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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

ý

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

KLX Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o

 

No fee required.

ý

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        Common stock, $0.01 par value per share
 
    (2)   Aggregate number of securities to which transaction applies:
        The maximum number of shares of KLX Inc. common stock to which this transaction applies is estimated to be 52,500,000, which consists of (a) 50,739,597 shares of KLX Inc. common stock outstanding; (b) up to 1,560,403 shares of KLX Inc. common stock underlying outstanding restricted stock awards and restricted stock unit awards entitled to receive the per share merger consideration of $63.00 (after giving effect to potential adjustment in connection with the transactions described in this proxy statement); and (c) up to 200,000 shares of common stock underlying restricted stock unit awards that may be awarded between May 25, 2018 and the closing of the merger described herein in accordance with the merger agreement described herein, in each case, as of May 25, 2018.
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated based on the product of 52,500,000 shares of KLX Inc. common stock and the per share merger consideration of $63.00.
 
    (4)   Proposed maximum aggregate value of transaction:
        $3,307,500,000
 
    (5)   Total fee paid:
        $411,783.75
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

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PRELIMINARY PROXY STATEMENT, SUBJECT TO COMPLETION, DATED JUNE 1, 2018

LOGO

[    ·    ], 2018

Dear Fellow Stockholder:

        On April 30, 2018, KLX Inc. ("KLX") entered into a definitive merger agreement (as amended, the "merger agreement") to be acquired by The Boeing Company ("Boeing"). Subject to the terms and conditions of the merger agreement, a wholly owned subsidiary of Boeing will be merged with and into KLX and KLX will survive the merger as a wholly owned subsidiary of Boeing (the "merger"), following which Boeing will own all of KLX's issued and outstanding shares of common stock.

        Prior to or simultaneously with the consummation of the merger, and subject to the terms and conditions of the agreements described in this proxy statement, KLX expects to transfer its Energy Services Group business to KLX Energy Services Holdings, Inc. ("KLX Energy Services"), a newly formed subsidiary of KLX (the "separation"), followed by a pro rata distribution of common stock representing 100% of the equity interests of KLX Energy Services to KLX stockholders as of the record date of such distribution (the "spin-off"). After the spin-off is completed, KLX Energy Services will be a separate, publicly held company that will own and operate KLX's Energy Services Group business.

        The KLX board of directors has unanimously determined that it is in the best interests of KLX stockholders to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby, including the separation and the spin-off. The KLX board of directors made its determination after consideration of a number of factors more fully described in this proxy statement. The KLX board of directors unanimously recommends that you vote "FOR" the proposal to adopt the merger agreement.

        You are cordially invited to attend a special meeting of our stockholders to be held in connection with the proposed merger on [    ·    ], 2018 at [    ·    ]a.m., Eastern Time, at [    ·    ]. At the special meeting, stockholders will be asked to consider and vote on a proposal to adopt the merger agreement. Approval of the proposal to adopt the merger agreement requires the affirmative vote of a majority of the outstanding shares of KLX common stock entitled to vote thereon.

        If the merger is completed, KLX stockholders will have the right to receive, for each share of KLX common stock, par value $0.01 per share, that they own immediately prior to the effective time of the merger, $63.00 in cash per share, without interest (the "merger consideration"). The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off.

        At the special meeting, KLX stockholders will also be asked to vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid to KLX's named executive officers by KLX based on or otherwise relating to the merger, as required by the rules adopted by the U.S. Securities and Exchange Commission (the "SEC"), and a proposal to approve an adjournment of the special meeting, from time to time, if necessary or appropriate, to solicit additional votes for the approval of the proposal to adopt the merger agreement. The KLX board of directors unanimously recommends that you vote "FOR" each of these proposals.

