliquidated, whether or not foreseeable, and whether due or to become due and regardless of when asserted.

        Losses means any and all damages, losses, Liabilities, penalties, judgments, settlements, claims, payments, fines, interest, costs and expenses (including the costs and expenses of any and all Proceedings, assessments, judgments, settlements and compromises relating thereto and the reasonable costs and expenses of attorneys', accountants', consultants' and other professionals' fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder) and excluding Taxes.

        Management Assessments has the meaning set forth in Section 3.07(a).

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        Merger Sub has the meaning set forth in the Recitals.

        Order shall mean any decree, order, judgment, injunction, temporary restraining order, writ, determination, ruling, settlement or stipulation or other order in any Proceeding or similar requirement by or with any Governmental Authority.

        Other Party's Auditors has the meaning set forth in Section 3.07(a).

        Party or Parties has the meaning set forth in the Preamble.

        Party has the meaning set forth in the Preamble.

        Person shall mean any individual or any corporation, limited liability company, partnership, trust, association or other entity of any kind.

        Pre-Spin Transaction has the meaning set forth in the Recitals.

        Proceeding shall mean legal, administrative, arbitral, civil, criminal, investigative, appellate or other proceedings, suits, claims, charges, complaints, settlements, hearings, audits, examinations, or actions.

        Record Date means 11:59 pm Eastern Time on the date to be determined by the Board as the record date for determining the KLX Shares in respect of which shares of ESG SpinCo Common Stock will be distributed pursuant to the Distribution.

        Record Holders has the meaning set forth in Section 2.01(b)(i).

        Registration Expenses has the meaning set forth in Section 4.10(e).

        Representatives means, with respect to a Person, the directors, managers, officers, employees, agents or advisors (including attorneys, accountants, consultants, bankers and financial advisors) of such Person.

        Review Period has the meaning set forth in Section 3.01(b).

        SEC means the United States Securities and Exchange Commission.

        Securities Act means the United States Securities Act of 1933, as amended.

        Spin Costs means all fees, expenses, and other amounts that have been incurred or are payable by any member of the KLX Group (or incurred or paid by the ESG Group prior to the Effective Time) to the extent payable or incurred in connection with the preparation, negotiation and execution of this Agreement, the ESG Documents, the ESG Registration Statement and the Other ESG Required Filings (in each case, as defined in the ASG Merger Agreement), and the other transaction documents contemplated hereby and thereby and the evaluation, preparation for, review of, negotiation and consummation of the Spin-Off and the other transactions contemplated hereby and thereby, including the following: (a) the fees and disbursements of, or other similar amounts charged by, counsel to any such Persons, (b) the out of pocket expenses, if any, of any such Persons; and (c) the fees and expenses of, or other similar amounts charged by, any accountants, agents, financial advisors, consultants, and experts employed by any such Person; provided that in no event shall Spin Costs include (i) any of the foregoing incurred in connection with any dispute between the Parties hereto (or any member of their respective Groups) or Section 3.01 or (ii) any consent fees payable to bondholders, lenders or an agent on their behalf in connection with the Consent or the Bank Consent (each as defined in the ASG Merger Agreement) and any fees of JPMorgan Chase Bank associated therewith.

        Spin Costs Cap means $10,000,000.

        Spin-Off has the meaning set forth in the Recitals.

        Subsidiary of a Person shall mean any other Person with respect to which the first Person (i) has the right to elect a majority of the board of directors or other Persons performing similar functions or

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(ii) beneficially owns more than fifty percent (50%) of the voting stock (or of any other form of voting or controlling equity interest in the case of a Person that is not a corporation), in each case, directly or indirectly through one or more other Persons.

        Tax means any and all national, federal, state, local municipal and foreign income, capital gains, profits, margin franchise, gross receipts, margin, capital, net worth, sales, use, withholding, payroll, estimated, goods and services, value added, ad valorem, alternative or add-on, registration, environmental, custom, general business, employment, social security (or similar), disability, workmen's compensation, business, occupation, unemployment, premium, real property, personal property (tangible and intangible), capital stock, stamp, customs, transfer (including real property transfer or gains), conveyance, severance, production, excise, environmental (including Code section 59A), windfall profits and other taxes, governmental fees, withholdings, duties, charges, fees, levies, imposts, license and registration fees and other similar charges and assessments in lieu of, or in the nature of, a tax (including any and all fines, penalties, assessments, and additions attributable to or otherwise imposed on or with respect to any such taxes, fees, levies, duties, tariffs, imposts, and other similar charges or assessments (together with any and all interest, penalties and additions to tax)) computed on a separate or consolidated, unitary or combined basis, imposed by or on behalf of any Taxing Authority and (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, joint and several liability, or for being a member of an affiliated, consolidated, combined, unitary or other group (defined within the meaning of Section 1504(a) of the Code or any similar provision of foreign, state or local Applicable Law) for any period, or payable by reason of contract assumption, operation of Law, or otherwise, and (iii) any liability for the payment of amounts described in clause (i) or (ii) as a result of any Tax sharing, Tax indemnity or Tax allocation agreement or any other express agreement to pay or indemnify any other Person whether by contract or otherwise.

        Tax Contest means any audit, examination, investigation, dispute, claim or other administrative or judicial proceeding or review or other Proceeding by or with a Taxing Authority with respect to Taxes or Tax Returns.

        Tax Elections has the meaning set forth in Section 4.06(a).

        Tax Return means any return, declaration of estimated Tax, report, estimate, claim for refund, information return or statement, including any related or supporting information with respect to any of the foregoing, filed or to be filed with any Taxing Authority in connection with the determination, assessment, collection or administration of any Tax.

        Taxing Authority means any Governmental Authority exercising Tax regulatory authority.

        Third Party Claim has the meaning set forth in Section 4.07(a).

        Trademarks means trademarks, slogans, logos, symbols, certification marks, collective marks, uniform resource locators (URL's), corporate names, service marks, trade dress and Internet domain names, trade names, whether statutory or common law, whether registered or unregistered, whether establisher or registered in the United States or any other country, and registrations and applications for registration thereof, together with the goodwill associated therewith and any and all (i) rights and privileges arising under Applicable Law and international treaties and conventions with respect to such use of any trademarks, (ii) reissues, continuations, extensions and renewals thereof and amendments thereto, (iii) income, fees, royalties, damages and payments now and hereafter due and/or payable thereunder and with respect thereto, including damages, claims and payments for past, present.

        Transaction Expenses means all fees, expenses, and other amounts that have been incurred or are payable by any member of the KLX Group in connection with the preparation, negotiation, and execution of this Agreement, the ASG Merger Agreement, the Ancillary Agreements and the other transaction documents contemplated hereby and thereby and the evaluation, preparation for, review of, negotiation and consummation of the transactions contemplated hereby and thereby and of other

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strategic alternatives, including the following: (a) the fees and disbursements of, or other similar amounts charged by, counsel to any such Persons, (b) the out of pocket expenses, if any, of any such Persons; (c) the fees and expenses of, or other similar amounts charged by, any accountants, agents, financial advisors, consultants, and experts employed by any such Person and (d) any and all consent fees payable to bondholders, lenders or an agent on their behalf in connection with the Consent or the Bank Consent (each, as defined in the ASG Merger Agreement) and any fees of JPMorgan Chase Bank associated therewith, but specifically excluding any Spin Costs in excess of the Spin Costs Cap and any fees, expenses, and other amounts incurred or payable by the ESG Group after the Effective Time; provided that in no event shall Transaction Expenses include any of the foregoing incurred in connection with any dispute between the Parties hereto (or any member of their respective Groups) or Section 3.01.

        Transition Services Agreement has the meaning set forth in Section 8.01.


ARTICLE II
THE DISTRIBUTION

2.01
The Distribution

(a)
ESG SpinCo shall cooperate with KLX to accomplish the Distribution and shall promptly take any and all actions reasonably necessary or desirable to effect the Distribution. KLX shall select an investment bank or manager in connection with the Distribution, as well as a financial printer, the Agent and financial, legal, accounting and other advisors and consultants for ESG SpinCo. KLX or ESG SpinCo, as the case may be, will provide, or cause the applicable member of its Group to provide, to the Agent all share certificates and any documentation or information required in order to complete the Distribution.

(b)
Subject to the terms hereof,

(i)
on or prior to the Distribution Date, for the benefit of and distribution to the holders of issued and outstanding KLX Shares (other than, for the avoidance of doubt, restricted stock awards, performance stock unit awards or restricted stock unit awards granted pursuant to KLX equity plans, which shall be treated as provided for in the Employee Matters Agreement) as of the Record Date (the Record Holders), KLX will deliver to the Agent all of the issued and outstanding shares of ESG SpinCo Common Stock then owned by KLX and book-entry authorizations for such shares; and

(ii)
on the Distribution Date, KLX shall instruct the Agent to distribute, by means of a pro rata dividend, to each Record Holder (or such Record Holder's bank or brokerage firm on such Record Holder's behalf) electronically, by direct registration in book-entry form, the number of shares of ESG SpinCo Common Stock to which such Record Holder is entitled based on a distribution ratio to be determined by KLX in its sole discretion.

(c)
The Distribution shall be effective at the Effective Time. On or as soon as practicable after the Distribution Date, the Agent will mail to each Record Holder an account statement indicating the number of shares of ESG SpinCo Common Stock that have been registered in book-entry form in the name of such Record Holder.

2.02
Fractional Shares

        Shareholders holding a number of shares of KLX Shares, on the Record Date, which would entitle such shareholders to receive less than one whole share of ESG SpinCo Common Stock in the Distribution will receive cash, without any interest thereon, in lieu of fractional shares. Fractional shares of ESG SpinCo Common Stock will not be distributed in the Distribution nor credited to

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book-entry accounts. The Agent shall, as soon as practicable after the Distribution Date, (a) determine the number of whole shares and fractional shares of ESG SpinCo Common Stock allocable to each Record Holder, (b) aggregate (as completely as possible) all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions, in each case, at then-prevailing trading prices on behalf of holders who would otherwise be entitled to fractional share interests and (c) distribute to each such holder, or for the benefit of each beneficial owner, such holder's or owner's ratable share of the net proceeds of such sale, based upon the average gross selling price per share of ESG SpinCo Common Stock after making appropriate deductions for any amount required to be withheld under Applicable Law and less any brokers' charges, commissions or transfer Taxes. ESG SpinCo shall bear the cost of brokerage fees incurred in connection with these sales of fractional shares, which sales shall occur as soon after the applicable Distribution Date as practicable and as determined by the Agent. None of KLX, ESG SpinCo or the Agent will guarantee any minimum sale price for the fractional shares of ESG SpinCo Common Stock. Neither KLX nor ESG SpinCo will pay any interest on the proceeds from the sale of fractional shares. The Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Agent nor the broker-dealers through which the aggregated fractional shares are sold will be Affiliates of KLX or ESG SpinCo.

2.03
Distribution Date

        The consummation of the transactions provided for in this ARTICLE II shall only be effected after the Distribution has been declared by the Board and after all of the conditions set forth in Section 2.04 shall have been satisfied.

2.04
Conditions to the Distribution

        The consummation of the Distribution shall be subject to the satisfaction of the following conditions:

(a)
The Board, in its sole and absolute discretion, shall have authorized and approved the transactions contemplated hereby and not withdrawn such authorization and approval, shall be satisfied that the Distribution will be made out of surplus in accordance with Section 170 of the General Corporation Law of the State of Delaware and shall have declared the dividend of ESG SpinCo Common Stock to the holders of issued and outstanding KLX Shares;

(b)
The Form 10 shall have been declared effective by the SEC and shall not be the subject of any stop order or proceedings seeking a stop order, all necessary permits and authorizations under the Securities Act and the Exchange Act relating to the issuance and trading of shares of ESG SpinCo. ESG SpinCo Common Stock shall have been obtained and be in effect, and such shares of ESG SpinCo. ESG SpinCo Common Stock shall have been approved for listing on the NASDAQ and the period of time specified by Applicable Law for the mailing of an Information Statement shall have expired (assuming such Information Statement is mailed immediately after the ESG Registration Statement (as defined in the ASG Merger Agreement) is declared effective by the SEC, whether or not the Information Statement has in fact been mailed).

(c)
Any approvals of non-United States Governmental Authorities required in connection with the Spin-Off or the Distribution shall have been obtained;

(d)
No Governmental Authority having jurisdiction over the KLX Group or the ESG Group shall have issued or entered any Order after the date of this Agreement, and no Applicable Law shall have been enacted or promulgated after the date of this Agreement, in each case, that is then in effect and has the effect of permanently restraining, enjoining or otherwise prohibiting the consummation of the Distribution or the other transactions contemplated hereby; and

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(e)
The Merger Agreement has not been terminated pursuant to its terms.

        Notwithstanding anything to the contrary in this Agreement, none of the Parties shall consummate the Distribution prior to obtaining the Consent and the Bank Consent (each, as defined in the ASG Merger Agreement) if the Distribution occurs other than substantially concurrently with the Closing, and no Party shall be obligated to consummate the Distribution prior to obtaining such Consent and such Bank Consent unless the Distribution occurs substantially concurrently with the Closing (as defined in the ASG Merger Agreement) and the ASG Buyer provides a sufficient amount of cash on the Closing Date in order to enable KLX to satisfy and discharge the Company Notes and to pay the Payoff Amount with respect to the Existing Credit Agreement (each, as defined in the ASG Merger Agreement).


ARTICLE III
COVENANTS

3.01
ESG Funding Adjustment

(a)
As soon as reasonably practicable following the Closing Date, but in any event within sixty (60) days thereafter, KLX shall prepare in good faith and deliver to ESG SpinCo, at the sole expense of KLX, a statement setting forth its calculation of the (i) FCF Net Amount and (ii) the Spin Costs, in each case together with reasonable supporting documentation related to such calculation (the Funding Statement). During such 60-day period, ESG SpinCo shall provide KLX and its accountants with reasonable access to the books and records of ESG SpinCo, during regular business hours and on reasonable advance notice, to the extent reasonably necessary for KLX and its accountants to prepare the Funding Statement. The Funding Statement shall be prepared in accordance with this Agreement.

(b)
For a period of thirty (30) days following its receipt of the Funding Statement (the Review Period), ESG SpinCo shall be entitled to review the Funding Statement to confirm the accuracy thereof and of KLX's calculations. During the Review Period, KLX shall provide ESG SpinCo and its accountants reasonable access to the books and records of the KLX Group, during regular business hours and on reasonable advance notice, to the extent reasonably necessary for ESG SpinCo and its accountants to assess the accuracy of the Funding Statement, to prepare a notice of Disputed Items, if any, or to prepare materials for presentation to the Audit Firm. If ESG SpinCo fails to give KLX written notice of any Disputed Items by 11:59 PM Eastern Time on the last day of the Review Period (the Expiration Time), then the Funding Statement shall become the Final Funding Statement for purposes hereof and shall be binding on the Parties. If ESG SpinCo disputes any items on the Funding Statement, ESG SpinCo shall deliver a written notice of such disputed items to KLX prior to the Expiration Time; provided that, such disputed items shall be based only on the existence of mathematical errors in the Funding Statement or on the failure of one or more components of the FCF Net Amount or the Spin Costs to be prepared in accordance with this Agreement (the Disputed Items) and on no other basis. The notice of Disputed Items shall specify in reasonable detail any adjustment to the FCF Net Amount proposed by ESG SpinCo and the basis therefor, including in each case the specific items and amounts proposed to be adjusted. If ESG SpinCo gives KLX written notice of any Disputed Items prior to the Expiration Time, KLX and ESG SpinCo shall attempt in good faith to agree on any adjustments that should be made to the Funding Statement. If KLX and ESG SpinCo fail to resolve any Disputed Item within forty (40) days after ESG SpinCo receives the Funding Statement, the Parties will promptly engage the Audit Firm to resolve any such Disputed Items in accordance with the terms of this Agreement, and, in connection with such engagement, KLX, ESG SpinCo and any other member of their respective Groups, shall execute any engagement, indemnity or other agreements as the Audit Firm may require as a condition to such engagement. The Audit Firm's engagement shall be limited to the resolution of Disputed Items that have been identified by ESG SpinCo, and no

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    other matter relating to the Final Funding Statement shall be subject to determination by the Audit Firm. KLX and ESG SpinCo shall reasonably cooperate with the Audit Firm in an effort to resolve any Disputed Item as soon as reasonably possible after the Audit Firm is engaged. The decision of the Audit Firm shall be made within thirty (30) days after being engaged, or as soon as possible thereafter. In any event, the Audit Firm's decision with respect to the Disputed Items shall be final and binding on the Parties. The Funding Statement shall be revised, if necessary, to reflect the final determination of the FCF Net Amount (the final form of the Funding Statement, including any revisions that are made thereto pursuant to this Section 3.01, if any, is referred to herein as the Final Funding Statement). The fees of the Audit Firm shall be borne equally by KLX and ESG SpinCo.

(c)
If (i) the Final FCF Net Amount, as determined in the Final Funding Statement, is negative, then ESG SpinCo shall pay to KLX such Final FCF Net Amount, and, without duplication, (ii) the aggregate amount of Spin Costs exceed the Spin Costs Cap, as determined in the Final Funding Statement, then ESG SpinCo shall pay to KLX such excess amount, in each case within three (3) Business Days after the Final Funding Statement becoming final and binding on the Parties pursuant to Section 3.01(b) by means of a wire transfer of immediately available funds to an account designated in writing by KLX.

(d)
Subject only to the adjustment in clause (i) of Section 3.01(c), the Parties agree that (i) all cash generated by the operations of the ESG Business from May 1, 2018 through the Effective Time will be for the account of the ESG Group, and that such cash so generated may be retained by the members of the ESG Group, and to the extent that such cash has been transferred or swept from the ESG Group to, or on behalf of, any member of the KLX Group, prior to the Effective Time, KLX shall cause such cash to be returned to ESG SpinCo, on behalf of the ESG Group, by way of an intragroup funds transfer or settlement of intra-group balances, and (ii) subject to Section 3.01(e) below, all cash generated by the operations of the ASG Business from May 1, 2018 through the Effective Time will be for the account of the KLX Group, and that such cash so generated may be retained by the members of the KLX Group, and to the extent that such cash has been transferred to any member of the ESG Group, prior to the Effective Time to the extent the members of the KLX Group have not been compensated in the Final FCF Net Amount, ESG SpinCo shall cause such cash to be returned to KLX, on behalf of KLX, by way of an intragroup funds transfer or settlement of intra-group balances.

(e)
For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement, the ESG Group shall be permitted to retain the ESG Cash (as defined in the ASG Merger Agreement) which shall be funded by KLX, as contemplated in the Merger Agreement.

3.02
Credit and Performance Support Obligations

(a)
ESG SpinCo shall (with the reasonable cooperation of KLX) use its commercially reasonable efforts to, as soon as reasonably practicable, have any member of the KLX Group removed as guarantor of or obligor for any ESG Liability, which shall include the removal of any related Encumbrance on or in any KLX Asset.

(b)
Notwithstanding Section 3.02(a), on or prior to the Distribution Date, with respect to any guaranty or obligation for any ESG Liability that obligates a member of the KLX Group, the Parties shall cause ESG SpinCo or another member of the ESG Group to procure a release of such guaranty and/or obligation by either (A) executing a guaranty agreement in the form of the existing guaranty or such other form as is agreed to by the relevant parties to such guaranty agreement or (B) executing an amendment to the agreement giving rise to such obligation in such form as is necessary to obtain such release, except to the extent that such existing guaranty or amendment contains representations, covenants or other terms or provisions with which either (x) ESG SpinCo

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    (or another member of the ESG Group, as applicable) would be reasonably unable to comply or (y) ESG SpinCo would not reasonably be able to avoid breaching. In the event a release is not procured on or prior to the Distribution Date as required pursuant to the first sentence of this Section 3.02(b), then on the Distribution Date, ESG Spinco or another member of the ESG Group shall provide KLX an Acceptable Letter of Credit in an amount equal to any obligation(s) for which a release was not procured. "Acceptable Letter of Credit" means an unconditional, irrevocable letter(s) of credit in form satisfactory to KLX, in favor of KLX, issued by a financial institution with a short term commercial paper rating from (i) S&P of at least A-1 or (ii) Moody's of at least P-1, or such other financial institution acceptable to KLX (in its sole discretion).

(c)
If ESG SpinCo is unable to obtain, or to cause to be obtained, any such required removal as set forth in Section 3.02(a) and Section 3.02(b), ESG SpinCo shall, and shall cause the relevant ESG Group beneficiary to, indemnify and hold harmless the KLX Group guarantor or obligor for any Losses arising from or relating thereto (in accordance with the provisions of Article IV) and shall timely pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder.