        The merger cannot be completed unless the holders of a majority of the outstanding shares of KLX common stock entitled to vote thereon adopt the merger agreement. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting. If you intend to attend the special meeting and vote


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in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote on the proposal to adopt the merger agreement will have the same effect as a vote "AGAINST" such proposal. In addition, if you hold your shares in "street name," the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote "AGAINST" the proposal to adopt the merger agreement.

        The obligations of KLX and Boeing to complete the merger are subject to the satisfaction or waiver of certain conditions. The accompanying proxy statement contains detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to the accompanying proxy statement. The proxy statement also describes the actions and determinations of the KLX board of directors in connection with its evaluation of the merger agreement and the merger. We encourage you to read the proxy statement and its annexes, including the merger agreement, carefully and in its entirety. You may also obtain additional information about KLX from documents that KLX files with the SEC from time to time.

        If you have any questions or need assistance with voting your shares of our common stock, please contact Georgeson, our proxy solicitor, by calling 1-866-277-0928 toll free.

    Thank you for your confidence in KLX.

    Yours truly,

    Amin Khoury
    Chairman of the Board of Directors and
    Chief Executive Officer

        Neither the SEC nor any state securities regulatory agency has approved or disapproved of the merger, passed upon the merits of the merger, the merger agreement or any of the other transactions contemplated by the merger agreement or determined if the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.

        The accompanying proxy statement is dated [    ·    ], 2018 and, together with the enclosed form of proxy, is first being mailed to KLX stockholders on or about [    ·    ], 2018.


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LOGO

KLX Inc.
1300 Corporate Center Way
Wellington, Florida 33414

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

DATE & TIME   [·], 2018 at [·] a.m., Eastern Time

PLACE

 

[·]

 

 

[·]

 

 

[·]

ITEMS OF BUSINESS

 

To consider and vote on a proposal (the "merger proposal") to adopt the Agreement and Plan of Merger, dated as of April 30, 2018, as amended on June 1, 2018, and as it may be further amended from time to time (the "merger agreement"), among KLX Inc. ("KLX"), The Boeing Company ("Boeing") and Kelly Merger Sub, Inc. ("Merger Sub") (a copy of the merger agreement is attached to the accompanying proxy statement as Annex A);

 

To consider and vote on a proposal (the "named executive officer merger-related compensation proposal") to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by KLX to its named executive officers that is based on or otherwise relates to the merger; and

 

To consider and vote on a proposal (the "adjournment proposal") to approve an adjournment of the special meeting, from time to time, if necessary or appropriate, to solicit additional votes for the approval of the merger proposal.


 

 

KLX will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

RECORD DATE

 

Only stockholders of record at the close of business on [·], 2018 (the "record date") are entitled to notice of, and to vote at, the special meeting and at any adjournment or postponement of the special meeting.

VOTING BY PROXY

 

Your vote is very important, regardless of the number of shares you own. The KLX board of directors (the "KLX Board") is soliciting your proxy to assure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the Internet, by telephone or by mailing back the traditional proxy card (no extra postage is needed for the provided envelope if mailed in the U.S.), please see the attached proxy statement and enclosed proxy card. If you later decide to vote in person at the special meeting, information on revoking your proxy prior to the special meeting is also provided.

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RECOMMENDATIONS   The KLX Board unanimously recommends that you vote:

 

"FOR" the merger proposal;

 

"FOR" the named executive officer merger-related compensation proposal, which shall be on a non-binding, advisory basis; and

 

"FOR" the adjournment proposal.


APPRAISAL

 

KLX stockholders who do not vote in favor of the merger proposal will have the right to seek appraisal of the fair value of their shares of KLX common stock, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware (the "DGCL"), if they deliver a valid demand for appraisal before the vote is taken on the adoption of the merger agreement and comply with all of the requirements of Delaware law, including Section 262 of the DGCL, which are summarized herein. Section 262 of the DGCL is reproduced in its entirety in Annex C to the accompanying proxy statement. The accompanying proxy statement constitutes the notice of appraisal rights with respect to the merger proposal required by Section 262 of the DGCL.

        YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE SUBMIT A PROXY OVER THE INTERNET OR BY TELEPHONE PURSUANT TO THE INSTRUCTIONS CONTAINED IN THESE MATERIALS OR COMPLETE, DATE, SIGN AND RETURN A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE SUBMITTED. IF YOU DO NOT SUBMIT YOUR PROXY, INSTRUCT YOUR BROKER HOW TO VOTE YOUR SHARES OR VOTE IN PERSON AT THE SPECIAL MEETING ON THE MERGER PROPOSAL, IT WILL HAVE THE SAME EFFECT AS A VOTE "AGAINST" SUCH PROPOSAL.

        Your proxy may be revoked at any time before the vote at the special meeting by following the procedures outlined in the accompanying proxy statement.

        If your shares are held by a bank, broker or other nominee and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the bank, broker or other nominee that holds your shares authorizing you to vote in person at the special meeting. Please also bring to the special meeting your account statement evidencing your beneficial ownership of KLX common stock as of the record date. All stockholders and proxy holders who attend the special meeting must also bring photo identification.

        In considering the recommendation of the KLX Board, KLX stockholders should be aware that members of the KLX Board and KLX executive officers have agreements and arrangements that provide them with interests in the merger that may be deemed to be in addition to or different from those of KLX stockholders. See "The Merger Proposal—Interests of KLX's Executive Officers and Directors in the Merger."

        The proxy statement, of which this notice forms a part, provides a detailed description of the merger agreement and the merger. We urge you to read the proxy statement, including any documents incorporated by reference, and its annexes carefully and in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies of the proxy statement or


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need help voting your shares of KLX common stock, please contact KLX's proxy solicitor, Georgeson, at 1-866-277-0928 toll free.

    By Order of the Board of Directors,

 

 

Roger Franks
General Counsel
Vice President—Law and Human Resources, Secretary

Wellington, Florida
[    
·    ], 2018


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TABLE OF CONTENTS

 
  Page  

SUMMARY

    1  

The Parties

    1  

The Special Meeting

    2  

The Merger

    5  

Merger Consideration

    5  

Treatment of KLX Equity Awards

    6  

Effect on KLX if the Merger is not Completed

    7  

Recommendation of the KLX Board

    7  

Opinion of Goldman Sachs & Co. LLC

    7  

Interests of KLX's Executive Officers and Directors in the Merger

    8  

Financing of the Merger

    8  

Regulatory Clearances and Approvals Required for the Merger

    9  

Material U.S. Federal Income Tax Consequences of the Merger

    9  

Appraisal Rights

    10  

Expected Timing of the Merger

    10  

Restrictions on Solicitation of Acquisition Proposals

    10  

KLX Board Recommendation and Adverse Recommendation Change

    11  

Conditions to the Closing of the Merger

    13  

Termination of the Merger Agreement

    15  

Termination Fees

    16  

Directors' and Officers' Indemnification and Insurance

    18  

Delisting and Deregistration of KLX Common Stock

    18  

Market Prices of KLX Common Stock

    19  

Spin-Off Transaction Agreements

    19  

Distribution Agreement

    19  

Employee Matters Agreement

    20  

Transition Services Agreement

    22  

IP Matters Agreement

    22  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

    24  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    35  

THE PARTIES TO THE MERGER

    37  

THE SPECIAL MEETING

    39  

THE MERGER PROPOSAL (PROPOSAL 1)