3.03
Certificate of Incorporation; Bylaws; Directors and Officers

On or prior to the Distribution Date,

(a)
all necessary actions shall be taken to adopt the form of Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws filed by ESG SpinCo with the SEC as exhibits to the Form 10.

(b)
KLX shall take all reasonably necessary actions to cause the board of directors of ESG SpinCo to consist of the individuals identified in the Information Statement as directors of ESG SpinCo; provided, however, that to the extent required by any Applicable Law or requirement of NASDAQ or any other national securities exchange, as applicable, one independent director shall be appointed by the existing board of directors of ESG SpinCo and begin his or her term prior to the Distribution and shall serve on ESG SpinCo's audit committee, compensation committee and nominating and corporate governance committee; and

(c)
(i) KLX shall direct its applicable employees and any employees of any member of KLX Group (excluding any employees of any member of the ESG Group and those set forth on Schedule 3.03(c)) to resign, effective as of no later than the Distribution Date, from all positions as officers or directors of any member of the ESG Group in which they serve and (ii) ESG SpinCo shall direct its applicable employees and any employees of any member of the ESG Group to resign, effective as of the Distribution Date, from all positions as officers or directors of any members of KLX Group.

3.04
Transfer of Business Assets and Liabilities after the Distribution Date

(a)
To the extent that a member of the ESG Group has record or beneficial ownership, or possession, of any KLX Asset on or after the Distribution Date, ESG SpinCo shall, and shall cause any other applicable member of the ESG Group to, use its commercially reasonable efforts to transfer, or cause to be transferred, to KLX (or, as designated by KLX, to one of its Subsidiaries) such Asset for no value. Pending such transfer, ESG SpinCo shall, or shall cause its Subsidiaries to, operate or retain such Asset as may reasonably be instructed by KLX and provide to KLX all of the benefits and Liabilities associated with the ownership and operation thereof.

(b)
To the extent that a member of KLX Group has record or beneficial ownership, or possession, of any ESG Asset after the Distribution Date, KLX shall, and shall cause any other applicable member of the KLX Group to, use its commercially reasonable efforts to transfer, or cause to be

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    transferred, to ESG SpinCo (or, as designated by ESG SpinCo, to one of its Subsidiaries) such Asset for no value. Pending such transfer, KLX shall or shall cause its Subsidiaries to operate or retain such Asset as may reasonably be instructed by ESG SpinCo and provide to ESG SpinCo all of the benefits and Liabilities associated with the ownership and operation thereof.

3.05
Former Directors, Managers and Officers(11)

(a)
ESG SpinCo will, for a period of six (6) years after the Distribution Date, maintain in effect any exculpatory, indemnification and advancement of expenses provisions now existing in the Governing Documents of any member of the ESG Group for the benefit of any individual who served as a director, manager or officer of any member of the ESG Group at any time prior to the Distribution Date (the ESG D&O Indemnified Parties) and will not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any ESG D&O Indemnified Parties, except for any changes which may be required to conform with changes in Applicable Law or any changes which do not affect the application of such provisions to acts or omissions of such individuals prior to the Effective Time. Without limiting the generality of this Section 3.05(a), the provisions of this Section 3.05(a) are intended for the benefit of, and may be enforced by, each of the ESG D&O Indemnified Parties and their respective heirs only if the Distribution is consummated and will not be deemed exclusive of any other rights to which any such Person is entitled, whether pursuant to Applicable Law, Contract or otherwise.

(b)
ESG SpinCo will, as soon as practicable at or after the Distribution Date, procure that written resolutions be adopted and take any other corporate action or procure that such action be taken in order to grant the absolution, discharge, release and acquittal in full, to the fullest extent possible under Applicable Law, of each of the ESG D&O Indemnified Parties for the period up to the Distribution Date, except in the case of willful misconduct or fraud on the part of any such directors, managers or officers (the ESG D&O Release). ESG SpinCo will cause the ESG D&O Release to be ratified, approved and confirmed in all respects, if required under Applicable Law.

(c)
KLX will, for a period of six (6) years after the Distribution Date, maintain in effect any exculpatory, indemnification and advancement of expenses provisions now existing in the Governing Documents of any member of the KLX Group for the benefit of any individual who served as a director, manager or officer of any member of the KLX Group at any time prior to the Distribution Date (the KLX D&O Indemnified Parties) and will not amend, repeal or otherwise modify any such provisions in any manner that would adversely affect the rights thereunder of any KLX D&O Indemnified Parties, except for any changes which may be required to conform with changes in Applicable Law or any changes which do not affect the application of such provisions to acts or omissions of such individuals prior to the Effective Time. Without limiting the generality of this Section 3.05(c), the provisions of this Section 3.05(c) are intended for the benefit of, and may be enforced by, each of the KLX D&O Indemnified Parties and their respective heirs only if the Distribution is consummated and will not be deemed exclusive of any other rights to which any such Person is entitled, whether pursuant to Applicable Law, Contract or otherwise.

(d)
KLX will, as soon as practicable at or after the Distribution Date, procure that written resolutions be adopted and take any other corporate action or procure that such action be taken in order to grant the absolution, discharge, release and acquittal in full, to the fullest extent possible under Applicable Law, of each of the KLX D&O Indemnified Parties for the period up to the Distribution Date, except in the case of willful misconduct or fraud on the part of any such directors, managers or officers (the KLX D&O Release). KLX will cause the KLX D&O Release to be ratified, approved and confirmed in all respects, if required under Applicable Law.

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3.06
Insurance Matters

(a)
ESG SpinCo acknowledges and agrees that all insurance coverage for the members of the ESG Group and the ESG Business under insurance policies and/or self-insurance programs of the KLX Group (other than insurance policies and self-insurance programs solely of the ESG Group) will terminate as of the Effective Time and, following the Distribution, except as set forth in Section 3.06(b), no claims by ESG SpinCo or any of its Affiliates may be brought against any insurance policy or self-insurance program of the KLX Group in respect of the members of the ESG Group or the ESG Business regardless of whether the events underlying such claim arose prior to, at or after the Effective Time. For the avoidance of doubt, except as set forth in Section 3.06(b), it is understood that any insurance policies and self-insurance programs of the KLX Group will not terminate as of the Effective Time for the benefit of members of the KLX Group.

(b)
With respect to any claims under the KLX Group's occurrence-based insurance policies, workers' compensation insurance policies related to any ESG Business Employee, or third party U.S. automobile liability insurance policies, KLX will retain responsibility for claims on its policies to the extent that (i) the incidents or occurrences underlying any such claims occurred prior to the Effective Time and (ii) such coverage is available under such polices; provided, however, that ESG SpinCo will reimburse KLX for any (i) deductibles or self-insured retention amounts required by any such policies accruing after the Effective Time and (ii) administrative, service or other similar fees, costs or expenses accruing after the Effective Time in connection with the processing of any such claims. Such payments will be made by wire transfer of immediately available funds to an account designated in writing by KLX for such purposes. Following the Distribution, ESG SpinCo and KLX will reasonably work together, and provide such cooperation as is reasonably necessary, to conduct and settle any claim brought under any insurance policy of KLX Group for which ESG SpinCo is required to reimburse KLX pursuant to this Section 3.06(b).

3.07
Auditors and Audit; Annual Financial Statements and Accounting; Tax Cooperation

(a)
Each Party shall provide, or provide reasonable access to the other Party on a timely basis, all information reasonably required and requested by the other Party to meet its schedule for the preparation, printing, filing, and public dissemination of its audited 2018 annual financial statements and for management's assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K under the Securities Act and, to the extent applicable to such Party, its auditor's audit of its internal control over financial reporting and management's assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and the SEC's and Public Company Accounting Oversight Board's rules and auditing standards thereunder, if required (such assessments and audit being referred to as the Internal Control Audit and Management Assessments). With respect to information required or requested by KLX, such information shall be provided in the form, time and manner reasonably requested by KLX, which shall not be materially different than the form, time and manner required by KLX prior to the Distribution Date pursuant to the KLX Year End Financial Reporting Instructions in effect as of the Distribution Date. Without limiting the generality of the foregoing, each Party will provide all required financial and other information with respect to itself and its Subsidiaries to its auditors in a sufficient and reasonable time and in sufficient detail to permit its auditors to take all steps and perform all reviews necessary to provide sufficient assistance to the other Party's auditors (each such other Party's auditors, collectively, the Other Party's Auditors) with respect to information to be included or contained in such other Party's audited 2018 annual financial statements and to permit the Other Party's Auditors and management to complete the Internal Control Audit and Management Assessments, if required.

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(b)
Each Party shall authorize its respective auditors to make reasonably available to the Other Party's Auditors both the personnel who performed or are performing the annual audits of such audited Party (each such Party with respect to its own audit, the Audited Party) and work papers related to the annual audits of such Audited Party, in all cases within a reasonable time prior to such Audited Party's auditors' opinion date, so that the Other Party's Auditors are able to perform the procedures necessary to take responsibility for the work of the Audited Party's auditors as it relates to their auditors' report on such other Party's audited 2018 annual financial statements, all within sufficient time to enable such other Party to meet its timetable for the printing, filing and public dissemination of its audited 2018 annual financial statements. Each Party shall make reasonably available to the Other Party's Auditors and management its personnel and Records in a reasonable time prior to the Other Party's Auditors' opinion date and other Party's management's assessment date so that the Other Party's Auditors and other Party's management are able to perform the procedures they reasonably consider necessary to conduct the Internal Control Audit and Management Assessments.

(c)
In order to enable the principal executive officer(s) and principal financial officer(s) (as such terms are defined in the rules and regulations of the SEC) of KLX to make any certifications required of them under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, ESG SpinCo shall, within a reasonable period of time following a request from KLX in anticipation of filing such reports, cause its principal executive officer(s) and principal financial officer(s) to provide KLX with certifications of such officers in support of the certifications of KLX's principal executive officer(s) and principal financial officer(s) required under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 with respect to KLX's Quarterly Report on Form 10-Q filed with respect to the fiscal quarter during which the Distribution Date occurs (unless such quarter is the fourth fiscal quarter), each subsequent fiscal quarter through the third fiscal quarter of the year in which the Distribution Date occurs and KLX's Annual Report on Form 10-K filed with respect to the fiscal year during which the Distribution Date occurs. Such certifications shall be provided in substantially the same form and manner as such ESG SpinCo officers provided prior to the Distribution (reflecting any changes in certifications necessitated by the transactions contemplated hereby or any other transactions related thereto) or as otherwise agreed upon between KLX and ESG SpinCo.

(d)
To the extent it relates to a pre-Distribution Date period, (i) each of the Parties shall give the other Party as much prior notice as is reasonably practicable of any changes in, or proposed determination of, its accounting estimates from those in effect as of immediately prior to the Distribution Date or of any other action with regard to its accounting estimates or previously reported financial results which may affect the other Party's financial results, (ii) each of the Parties will consult with the other and, if requested by the Party contemplating such changes, with the Other Party's Auditors and (iii) unless required by generally accepted accounting principles or a reasonable interpretation thereof by either Party's auditors, Applicable Law or a Governmental Authority, neither Party shall make such determination or changes which would affect the other Party's previously reported financial results without prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Further, each Party will give the other Party prompt notice of any amendments or restatements of accounting statements with respect to pre-Distribution Date periods and will provide the other Party with access as provided in Section 3.07(b) as promptly as possible such that the other Party will be able to satisfy its financial reporting requirements.

(e)
In the event either KLX or ESG SpinCo is the subject of any SEC or other Governmental Authority's comment, review, audit or investigation (formal or informal) relating to a period prior to the Distribution Date and which in any way relates to the other Party or the other Party's public filings, such Party shall, to the extent not prohibited by Applicable Law and upon the execution by the Parties of a customary confidentiality agreement or other undertaking of confidentiality in

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    respect thereof, provide the other Party with a copy of any comment or notice of such review or investigation and shall, to the extent not prohibited by Applicable Law, the SEC or such other Governmental Authority, give the other Party a reasonable opportunity to be involved in responding to such comment, review, audit or investigation, and such other Party shall reasonably cooperate with such Party in connection with responding to such comment, review, audit or investigation.

(f)
Each Party shall cooperate fully, as and to the extent reasonably requested by another Party, in connection with the filing of Tax Returns and the defense of any Tax Contest relating to the Distribution, the Pre-Spin Transaction or any other transactions arising under this Agreement. Such cooperation shall include (a) the retention and (upon the another Party's reasonable request) the provision of all books and records and information which are reasonably relevant to any such Tax Returns or Tax Contest and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and (b) written notice to the other Party prior to transferring, destroying, or discarding any such books and records and, if the other Party so requests . The Parties shall retain all books and records with respect to Tax matters pertinent to the ESG Business and ASG Business relating to any Taxable period that includes the Distribution Date or other matters covered by this Agreement until sixty (60) days after the expiration of the statute of limitations (and, to the extent notified by a Party, any extensions thereof) of the respective Taxable periods, and shall abide by all record retention agreements entered into with any Tax Authority. In addition, the Parties shall comply with reasonable requests for assistance in relation to preparation of any other Tax Returns and Tax Contests.

(g)
Any information exchanged pursuant to this Section 3.07 is subject to Section 5.06, and in no event will any Party be required to provide any information pursuant to this Section 3.07 in violation of Section 5.06.

(h)
The Party requesting information under this Section 3.07 or otherwise pursuant to this Agreement or any Ancillary Agreement agrees to reimburse the other Party for the reasonable, out-of-pocket costs associated with complying with such request (not including internal costs of preparation, but including reasonable counsel and other professional fees). To the extent not otherwise specifically provided elsewhere in this Agreement or in any Ancillary Agreement, such costs shall be computed in accordance with the providing Party's standard methodologies and procedures.

3.08
Further Assurances

(a)
As between the Parties (and the other members of their respective Group), all payments, reimbursements and other Assets received after the Effective Time by any Party (whether received directly or indirectly through another member of its respective Group) that relate to a business, Asset or Liability of the other Party (including members of the other Group) shall be held by such Party in trust for the use and benefit of the Party entitled, directly or indirectly, thereto (at the expense of the Party so entitled) and, promptly upon receipt by such Party of any such payment, reimbursement or other Asset, such Party shall promptly pay or transfer or shall cause the applicable member of its Group to pay over or transfer to the applicable Party (or, at the direction, in writing, of the applicable Party, to another member of such Party's Group) such Asset or the amount of such payment or reimbursement without right of set-off, net of any costs, including Tax costs, to the Party making such payment.

(b)
In addition to and without limiting the actions specifically provided for elsewhere in this Agreement (including Section 3.08(a) and Section 3.04), each of the Parties shall reasonably cooperate with each other and use (and will cause their respective Subsidiaries to use) commercially reasonable efforts, on and after the Effective Time, to take, or to cause to be taken,

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    all actions, and to do, or to cause to be done, all things reasonably necessary on its part to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements; provided that in no event shall either Party hereto be required to violate Applicable Law or applicable contractual obligations pursuant to this Section 3.08(b).

(c)
Without limiting the foregoing, on and after the Effective Time, (i) each Party shall reasonably cooperate with the other Party, and (ii) without any further consideration, but at the expense of the requesting Party from and after the Effective Time, use commercially reasonable efforts to (A) execute and deliver, or to cause to be executed and delivered, all instruments, and to make all filings with, and to obtain all consents and/or governmental approvals and/or any permit, license, Contract, indenture or other instrument (including any consents or governmental approvals), and (B) to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby.

(d)
The provisions of this Section 3.08 are not intended to limit or otherwise modify in any way the Parties' rights and obligations under the Employee Matters Agreement or the IP Matters Agreement.

3.09
Non-Competition

        ESG SpinCo acknowledges and agrees, on its and its controlled Affiliates' behalf, that KLX and its Affiliates (including following the consummation of the transactions contemplated by the ASG Merger Agreement, Parent and its Affiliates) would be irreparably damaged if ESG SpinCo or any of its controlled Affiliates were to provide services or to otherwise participate in the ownership, management, operation or control of a business that engages in the sale of aerospace fasteners and other consumables directly to suppliers to the commercial, business jet, military and defense airframe manufacturers, the airframe manufacturers, the airlines, aircraft leasing companies, MRO providers, domestic military depots, general aviation, and other distributors anywhere in the world (the Restricted Business) and that any such competition or activity by ESG SpinCo or any of its controlled Affiliates would result in a significant loss of goodwill by KLX and its Affiliates in respect of the Restricted Business. Effective as of, and contingent upon, the Effective Time, ESG SpinCo agrees that until the fifth (5th) anniversary of the Distribution Date, it will not, and will cause its controlled Affiliates not to, directly or indirectly, through one or more Representatives or other third parties, own, manage, operate, control or participate in the ownership, management, operation or control of a Restricted Business anywhere in the world (it is understood and agreed that for this purpose the Restricted Business shall be deemed to be conducted everywhere in the world); provided, however, that it shall not be a violation of this Section 3.09 for ESG SpinCo or its Affiliates to (i) own (directly or indirectly), as a passive investment, any class of securities that are publicly traded or listed on any securities exchange or automated quotation system and that constitutes less than two percent (2%) of the outstanding voting power of the issuing Person; (ii) permit their Representatives to perform speaking engagements and receive honoraria in connection with such speaking engagements; or (iii) engage or participate in any activity consented to in advance in writing by Parent where Parent acknowledges in such writing that such activity would be a violation of this Section 3.09 and expressly waives compliance with this Section 3.09. ESG SpinCo agrees, on its and its controlled Affiliates' behalf, that this covenant is reasonably designed to protect KLX's substantial investment and is reasonable with respect to its duration, geographical area and scope.

3.10
Transfer of Permits

        From the date hereof until the Effective Time, at KLX's sole cost and expenses, KLX and ESG SpinCo shall, and shall cause each member of their respective Group to, take all actions necessary or

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desirable to transfer the record and beneficial ownership of those certain franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, exemptions, consents, certificates, approvals, registrations, clearances, orders and other authorizations that constitute ESG Assets (the Transferred Permits) from each and every member of the KLX Group who is the record and/or beneficial owners of such Transferred Permits to a member of the ESG Group.


ARTICLE IV
INDEMNIFICATION

4.01
Release of Pre-Distribution Claims

(a)
Except as is otherwise expressly provided in this Agreement or in any Ancillary Agreement, from and after the Effective Time, each Party for itself and each member of its respective Group, its and their predecessors, successors and assigns, does hereby remise, release and forever discharge the other Party and each member of its respective Group and all Persons who at any time prior to the Effective Time were directors, officers, agents or employees of any member of such other Party or its Group (in their respective capacities as such), in each case, together with their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of Applicable Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Effective Time, whether or not known as of the Effective Time.

(b)
Notwithstanding anything to the contrary herein, nothing contained in Section 4.01(a) releases or shall release any Person from the obligations under this Agreement or any Ancillary Agreement (in each case in accordance with its terms).

(c)
Notwithstanding anything to the contrary herein, nothing in Section 4.01(a) shall release any Person from:

(i)
any Liability provided in or resulting from any Contract among any members of the KLX Group, on the one hand, and any members of the ESG Group, on the other hand, where such Contract or obligation survives the Effective Time, or any other Liability that survives the Effective Time pursuant to the express terms of this Agreement or any Ancillary Agreement; and

(ii)
any Liability to the extent either Party is entitled to, and actually receives, indemnification from a third party if that assignment, release or discharge of such Liability pursuant to Section 4.01(a) would cause such third party indemnification obligations to be terminated.

(d)
Following the Effective Time, no Party hereto shall make, or permit any member of its Group to make, any claim or demand, or commence any Proceeding asserting any claim or demand, including any claim of contribution or any indemnification, against the other Party or any member of its respective Group, or any other Person released pursuant to Section 4.01(a), with respect to any Liabilities released pursuant to Section 4.01(a).

(e)
It is the intent of each Party, by virtue of the provisions of this ARTICLE IV, to provide for a full and complete general release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed on or before the Effective Time, between or among ESG SpinCo or any member of the ESG Group, on the one hand, and KLX or any member of the KLX Group, on the other hand, except as expressly set forth in Section 4.01(c). At any time, at the request of any other Party, each Party shall cause each member of its Group to execute and deliver releases reflecting the provisions hereof.

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4.02
Tax Matters

(a)
Withholding Taxes.    Each member of the KLX Group and each member of the ESG Group shall deduct and withhold from amounts otherwise payable (or distributable) pursuant to this Agreement such amounts as are required to be deducted and withheld under Applicable Law and such amounts will be treated as being paid (or distributed) to the Person with respect to which such deduction and withholding was made. KLX or any withholding agent acting on its behalf may sell a portion of the ESG SpinCo Common Stock otherwise distributable to any Person in order to pay any withholding Taxes required to be withheld under Applicable Law from distributions to such Person, as well as any related fees and expenses. If a Taxing Authority determines that the KLX Group is liable with respect to any withholding Taxes on the Distribution, the ESG Group shall promptly indemnify, reimburse, defend and hold harmless the KLX Group for such Taxes.