    44  

Structure of the Merger

    44  

Merger Consideration—What KLX Stockholders Will Receive in the Merger

    44  

Treatment of KLX Equity Awards

    44  

Effects on KLX if the Merger is Not Completed

    45  

Background of the Merger

    46  

Recommendation of the KLX Board and Reasons for the Merger

    62  

Opinion of Goldman Sachs & Co. LLC

    67  

Financial Projections

    75  

Interests of KLX's Executive Officers and Directors in the Merger

    77  

Regulatory Clearances and Approvals Required for the Merger

    84  

Material U.S. Federal Income Tax Consequences of the Merger

    85  

Delisting and Deregistration of KLX Common Stock

    85  

Appraisal Rights

    85  

THE MERGER AGREEMENT

    90  

The Merger

    90  

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  Page  

Closing and Effectiveness of the Merger

    90  

Merger Consideration

    90  

Exchange Procedures

    91  

Treatment of KLX Equity Awards

    92  

Representations and Warranties

    93  

Conduct of Business Pending the Merger

    97  

Certain Covenants Related to the ESG Business

    100  

Restrictions on Solicitation of Acquisition Proposals

    102  

Efforts to Complete the Merger

    106  

Employee Benefits

    107  

Directors' and Officers' Indemnification and Insurance

    109  

Other Covenants and Agreements

    109  

Conditions to the Closing of the Merger

    111  

Termination of the Merger Agreement

    112  

Termination Fees and Expenses

    114  

Amendment and Waiver of the Merger Agreement

    116  

Assignment of the Merger Agreement

    116  

Specific Performance

    116  

SPIN-OFF TRANSACTION AGREEMENTS

    117  

Distribution Agreement

    117  

Employee Matters Agreement

    119  

Transition Services Agreement

    120  

IP Matters Agreement

    120  

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION PROPOSAL (PROPOSAL 2)

    122  

ADJOURNMENT PROPOSAL (PROPOSAL 3)

    123  

MARKET PRICES OF KLX COMMON STOCK

    124  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    125  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

    127  

FUTURE KLX STOCKHOLDER PROPOSALS

    129  

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

    130  

WHERE YOU CAN FIND MORE INFORMATION

    131  

Annex A—Agreement and Plan of Merger

   
A-1
 

Annex B—Opinion of Goldman Sachs & Co. LLC

    B-1  

Annex C—Section 262 of the General Corporation Law of the State of Delaware

    C-1  

Annex D—Form of Distribution Agreement

    D-1  

Annex E—Form of Employee Matters Agreement

    E-1  

Annex F—Form of Transition Services Agreement

    F-1  

Annex G—Form of IP Matters Agreement

    G-1  

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SUMMARY

        This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger and the other matters being considered at the special meeting of KLX stockholders. We urge you to carefully read the remainder of this proxy statement, including the attached annexes, and the other documents to which we have referred you. For additional information on KLX included in documents incorporated by reference into this proxy statement, see the section entitled "Where You Can Find More Information" beginning on page 131. We have included page references in this summary to direct you to a more complete description of the topics presented below.

        All references to "KLX," "the Company," "we," "us" or "our" in this proxy statement refer to KLX Inc., a Delaware corporation; all references to "Boeing" refer to The Boeing Company, a Delaware corporation; all references to "Merger Sub" refer to Kelly Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Boeing, the sole purpose of which is to effect the merger; all references to "KLX common stock" refer to the common stock, par value $0.01 per share, of KLX; all references to the "KLX Board" refer to the board of directors of KLX; all references to the "merger" refer to the merger of Merger Sub with and into KLX with KLX surviving as a wholly owned subsidiary of Boeing; all references to the ASG Business refer to the business operated by KLX's Aerospace Solutions Group; all references to the ESG Business refer to the business of providing technical services and related rental equipment to oil and gas exploration and production companies in remote oil and gas production regions, solely as conducted by KLX's Energy Services Group; all references to "KLX Energy Services" refer to KLX Energy Services Holdings, Inc., a wholly owned subsidiary of KLX, which will hold KLX's ESG Business prior to the spin-off and whose common stock will be distributed to KLX stockholders; all references to the "spin-off" refer to the pro rata distribution of common stock representing 100% of the equity interests of KLX Energy Services to KLX stockholders as of the record date of such distribution, which will become a separate, publicly held company upon the completion of the spin-off; and all references to the "merger agreement" refer to the Agreement and Plan of Merger, dated as of April 30, 2018, as amended June 1, 2018 and as may be further amended from time to time, by and among KLX, Boeing and Merger Sub, a copy of which is included as Annex A to this proxy statement. KLX, following the completion of the merger, is sometimes referred to in this proxy statement as the "surviving corporation."


The Parties

KLX (see page 37)

        KLX, through its two operating segments, provides mission critical products and complex logistical solutions to support its customers' high value assets. KLX serves its customers in demanding environments that face high cost of downtime and require dependable, high quality just-in-time customer support. KLX's Aerospace Solutions Group is a leading distributor and value added service provider of aerospace fasteners and consumables, offering the broadest range of aerospace hardware and consumables and inventory and supply chain management services worldwide. Through its global facilities network and advanced information technology systems, KLX offers its services to commercial airline, business jet and defense original equipment manufacturers and their subcontractors, airlines, maintenance, repair and overhaul operators, fixed base operators and domestic military depots. KLX's Energy Services Group provides completion, intervention and production services to the major onshore oil and gas producing regions of the United States, including the Northeast Region (the Marcellus and Utica Shales as well as the Mid-Continent STACK and SCOOP) and Haynesville, the Rocky Mountains Region (the Bakken formation, Williston, DJ, Uinta and Piceance Basins and Niobrara Shale) and the Southwest Region (including the Permian Basin and Eagle Ford Shale), serving the leading companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves.

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        KLX's common stock is traded on the Nasdaq Global Select Market under the symbol "KLXI." KLX's headquarters are located at 1300 Corporate Center Way, Wellington, Florida 33414, and the telephone number is (561) 383-5100. KLX's corporate web address is www.klx.com. The information provided on the KLX website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to KLX's website provided in this proxy statement.

Boeing (see page 37)

        Boeing is the world's largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems. Boeing is also the world leader in combined commercial airlines and government services with customers in more than 150 countries. Boeing's products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing employs approximately 140,000 people across the United States and in more than 65 countries.

        Boeing's common stock is traded on the New York Stock Exchange under the ticker symbol "BA." Boeing's headquarters are located at 100 North Riverside Plaza, Chicago, Illinois 60606-1596, and its telephone number is (312) 544-2000. Boeing's corporate web address is www.boeing.com. The information provided on the Boeing website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to Boeing's website provided in this proxy statement.

Merger Sub (see page 38)

        Merger Sub is a Delaware corporation and a wholly owned subsidiary of Boeing, the sole purpose of which is to effect the merger. Upon consummation of the merger, Merger Sub will merge with and into KLX, with Merger Sub ceasing to exist and KLX surviving as a wholly owned subsidiary of Boeing. The headquarters of Merger Sub will be located at 100 North Riverside Plaza, Chicago, Illinois 60606-1596, and its telephone number will be (312) 544-2000.


The Special Meeting

Date, Time and Place (see page 39)

        The special meeting of KLX stockholders (the "special meeting") is scheduled to be held on [    ·    ], 2018 at [    ·    ] a.m., Eastern Time, at [    ·    ].

Purpose of the Special Meeting (see page 39)

        At the special meeting, KLX stockholders will be asked to consider and vote on the following proposals:

    to adopt the merger agreement (the "merger proposal");

    to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by KLX to its named executive officers that is based on or otherwise relates to the merger (the "named executive officer merger-related compensation proposal"); and

    to approve the adjournment of the special meeting, from time to time, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the merger proposal (the "adjournment proposal").

        KLX will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

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        The KLX Board has unanimously determined that it is in the best interests of the KLX stockholders to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation and the spin-off). The KLX Board unanimously recommends that KLX stockholders vote "FOR" the merger proposal, "FOR" the named executive officer merger-related compensation proposal and "FOR" the adjournment proposal.

        KLX stockholders' approval of the merger proposal is a condition for the merger to occur. If KLX stockholders fail to approve the merger proposal by the requisite vote, the merger will not occur. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off.