(b)
The Pre-Spin Transaction.    The Parties agree to treat the Pre-Spin Transaction as described in section 351 of the Code to the extent permitted by Applicable Law.

4.03
Indemnification by KLX

        Except as otherwise specifically set forth in any provision of this Agreement or any Ancillary Agreement, following the Effective Time, KLX shall, and shall cause the other members of the KLX Group to, indemnify, reimburse, defend and hold harmless the ESG Indemnitees from and against (i) any and all Losses arising out of, by reason of, or otherwise in connection with (A) the KLX Liabilities or (B) any breach by KLX of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder; provided that such indemnity shall not extend to any past, present or future director, officer or employee or agent of the KLX Group to the extent such Person would not be eligible for indemnification under KLX's certificate of incorporation or bylaws with respect to such matter and (ii) any and all Taxes due with respect to or required to be paid on any KLX Combined Income Tax Return to the extent imposed on or assessed against any ESG Indemnitees.

4.04
Indemnification by ESG SpinCo

        Except as otherwise specifically set forth in any provision of this Agreement or any Ancillary Agreement, following the Effective Time, ESG SpinCo shall, and shall cause the other members of the ESG Group to, indemnify, reimburse, defend and hold harmless the KLX Indemnitees from and against any and all Losses arising out of, by reason of or otherwise in connection with (i) the ESG Liabilities, (ii) any action taken by ESG SpinCo or any member of the ESG Group or any Person acting on behalf of any member of the ESG Group, in each case, after the Effective Time and to the extent relating to the Spin-Off, (iii) any Liabilities to the extent relating to, to the extent arising out of or to the extent resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated in any Disclosure Document, or necessary to make the statements therein not misleading, with respect to all information contained in, or incorporated by reference into, any Disclosure Document filed by any Party in connection with the Distribution, or (iv) any breach by ESG SpinCo of any provision of this Agreement or any Ancillary Agreement unless such Ancillary Agreement expressly provides for separate indemnification therein, in which case any such indemnification claims shall be made thereunder; provided that such indemnity shall not extend to any past, present or future director, officer or employee or agent of the ESG Group to the extent such Person would not be eligible for indemnification under ESG SpinCo's certificate of incorporation or bylaws with respect to such matter. Notwithstanding anything herein to the contrary, in no event shall ESG SpinCo be required to indemnify, reimburse, defend or hold harmless any KLX Indemnitee from or against any Losses that arise out of or are otherwise incurred in connection with any Proceeding commenced prior to or after the Effective Time by or on behalf of a

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KLX shareholder in its capacity as such to the extent such Proceeding relates to the Transactions (as defined in the ASG Merger Agreement) or any filings with the SEC made in connection therewith, other than to the extent such Proceedings (A) relate to the ESG Registration Statement or the Other ESG Required Filings (in each case, as defined in the ASG Merger Agreement), or (B) arise after the Effective Time and relate solely to the Spin-Off. From and after the Effective Time, ESG SpinCo will indemnify, reimburse, defend and hold harmless the KLX Indemnitees from or against any Losses that arise out of or are otherwise incurred in connection with any Proceeding commenced after the Effective Time by or on behalf of a KLX shareholder in its capacity as such to the extent such litigation relates to the Distribution.

4.05
Distribution Gain Tax Indemnification

(a)
KLX shall within thirty (30) days of the Distribution Date determine whether it is required to take into account any gain as a result of the Distribution (Distribution Gain) for federal or corresponding state and local income Tax purposes.

(b)
For purposes of determining the amount of Distribution Gain, if any, for purposes of this Section 4.05 and for all related Tax reporting purposes, the Parties agree to (i) treat ESG SpinCo Common Stock as having a fair market value equal to its average trading price on the date of the Distribution and (ii) compute the Distribution Gain as if KLX had no expenses, losses or other Tax items for the Tax period in which the Distribution Gain is recognized and thus without taking into account any net operating loss carryovers, current year losses, Tax credits, Tax refunds, or other Tax attributes.

(c)
At the request of either Party, the amount of the Distribution Gain shall be calculated or confirmed by an accounting firm of national reputation mutually agreed by ESG SpinCo and KLX, and the costs of such accounting firm, and any related reasonable out-of-pocket expenses, shall be borne equally by the Parties. The Parties shall cooperate and act in good faith in assisting such accounting firm in computing or confirming the amount of Distribution Gain, as determined under this Section 4.05. The amount of Distribution Gain computed or confirmed by such accounting firm, after taking into account the comments of each Party, shall be final and binding on both Parties.

(d)
ESG SpinCo shall indemnify KLX for an amount equal to 24% of every dollar of Distribution Gain; provided, however that if either the Consent or Bank Consent (each, as defined in the ASG Merger Agreement) were not obtained by the ESG Termination Date (as defined in the ASG Merger Agreement) due only to ASG Buyer's failure to provide its consent to the consent fee referenced in the proviso to the first sentence of Section 6.14(a) of the ASG Merger Agreement, the indemnity payable by ESG SpinCo shall not exceed $50,000,000.

(e)
At the option of ESG SpinCo, any indemnity that it is required to pay under this Section 4.05 shall be payable either in cash or in ESG SpinCo Common Stock (or in a combination of cash and ESG SpinCo Common Stock). To the extent ESG SpinCo delivers ESG SpinCo Common Stock to satisfy its indemnity obligation under this Section 4.05, any ESG SpinCo Common Stock shall be deliverable within thirty (30) days of the date that KLX (or any consolidated group of which it is a member) actually files its income Tax Returns for such period and shall be considered to have a value equal to its average trading price on the day on which it is delivered to KLX. If ESG SpinCo elects to pay it in cash, it shall pay to KLX, by wire transfer of immediately available funds, any indemnity due with respect to Tax on Distribution Gain within thirty (30) days of the date that KLX (or any consolidated group of which it is a member) actually files its income Tax Returns for such period.

(f)
For all Tax purposes, to the extent permitted by Applicable Law, the Parties agree to treat any payment of the indemnity due hereunder as reducing the aggregate value of the ESG SpinCo

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    Common Stock distributed and to treat (x) any transfer of shares of ESG SpinCo Common Stock to KLX in satisfaction of the indemnity due hereunder as if such shares were issued to KLX by ESG SpinCo immediately before the Distribution and retained by KLX and (y) any cash paid to KLX in satisfaction of the indemnity due under this Section 4.05 as if such cash had been distributed by ESG SpinCo to KLX immediately before the Distribution.

4.06
Tax Elections

(a)
If KLX has recognized any Distribution Gain, KLX shall, if timely requested by ESG SpinCo, make an election under Section 336(e) of the Code (a 336 Election) with respect to the Distribution to support treatment by ESG SpinCo of the Distribution as a purchase by ESG SpinCo of its assets from an unrelated party for their fair market value. If KLX has not recognized any Distribution Gain, KLX shall make any legally available election timely requested by ESG SpinCo in order to avoid a reduction of basis in the ESG Group's assets, including (but not limited to) an election described in Treasury Regulation 1.1502-36(d)(6) (the Carry-Over Basis Election and, together with the 336 Election, the Tax Elections)

(b)
The ESG Group shall reasonably cooperate with KLX by providing any information or other assistance necessary for any Tax Elections. The Parties agree to work together in good faith to minimize any reduction in Tax basis in the ESG Group's assets and, to the extent not inconsistent with the foregoing, to minimize any Tax costs (including Tax attribute reductions) to the KLX Group, associated in each case with the Pre-Spin Transaction, the Distribution, and any proposed Tax Elections. If any Tax Election increases the income Taxes or reduces the Tax attributes of the KLX Group (including, but not limited to, net operating losses) for any taxable period that ends on or includes the Distribution Date, the ESG Group agrees to indemnify, reimburse, defend and hold harmless the KLX Group for such additional Taxes or loss of Tax attributes in that taxable period, regardless whether the cash Tax effect of that loss of Tax Attributes does not occur until a subsequent taxable period or periods (and in the case that Distribution Gain is recognized, without duplication of its obligation to indemnify for Tax with respect such gain under Section 4.05, which shall be applied prior to this Section 4.06(b), and subject to the cap described in the proviso in Section 4.05(e) hereof). Notwithstanding the foregoing, any additional Taxes or loss of Tax attributes resulting solely from a reduction in the basis of ESG SpinCo Common Stock as a result of a Tax Election shall not be treated as an increase in income Taxes or a reduction in Tax attributes for purposes of this Section 4.06.

4.07
Third Party Claims; Notice of Direct Claims

(a)
In order for a Party to be entitled to any indemnification provided for under this ARTICLE IV (the Indemnified Party) in respect of, arising out of or involving a claim made by any Person (other than a Party) against the Indemnified Party (a Third Party Claim), such Indemnified Party must notify the Party against whom indemnity is sought (the Indemnifying Party) in writing of the Third Party Claim within ninety (90) days after receipt by such Indemnified Party of written notice of the Third Party Claim (or sooner, to the extent the nature of the Third Party Claim requires a response in a shorter period of time); provided that failure to give such notice shall not affect the right to indemnification provided hereunder except to the extent the Indemnifying Party shall have been prejudiced as a result of such failure. Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, as promptly as reasonably practicable following such Indemnified Party's receipt thereof, copies of all written notices and documents (including any court papers) received by such Indemnified Party relating to the Third Party Claim.

(b)
If a Third Party Claim is made against an Indemnified Party, the Indemnifying Party shall be entitled (at its election), subject to Section 4.07(c), to assume the defense, at the Indemnifying Party's sole risk and expense, of such Third Party Claim with counsel selected by the Indemnifying

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    Party (provided such counsel is reasonably satisfactory to the Indemnified Party) if the Indemnifying Party (i) agrees in writing to assume responsibility for all indemnity losses arising out of such Third Party Claim (with no reservation of any rights) and (ii) reasonably demonstrates to the Indemnified Party the financial ability of the Indemnifying Party to provide full indemnification with respect to such Third Party Claim (including the ability to post any bond required) to the extent ultimately payable. If the Indemnifying Party assumes such defense, the Indemnified Party shall nonetheless have the right to employ counsel separate from the counsel employed by the Indemnifying Party; provided that the Indemnifying Party shall not be liable to such Indemnified Party for any fees of such separate counsel with respect to the defense of such Third Party Claim, unless the engagement of such separate counsel is consented to by the Indemnifying Party in writing or a conflict of interest exists between such Indemnified Party and the Indemnifying Party that requires such separate representation under applicable standards of professional conduct. If the Indemnifying Party does not assume such defense, and for any period during which the Indemnifying Party has not assumed such defense, the Indemnified Party may defend the Third Party Claim and the Indemnifying Party shall be liable for the reasonable fees and expenses of one single counsel employed (and reasonably acceptable to the Indemnifying Party) by such Indemnified Party (which reasonable fees and expenses shall be considered Losses for purposes of this Agreement). If the Indemnifying Party chooses to defend a Third Party Claim or prosecute a claim in connection therewith, each Indemnified Party shall provide all reasonable cooperation in such defense or prosecution.

(c)
If (i) the Indemnifying Party shall elect not to undertake such defense; (ii) the Indemnifying Party shall fail to undertake and pursue the defense of such Third Party Claim within thirty (30) days after delivery of notice by the Indemnified Party of such Third Party Claim; (iii) the Indemnifying Party shall fail to diligently pursue or maintain such defense after delivery of written notice by the Indemnified Party setting forth in reasonable detail the basis for the Indemnified Party's good faith determination that the Indemnifying Party has failed or is not diligently pursuing or maintaining such defense, and the Indemnifying Party has failed to remedy such failure within thirty (30) days of receipt of the Indemnified Party's notice; (iv) such Third Party Claim seeks non-monetary relief that would reasonably be expected to materially and adversely affect the ability of the Indemnified Party to conduct its business, other than as a result solely of money damages or other money payment; or (v) a conflict of interest exists between the Indemnifying Party and the Indemnified Party with respect to such Third Party Claim that would make representation of the interests of both parties by the same legal counsel inappropriate under applicable standards of professional conduct, then the Indemnified Party (upon written notice to the Indemnifying Party) shall have the right to undertake the defense, compromise and/or settlement of such Third Party Claim, by counsel of its own choosing that is reasonably acceptable to the Indemnifying Party, on behalf of and without limiting the indemnification obligations of the Indemnifying Party under this Agreement.

(d)
If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnifying Party may settle, compromise or discharge such Third Party Claim without the prior written consent of the Indemnified Party, subject to (i) the Indemnifying Party paying or causing to be paid all amounts arising out of such settlement and agreeing irrevocably in writing to pay any other indemnifiable amounts arising in connection with such Third Party Claim, (ii) obtaining and delivering to such Indemnified Party, prior to the execution of such settlement, an irrevocable general release prepared and executed by all Persons bringing such Third Party Claim, or who otherwise would receive payment in connection with such Third Party Claim, from all liability in respect of such Third Party Claim in form and substance satisfactory to the Indemnified Party, and (iii) such settlement, compromise or discharge would not result in the finding or admission of any violation of Applicable Law by or on behalf of the Indemnified Party and does not impose any injunctive relief or material operational restrictions on the Indemnified Party. In the event of a Third Party

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    Claim which seeks only monetary relief, the Indemnified Party will not agree to any settlement of, or the entry of any judgement (other than a judgment of dismissal on the merits with prejudice and without costs), in respect of such Third Party Claim without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld, conditioned or delayed; provided that if such consent is withheld for any reason and the final resolution of such Third Party Claim results in Losses which are greater than the amount of Losses that would have resulted if the Third Party Claim had been settled on the terms pursuant to which consent was initially requested (such greater amount, the Excess Losses), then the Indemnifying Party shall be responsible for the amount of the Excess Losses.

(e)
In the event an Indemnified Party has a claim against the Indemnifying Party under Section 4.03 or Section 4.04 that does not involve a Third Party Claim, such Indemnified Party shall deliver notice of such claim to the Indemnifying Party stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.

(f)
Notwithstanding anything in this Agreement to the contrary, the KLX Group shall have the sole right to represent the KLX Group with respect to any Tax Contest before any Tax Authority, and shall have the sole right to control the defense, compromise, or other resolution of any such Tax Contest, including responding to inquiries, filing Tax Returns and settling audits. For the avoidance of doubt, Section 3.07(f) and Section 4.08(b) shall apply to Tax Contests.

4.08
Additional Matters

(a)
Double Recovery.    No Indemnified Party shall be entitled to recover any portion of a Loss pursuant to any provision under this Agreement to the extent such portion has already been paid to such Indemnified Party.

(b)
Joint Defense.    With respect to any Third-Party Claim for which any member of the ESG Group, on the one hand, and any member of the KLX Group, on the other hand, may have Liability under this Agreement or any of the Ancillary Agreements, the Parties agree to reasonably cooperate and maintain a joint defense (in a manner that shall preserve the attorney-client privilege, joint defense or other privilege with respect thereto) so as to seek to minimize such Liabilities and defense costs associated therewith. The Party that is not responsible for managing the defense of such Third-Party Claim shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may retain counsel to monitor or assist in the defense of such Third-Party Claim at its own cost.

(c)
Payment.    Payment or reimbursement of any amount for which an Indemnified Party is entitled to hereunder (other than pursuant to Section 4.05, which shall be addressed as set forth in such section) shall be made promptly (but in any event within ten (10) Business Days) following the final determination of the amount that the applicable Indemnified Party is entitled to under this ARTICLE IV. Such payment shall be made by wire transfer of immediately available funds to the bank account(s) designated in writing by the Indemnified Party.

(d)
Limitation of Recovery.    Notwithstanding anything else contained in this Agreement, in no event shall (i) the indemnification obligations of KLX Group pursuant to Section 4.03(i)(B) exceed $300 million in the aggregate and (ii) the indemnification obligations of ESG SpinCo pursuant to Section 4.04(iv) exceed $300 million in the aggregate.

(e)
Duty to Mitigate Losses.    The Indemnified Party shall mitigate Losses to the fullest extent required under Applicable Law.

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4.09
Survival

        All covenants and agreements of the Parties and their respective Indemnitees contained in this ARTICLE IV will survive the Distribution, the sale or transfer by any Party of any assets or businesses, and the assignment by any Party of any Liabilities, and will continue in full force and effect regardless of (i) any investigation made by or on behalf of any Indemnitee, (ii) any sale or transfer by either Party or any member of its Group of any Asset or Liability or business, (iii) any merger, consolidation, business combination, sale of all or substantially all of the Assets, restructuring, recapitalization, reorganization or similar transaction involving either Party or any member of its Group and (iv) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification hereunder.

4.10
Registration Rights

(a)
With respect to any ESG SpinCo Common Stock which KLX receives pursuant to Section 4.05 hereof, at any time and from time to time following the Distribution Date, KLX may request up to two registrations under the Securities Act of all or any portion of such ESG SpinCo Common Stock on Form S-1 or any similar long-form registration or, if available, on Form S-3 (including a shelf registration pursuant to Rule 415 under the Securities Act) or any similar short-form registration.

(b)
Whenever ESG SpinCo proposes to register any of its equity securities under the Securities Act and the registration form to be used may be used for the registration of ESG SpinCo Common Stock under this Section 4.10, ESG SpinCo shall notify KLX of such registration and include in such registration (and in all related registrations or qualifications under blue-sky laws and in compliance with other registration requirements and in any related underwriting) all ESG SpinCo Common Stock with respect to which ESG SpinCo has received written requests for inclusion.

(c)
ESG SpinCo shall use its commercially reasonable efforts to effect the registration and the sale of ESG SpinCo Common Stock requested to be registered pursuant to Section 4.10(a) in accordance with the intended method of disposition thereof, and ESG SpinCo shall use its commercially reasonable efforts to make all requested registrations requested pursuant to Section 4.10(a) on Form S-3.

(d)
ESG SpinCo shall have the right to select the investment banker(s) and manager(s) to administer the offering in connection with any underwritten registration, subject to the approval of KLX, such consent not to be unreasonably withheld, conditioned or delayed.

(e)
All expenses incident to the ESG SpinCo's performance of or compliance with this Section 4.10, including all registration, qualification and filing fees, fees and expenses of compliance with securities or blue-sky laws, printing expenses, filing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for ESG SpinCo and all independent certified public accountants, underwriters (excluding discounts and commissions for which the selling holders of ESG SpinCo Common Stock) and other Persons retained by ESG SpinCo (all such expenses being herein called Registration Expenses), shall be borne by ESG SpinCo as provided in this Section 4.10(e) , and ESG SpinCo also shall pay all of its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by ESG SpinCo are then listed.

(f)
A registration shall not count as a permitted registration under Section 4.10(a) unless it has become effective and unless KLX is able to register and sell at least 90% of the ESG SpinCo Common Stock requested to be included in such registration; provided that in any event the Company shall pay all Registration Expenses in connection with any registration initiated whether

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    or not it has become effective and whether or not such registration has counted as a permitted registrations hereunder.


ARTICLE V
ACCESS TO RECORDS; ACCESS TO INFORMATION; LEGAL AND OTHER MATTERS

5.01
Provision of Corporate Records

        Other than in circumstances in which indemnification is or may be sought pursuant to ARTICLE IV (in which event the provisions of such Article will govern) and subject to appropriate restrictions for privileged or Confidential Information:

(a)
After the Distribution Date until the earlier of (i) the seventh (7th) anniversary of the Distribution Date or (ii) the date on which KLX is entitled to destroy information related to the period prior to the Distribution Date pursuant to its normal record retention policies, upon the prior written request by ESG SpinCo for specific and identified information to the extent it relates to (A) ESG SpinCo (or any member of the ESG Group) or the conduct of the ESG Business (including Tax matters) prior to the Distribution Date, or (B) compliance with the ESG Group's obligations under any Ancillary Agreement to which KLX and ESG SpinCo (or any other member of their respective Groups) are parties, KLX shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such documents (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of KLX or any of its Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of the requesting Party, and in no event will KLX or any of its Subsidiaries be required to change the form or substance of such documentation; provided that in the event that KLX reasonably determines that the provision of such documentation could be commercially detrimental, violate Applicable Law or result in the loss of any legal privilege, then the Parties shall use commercially reasonable efforts to facilitate the provision of the requested documentation to the extent and in a manner that avoids any such harm or consequence.

(b)
After the Distribution Date until the earlier of (i) the seventh (7th) anniversary of the Distribution Date or (ii) the date on which ESG SpinCo is entitled to destroy information related to the period prior to the Distribution Date pursuant to its normal record retention policies, upon the prior written request by KLX for specific and identified information to the extent it relates to (A) KLX (or any member of the KLX Group) or the conduct of the ASG Business (including Tax matters) prior to the Distribution Date, or (B) compliance with the ESG Group's obligations under any Ancillary Agreement to which ESG SpinCo and KLX (or other member of their respective Groups) are parties, as applicable, ESG SpinCo shall provide, as soon as reasonably practicable following the receipt of such request, appropriate copies of such documents (or the originals thereof if the Party making the request has a reasonable need for such originals) in the possession or control of ESG SpinCo or any of its Subsidiaries, but only to the extent such items so relate and are not already in the possession or control of the requesting Party, and in no event will ESG SpinCo or any of its Subsidiaries be required to change the form or substance of such documentation; provided that in the event that ESG SpinCo reasonably determines that the provision of such documentation could be commercially detrimental, violate Applicable Law or result in the loss of any legal privilege, then the Parties shall use commercially reasonable efforts to facilitate the provision of the requested documentation to the extent and in a manner that avoids any such harm or consequence.

5.02
Access to Information

        Other than in circumstances in which indemnification is sought pursuant to ARTICLE IV (in which event the provisions of such Article will govern), from the Distribution Date and for so long as any

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access is required, each of KLX and ESG SpinCo shall afford to the members of the respective other Group and their authorized accountants, counsel and other designated Representatives reasonable access during normal business hours, upon reasonable advance notice, subject to appropriate restrictions for privileged or Confidential Information and to preserve the completeness and integrity of the information, to the personnel, properties, and information of such Party and its Subsidiaries insofar as such access is reasonably required by the other Party and relates to (i) such other Group or the conduct of its business prior to the Effective Time or (ii) any Ancillary Agreement. Nothing in this Section 5.02 shall require any Party to violate any agreement with any third party regarding the confidentiality of information relating to that third party or its business; provided, however, that (i) in the event that a request for access to such third party-related information is made pursuant to this provision, the Party from whom the information is requested shall use commercially reasonable efforts to obtain such third party's consent to the disclosure of such information, or (ii) in the event that the providing Party reasonably determines that disclosure of any information could be commercially detrimental, violates Applicable Law or results in the loss of any legal privilege, the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence.

5.03
Disposition of Information

(a)
Each Party acknowledges that information in its or in another member of its Group's possession, custody or control as of the Effective Time may include information owned by the other Party or a member of such Party's Group and not related to (i) its Group or its business or (ii) any Ancillary Agreement to which it or any member of its Group is a party. The provision of any information pursuant to this Article V shall not affect the ownership of such information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute the grant of rights in or to any such information.

(b)
Notwithstanding a Party's (or Group's) possession, custody or control of information owned by the other Party (or Group) as described in Section 5.03(a) above, such information shall remain the property of such other Party or other member of such other Party's Group. Each Party agrees (i) that any such information is to be treated as Confidential Information of the Party to which it relates and handled in accordance with Section 5.06 (except that such information will not be used for any purpose other than a purpose permitted under this Agreement or any Ancillary Agreement) and (ii) following a reasonable request from the other Party, subject to Applicable Law, to use commercially reasonable efforts within a reasonable time to (A) purge such information from its databases, files and other systems and not retain any copy of such information (including, if applicable, by transferring such information to the Party to which such information belongs), or (B) if such purging is not reasonably practicable, to encrypt or otherwise make unreadable or inaccessible such information.

5.04
Witness Services

(a)
At all times from and after the Distribution Date, each of KLX and ESG SpinCo shall use its commercially reasonable efforts to make available to the other, upon reasonable written request, its and any other member of its Group's officers, directors, employees and agents as witnesses to the extent that (i) such persons have material information relevant to any Proceeding in which the requesting Party may be involved (except for Proceedings between members of each Group), or are required to testify in connection with the prosecution or defense of such Proceeding, and (ii) there is no conflict of interest in the underlying Proceeding between the requesting Party and KLX or ESG SpinCo, as the case may be; provided, however, that the existence of a claim for indemnification under ARTICLE IV shall not in and of itself be deemed a conflict of interest. A Party providing a witness to the other Party under this Section 5.04 shall be entitled to receive

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    from the recipient of such services, upon the presentation of invoices therefor, payments for such amounts, relating to disbursements and other out-of-pocket expenses (which shall not include the costs of salaries and benefits of employees who are witnesses or any pro rata portion of overhead or other costs of employing such employees which would have been incurred by such employees' employer regardless of the employees' service as witnesses), as may be reasonably incurred and properly payable under Applicable Law.

5.05
Reimbursement

        Except to the extent otherwise provided by this Agreement or any Ancillary Agreement, a Party providing information or access to information to the other Party under this Article V shall be entitled to receive from the recipient, upon the presentation of invoices therefor, payments for such amounts, relating to supplies, disbursements and other out-of-pocket expenses, as may be reasonably incurred in providing such information or access to such information.

5.06
Confidentiality

        Notwithstanding any termination of this Agreement, the Parties shall hold, and shall cause each of the other members of their respective Groups to hold, and shall each cause their respective Representatives (including those of each other member of their respective Groups) to hold, in strict confidence, and not to disclose or release or use, without the prior written consent of the other Party, any and all Confidential Information concerning the other Party (or any other member of such Party's Group) or its respective business; provided, however, that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, the applicable Party will be responsible, (ii) if the Parties or any other member of their respective Groups are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Applicable Law or stock exchange rule, (iii) as required in connection with any Proceeding by one Party against the other Party, or (iv) as necessary in order to permit a Party to prepare and disclose its financial statements, Tax Returns or other required disclosures. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each Party shall, to the extent not prohibited by Applicable Law, promptly notify the other of the existence of such request or demand and shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which such Parties will reasonably cooperate in obtaining, at the sole cost of the Party seeking such order or other remedy. In the event that such appropriate protective order or other remedy is not obtained, the Party whose Confidential Information is required to be disclosed shall or shall cause the other Party to furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall use commercially reasonable efforts, at the sole cost and expense of the Party whose Confidential Information is required to be disclosed, to ensure that confidential treatment is accorded such information. Notwithstanding anything in this Agreement to the contrary, including Section 7.02(f), each Party hereby acknowledges that the other Party, in addition to any other remedies available to it for any breach or threatened breach of this Section 5.06, shall be entitled to seek a preliminary injunction, temporary restraining order or other equivalent relief restraining such Party and any member of such Party's Group from any such breach or threatened breach.

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5.07
Privileged Matters

(a)
The Parties recognize that certain legal services (both internal and external) have been provided prior to the Distribution Date, and certain external legal services may be provided after the Distribution Date, in each case, rendered for the collective benefit of each of the members of the KLX Group and the ESG Group, and that each of the members of the KLX Group and the ESG Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges which may be asserted under Applicable Law; provided, however, that with respect to such services the Parties agree as follows:

(i)
The Parties shall not be entitled to assert privilege with respect to such legal services provided prior to the Distribution Date against the other Party or any other member of the other Party's Group;

(ii)
KLX shall be entitled, on behalf of itself or any member of the KLX Group, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information to the extent solely relating to the ASG Business, whether or not the privileged information is in the possession of or under the control of KLX or ESG SpinCo. KLX shall also be entitled, on behalf of itself or any other member of the KLX Group, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting KLX Liabilities, now pending or which may be asserted in the future, in any Proceedings initiated against or by any member of the KLX Group, whether or not the privileged information is in the possession of or under the control of KLX or ESG SpinCo;

(iii)
ESG SpinCo shall be entitled, on behalf of itself or any other member of the ESG Group, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information to the extent solely relating to the ESG Business, whether or not the privileged information is in the possession of or under the control of KLX or ESG SpinCo. ESG SpinCo shall also be entitled, on behalf of itself or any other member of the ESG Group, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting ESG Liabilities, now pending or which may be asserted in the future, in any Proceedings initiated against or by any member of the ESG Group, whether or not the privileged information is in the possession of or under the control of KLX or ESG SpinCo;

(iv)
The Parties shall have a shared privilege or immunity, with equal right to assert or waive, subject to the restrictions in this Section 5.07, with respect to all privileges not allocated pursuant to the terms of Section 5.07(a)(ii) and Section 5.07(a)(iii). All privileges relating to any Proceedings or other matters which involve members of both the KLX Group and the ESG Group in respect of which such Parties retain any responsibility or Liability under this Agreement, shall be subject to a shared privilege among them, and any waiver of such privilege shall be subject to Section 5.07(b); and

(v)
If ESG SpinCo and KLX do not agree as to whether certain information is privileged information, then the information shall be treated as privileged information, and the Party who believes such information is privileged shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information unless the Parties otherwise agree.

(b)
No Party may waive any privilege which could be asserted under Applicable Law, and in which a Party has a shared privilege, without the prior written consent of the other Party, which shall not be unreasonably withheld, conditioned or delayed, or as provided in Section 5.07(c) or Section 5.07(d) below.

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(c)
Subject to Section 5.07(a)(i), in the event of any litigation or dispute between the Parties, or any other members of their respective Groups, either Party may waive a privilege in which the other Party or member of such Group has a shared privilege, without obtaining the consent of the other Party; provided that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

(d)
If a dispute arises between the Parties, or any other member of their respective Groups, regarding whether a privilege should be waived to protect or advance the interest of either Party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of the other Party, and shall not unreasonably withhold, condition or delay consent to any request for waiver by the other Party. Each Party specifically agrees that it will not unreasonably withhold consent to waiver for any purpose except to protect its own legitimate interests.

(e)
Upon receipt by any Party or by any other member of a Party's Group of any subpoena, discovery, court order or other request which arguably calls for the production or disclosure of information subject to a shared privilege or as to which another Party has the sole right hereunder to assert a privilege, or if any Party obtains knowledge that any of its or any other member of its Group's current or former directors, officers, agents or employees have received any subpoena, discovery or other requests which arguably calls for the production or disclosure of such privileged information, such Party shall promptly (and in any event within five (5) Business Days) notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 5.07 or otherwise to prevent the production or disclosure of such privileged information.

(f)
Any furnishing of, or access to, information pursuant to this Agreement is made in reliance on the agreement of ESG SpinCo and KLX as set forth in this Section 5.06 and Section 5.07 to maintain the confidentiality of privileged information and to assert and maintain all applicable privileges and immunities. The Parties further agree that (i) the exchange by one Party (or any of its subsidiaries) to the other Party (or any of its subsidiaries) of any privileged information that should not have been transferred pursuant to the terms of this ARTICLE V shall not be deemed to constitute a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise with respect to such information; and (ii) the Party receiving (or for which a Subsidiary has received) such privileged information shall promptly return such privileged information to the Party (or its applicable Subsidiary) who has the right to assert the privilege or immunity.

5.08
Ownership of Information

(a)
Any information owned by one Party or any other member of such Party's Group that is provided to a requesting Party pursuant to this ARTICLE V shall be deemed to remain the property of the providing Party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such information.

(b)
Any information provided by or on behalf of or made available by or on behalf of the other Party pursuant to this ARTICLE V shall be on an "as is", "where is" basis and no Party is making any representation or warranty with respect to such information or the accuracy or completeness thereof.

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5.09
Control of Legal Matters

(a)
General.    On or prior to the Distribution Date,

(i)
KLX shall assume (or, as applicable, retain), or cause the applicable member of the KLX Group to assume (or, as applicable, retain) control of each of the KLX Litigation Matters, and KLX shall use its commercially reasonable efforts to have a member of the KLX Group substituted for any member of the ESG Group to the extent it is named as a defendant in any such KLX Litigation Matters; provided, however, that no member of the KLX Group shall be required to make any such effort if the removal of any member of the ESG Group would, in the reasonable judgment of KLX, result in a loss of insurance coverage or rights to indemnification from third parties applicable to such KLX Litigation Matters, cause KLX to accept, assume (or, as applicable, retain) a Liability at the level of KLX that was originally a Liability of another member of the KLX Group or the ESG Group, or otherwise compromise the position of the KLX Group in such KLX Litigation Matters; and

(ii)
ESG SpinCo shall assume (or, as applicable, retain), or cause the applicable member of the ESG Group to assume (or, as applicable, retain) control of each of the ESG Litigation Matters, and ESG SpinCo shall use its commercially reasonable efforts to have a member of the ESG Group substituted for any member of the KLX Group to the extent it is named as a defendant in any such ESG Litigation Matters; provided, however, that no member of the ESG Group shall be required to make any such effort if the removal of any member of the KLX Group would, in the reasonable judgment of ESG SpinCo, result in a loss of insurance coverage or rights to indemnification from third parties applicable to such ESG Litigation Matters, cause ESG SpinCo to accept, assume (or, as applicable, retain) a Liability at the level of ESG SpinCo that was originally a Liability of ESG SpinCo's Subsidiary or the KLX Group, or otherwise compromise the position of the ESG Group in such ESG Litigation Matters.

(b)
Proceedings Commenced After the Distribution Date.    Except as provided in Section 5.09(a), after the Distribution Date, the Parties agree that with respect to all Proceedings commenced against any member of the KLX Group, any member of the ESG Group or members of both Groups relating to events that take place before, on or after the Distribution Date, such Proceedings shall be controlled by:

(i)
a member of the KLX Group, if such Proceeding relates solely to the ASG Business (as conducted after the Distribution Date) (Future KLX Litigation Matter), and KLX shall use its commercially reasonable efforts to have a member of the KLX Group substituted for any member of the ESG Group to the extent it may be named as a defendant in such Future KLX Litigation Matter; provided, however, that no member of the KLX Group shall be required to make any such effort if the removal of any member of the ESG Group would, in the reasonable judgment of KLX, result in a loss of insurance coverage or rights to indemnification from third parties applicable to such Future KLX Litigation Matter or otherwise compromise the KLX Group's position in such Future KLX Litigation Matter;

(ii)
a member of the ESG Group, if such Proceeding relates solely to the ESG Business (as conducted after the Distribution Date) (Future ESG Litigation Matter), and ESG SpinCo shall use its commercially reasonable efforts to have a member of the ESG Group substituted for any member of the KLX Group to the extent it may be named as a defendant in such Future ESG Litigation Matter; provided, however, that no member of the ESG Group shall be required to make any such effort if the removal of any member of the KLX Group would, in the reasonable judgment of ESG SpinCo, result in a loss of insurance coverage or rights to indemnification from third parties applicable to such Future ESG Litigation Matter or otherwise compromise the ESG Group's position in such Future ESG Litigation Matter; and

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    (iii)
    except as provided in Section 5.09(b)(i) or Section 5.09(b)(ii), or as may be otherwise agreed by KLX and ESG SpinCo, a member of each of the KLX Group and the ESG Group jointly if (A) such Proceeding arises from or relates to any Disclosure Document or any other document filed with any Governmental Entity (including the SEC) at or prior to the Distribution Date by KLX or ESG SpinCo in connection with the Distribution, (B) a Proceeding is brought by or on behalf of the current or former shareholders of KLX or ESG SpinCo and relates to any filing by KLX or ESG SpinCo with the SEC other than those described in clause (A), or (C) a Proceeding is brought by any Person against KLX or ESG SpinCo with respect to the Distribution (the matters in clauses (A) through (C) being Future Joint Litigation Matters); provided, however, that no member of either Group may settle a Future Joint Litigation Matter without the prior written consent of the members of the other Group named or involved in such Future Joint Litigation Matter, which consent shall not be unreasonably withheld, conditioned or delayed; provided further that either Party may settle a Future Joint Litigation matter if such settlement is for money only and provides a full release from any Liability under such Future Joint Litigation Matter for the other Party and, as applicable, the members of the other Party's Group (including any Liability for any payment of any kind in connection with such settlement).

(c)
Claims Against Third Parties.    Proceedings by any member of either Group against third parties, and any proceeds or other benefits that may be received as a result of such Proceedings and any Liabilities arising out of or resulting from such Proceedings, that are

(i)
listed in Schedule 5.09(c)(i) or that relate to the ASG Business and not to the ESG Business shall be the property of the applicable member of the KLX Group, and

(ii)
listed in Schedule 5.09(c)(ii) or that relate to the ESG Business and not to the ASG Business shall be the property of the applicable member of the ESG Group.

(d)
Retention of Counsel.    The Parties agree that attorneys who have worked for any member of the KLX Group prior to the Distribution Date are not conflicted from representing any members of the ESG Group subsequent to the Distribution Date, except to the extent such representation on any specific matter will be adverse (whether actually or potentially) to a member of the KLX Group. Notwithstanding the foregoing, KLX agrees that from and after the Effective Time, Freshfields Bruckhaus Deringer US LLP shall not be prohibited by this Section 5.09(d) from representing any member of the ESG Group, except as restricted by applicable rules of professional responsibility.

(e)
Notice to Third Parties; Service of Process; Cooperation.    To the extent necessary to effectuate the provisions in this Agreement, each Party shall, and shall cause the other members of its Group to, promptly notify their respective agents for service of process and all other necessary parties, including plaintiffs and courts, and shall provide instructions for proper service of legal process and other documents. Each Party shall, and shall cause the other members of its Group to, attempt in good faith not to accept service on behalf of any member of the other Party's Group, and shall, and shall cause the other members of its Group to, use their commercially reasonable efforts to deliver to each other any legal process or other documents incorrectly delivered to them or their agents as soon as possible following receipt.

(f)
Indemnity.    Nothing in this Section 5.09 shall affect in any way the indemnification provisions in ARTICLE IV (including the defense assumption provisions thereof) or the allocation of Assets or Liabilities between the Parties under this Agreement.

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ARTICLE VI
TERMINATION

6.01
Termination

        This Agreement may be terminated, and the Distribution may be abandoned at any time, prior to the Distribution Date by and in the sole discretion of KLX, subject to compliance with the terms of the ASG Merger Agreement. After the Effective Time, this Agreement may only be terminated by an agreement in writing signed by a duly authorized officer of each of the Parties and, unless the ASG Merger Agreement has been terminated, Parent (as defined under the ASG Merger Agreement).

6.02
Effect of Termination

        In the event of termination of this Agreement in accordance with Section 6.01, this Agreement shall forthwith become void and there shall be no Liability on the part of either Party; provided that Section 5.06 shall survive any termination of this Agreement.

6.03
Amendment

        This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Parties or (b) by a waiver in accordance with Section 6.04, in each case subject to compliance with the terms of the ASG Merger Agreement.

6.04
Waiver

        Subject to the restrictions set forth in the ASG Merger Agreement, either Party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other Party and (b) waive compliance with any of the agreements of the other Party or conditions to such Party's obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of either Party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.


ARTICLE VII
DISPUTE RESOLUTION

7.01
Disputes

        Except as otherwise specifically provided in any Ancillary Agreement (the terms of which, to the extent so provided therein, shall govern the resolution of disputes, controversies or claims that are the subject of such Ancillary Agreement), the procedures for discussion, negotiation and arbitration set forth in this ARTICLE VII shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement or any Ancillary Agreement, or the transactions contemplated hereby or thereby (including all actions taken in furtherance of the transactions contemplated hereby or thereby on or prior to the Effective Time), between or among any member of the KLX Group, on the one hand, and any member of the ESG Group, on the other hand (collectively, Agreement Disputes).

7.02
Dispute Resolution

(a)
KLX and ESG SpinCo will use their respective commercially reasonable efforts to resolve any Agreement Dispute on a mutually acceptable negotiated basis. In furtherance of the foregoing, any member of the ESG Group or the KLX Group involved in an Agreement Dispute may deliver a

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    notice (an Escalation Notice) demanding an in-person meeting involving senior-level management representatives of KLX and ESG SpinCo (including, if appropriate, a senior management representative within the relevant strategic business unit or division within each such entity). A copy of any such Escalation Notice shall be given to the Law Department of each of KLX and ESG SpinCo (which copy shall state that it is an Escalation Notice pursuant to this Section 7.02). Any agenda, location or procedures for such discussions or negotiations between KLX and ESG SpinCo may be established by KLX and ESG SpinCo from time to time; provided, however, that the representatives of KLX and ESG SpinCo shall use their commercially reasonable efforts to meet in person, or telephonically if the representatives are unable to meet in person, within 30 days of the Escalation Notice.