Record Date; Stockholders Entitled to Vote (see page 40)

        Only holders of KLX common stock at the close of business on [    ·    ], 2018, the record date for the special meeting (the "record date"), will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on May 25, 2018, 50,739,597 shares of KLX common stock were issued and outstanding.

        Holders of KLX common stock are entitled to one vote for each share of KLX common stock they own at the close of business on the record date.

Quorum (see page 40)

        The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of KLX common stock issued and outstanding at the close of business on the record date and entitled to vote at the special meeting will constitute a quorum. As a result, [    ·    ] shares must be represented by proxy or by stockholders present and entitled to vote at the special meeting in order to have a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment of the special meeting and may subject KLX to additional expense.

Required Vote (see page 40)

        Approval of the merger proposal requires the affirmative vote of a majority of the shares of KLX common stock outstanding at the close of business on the record date and entitled to vote thereon.

        Under KLX's bylaws, approval of the named executive officer merger-related compensation proposal and the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of KLX common stock present in person or represented by proxy at the special meeting, provided that a quorum is present. If no quorum is present at the special meeting, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the special meeting.

Voting at the Special Meeting (see page 42)

        If your shares are registered directly in your name with our transfer agent, you are considered a "stockholder of record" (also referred to in this proxy statement as a "registered stockholder"), and you may vote your shares in person at the special meeting or over the Internet, by telephone or by submitting a proxy by mail. If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Although KLX offers four different voting methods, KLX encourages you to submit a proxy over the Internet or by telephone, as KLX believes they are the most convenient, cost-effective and reliable voting methods. If you choose to submit a proxy over the Internet or by telephone, there is no need for you to mail back your proxy card.

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        If your shares are held by your bank, broker or other nominee, you are considered the beneficial owner of shares held in "street name," and you will receive a form from your bank, broker or other nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner, you should instruct your bank, broker or other nominee on how you wish to vote your shares of KLX common stock using the instructions provided by your bank, broker or other nominee. Under applicable rules, banks, brokers or other nominees have the discretion to vote on routine matters. However, the proposals in this proxy statement are non-routine matters, and banks, brokers and other nominees therefore cannot vote on these proposals without your instructions. Consequently, it is important that you cast your vote or instruct your bank, broker or nominee on how you wish to vote your shares.

        If you sign your proxy, but do not indicate how you wish to vote, your shares will be voted "FOR" the merger proposal, "FOR" the named executive officer merger-related compensation proposal and "FOR" the adjournment proposal.

        If you are a beneficial owner and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the bank, broker or other nominee that holds your shares authorizing you to vote in person at the special meeting. Beneficial owners should also bring a copy of an account statement reflecting their ownership of KLX common stock as of the record date. All stockholders and proxyholders who attend the special meeting must also bring photo identification.

        KLX recommends that you submit a proxy or submit your voting instructions as soon as possible, even if you are planning to attend the special meeting, to ensure that your shares will be represented and voted at the special meeting.

Revocation of Proxies

        If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by submitting a new proxy electronically over the Internet or by telephone after the date of the earlier submitted proxy, signing another proxy card with a later date and returning it to us prior to the special meeting or attending the special meeting and voting in person. If you hold your shares of common stock in "street name," you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a valid legal proxy from your bank, broker or other nominee.

Solicitation of Proxies (see page 43)

        The KLX Board is soliciting your proxy, and KLX will bear the cost of soliciting proxies. Georgeson has been retained to assist with the solicitation of proxies. Georgeson will be paid approximately $9,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through banks, brokers and other nominees to the beneficial owners of shares of KLX common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by certain of KLX's directors, officers and employees, without additional compensation.

Adjournment (see page 43)

        In addition to the merger proposal and the named executive officer merger-related compensation proposal, KLX stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting for the purpose of soliciting additional votes in favor of the merger proposal, if there are not sufficient votes at the time of the special meeting to approve the

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merger proposal. If a quorum is not present, either the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the special meeting to another place, date or time. In addition, the special meeting could be postponed before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional votes, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals.