(b)
If KLX and ESG SpinCo are not able to resolve the Agreement Dispute through the processes set forth in Section 7.02(a) within 60 days (or such shorter time as is reasonably necessary to avoid immediate irreparable injury) after the date of receipt of the Escalation Notice, then, at the request of either KLX or ESG SpinCo, such Agreement Dispute shall be determined shall be resolved by arbitration, which shall be conducted (i) by three arbitrators, consisting of one arbitrator appointed by KLX, one arbitrator appointed by ESG SpinCo and a third arbitrator appointed by the two arbitrators appointed by KLX and ESG SpinCo or, if the arbitrators appointed by KLX and ESG SpinCo cannot agree on a third arbitrator, the third arbitrator shall be appointed by the President of the American Arbitration Association, and (ii) in accordance with the Commercial Rules of the American Arbitration Association (except with respect to the selection of arbitrators) in effect at the time of filing of the demand for arbitration, including the AAA's Optional Appellate Arbitration Rules (the Appellate Rules).

(c)
The arbitrators shall issue a reasoned award, in writing. The decision of the arbitrators shall be final and binding upon the Parties (subject to the exhaustion of the appellate process set forth in the Appellate Rules), and the expense of the arbitration (including the award of attorneys' fees to the prevailing party) shall be paid as the arbitrators determine. The panel of arbitrators shall have no power to award non-monetary or equitable relief of any sort. The decision of the arbitrators shall be executory, and judgment thereon may be entered by any court of competent jurisdiction. The seat of the arbitration shall be New York, NY.

(d)
At any time during the resolution of an Agreement Dispute between the parties, either Party has the right to apply to any court of competent jurisdiction for interim relief, including pre-arbitration attachments or injunctions, necessary to preserve the parties' rights or to maintain the parties' relative positions until such time as the arbitration award is rendered or the Agreement Dispute is otherwise resolved.

(e)
The existence of, and any discussions, negotiations, arbitrations or other Proceedings relating to, any Agreement Dispute shall be considered by each Party as Confidential Information, and shall not be disclosed except as, and only to the extent, necessary to comply with Applicable Law, or to seek any court application for interim relief or post-arbitration confirmation, or in connection with any enforcement Proceedings.

(f)
Notwithstanding anything contained in this Agreement to the contrary, other than as set forth in the IP Matters Agreement or Section 5.06, no member of the ESG Group and no member of the KLX Group shall have the right to institute judicial Proceedings against the other Party or any Person acting by, through or under such other Party, in order to enforce the instituting Party's rights hereunder, except that any such member shall be permitted to seek an injunction in aid of arbitration with respect to an Agreement Dispute to preserve the status quo during the pendency of any arbitration Proceeding pursuant to Section 7.02(b).

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ARTICLE VIII
MISCELLANEOUS

8.01
Transition Services Agreements

        The provision of certain services by KLX to ESG SpinCo following the Distribution Date shall be exclusively governed by the Transition Services Agreement attached as Exhibit 8.01 (the Transition Services Agreement).

8.02
Employee Matters

        Except as otherwise provided herein and not inconsistent with the Employee Matters Agreement, this Agreement shall not govern any employee matters, which shall be exclusively governed by the Employee Matters Agreement attached as Exhibit 8.02 (the Employee Matters Agreement).

8.03
Intellectual Property Matters

        Except as otherwise provided herein and not inconsistent with the IP Matters Agreement, this Agreement shall not govern any matters relating to the KLX Names and Marks and the ESG Names and Marks, which shall be exclusively governed by the IP Matters Agreement attached as Exhibit 8.03 (the IP Matters Agreement).

8.04
No Representation and Warranties

        EACH OF KLX (ON BEHALF OF ITSELF AND EACH OTHER KLX GROUP COMPANY) AND ESG SPINCO (ON BEHALF OF ITSELF AND EACH OTHER ESG GROUP COMPANY) UNDERSTANDS AND AGREES THAT, EXCEPT AS SET FORTH IN THE ASG MERGER AGREEMENT OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES, INFORMATION OR LIABILITIES CONTRIBUTED, TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY (OR OTHER MEMBER OF SUCH PARTY'S GROUP), OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SET-OFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY (OR OTHER MEMBER OF SUCH PARTY'S GROUP), OR AS TO THE LEGAL SUFFICIENCY OF ANY TRANSACTION, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER.

8.05
Limitation of Liability

        IN NO EVENT SHALL ANY MEMBER OF THE KLX GROUP OR THE ESG GROUP BE LIABLE TO ANY MEMBER OF THE OTHER GROUP FOR ANY PUNITIVE DAMAGES OR LOST PROFITS ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES AWARDED TO THIRD PARTIES IN A THIRD PARTY CLAIM SET FORTH HEREIN.

8.06
Expenses

        Subject to Section 3.01, all Transaction Expenses shall be borne by KLX.

A-35


8.07
Notices

        All notices, consents, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by e-mail or facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 8.07):

    (a)
    if to ESG SpinCo:

        [**************************]
        [**************************]
        [**************************]
        Phone: [*****************]
        Fax: [*****************]
        Email: [********************]
        Attention: [*****************];

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001
        Email:    Valerie.Jacob@freshfields.com
                       Omar.Pringle@freshfields.com
        Attention:    Valerie Ford Jacob, Esq.
                              Omar Pringle, Esq.

    (b)
    if to KLX:

        KLX Inc.
        1300 Corporate Center Way
        Wellington, FL 33414
        Phone: (561) 383-5100
        Fax: (561) 791-5479
        Email:    Roger.Franks@klx.com
        Attention:    General Counsel;

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001
        Email:    Valerie.Jacob@freshfields.com
                       Omar.Pringle@freshfields.com
        Attention:    Valerie Ford Jacob, Esq.
                              Omar Pringle, Esq.

A-36


8.08
Interpretation; Certain Definitions

(a)
The Parties have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted collectively by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(b)
The words "hereof," "herein," "hereby," "hereunder" and "herewith" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs, exhibits, annexes and schedules are to the articles, sections and paragraphs of, and exhibits, annexes and schedules to, this Agreement, unless otherwise specified, and the table of contents and headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the phrase "without limitation." Words describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns. The phrases "the date of this Agreement" and "the date hereof" and terms or phrases of similar import shall be deemed to refer to [    ·    ], 2018, unless the context requires otherwise. Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. All references to "dollars" or "$" refer to currency of the United States.

8.09
Public Announcements

        Following the Effective Time, except as expressly permitted by the Merger Agreement, the Parties shall not make, and shall procure that none of its respective Group members makes, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of the other Party unless otherwise required by Applicable Law or applicable stock exchange regulation.

8.10
Severability

        If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Distribution be consummated as originally contemplated to the fullest extent possible.

8.11
Assignment

        Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Applicable Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns. Any attempted assignment in violation of this Section 8.11 shall be null and void.

A-37


8.12
Entire Agreement

        This Agreement (including the exhibits, annexes and appendices hereto and any other agreement entered into by and between the Parties in connection herewith) constitutes, together with the Ancillary Agreements, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, by and between the Parties with respect to the subject matter hereof.

8.13
No Third-Party Beneficiaries

        This Agreement is not intended to and shall not confer upon any Person other than the Parties any rights or remedies hereunder; provided, however, that it is specifically intended that the KLX D&O Indemnified Parties and the ESG D&O Indemnified Parties (with respect to Section 3.05 and this Section 8.13 from and after the Effective Time) are intended third-party beneficiaries of such provisions.

8.14
Governing Law

        This Agreement and all Proceedings (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of KLX and ESG SpinCo in the negotiation, administration, performance and enforcement thereof, shall be governed by, and construed in accordance with, the Applicable Laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Applicable Laws of any jurisdiction other than the State of Delaware.

8.15
Consent to Jurisdiction

(a)
Each of the Parties hereby, with respect to any Proceeding arising out of this Agreement or the transactions contemplated by this Agreement, (i) expressly and irrevocably submits, for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the Delaware Court of Chancery and any appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such courts, (iii) agrees that it will not bring any claim or Proceeding relating to this Agreement or the transactions contemplated by this Agreement except in such courts and (iv) waives, to the fullest extent it may legally and effectively do so, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any objection which it may now or hereafter have to the laying of venue of any claim or Proceeding arising out of or relating to this Agreement. Notwithstanding the foregoing, each of KLX and ESG SpinCo agrees that a final and nonappealable judgment in any Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(b)
Each Party irrevocably consents to the service of process in any claim or Proceeding with respect to this Agreement and the transactions contemplated by this Agreement or for recognition and enforcement of any judgment in respect hereof brought by the other Party may be made by mailing copies thereof by registered or certified United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 8.07 and such service of process shall be sufficient to confer personal jurisdiction over such Party in such claim or Proceeding and shall otherwise constitute effective and binding service in every respect.

A-38


8.16
Counterparts

        This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement. Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

8.17
Waiver of Jury Trial

        EACH OF KLX AND ESG SPINCO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) BETWEEN ANY OF THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF KLX OR ESG SPINCO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

[Signature Page Follows]

A-39


        IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first written above.

KLX Inc.    

By:

 

  


 

 
    Name:        
    Title:        

KLX Energy Services Holdings, Inc.

 

 

By:

 

  


 

 
    Name:        
    Title:        

A-40



EXHIBIT B

                                 , 2018

KLX INC.

and

KLX ENERGY SERVICES HOLDINGS, INC.



EMPLOYEE MATTERS AGREEMENT





TABLE OF CONTENTS

 
   
  Page  

ARTICLE I DEFINITIONS

    B-1  

1.1

 

Definitions

   
B-1
 

1.2

 

Terms

   
B-1
 

ARTICLE II ASSIGNMENT OF EMPLOYEES

   
B-3
 

2.1

 

Active Employees

   
B-3
 

2.2

 

Former Employees

   
B-4
 

2.3

 

Employment Law Obligations

   
B-4
 

2.4

 

Employee Records

   
B-5
 

ARTICLE III EQUITY AWARDS

   
B-6
 

3.1

 

General Principals

   
B-6
 

3.2

 

Establishment of Long-Term Incentive Plan

   
B-6
 

3.3

 

Treatment of Outstanding KLX Equity Awards

   
B-6
 

3.4

 

Employee Stock Purchase Plan

   
B-7
 

3.5

 

Liabilities for Settlement of Awards

   
B-7
 

3.6

 

Tax Reporting, Withholding and Deduction for Equity-Based Awards

   
B-7
 

ARTICLE IV CERTAIN U.S. WELFARE BENEFIT MATTERS

   
B-8
 

4.1

 

Establishment of Welfare Plans

   
B-8
 

4.2

 

Accrued Paid Time Off

   
B-9
 

4.3

 

Flexible Spending Accounts

   
B-9
 

4.4

 

COBRA and HIPAA

   
B-9
 

4.5

 

Third Party Vendors

   
B-9
 

ARTICLE V NONQUALIFIED DEFERRED COMPENSATION PLANS

   
B-10
 

5.1

 

Deferred Compensation Plan

   
B-10
 

5.2

 

Non-Employee Directors Deferred Compensation Plan

   
B-10
 

ARTICLE VI U.S. DEFINED CONTRIBUTION PLAN

   
B-10
 

6.1

 

KLX Savings Plan

   
B-10
 

ARTICLE VII ANNUAL INCENTIVE PLANS

   
B-11
 

7.1

 

KLX Annual Incentive Plans

   
B-11
 

ARTICLE VIII COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE MATTERS

   
B-11
 

8.1

 

Restrictive Covenants in Employment and Other Agreements

   
B-11
 

8.2

 

Termination of Participation

   
B-12
 

B-i


 
   
  Page  

8.3

 

Leaves of Absence

    B-12  

8.4

 

Workers' and Unemployment Compensation

   
B-12
 

8.5

 

Preservation of Rights to Amend

   
B-12
 

8.6

 

Confidentiality

   
B-12
 

8.7

 

Administrative Complaints/Litigation

   
B-13
 

8.8

 

Reimbursement and Indemnification

   
B-13
 

8.9

 

Fiduciary Matters; Restrictive Covenants and Confidentiality

   
B-14
 

8.10

 

Section 409A

   
B-14
 

8.11

 

Non-Solicitation

   
B-14
 

ARTICLE IX MISCELLANEOUS

   
B-14
 

9.1

 

Limitation of Liability

   
B-14
 

9.2

 

Expenses

   
B-14
 

9.3

 

Notices

   
B-15
 

9.4

 

Interpretation; Certain Definitions

   
B-16
 

9.5

 

Public Announcements

   
B-16
 

9.6

 

Severability

   
B-16
 

9.7

 

Entire Agreement

   
B-16
 

9.8

 

Assignment

   
B-17
 

9.9

 

No Third-Party Beneficiaries

   
B-17
 

9.10

 

Governing Law

   
B-17
 

9.11

 

Consent to Jurisdiction

   
B-17
 

9.12

 

Effect if Distribution Does Not Occur

   
B-18
 

9.13

 

Counterparts

   
B-18
 

9.14

 

Waiver of Jury Trial

   
B-18
 

B-ii



EMPLOYEE MATTERS AGREEMENT

        This EMPLOYEE MATTERS AGREEMENT (this Agreement), dated as of [    ·    ], by and between KLX Inc., a corporation organized under the laws of the State of Delaware (KLX), and KLX Energy Services Holdings, Inc., a corporation organized under the laws of the State of Delaware (ESG SpinCo). Each of KLX and ESG SpinCo is sometimes referred to herein as a "Party" and together, as the "Parties".


RECITALS

        WHEREAS, KLX and ESG SpinCo have entered into a Distribution Agreement as of the date hereof (the Distribution Agreement) pursuant to which KLX shall separate the ASG Business and the ESG Business through a taxable spin-off of the ESG Business into a separate publicly traded company and distribute to the holders of KLX Common Stock all of the ESG SpinCo Common Stock; and

        WHEREAS, in connection with the Distribution, the Parties desire to enter into this Agreement as a complement to the Distribution Agreement.

        NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein and in the Distribution Agreement, and intending to be legally bound hereby, KLX and ESG SpinCo hereby agree as follows:


ARTICLE I
DEFINITIONS

1.1
Definitions

        Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Distribution Agreement.

1.2
Terms

        As used herein, the following terms have the following meanings:

        Agreement has the meaning as set forth in the Preamble.

        ASG Business Employee means an individual whose employment duties are primarily related to the ASG Business immediately prior to the Distribution Date.

        Benefit Plan shall mean any plan, program, policy, agreement, arrangement or understanding that is an employment, consulting, deferred compensation, executive compensation, incentive bonus or other bonus, employee pension, profit sharing, savings, retirement, supplemental retirement, stock option, stock purchase, stock appreciation right, restricted stock, restricted stock unit, deferred stock unit, other equity-based compensation, severance pay, retention, change in control, salary continuation, life, death benefit, health, hospitalization, workers' compensation, sick leave, vacation pay, disability or accident insurance or other employee benefit plan, program, agreement or arrangement, including any "employee benefit plan" (as defined in Section 3(3) of ERISA) (whether or not subject to ERISA) sponsored or maintained by such entity or to which such entity is a party.

        COBRA means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

        Committee means the Compensation Committee of the Board.

        Distribution Agreement has the meaning as set forth in the Recitals.

        Employee Records means all records pertaining to employment, including benefits, eligibility, training history, performance reviews, disciplinary actions, job experience and history and compensation history.

B-1


        ERISA means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

        ESG Deferred Compensation Plan has the meaning as set forth in Section 5.1(b).

        ESG Employee means any individual who shall be employed by ESG SpinCo or a member of the ESG Group (a) on and after the date two days prior to the Distribution Date or (b) in the case of the Specified Employees, each of whom shall transfer employment from KLX to ESG SpinCo on or prior to the closing of the transactions contemplated by the ASG Merger (the ASG Closing), on and after the Transfer Date.

        ESG Equity Plan has the meaning as set forth in Section 3.2.

        ESG ESPP has the meaning as set forth in Section 3.3.

        ESG FSA has the meaning as set forth in Section 4.3.

        ESG NEDDSP has the meaning as set forth in Section 5.2.

        ESG Non-Employee Director means any individual who shall be a non-employee member of the board of directors of ESG immediately after the Distribution Date and who is not a KLX Non-Employee Director.

        ESG Savings Plans has the meaning as set forth in Section 6.1(a).

        ESG SpinCo has the meaning as set forth in the Preamble.

        ESG Welfare Plans has the meaning as set forth in Section 4.1(a).

        Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

        FICA has the meaning as set forth in Section 2.1(e).

        Former ESG Employee has the meaning as set forth in Section 2.2(b).

        Former KLX Employee has the meaning as set forth in Section 2.2(c).

        FSA Participation Period has the meaning as set forth in Section 4.4.

        FUTA has the meaning as set forth in Section 2.1(e).

        HIPAA shall mean the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

        KLX Adjustment Ratio means a fraction, the numerator of which is the KLX Pre-Distribution Stock Value and the denominator of which is the KLX Post-Distribution Stock Value.

        KLX Annual Incentive Plan means any annual incentive bonus or commission program maintained by KLX.

        KLX Deferred Compensation Plan means the KLX Inc. 2014 Deferred Compensation Plan, as amended.

        KLX DSU means any stock unit held by a non-employee member of the Board pursuant to the KLX NEDDSP and/or the KLX Deferred Compensation Plan.

        KLX Employee means any individual who shall be employed by a member of the KLX Group on and after the Distribution Date.

        KLX Equity Awards means KLX RSAs, KLX RSUs, KLX PSUs, and KLX DSUs.

        KLX Equity Plan means the KLX Inc. Long-Term Incentive Plan, as amended from time to time.

        KLX ESPP means the KLX Inc. Employee Stock Purchase Plan, effective as of January 1, 2015, as amended.

B-2


        KLX has the meaning as set forth in the Preamble.

        KLX NEDDSP means the KLX Inc. Non-Employee Directors Stock and Deferred Compensation Plan, as amended.

        KLX PSU means a KLX stock unit award subject to performance-based vesting.

        KLX Post-Distribution Stock Value means the opening price per share of the KLX Common Stock trading on the first trading day following the Distribution Date during Regular Trading Hours.

        KLX Pre-Distribution Stock Value means the closing price per share of the KLX Common Stock trading regular way with due bills on the Distribution Date during Regular Trading Hours.

        KLX RSA means the portion of any restricted stock awards issued under the KLX Equity Plan that is subject only to time-based vesting.

        KLX RSU means any stock unit award issued under the KLX Equity Plan that is subject only to time-based vesting.

        Party has the meaning as set forth in the Preamble.

        Regular Trading Hours means the period beginning at 9:30 AM, New York City time, and ending at 4:00 PM, New York City time.

        Specified Employee means an individual set forth on Schedule 1.2.

        Transfer Date means with respect to a Specified Employee, the date on which such individual's employment transfers to ESG SpinCo.


ARTICLE II
ASSIGNMENT OF EMPLOYEES

2.1
Active Employees

(a)
General.    Effective no later than the Distribution Date, the employment of each ESG Employee who is employed by a member of the KLX Group shall be assigned and transferred to ESG SpinCo or a member of the ESG Group. There shall be no assignment or transfer of employment with respect to an ASG Business Employee to ESG or the ESG Group as of the Distribution Date. KLX and ESG SpinCo shall take any and all reasonable actions as shall be necessary and appropriate to further the provisions of this Article II, including, to the extent practicable, providing written notice or similar communication to employees.

(b)
At Will Employment.    Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on the part of any member of the KLX Group or the ESG Group to continue the employment of any employee for any period of time following the Distribution Date or to change the employment status of any employee from "at will," to the extent such employee is an "at will" employee under Applicable Law.

(c)
Severance.    The Distribution and the assignment, transfer or continuation of the employment of employees in connection therewith, whether as of or before the Distribution Date, shall not be deemed a severance of employment of any employee for purposes of any plan, policy, practice or arrangement of any member of the KLX Group or ESG Group. This Section 2.1(c) shall not apply to the Specified Employees.

(d)
Not a Change of Control/Change in Control.    Neither the consummation of the Distribution nor any transaction in connection with the Distribution (other than the ASG Merger) shall be deemed a "change of control," "change in control," or term of similar import for purposes of Section 409A of the Code or any Benefit Plan of the KLX Group or ESG Group.

B-3


(e)
Payroll and Related Taxes.    With respect to the portion of the Tax year occurring prior to the day immediately following the Distribution Date (or, with respect to any Specified Employee), with respect to the portion of the Tax year occurring prior to the day immediately following such individual's Transfer Date), KLX will (i) be responsible for all payroll obligations, Tax withholding and reporting obligations and (ii) furnish a Form W-2 or similar earnings statement to all ESG Employees and Former ESG Employees for such period. Except as otherwise expressly provided in this Agreement, with respect to the remaining portion of such tax year, ESG SpinCo will (A) be responsible for all payroll obligations, Tax withholding, and reporting obligations regarding ESG Employees and (B) furnish a Form W-2 or similar earnings statement to all ESG Employees. With respect to each ESG Employee, KLX and ESG SpinCo shall, and shall cause their respective Affiliates to (to the extent permitted by Applicable Law and practicable) (1) treat ESG SpinCo (or the applicable member of the ESG Group) as a "successor employer" and KLX (or the applicable member of the KLX Group) as a "predecessor," within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of Taxes imposed under the United States Federal Insurance Contributions Act, as amended (FICA), or the United States Federal Unemployment Tax Act, as amended (FUTA), and (2) cooperate with each other to avoid, to the extent possible, the restart of FICA and FUTA upon or following the Distribution Date with respect to each such ESG Employee for the tax year during which the Distribution Date occurs.

(f)
Employment Contracts.    Effective as of the Distribution Date, ESG SpinCo will assume and honor, or will cause a member of the ESG Group to assume and honor, the agreements to which any ESG Employee is party with any member of the KLX Group. This Section 2.1(f) shall not apply to the Specified Employees.

2.2
Former Employees

(a)
General Principle.    Except as otherwise provided in this Agreement, each former employee of the KLX Group or the ESG Group as of the Distribution Date will be considered a former employee of the business as to which his or her duties were primarily related immediately prior to his or her termination of employment with all of KLX, ESG SpinCo and their respective Affiliates.

(b)
Former ESG Employees.    Former employees of the ESG Group as of the Distribution Date shall be deemed to include all employees who, as of their last day of employment with any of KLX, ESG SpinCo or their respective Affiliates, had employment duties primarily related to the ESG Business (collectively, the Former ESG Employees).

(c)
Former KLX Employees.    Former employees of the KLX Group shall be deemed to include all employees who, as of their last day of employment with any of KLX, ESG SpinCo or their respective Affiliates, had employment duties primarily related to the ASG Business (collectively, the Former KLX Employees).

2.3
Employment Law Obligations

        On and after the Distribution Date (i) the members of the ESG Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of the ESG Employees and (ii) the members of the KLX Group shall remain responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of the KLX Employees and the treatment of the Former KLX Employees and Former ESG Employees in respect of their former employment with KLX.

B-4


2.4
Employee Records

(a)
Employee Records Relating to ESG Employees and Former ESG Employees.    All Employee Records and data in any form relating to ESG Employees and Former ESG Employees shall be the property of ESG SpinCo, except that data pertaining to any ESG Employee or Former ESG Employee and relating to any period that any such ESG Employee or Former ESG Employee was employed by a member of the KLX Group prior to the Distribution (or, with respect to any Specified Employee, such individual's Transfer Date) shall be jointly owned by ESG SpinCo and KLX.

(b)
Employee Records Relating to KLX Employees and Former KLX Employees.    All Employee Records and data in any form relating to KLX Employees and Former KLX Employees shall be the property of KLX, except that data pertaining to any KLX Employee or Former KLX Employee and relating to any period that any such KLX Employee or Former KLX Employee was employed by ESG SpinCo, KLX or any of their respective Affiliates prior to the Distribution shall be jointly owned by KLX and ESG SpinCo.

(c)
Sharing of Records.    The Parties shall use their respective reasonable commercial efforts to provide each other such Employee Records and information only as necessary or appropriate to carry out their obligations under Applicable Law (including, without limitation, any relevant privacy protection laws or regulations in any applicable jurisdictions), this Agreement or the Distribution Agreement or the Transition Services Agreement, or for the purposes of administering their respective employee Benefit Plans and policies. Subject to Applicable Law, all information and Employee Records regarding employment and personnel matters of (i) KLX Employees and Former KLX Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date by KLX in accordance with all laws and policies relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records and (ii) ESG Employees and Former ESG Employees shall be accessed, retained, held, used, copied and transmitted after the Distribution Date or the Transfer Date, as applicable, by ESG SpinCo in accordance with all laws and policies relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records. The Parties shall reimburse each other for any reasonable costs incurred in copying or transmitting any records requested pursuant to this Section 2.4.

(d)
Access to Records.    To the extent consistent with applicable privacy protection laws or regulations, access to such Employee Records after the Distribution Date (or, with respect to any Specified Employee, such individual's Transfer Date) will be provided to ESG SpinCo and KLX in accordance with the Distribution Agreement. In addition, notwithstanding anything to the contrary, ESG SpinCo and KLX shall retain reasonable access to those Employee Records necessary for ESG SpinCo's or KLX's continued administration of any plans or programs on behalf of Employees after the Distribution Date (or, with respect to any Specified Employee, such individual's Transfer Date); provided that such access shall be limited to individuals who have a job-related need to access such Employee Records in order to administer such plans. ESG SpinCo shall also retain copies of all restrictive covenant agreements with any KLX Employee or Former KLX Employee in which ESG SpinCo has a valid business interest.

(e)
No Access to Computer Systems.    Except as set forth in the Distribution Agreement or the Transition Services Agreement, no provision of this Agreement shall give either Party direct access to the computer systems of the other Party.

(f)
Relation to Distribution Agreement.    The provisions of this Section 2.4 shall be in addition to, and not in derogation of, the provisions of the Distribution Agreement governing Confidential Information and access to and use of employees, Information and Records.

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(g)
Confidentiality.    Except as otherwise set forth in this Agreement, all Employee Records and data relating to employees shall, in each case, be subject to the confidentiality provisions of the Distribution Agreement.

(h)
Cooperation.    Each member of the KLX Group and ESG Group shall use reasonable commercial efforts to share, retain and maintain data and Employee Records that are necessary or appropriate to further the purposes of this Section 2.4 and for each other to administer their respective Benefit Plans to the extent consistent with this Agreement and Applicable Law. Except as otherwise provided in this Agreement or as provided under the Transition Services Agreement, neither KLX nor ESG SpinCo shall charge the other any fee for such cooperation. The Parties agree to cooperate as long as is reasonably necessary to further the purposes of this Section 2.4.


ARTICLE III
EQUITY AWARDS

3.1
General Principals

(a)
KLX and ESG SpinCo shall take any and all reasonable actions as shall be necessary and appropriate to further the provisions of this ARTICLE III, including, to the extent practicable, providing written notice or similar communication to employees who hold one or more awards granted under the KLX Equity Plan informing such employees of (i) the actions contemplated by this ARTICLE III with respect to such awards and (ii) whether (and during what time period) any "blackout" period shall be imposed upon holders of awards granted under the KLX Equity Plan during which time awards may not be exercised or settled, as the case may be.

(b)
No award described in this ARTICLE III, whether outstanding or to be issued, adjusted, substituted, assumed, converted or cancelled by reason of or in connection with the Distribution, shall be issued, adjusted, substituted, assumed, converted or cancelled until, in the judgment of the administrator of the applicable plan or program, such action is consistent with all Applicable Laws, including federal securities Laws.

3.2
Establishment of Long-Term Incentive Plan

        On or prior to the Distribution Date, ESG SpinCo shall establish a long-term incentive plan for the benefit of eligible ESG Employees that is substantially similar to the KLX Equity Plan (the ESG Equity Plan). Prior to the Distribution Date, KLX, as the sole stockholder of ESG SpinCo, shall approve the ESG Equity Plan.

3.3
Treatment of Outstanding KLX Equity Awards

(a)
Vesting Credit for ESG Employees in respect of KLX Equity Awards.    Prior to the Distribution Date, KLX shall take all actions required to permit any KLX Equity Awards outstanding under the KLX Equity Plan issued to or held by ESG Employees immediately prior to the Distribution Date (or, with respect to any Specified Employee, such individual's the Transfer Date) to continue to vest and be satisfied at the relevant time following the Distribution Date or Transfer Date, as the case may be, in accordance with the KLX Equity Plan rules and relevant award agreements, and otherwise in accordance with Sections 3.3(b) and 3.3(c) hereof, without regard to any forfeiture provisions that otherwise may apply solely as a result of the Distribution and the ESG Employees no longer being employed within the KLX Group. Solely for the purpose of the continued vesting contemplated by the preceding sentence, continued service with ESG SpinCo or the ESG Group following the Distribution Date or the Transfer Date, as the case may be, will be treated as continued service with KLX and the KLX Group, and such continued vesting shall be conditioned upon the relevant ESG Employees remaining in the continued service of the ESG Group following the Distribution Date or the Transfer Date, as the case may be, and through the applicable vesting date(s) under the applicable KLX Equity Award. In connection with the foregoing, ESG SpinCo shall promptly notify KLX of any termination of employment of an ESG Employee holding any such KLX Equity Award so that KLX can properly account for the vesting or forfeiture of such KLX Equity Awards in accordance with the otherwise applicable provisions of the KLX Equity Plan rules and relevant award agreements to which such KLX Equity Awards are subject.

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(b)
Treatment of KLX RSAs in connection with the Distribution.    Rather than participate in the Distribution, the KLX RSAs that are outstanding and unvested as of immediately prior to the Distribution Date shall, as soon as practicable following the Distribution Date, be adjusted by multiplying the number of shares of KLX Common Stock subject to such KLX RSAs immediately prior to the Distribution Date by the KLX Adjustment Ratio and rounding down to the nearest whole share (with each separate vesting tranche of KLX RSAs comprising the holder's aggregate number of KLX RSAs being rounded up or down to the nearest whole share). Following the Distribution Date, the adjusted KLX RSAs shall remain subject to the same terms and conditions as applicable to the KLX RSA prior to the Distribution Date, as modified by Section 3.3(a) hereof.

(c)
Treatment of KLX RSUs, KLX PSUs and KLX DSUs in connection with the Distribution.    Rather than participate in the Distribution, the KLX RSUs, KLX PSUs and KLX DSUs that are outstanding as of immediately prior to the Distribution Date shall be adjusted, as soon as practicable following the Distribution Date, by multiplying the number of shares subject to such KLX RSUs, KLX PSUs or KLX DSUs immediately prior to the Distribution Date by the KLX Adjustment Ratio and rounding down to the nearest whole unit (with each separate vesting tranche comprising the holder's aggregate number of underlying units being rounded up or down to the nearest whole unit). Following the Distribution Date, all adjusted KLX RSUs, adjusted KLX PSUs and adjusted KLX DSUs shall remain subject to the same terms and conditions as applicable to the KLX RSU, KLX PSU or KLX DSU prior to the Distribution Date, as modified by Section 3.3(a) hereof.

3.4
Employee Stock Purchase Plan

(a)
Effective as of the Distribution Date, ESG SpinCo shall establish an employee stock purchase plan for the benefit of ESG Employees that is substantially similar to the KLX ESPP (the ESG ESPP). Prior to the Distribution Date, KLX, as the sole stockholder of ESG SpinCo, shall approve the ESG ESPP.

(b)
Unless otherwise decided by the Committee in its sole discretion, all payroll deductions under the KLX ESPP shall cease following the last payroll payment date prior to the Distribution Date. The option period that would be in progress on the Distribution Date shall be shortened so that the exercise shall occur by the day prior to the Distribution Date. After such exercise, any residual amounts remaining in the KLX ESPP accounts of ESG Employees shall remain in such accounts until after the Distribution Date, at which point they shall be transferred to ESG SpinCo for deposit in the appropriate individuals' ESG ESPP accounts. In the event that an ESG Employee chooses not to participate in the ESG ESPP, that ESG Employee shall receive the appropriate residual amount following the Distribution Date.

3.5
Liabilities for Settlement of Awards

        From and after the Distribution Date KLX shall remain responsible for all Liabilities associated with KLX Equity Awards, including share delivery, registration or other obligations related to the exercise, vesting or settlement of the KLX Equity Awards.

3.6
Tax Reporting, Withholding and Deduction for Equity-Based Awards

(a)
A member of the KLX Group will be responsible for all income, payroll, or other Tax reporting and withholding obligations associated with the income recognized in connection with the KLX Equity Awards KLX and ESG SpinCo acknowledge and agree that the Parties will cooperate with each other and with third party providers to effectuate withholding and remittance of Taxes in a timely, efficient, and appropriate manner in accordance with Applicable Law.

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(b)
KLX and ESG SpinCo agree that the consideration paid on vesting and settlement of equity awards pursuant to this Article 3 shall be reported on KLX's federal income Tax Return. ESG Spinco (i) will be bound by the agreement in this Section 3.6(b) for purposes of determining any and all consequences with respect to Taxes of the transactions contemplated herein, (ii) will prepare and file all Tax Returns to be filed with any Tax Authority in a manner consistent with such agreement, and (iii) will take no position inconsistent with such agreement on any Tax Return, any discussion with or proceeding before any Tax Authority, or otherwise, in each case except as otherwise required by a final and non-appealable decision or other order by a court or by a final closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code. In the event that the agreement in this Section 3.6(b) is disputed by any Tax Authority, the Party receiving notice of such dispute will promptly notify the other Party thereof.


ARTICLE IV
CERTAIN U.S. WELFARE BENEFIT MATTERS

4.1
Establishment of Welfare Plans

(a)
On or prior to the Distribution Date, ESG SpinCo shall establish and adopt Welfare Plans that will provide welfare benefits to each eligible ESG Employee who is, as of the Distribution Date, a participant in any of the KLX Welfare Plans (and their eligible spouses and dependents, as the case may be) under terms and conditions that are comparable to the KLX Welfare Plans (the ESG Welfare Plans). Coverage and benefits under the KLX Welfare Plans shall then be provided to the ESG Employees on an uninterrupted basis under the newly established ESG Welfare Plans which shall contain comparable terms and conditions as in effect under the corresponding KLX Welfare Plans immediately prior to the Distribution Date, unless otherwise noted on Schedule 4.1(a). ESG Employees shall cease to be eligible for coverage under the KLX Welfare Plans on the Distribution Date or the Transfer Date, as applicable, unless otherwise noted on Schedule 4.1(a). For the avoidance of doubt, ESG SpinCo shall not participate in any KLX Welfare Plans on or after the Distribution Date, and KLX Employees and Former KLX Employees shall not participate in any ESG Welfare Plans at any time. During the period, if any, after the Distribution Date or the Transfer Date, as applicable, coverage for ESG Employees under the KLX Welfare Plans shall be provided pursuant to the terms set forth in the Transition Services Agreement.

(b)
ESG SpinCo shall use commercially reasonable efforts to cause all ESG Welfare Plans (to the extent not already waived or taken into account, as applicable, prior to the date hereof) to (i) waive all limitations as to preexisting conditions, exclusions, and service conditions with respect to participation and coverage requirements applicable to ESG Employees, other than limitations that were in effect with respect to such ESG Employees as of the Distribution Date or the Transfer Date, as applicable, under the KLX Welfare Plans, and (ii) waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to an ESG Employee to the extent such ESG Employee had satisfied any similar limitation under the analogous KLX Welfare Plan as of the Distribution Date or the Transfer Date, as applicable.

(c)
Unless otherwise noted on Schedule 4.1(c) KLX shall retain Liability and responsibility in accordance with the applicable KLX Welfare Plan for all reimbursement claims (such as medical and dental claims) for expenses incurred and for all non-reimbursement claims (such as life insurance claims) incurred by ESG Employees (and their dependents and beneficiaries) under such plans prior to the Distribution Date or the Transfer Date, as applicable, and ESG SpinCo shall retain Liability and responsibility in accordance with the ESG Welfare Plans for all reimbursement claims (such as medical and dental claims) for expenses incurred and for all non-reimbursement claims (such as life insurance claims) incurred by ESG Employees (and their dependents and beneficiaries) on or following the Distribution Date or the Transfer Date, as applicable. For purposes of this Section 4.1(c), a benefit claim shall be deemed to be incurred as follows: (i) when

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    the event giving rise to the benefit under the applicable plan has occurred as set forth in the governing plan documents, if it is clear based on the governing documents of both the KLX Welfare Plan and ESG Welfare Plans which plan should be responsible for the claim or, if not, as follows: (ii) (A) health, dental, vision, employee assistance program, education assistance program and prescription drug benefits (including in respect of any hospital confinement), upon provision of such services, materials or supplies; and (B) life, accidental death and dismemberment and business travel accident insurance benefits, upon the death, or other event giving rise to such benefits. The members of the KLX Group shall retain liability and responsibility in accordance with the applicable KLX Welfare Plan for all reimbursement claims (such as medical and dental claims) for expenses incurred and for all non-reimbursement claims (such as life insurance claims) for individuals who, immediately prior to the Distribution Date are Former ESG Employees (and their dependents and beneficiaries), including any such employee on long-term disability on the Distribution Date.

(d)
As of the Distribution Date or the Transfer Date, as applicable, ESG SpinCo shall cause the ESG Welfare Plans to recognize and give effect to all elections and designations (including all coverage and contribution elections and beneficiary designations) made by each ESG Employee under, or with respect to, the corresponding KLX Welfare Plan for the plan year in which the Distribution occurs. Notwithstanding the foregoing, nothing in this Section 4.1 will prohibit ESG SpinCo from soliciting or causing the solicitation of new election forms or beneficiary designations from ESG Employees to be effective under the ESG Welfare Plan as of the Distribution Date or the Transfer Date, as applicable.

4.2
Accrued Paid Time Off

        ESG SpinCo shall credit each ESG Employee with the amount of accrued but unused vacation time, sick time and other time-off benefits as such ESG Employee had with the KLX Group as of the Distribution Date or the Transfer Date, as applicable.

4.3
Flexible Spending Accounts

        On or prior to the Distribution Date, ESG SpinCo shall establish and adopt ESG Welfare Plans that will provide health care flexible spending account and dependent care flexible spending account benefits to ESG Employees (each an ESG FSA).

4.4
COBRA and HIPAA

        KLX shall retain responsibility for compliance with the health care continuation coverage requirements of COBRA with respect to Former ESG Employees who, prior to the Distribution Date or the Transfer Date, as applicable, were covered under a KLX Welfare Plan pursuant to COBRA. KLX shall be responsible for administering compliance with any certificate of creditable coverage requirements of HIPAA or Medicare applicable to the KLX Welfare Plans with respect to ESG Employees. The Parties agree that neither the Distribution nor any transfers of employment that occur in connection with and on or prior to the Distribution shall constitute a COBRA qualifying event for purposes of COBRA; provided, that, in all events, ESG SpinCo shall assume, or shall have caused the ESG Welfare Plans to assume, responsibility for compliance with the health care continuation coverage requirements of COBRA with respect to ESG Employees who, on or after the Distribution Date or the Transfer Date, as applicable, incur a qualifying event for purposes of COBRA.

4.5
Third Party Vendors

        Except as provided below, to the extent any KLX Welfare Plan is administered by a third-party vendor, KLX and ESG SpinCo will cooperate and use their reasonable commercial efforts to "clone"

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any contract with such third-party vendor for ESG SpinCo and to maintain any pricing discounts or other preferential terms for both KLX and ESG SpinCo. Neither party shall be liable for failure to obtain such pricing discounts or other preferential terms for ESG SpinCo. Each party shall be responsible for any additional premiums, charges or administrative fees that such party may incur pursuant to this Section 4.5.


ARTICLE V
NONQUALIFIED DEFERRED COMPENSATION PLANS

5.1
Deferred Compensation Plan

(a)
Prior to and following the Distribution Date, KLX shall retain any and all Liability and responsibility in accordance with, and pursuant to, the KLX Deferred Compensation Plan. In connection with the foregoing, ESG SpinCo shall promptly notify KLX of any separation from service of an ESG Employee participating in the KLX Deferred Compensation Plan so that KLX can properly account for the vesting or forfeiture of such ESG Employee's account balance, and arrange for payment, if applicable, in accordance with the otherwise applicable provisions of the KLX Deferred Compensation Plan. KLX will be responsible for all income, payroll, or other Tax reporting and withholding obligations associated with the distribution of amounts from the KLX Employee Deferred Compensation, but will not be responsible for adverse consequences to ESG Employees under Section 409A, and associated costs, resulting from failures of ESG SpinCo to timely and accurately notify KLX of any termination or other events requiring distribution of deferred compensation. KLX and ESG SpinCo agree that the distributions called for under this Section 5.1 shall be reported as deductions on KLX's federal income Tax Return.

(b)
Following the Distribution Date, ESG SpinCo shall establish a nonqualified deferred compensation plan for the benefit of ESG Employees that is comparable to the KIAWAH Deferred Compensation Plan (the ESG Deferred Compensation Plan).

5.2
Non-Employee Directors Deferred Compensation Plan

        On or prior to the Distribution Date, ESG SpinCo shall establish a nonqualified deferred compensation plan for the benefit of ESG Non-Employee Directors that is comparable to the KLX NEDDSP (the ESG NEDDSP).


ARTICLE VI
U.S. DEFINED CONTRIBUTION PLAN

6.1
KLX Savings Plan

(a)
Prior to the Distribution Date, ESG SpinCo shall establish a Tax qualified defined contribution plan that is comparable in all material respects to the KLX Savings Plan (the ESG Savings Plan), and any trust agreements or other plan documents reasonably necessary, and cause trustees to be appointed for the ESG Savings Plan, for the benefit of each ESG Employee who is, immediately prior to the Distribution Date, a participant in the KLX Savings Plan.

(b)
In accordance with Applicable Law, KLX and ESG SpinCo shall cause the accounts under the KLX Savings Plan of each ESG Employee to be transferred to the ESG Savings Plan as soon as practicable after the Distribution Date or the Transfer Date, as the case may be, in the following manner: (i) KLX will cause the accounts (including any outstanding loan balances) of each ESG Employee as of the Distribution Date or the Transfer Date, as the case may be, in the KLX Savings Plan to be transferred as soon as practicable after the Distribution Date or the Transfer Date, as the case may be, to the ESG Savings Plan and its related trust, (ii) the ESG Savings Plan will assume and became solely responsible for all Liabilities relating to the accounts that were so

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    transferred to the ESG Savings Plan and its related trust as of the time of such transfer, and (iii) ESG SpinCo will cause such transferred accounts to be accepted by the ESG Savings Plan and its related trust and will cause the ESG Savings Plan to satisfy all protected benefit requirements under the Code and Applicable Law with respect to the transferred accounts.

(c)
The ESG Savings Plan shall provide, effective as of the Distribution Date, (i) for the establishment of a ESG SpinCo Common Stock fund and (ii) that such ESG SpinCo Common Stock fund shall receive a transfer of and hold all shares of ESG SpinCo Common Stock distributed in connection with the Distribution in respect of shares of KLX Common Stock. All participants in the KLX Savings Plan will be prohibited from increasing their holdings in such ESG SpinCo Common Stock fund under the KLX Savings Plan, and may elect to liquidate their holdings in such ESG SpinCo Common Stock fund and invest those monies in any other investment fund offered under the KLX Savings Plan.

(d)
KLX and ESG SpinCo each intend to preserve the right of KLX participants and ESG SpinCo participants to receive distributions in kind of employer securities from, respectively, the KLX Savings Plan and the ESG Savings Plan, if, and to the extent, investments under such plans are comprised of ESG SpinCo Common Stock or KLX Common Stock, respectively; provided, that, KLX shall cause the KLX Savings Plan to provide that, no later than twelve (12) months following the Distribution Date, the KLX Savings Plan shall hold no separate investment fund comprised of ESG SpinCo Common Stock and ESG SpinCo shall cause the ESG Savings Plan to provide that, no later than twelve (12) months following the Distribution Date, the ESG Savings Plan shall not hold a separate investment fund comprised of KLX Common Stock. Each of KLX and ESG SpinCo shall authorize the appropriate plan fiduciary to determine, in its discretion, the extent to which and when KLX Common Stock (in the case of the ESG Savings Plan) and ESG SpinCo Common Stock (in the case of the KLX Savings Plan) shall cease to be investment alternatives thereunder.


ARTICLE VII
ANNUAL INCENTIVE PLANS

7.1
KLX Annual Incentive Plans

(a)
Bonuses for Fiscal Year Ended January, 31 2019. ESG SpinCo shall assume all obligations to pay eligible ESG Employees their annual cash bonuses for the fiscal year ending January 31, 2019, in accordance with the terms and conditions of the KLX Annual Incentive Plan. ESG SpinCo shall be entitled to the benefit of any Tax deduction in respect of the cash bonus payment made pursuant to this Section 7.1(a).

(b)
Future Annual Incentive Plans. ESG SpinCo is expected to implement its own annual incentive plan for the fiscal year ending January 31, 2020 and beyond in which ESG Employees will participate. ESG SpinCo shall be solely responsible for funding, paying and discharging all obligations relating to any annual cash incentive awards that any ESG Employee is eligible to receive under any such ESG SpinCo annual incentive plan.


ARTICLE VIII
COMPENSATION MATTERS AND GENERAL BENEFIT AND EMPLOYEE MATTERS

8.1
Restrictive Covenants in Employment and Other Agreements

        To the fullest extent permitted by the agreements described in this Section 8.1 and Applicable Law, KLX shall assign, or cause an applicable member of the KLX Group to assign (including through notification to employees, as applicable), to ESG SpinCo or a member of the ESG Group, as designated by ESG SpinCo, all agreements containing restrictive covenants (including confidentiality,

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non-competition and non-solicitation provisions) between a member of the KLX Group and an ESG Employee, with such assignment to be effective as of the Distribution Date or the Transfer Date, as applicable. Notwithstanding any such assignment, the restrictive covenant obligations noted above shall continue in effect with respect to ESG Employees' ongoing obligations to maintain and not use or disclose, without prior written authorization from KIAWAH, any confidential information of KIAWAH, except in the good faith performance of such ESG Employees' duty to ESG SpinCo or a member of the ESG Group. To the extent that assignment of such agreements is not permitted, effective as of the Distribution Date or the Transfer Date, as applicable, each member of the ESG Group shall be considered to be a successor to each member of the KLX Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the KLX Group and an ESG Employee, such that each member of the ESG Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the ESG Group; provided, however, that in no event shall KLX be permitted to enforce such restrictive covenant agreements against ESG Employees for action taken in their capacity as employees of a member of the ESG Group.

8.2
Termination of Participation

        Except as otherwise provided under this Agreement, effective as of the Distribution Date or the Transfer Date, as applicable, ESG Employees shall cease participation in each KLX Benefit Plan and shall no longer be eligible to participate in any KLX Benefit Plan.

8.3
Leaves of Absence

        ESG SpinCo will continue to apply the appropriate leave of absence policies applicable to inactive ESG Employees who are on an approved leave of absence as of the Distribution Date. Leaves of absence taken by ESG Employees prior to the Distribution Date shall be deemed to have been taken as employees of a member of the ESG Group.

8.4
Workers' and Unemployment Compensation

        All workers' compensation Liabilities relating to, arising out of, or resulting from any claim by a KLX Employee, Former KLX Employee ESG Employee or Former ESG Employee that results from an accident, incident or event occurring, or from an occupational disease which becomes manifest, prior to the Distribution Date shall be retained by KLX. Effective as of the Distribution Date, ESG SpinCo, acting through the member of the ESG Group employing each ESG Employee, will be responsible for (a) obtaining workers' compensation insurance, including providing all collateral required by the insurance carriers and providing all notices to ESG Employees required by applicable workers' compensation Laws and (b) establishing new or transferred unemployment insurance employer accounts, policies and claims handling contracts with the applicable government agencies.

8.5
Preservation of Rights to Amend

        The rights of KLX or ESG SpinCo to amend or terminate any plan, program, or policy referred to herein shall not be limited in any way by this Agreement.

8.6
Confidentiality

        Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith is confidential and is subject to the terms of the confidentiality provisions set forth in the Distribution Agreement.

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8.7
Administrative Complaints/Litigation

        To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both KLX Employees (or Former KLX Employees) and ESG Employees (or Former ESG Employees) and such action involves employment or Benefit Plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of KLX Employees (or Former KLX Employees) and ESG Employees (or Former ESG Employees) included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions of the Distribution Agreement shall apply with respect to each Party's indemnification obligations under this Section 8.7.

8.8
Reimbursement and Indemnification

        To the extent provided for under this Agreement, each Party agrees to reimburse the other Party, within 30 days of receipt from the other Party of reasonable verification, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective Welfare Plans and other Benefit Plans. All Liabilities retained, assumed, or indemnified against by ESG SpinCo pursuant to this Agreement, and all Liabilities retained, assumed, or indemnified against by KLX pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Distribution Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the ESG Group to pay or reimburse to any member of the KLX Group any benefit-related cost item that a member of the ESG Group has paid or reimbursed to any member of the KLX Group prior to the Distribution Date; and (ii) no provision of this Agreement shall require any member of the KLX Group to pay or reimburse to any member of the ESG Group any benefit-related cost item that a member of the KLX Group has paid or reimbursed to any member of the ESG Group prior to the Distribution Date.

8.9
Fiduciary Matters; Restrictive Covenants and Confidentiality

        Each Party acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other Applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

        Each Party acknowledges and agrees that no Party or individual shall be deemed to be in breach of such Party's or individual's fiduciary duty to ESG or the ESG Group, or KLX or the KLX Group, as applicable, solely by virtue of the fact that such Party or individual is, while an ESG Employee or KLX Employee, as applicable, providing services to ESG or the ESG Group, and KLX or the KLX Group, simultaneously, as applicable. Each Party shall fully release and indemnify the other Party for any Liabilities caused by any such dual and simultaneous obligations.

        Each Party acknowledges and agrees that no Party or individual shall be deemed to be in breach of such Party's or individual's obligation of confidentiality or other restrictive covenant obligations (including non-competition and non-solicitation restrictions) to ESG or the ESG Group, or KLX or the KLX Group, as applicable, solely by virtue of the fact that such Party or individual is, while an ESG Employee or KLX Employee, as applicable, providing services to ESG or the ESG Group, and KLX or the KLX Group, simultaneously, as applicable. Each Party shall fully release and indemnify the other Party for any Liabilities caused by any such dual and simultaneous obligations.

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8.10
Section 409A

        KLX and ESG SpinCo shall cooperate in good faith so that the transactions contemplated by this Agreement and the Distribution Agreement will not result in adverse Tax consequences under Section 409A of the Code to any ESG Employee, ESG Non-Employee Director, Former ESG Employee, KLX Employee, KLX Non-Employee Director or Former KLX Employee, in respect of their respective benefits under any Benefit Plan. In the event the Parties determine that the actions described in this Agreement may result in any ESG Employee, ESG Non-Employee Director, Former ESG Employee, KLX Employee, KLX Non-Employee Director or Former KLX Employee becoming subject to additional Taxes pursuant to Section 409A of the Code, the Parties agree to cooperate in good faith to modify the procedures described in this Agreement to prevent such ESG Employee, ESG Non-Employee Director, Former ESG Employee, KLX Employee, KLX Non-Employee Director or Former KLX Employee from becoming subject to such additional Tax.

8.11
Non-Solicitation

        From the Distribution Date until the 18-month anniversary of the Closing Date, KLX and ESG SpinCo shall not, and each shall cause, in the case of KLX, each member of the KLX Group and, in the case of ESG SpinCo, each member of the ESG Group, not to, solicit, hire, or in any other capacity recruit, offer employment, employ or engage as a consultant or independent representative, in the case of EGS SpinCo, any KLX Employee, and, in the case of KLX, any ESG Employee (such individuals described in the foregoing, Covered Employees); provided that, the foregoing shall not restrict (a) KLX, ESG SpinCo or their respective Affiliates from making general solicitations of employment in the ordinary course of business that are not specifically directed to any Covered Employee, (b) KLX, ESG SpinCo or their respective Affiliates from employing, hiring, engaging, recruiting or soliciting any Covered Employee whose service with the Company or a Member or any of its Affiliates, as the case may be, has been terminated, or (c) ESG SpinCo from soliciting, engaging, recruiting and/or hiring any Specified Employee.


ARTICLE IX
MISCELLANEOUS

9.1
Limitation of Liability

        IN NO EVENT SHALL ANY MEMBER OF THE KLX GROUP OR THE ESG GROUP BE LIABLE TO ANY MEMBER OF THE ESG GROUP OR THE KLX GROUP, RESPECTIVELY, FOR ANY PUNITIVE DAMAGES ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES AWARDED TO THIRD PARTIES.

9.2
Expenses

        Except as otherwise provided in this Agreement in this Agreement, the Distribution Agreement or in any Ancillary Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement. Notwithstanding anything in this Agreement, the Distribution Agreement or in any Ancillary Agreement to the contrary, all ESG Transaction Costs shall be borne by ESG SpinCo and all KLX Transaction Costs shall be borne by KLX.

9.3
Notices

        All notices, consents, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when

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received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by e-mail or facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.3):

    (a)
    if to ESG SpinCo:

        [**************************]
        [**************************]
        [**************************]
        Facsimile: [*****************]
        Email: [********************]
        Attention: [*****************];

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001
        Email:    Valerie.Jacob@freshfields.com
                       Omar.Pringle@freshfields.com
        Attention:    Valerie Ford Jacob, Esq.
                             Omar Pringle, Esq.

    (b)
    if to KLX:

        KLX Inc.
        1300 Corporate Center Way
        Wellington, FL 33414
        Phone: (561) 383-5100
        Fax: (561) 791-5479
        Email: Roger.Franks@klx.com
        Attention: General Counsel;

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001
        Email:    Valerie.Jacob@freshfields.com
                       Omar.Pringle@freshfields.com
        Attention:    Valerie Ford Jacob, Esq.
                             Omar Pringle, Esq.

9.4
Interpretation; Certain Definitions

(a)
The Parties have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed

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    as if drafted collectively by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(b)
The words "hereof," "herein," "hereby," "hereunder" and "herewith" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs, exhibits, annexes and schedules are to the articles, sections and paragraphs of, and exhibits, annexes and schedules to, this Agreement, unless otherwise specified, and the table of contents and headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the phrase "without limitation." Words describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns. The phrases "the date of this Agreement" and "the date hereof" and terms or phrases of similar import shall be deemed to refer to [    ·    ], 2018, unless the context requires otherwise. Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. All references to "dollars" or "$" refer to currency of the United States.

9.5
Public Announcements

        Following the Effective Time, KLX shall not make, and shall procure that none of the members of the KLX Group makes, any press release or public announcement in respect of this Agreement or the transactions contemplated by this Agreement without the prior written consent of ESG SpinCo unless otherwise required by Applicable Law or applicable stock exchange regulation.

9.6
Severability

        If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Distribution be consummated as originally contemplated to the fullest extent possible.

9.7
Entire Agreement

        This Agreement and the Distribution Agreements (including the other Ancillary Documents) constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, by and between the Parties with respect to the subject matter hereof and thereof. Irrespective of anything else contained herein, the Parties do not intend for this Agreement constitute the establishment or adoption of, or amendment to, any Benefit Plan, and no person participating in any such Benefit Plan shall have any claim or cause of action, under ERISA or otherwise, in respect of any provision of this Agreement as it relates to any such Benefit Plan or otherwise.

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9.8
Assignment

        Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Applicable Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns. Any attempted assignment in violation of this Section 9.8 shall be null and void.

9.9
No Third-Party Beneficiaries

        The Parties acknowledge and agree that all provisions contained in this Agreement with respect to ESG Business Employees and ASG Business Employees are included for the sole benefit of the respective Parties and shall not create any right (i) in any other Person, including employees, former employees, any participant or any beneficiary thereof, in any Benefit Plan, or (ii) to continued employment with the ESG Group or the KLX Group. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement, whether express or implied, shall be treated as an amendment or other modification of any Benefit Plan or shall prohibit the KLX group or the ESG Group from amending or terminating any Benefit Plan.

9.10
Governing Law

        This Agreement and all Proceedings (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of KLX and ESG SpinCo in the negotiation, administration, performance and enforcement thereof, shall be governed by, and construed in accordance with, the Applicable Laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Applicable Laws of any jurisdiction other than the State of Delaware.

9.11
Consent to Jurisdiction

(c)
Each of the Parties hereby, with respect to any legal claim or Proceeding arising out of this Agreement or the transactions contemplated by this Agreement, (i) expressly and irrevocably submits, for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the Delaware Court of Chancery and any appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such courts, (iii) agrees that it will not bring any claim or Proceeding relating to this Agreement or the transactions contemplated by this Agreement except in such courts and (iv) waives, to the fullest extent it may legally and effectively do so, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any objection which it may now or hereafter have to the laying of venue of any claim or Proceeding arising out of or relating to this Agreement. Notwithstanding the foregoing, each of KLX and ESG SpinCo agrees that a final and nonappealable judgment in any Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(d)
Each Party irrevocably consents to the service of process in any claim or Proceeding with respect to this Agreement and the transactions contemplated by this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other Party may be made by mailing copies thereof by registered or certified United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 9.3 and such service of process shall

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    be sufficient to confer personal jurisdiction over such Party in such claim or Proceeding and shall otherwise constitute effective and binding service in every respect.

9.12
Effect if Distribution Does Not Occur

        Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.

9.13
Counterparts

        This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement. Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

9.14
Waiver of Jury Trial

        EACH OF KLX AND ESG SPINCO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) BETWEEN ANY OF THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF KLX OR ESG SPINCO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

[Signature Page Follows]

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        IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective officers, each of whom is duly authorized, all as of the day and year first above written.

KLX INC.    

By:

 

  


 

 
    Name:        
    Title:        

KLX ENERGY SERVICES HOLDINGS, INC.

 

 

By:

 

  


 

 
    Name:        
    Title:        


EXHIBIT C

IP MATTERS AGREEMENT

        THIS IP MATTERS AGREEMENT (this Agreement), dated as of [    ·    ], 2018, is entered into by and between KLX Inc., a corporation formed under the laws of the State of Delaware (KLX), and KLX Energy Services Holdings, Inc., a corporation formed under the laws of the State of Delaware (ESG SpinCo). KLX and ESG SpinCo are referred to herein individually as a Party and collectively as the Parties.


RECITALS

        WHEREAS, KLX owns the KLX Trademarks (as defined herein);

        WHEREAS, KLX has been using certain KLX Trademarks in relation to the ASG Business and ESG SpinCo has been using certain KLX Trademarks in relation to the ESG Business;

        WHEREAS, KLX and The Boeing Company (the ASG Buyer) entered into an Agreement and Plan of Merger on April 30, 2018 (the ASG Merger Agreement), pursuant to which a wholly owned subsidiary of the ASG Buyer (Merger Sub) will be merged with and into KLX, whereupon the separate existence of the Merger Sub shall cease, and KLX will continue as the surviving corporation and as a direct or indirect wholly owned subsidiary of the ASG Buyer (the ASG Merger);

        WHEREAS, concurrently with the execution of this Agreement, KLX and ESG SpinCo are entering into a distribution agreement (the Distribution Agreement) pursuant to which, inter alia, KLX agrees to separate the ASG Business and the ESG Business through a taxable spin-off of the ESG Business into a separate publicly traded company upon the terms and subject to the conditions set forth in the Distribution Agreement (the Spin-Off);

        WHEREAS, following the Spin-Off and the ASG Merger, the Parties intend that ESG SpinCo will own the KLX Trademarks; and

        WHEREAS, KLX and ESG SpinCo wish to enter into this Agreement setting forth their rights and obligations with respect to the transfer of the KLX Trademarks and associated rights (as set forth in Section 3.01), on an as-is basis, to ESG SpinCo and the rebranding of the ASG Business (as more fully described in Article IV).

        NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual terms, conditions and other agreements set forth herein, and intending to be legally bound hereby, the Parties agree, with effect as of the Effective Time, as follows:


ARTICLE I
DEFINITIONS

        As used herein, the following terms have the following meanings:

        Acquired Rights has the meaning set forth in Section 3.01.

        Affiliate means, with respect to any Person, any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise.

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        Agreement has the meaning set forth in the Preamble.

        Ancillary Agreement has the meaning given in the Distribution Agreement.

        Applicable Law has the meaning given in the ASG Merger Agreement.

        ASG Business means all businesses of KLX and its Subsidiaries, other than the ESG Business.

        Assignment has the meaning set forth in Section 3.02.

        Closing has the meaning given in the ASG Merger Agreement.

        Closing Date has the meaning given in the ASG Merger Agreement.

        Effective Time has the meaning given in the Distribution Agreement.

        ESG Business means the business of providing technical services and related rental equipment to oil and gas exploration and production companies in remote oil and gas producing regions solely as conducted by the ESG Group, but does not include any other business operated or conducted by any member of the KLX Group.

        ESG Group means ESG SpinCo, KLX RE Holdings LLC and each Person that is or becomes a Subsidiary of ESG SpinCo, including in each case any Person that is merged or consolidated with and into ESG SpinCo or any Subsidiary of ESG SpinCo.

        Governmental Authority has the meaning given in the ASG Merger Agreement.

        KLX ES Mark means the United States trademark "KLX ENERGY SERVICES" (Registration No. 5212182).

        KLX Group means KLX, each Person that is or becomes a Subsidiary of KLX (other than the members of the ESG Group), including in each case any Person that is merged or consolidated with and into KLX or any Subsidiary of KLX.

        KLX Trademarks means the trademarks and trademark applications listed on Schedule 1, together with any other trademarks, trade names, service marks, logos or similar rights, in each case, (a) owned as of the Effective Time by the KLX Group and (b) containing "KLX".

        Parties has the meaning set forth in the Preamble.

        Party has the meaning set forth in the Preamble.

        Person means any individual or any corporation, limited liability company, partnership, trust, association or other entity of any kind.

        Proceeding has the meaning given in the ASG Merger Agreement.

        Similar Marks means the "KLX" name and any trademarks, trade names, service marks, logos or similar rights that are likely to cause confusion with the KLX Trademarks.

        Subsidiary of a Person means any other Person with respect to which the first Person (i) has the right to elect a majority of the board of directors or other Persons performing similar functions or (ii) beneficially owns more than fifty percent (50%) of the voting stock (or of any other form of voting or controlling equity interest in the case of a Person that is not a corporation), in each case, directly or indirectly through one or more other Persons.

        Capitalized terms used but not defined in this Agreement shall have the meaning set forth in the Distribution Agreement.

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ARTICLE II
CO-EXISTENCE

2.01
Use of "KLX" by ESG SpinCo

        With effect from the Effective Time until such time as the Acquired Rights are assigned to ESG SpinCo in accordance with Section 3.01, KLX consents to and grants the ESG Group a non-exclusive, irrevocable, royalty-free, non-transferable, non-sublicensable license to use the KLX Trademarks in the form "KLX ENERGY SERVICES" (or any form which varies in insignificant ways thereto), solely in connection with the ESG Business.

2.02
KLX's Obligations

        KLX shall not, and shall procure that the members of the KLX Group shall not (except, in each case, as otherwise permitted herein):

(a)
use, or apply to register as a trademark, company name, business name, trading name or domain name, the name "KLX ENERGY SERVICES", except that KLX may use "KLX ENERGY SERVICES" for fair use purposes, to refer to "KLX", ESG SpinCo, the ESG Group or the ESG Business in a factual manner, as may be required under Applicable Law, or otherwise in accordance with honest business practices;

(b)
oppose or apply to revoke or invalidate, or otherwise challenge, the KLX ES Mark;

(c)
challenge the use or registration by any member of the ESG Group of any domain names containing "KLX ENERGY" or "KLX ENERGY SERVICES", except to the extent combined with, including, or otherwise incorporating any trademarks owned by any member of the KLX Group or an Affiliate thereof (other than the KLX Trademarks);

(d)
use any KLX Trademarks in relation to goods or services equivalent or similar to those provided by the ESG Business; or

(e)
use any KLX Trademark in a manner calculated to cause confusion with the ESG Business.

2.03
ESG Group Obligations

        Notwithstanding anything to the contrary in this Agreement, the ASG Merger Agreement, the Distribution Agreement, or any Ancillary Agreement, with effect from the Closing Date, including after the Acquired Rights have been assigned to ESG SpinCo in accordance with Section 3.01, ESG SpinCo shall not, and shall procure that each member of the ESG Group shall not, use or otherwise attempt to procure a registration for the KLX Trademarks or any Similar Mark, or otherwise permit (whether directly through a license grant or indirectly) any other Person to use or otherwise attempt to procure a registration for the KLX Trademarks or any Similar Mark: (a) in relation to goods or services equivalent or similar to those provided by the ASG Business at any time; (b) in a manner calculated to cause confusion with the ASG Business; or (c) otherwise within the fields of use in which the ASG Business may operate.


ARTICLE III
ASSIGNMENT OF ACQUIRED RIGHTS

3.01
Assignment

        KLX hereby, with effect from immediately prior to the Closing Date (but subject to the occurrence of the Closing), assigns, and causes all members of the KLX Group to assign, to ESG SpinCo, all of its and their right, title and interest in and to:

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(a)
the KLX Trademarks and all issuances, extensions, and renewals thereof, together with the goodwill of the business connected with the use of, and symbolized by, the KLX Trademarks;

(b)
all rights of any kind whatsoever of KLX accruing under any of the foregoing provided by Applicable Law of any jurisdiction, by international treaties and conventions, and otherwise throughout the world;

(c)
all internet domain name registrations incorporating any KLX Trademark or any acronym, abbreviation, or component thereof, including the domain names listed on Schedule 2, and all associated web addresses, URLs, websites and web pages, and all content and data thereon or relating thereto, but only to the extent such web pages, content, and data relate exclusively to the ESG Business;

(d)
any and all royalties, fees, income, payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and

(e)
any and all claims and causes of action with respect to any of the foregoing, whether accruing before, on, or after the Closing Date, including all rights to and claims for damages, restitution, and injunctive and other legal and equitable relief for past, present, and future infringement, dilution, misappropriation, violation, misuse, breach, or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages,

((a)
through (e) together, the Acquired Rights).

3.02
Deliverables

        Within a reasonable amount of time after the consummation of the assignment pursuant to Section 3.01, KLX shall promptly deliver to ESG SpinCo:

(a)
an assignment in the form of Schedule 3 hereto and duly executed by KLX (the Assignment); and

(b)
all prosecution and maintenance files relating to registrations, or applications for registration, of the KLX Trademarks.

3.03
Further Assurances; Recordation

(a)
Each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances, and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the documents to be delivered hereunder.

(b)
Without limiting the foregoing, and without limiting Section 3.02, KLX shall, at ESG SpinCo's cost, execute and deliver to ESG SpinCo such assignments and other documents, certificates, and instruments of conveyance in a form satisfactory to ESG SpinCo and suitable for filing with the United States Patent and Trademark Office and the registries and other recording Governmental Authorities in all applicable jurisdictions as reasonably requested by ESG SpinCo and reasonably necessary to record and perfect the assignment of the Acquired Rights in Section 3.01, and to vest in ESG SpinCo all right, title, and interest in and to the Acquired Rights in accordance with Applicable Law. As between KLX and ESG SpinCo, ESG SpinCo shall be responsible, at ESG SpinCo's cost, for filing the Assignment, and other documents, certificates, and instruments of conveyance with the applicable Governmental Authorities; provided that KLX shall, at ESG SpinCo's cost, take such steps and actions, and provide such cooperation and assistance, to ESG SpinCo and its successors, assigns, and legal representatives, including the execution and delivery of any affidavits, declarations, oaths, exhibits, assignments, powers of attorney, or other documents, as may be reasonably requested by ESG SpinCo and reasonably necessary to effect, evidence, or

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    perfect the assignment of the Acquired Rights to ESG SpinCo, or any of ESG SpinCo's successors or assigns.


ARTICLE IV
REBRANDING OF KLX GROUP

4.01
Change of Name and Rebranding

        If the ASG Merger is consummated, then, KLX shall:

(a)
as soon as reasonably practicable after the Closing Date and no later than one hundred eighty (180) days from and including the Closing Date, make all necessary filings in the applicable jurisdictions and take all other reasonably necessary actions for purposes of changing the name of any member of the KLX Group that consists of or includes the word "KLX" to a name that does not include that word or any other words which would likely cause confusion from the perspective of a consumer;

(b)
as soon as reasonably practicable after the Closing Date and no later than one hundred eighty (180) days from and including the Closing Date, cause each member of the KLX Group to (i) cease to use or display on any real physical properties (and associated signage) and equipment the KLX Trademarks or any Similar Marks; and (ii) remove from all websites within their control any reference to "KLX", the ESG Group or the ESG Business, except for fair use purposes, to refer to "KLX", the ESG Group or the ESG Business in a factual manner, as may be required under Applicable Law, or otherwise in accordance with honest business practices;

(c)
as soon as reasonably practicable after the Closing Date and no later than three hundred sixty-five (365) days from and including the Closing Date, to cause the word "KLX" to be removed from any goods, stock, products, product literature, product labels, packaging, signage, stationery or any marketing, promotional, advertising or public relations materials, in each case, branded with a KLX Trademark or any Similar Mark, and KLX shall certify in writing to ESG SpinCo that it has done so, provided, however, that the KLX Group shall have no obligation hereunder to perform any removal contemplated in this Section 4.01(c) (i) to the extent such removal would be commercially impractical or otherwise time or cost prohibitive, or (ii) with respect to internal materials that are not publicly visible and not intended to be distributed to the public;

(d)
from the Closing Date, not, and shall cause the members of the KLX Group not, to: (i) register, attempt to register or purchase or procure as advertising keywords, the KLX Trademarks or any Similar Marks in any territory in the world, either directly or through a third party; (ii) object to, oppose, challenge or apply to revoke or invalidate, either directly or through a third party, the use or registration by any member of the ESG Group (or any Person authorized or licensed by them) of any KLX Trademarks or any other trademarks containing the word "KLX" in any territory in the world, except to the extent such Similar Marks are used in combination, include, or otherwise incorporate any trademarks owned by any member of the KLX Group or any Affiliate thereof (other than the "KLX" Trademarks); (iii) produce any goods, stock, products, product literature, product labels, packaging, signage, stationery or any marketing, promotional, advertising or public relations materials bearing a KLX Trademark or any Similar Mark; or (iv) hold themselves out as being part of, or otherwise connected or associated with, any member of the ESG Group or the ESG Business, except for fair use purposes, to refer to "KLX", ESG SpinCo, the ESG Group or the ESG Business in a factual manner, or otherwise in accordance with honest business practices.

4.02
Run-off License

        Provided that the Assignment has been consummated in accordance with Section 3.01 ESG SpinCo hereby grants to the KLX Group a non-exclusive, irrevocable, royalty-free, non-transferable,

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sublicensable license to use the KLX Trademarks, for three hundred sixty-five (365) days after the Closing Date, to enable the KLX Group to rebrand in accordance with this Article IV and otherwise wind-down and transition off any trademark usage of the KLX Trademarks or any Similar Mark; provided such use (including sublicensing) is generally consistent with the purposes for which, the manner in which, and the extent to which the KLX Trademarks or Similar Marks were used (or licensed) by the KLX Group in the six (6) months prior to the Closing Date.


ARTICLE V
TERMINATION

5.01
Automatic termination

        This Agreement shall automatically terminate on the earlier of (i) the termination of the ASG Merger Agreement and (ii) the termination of the Distribution Agreement; provided that if the ASG Merger Agreement is terminated after the consummation of the Spin-Off, KLX and ESG SpinCo shall enter into a long-term brand co-existence agreement on customary terms and conditions to provide for the use of the KLX Trademarks between KLX and ESG SpinCo.

5.02
Termination for breach 

        Without affecting any other right or remedy available to it, either Party may terminate this Agreement with immediate effect by giving written notice to the other Party if the other Party commits a material breach of any term of this Agreement which is incapable of remedy or (if such breach is remediable) fails to remedy that breach within a period of thirty (30) days after being notified in writing to do so.

5.03
Survival 

        In the event of termination of this Agreement as provided in this Article V, this Agreement will be of no further force or effect; provided, however, that no such termination shall affect this paragraph or any of Section 2.03, Article I, Article V or Article VI, which Section and Articles shall survive any termination of this Agreement.


ARTICLE VI
MISCELLANEOUS

6.01
Severability

        If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.

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6.02
Assignment

        Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties (whether by operation of Applicable Law or otherwise) without the prior written consent of the other Party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective permitted successors and assigns. Any attempted assignment in violation of this Section 6.02 shall be null and void. Without limiting the foregoing, the licenses and other rights granted, and obligations made, under Section 2.03 (but solely for a period of 10 years from the Closing Date) and Section 4.02 are intended to be and will be binding on any Person to which the KLX Trademarks may be sold, assigned, transferred, or otherwise divested, and on any subsequent purchaser, assignee, or transferee, and any subsequent owner of the Acquired Rights, and ESG SpinCo shall procure that any such sale, assignment, transfer, or divestiture that it or its Affiliate makes of such Acquired Rights will be made subject to the rights of, and obligations owed to, the KLX Group therein.

6.03
Governing Law

        This Agreement and all Proceedings (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the actions of KLX and ESG SpinCo in the negotiation, administration, performance and enforcement thereof, shall be governed by, and construed in accordance with, the Applicable Laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the Applicable Laws of any jurisdiction other than the State of Delaware.

6.04
WAIVER OF JURY TRIAL. EACH OF KLX AND ESG SPINCO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) BETWEEN ANY OF THEM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF KLX OR ESG SPINCO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

6.05
Consent to Jurisdiction and Service of Process

(a)
Each of the Parties hereby, with respect to any legal claim or Proceeding arising out of this Agreement or the transactions contemplated by this Agreement, (i) expressly and irrevocably submits, for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the Delaware Court of Chancery and any appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such courts, (iii) agrees that it will not bring any claim or Proceeding relating to this Agreement or the transactions contemplated by this Agreement except in such courts and (iv) waives, to the fullest extent it may legally and effectively do so, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, any objection which it may now or hereafter have to the laying of venue of any claim or Proceeding arising out of or relating to this Agreement. Notwithstanding the foregoing, each of KLX and ESG SpinCo agrees that a final and nonappealable judgment in any Proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

(b)
Each Party irrevocably consents to the service of process in any claim or Proceeding with respect to this Agreement and the transactions contemplated by this Agreement or for recognition and enforcement of any judgment in respect hereof brought by any other Party may be made by

C-7


    mailing copies thereof by registered or certified United States mail, postage prepaid, return receipt requested, to its address as specified in or pursuant to Section 6.06 and such service of process shall be sufficient to confer personal jurisdiction over such Party in such claim or Proceeding and shall otherwise constitute effective and binding service in every respect.

6.06
Notices

        All notices, consents, and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by e-mail or facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.06):

    (i)
    if to ESG SpinCo, to:

        [**************************]
        [**************************]
        [**************************]
        Attention: [*****************]
        Facsimile: [*****************]
        Email: [********************];

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001
        Email: Valerie.Jacob@freshfields.com
                     Omar.Pringle@freshfields.com
        Attention: Valerie Ford Jacob, Esq.
                            Omar Pringle, Esq.

    (ii)
    if to KLX to:

        KLX Inc.
        1300 Corporate Center Way
        Wellington, FL 33414
        Phone: (561) 383-5100
        Fax: (561) 791-5479
        Email: Roger.Franks@klx.com
        Attention: General Counsel;

      with a copy (which shall not constitute notice) to:

        Freshfields Bruckhaus Deringer US LLP
        601 Lexington Avenue, 31st Floor
        New York, NY 10022
        Phone: (212) 277-4000
        Fax: (212) 277-4001

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        Email: Valerie.Jacob@freshfields.com
                     Omar.Pringle@freshfields.com
        Attention: Valerie Ford Jacob, Esq.
                            Omar Pringle, Esq.

6.07
Interpretation; Certain Definitions

(a)
The Parties have participated collectively in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted collectively by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions of this Agreement.

(b)
The words "hereof," "herein," "hereby," "hereunder" and "herewith" and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to articles, sections, paragraphs, exhibits, annexes and schedules are to the articles, sections and paragraphs of, and exhibits, annexes and schedules to, this Agreement, unless otherwise specified, and the table of contents and headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the phrase "without limitation." Words describing the singular number shall be deemed to include the plural and vice versa, words denoting any gender shall be deemed to include all genders, words denoting natural persons shall be deemed to include business entities and vice versa and references to a Person are also to its permitted successors and assigns. The phrases "the date of this Agreement" and "the date hereof" and terms or phrases of similar import shall be deemed to refer to [    ·    ], unless the context requires otherwise. Terms defined in the text of this Agreement have such meaning throughout this Agreement, unless otherwise indicated in this Agreement, and all terms defined in this Agreement shall have the meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. All references to "dollars" or "$" refer to currency of the United States.

6.08
No Representation and Warranties

        EACH OF KLX (ON BEHALF OF ITSELF AND EACH OTHER KLX GROUP COMPANY) AND ESG SPINCO (ON BEHALF OF ITSELF AND EACH OTHER ESG GROUP COMPANY) UNDERSTANDS AND AGREES THAT, EXCEPT AS SET FORTH IN THE ASG MERGER AGREEMENT, ANY ASSIGNMENT OF THE KLX TRADEMARKS AND ACQUIRED RIGHTS HEREUNDER IS MADE "AS-IS" WITHOUT ANY REPRESENTATION OR WARRANTY, AND NO PARTY TO THIS AGREEMENT IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE KLX TRADEMARKS OR ACQUIRED RIGHTS, AS TO ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY (OR OTHER MEMBER OF SUCH PARTY'S GROUP), OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SET-OFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY (OR OTHER MEMBER OF SUCH PARTY'S GROUP), OR AS TO THE LEGAL SUFFICIENCY OF ANY TRANSACTION, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER.

6.09
No Third-Party Beneficiaries

        This Agreement is not intended to and shall not confer upon any Person other than the Parties any rights or remedies hereunder

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6.10
Entire Agreement

        This Agreement (including the schedules hereto and any other agreement entered into by and between the Parties in connection herewith) constitutes, together with the ASG Merger Agreement and the Distribution Agreement, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, by and between the Parties with respect to the subject matter hereof.

6.11
Counterparts

        This Agreement may be executed in multiple counterparts, all of which shall together be considered one and the same agreement. Delivery of an executed signature page to this Agreement by electronic transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

[Signature Page Follows]

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        IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the Effective Time.

KLX Inc.    

By:

 

  


 

 
    Name:        
    Title:        

KLX Energy Services Holdings, Inc.

 

 

By:

 

  


 

 
    Name:        
    Title:        


EXHIBIT D

         [                ], 2018

KLX INC.

and

KLX ENERGY SERVICES HOLDINGS, INC.



TRANSITION SERVICES AGREEMENT





TABLE OF CONTENTS

 
   
  Page  

ARTICLE I DEFINITIONS

    D-1  

1.1

 

Definitions

   
D-1
 

1.2

 

Terms

   
D-1
 


ARTICLE II TRANSITION SERVICES; FEES


 

 


D-2

 

2.1

 

Services; Time Period

   
D-2
 

2.2

 

Fees and Invoicing

   
D-2
 

2.3

 

Cooperation

   
D-3
 

2.4

 

Access to Systems

   
D-3
 

2.5

 

Subcontractors

   
D-3
 

2.6

 

Migration Planning

   
D-4
 

2.7

 

Compliance Matters

   
D-4
 

2.8

 

Limitation of Services

   
D-5
 


ARTICLE III TERM; TERMINATION


 

 


D-5

 

3.1

 

Term

   
D-5
 

3.2

 

Termination Rights

   
D-5
 


ARTICLE IV LIMITATION ON LIABILITY


 

 


D-6

 

4.1

 

Nature of Services; Limited Warranty

   
D-6
 

4.2

 

Limitations on Liability; Disclaimer of Warranties

   
D-7
 

4.3

 

Indemnification

   
D-8
 

4.4

 

Employment-Related Liabilities

   
D-8
 

4.5

 

Force Majeure

   
D-8
 


ARTICLE V MISCELLANEOUS


 

 


D-8

 

5.1

 

Owned Intellectual Property

   
D-8
 

5.2

 

Notices

   
D-10
 

5.3

 

Interpretation; Certain Definitions

   
D-11
 

5.4

 

Severability

   
D-11
 

5.5

 

Assignment

   
D-11
 

5.6

 

Entire Agreement

   
D-11
 

5.7

 

No Third Party Beneficiary

   
D-12
 

5.8

 

Governing Law

   
D-12
 

5.9

 

Consent to Jurisdiction and Service of Process

   
D-12
 

5.10

 

Counterparts

   
D-12
 

5.11

 

WAIVER OF JURY TRIAL

   
D-12
 

D-i



TRANSITION SERVICES AGREEMENT

        THIS TRANSITION SERVICES AGREEMENT (this Agreement), dated as of [    ·    ] 2018 (the Effective Date), is entered into by and between KLX Inc., a corporation formed under the laws of the State of Delaware (KLX), and KLX Energy Services Holdings, Inc., a corporation formed under the laws of the State of Delaware (ESG SpinCo). KLX and ESG SpinCo are referred to herein individually as a Party and collectively as the Parties.


RECITALS

        WHEREAS, KLX and The Boeing Company (the ASG Buyer) have entered into an Agreement and Plan of Merger on April 30, 2018 (the ASG Merger Agreement), pursuant to which a wholly owned subsidiary of the ASG Buyer (Merger Sub) will be merged with and into KLX, whereupon the separate existence of the Merger Sub shall cease, and KLX will continue as the surviving corporation and as a direct or indirect wholly owned subsidiary of the ASG Buyer (the ASG Merger);

        WHEREAS, concurrently with the execution of this Agreement, KLX and ESG SpinCo are entering into a distribution agreement (the Distribution Agreement) pursuant to which, inter alia, KLX agrees to separate the ASG Business and the ESG Business through a taxable spin-off of the ESG Business into a separate publicly traded company upon the terms and subject to the conditions set forth in the Distribution Agreement;

        WHEREAS, the Distribution Agreement contemplates that ESG SpinCo and KLX enter into this Agreement; and

        WHEREAS, in connection therewith, KLX agrees to provide to the ESG Group, for the time periods set forth herein, certain services to support the operation of the ESG Business after the Distribution Date (as defined in the Distribution Agreement) in accordance with the terms and subject to the conditions set forth her