The Merger

        Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time of the merger (the "effective time"), Merger Sub will merge with and into KLX, the separate corporate existence of Merger Sub will cease and KLX will survive the merger as a wholly owned subsidiary of Boeing. As a result of the merger, KLX common stock will no longer be publicly traded, KLX common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of KLX common stock. If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.

        Prior to or simultaneously with the consummation of the merger, and subject to the terms and conditions of the agreements described in this proxy statement, KLX expects to transfer its Energy Services Group business to KLX Energy Services Holdings, Inc., followed by the spin-off. After the spin-off is completed, KLX Energy Services will be a separate, publicly held company that will own and operate KLX's Energy Services Group business. The separation and the spin-off will be carried out in accordance with the terms of a distribution agreement (the "distribution agreement"), the employee matters agreement (the "employee matters agreement"), a transition services agreement (the "transition services agreement") and an intellectual property matters agreement (the "IP matters agreement") (together, the "spin-off transaction agreements"). See "Spin-Off Transaction Agreements" beginning on page 19 for a description of the spin-off transaction agreements. The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off. If the merger agreement is terminated prior to the distribution date, KLX will have the right not to complete the distribution if, at any time following such termination and prior to the distribution, the board of directors of KLX determines, in its sole discretion, that the spin-off is no longer in the best interest of KLX or its stockholders or that it is not advisable for KLX Energy Services to separate from KLX.

Merger Consideration (see page 44)

        Upon the terms and subject to the conditions of the merger agreement, at the effective time, KLX stockholders will have the right to receive, for each share of KLX common stock that they own immediately prior to the effective time (other than any shares that may be held in the treasury of KLX, or that are held, directly or indirectly, by Boeing or Merger Sub immediately prior to the effective time, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL), $63.00 in cash per share, without interest (the "merger consideration"). After the merger is completed, under the terms of the merger agreement, you will have the right to receive the per share merger consideration, but you will no longer have any rights as a KLX stockholder as a result of the merger. Additionally, in connection with the spin-off, holders of KLX common stock as of the record date of the spin-off will receive a distribution equal to 100% of the shares of KLX Energy Services common stock (with cash in lieu of fractional shares). The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off.

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Treatment of KLX Equity Awards (see page 44)

        The merger agreement provides that outstanding equity-based awards issued under KLX's equity incentive plan will be treated as set forth below:

KLX Restricted Stock Awards.

        Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each award of KLX common stock subject to time-based, performance or other vesting or lapse restrictions (each a "KLX Restricted Stock Award") that is outstanding immediately prior to the effective time will, 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 KLX Restricted Stock Award will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX Restricted Stock Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest.

KLX PSU Awards and KLX RSU Awards.

        Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX performance stock unit award, including any performance stock unit awards deferred under any of KLX's deferred compensation plans or otherwise (each, a "KLX PSU Award"), and each KLX restricted stock unit award, including any stock unit awards deferred under any of KLX's deferred compensation plans or otherwise (each, a "KLX RSU Award"), in each case, subject to time-based, performance or other vesting restrictions, that is outstanding immediately prior to the effective time, will, to the extent not vested, become fully vested, provided that to the extent that such award is subject to performance conditions, any performance conditions will be deemed to have been satisfied at the maximum level and (ii) each KLX PSU Award and KLX RSU Award, in each case, whether payable in cash or shares of KLX common stock, will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX PSU Award or KLX RSU Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest. Any payment in respect of any KLX PSU Award and KLX RSU Award, in each case, which immediately prior to such cancellation was treated as "deferred compensation" subject to section 409A of the Internal Revenue Code, will be converted to the merger consideration and paid on the applicable settlement date for such KLX RSU Award or KLX PSU Award if required in order to comply with section 409A of the Internal Revenue Code.

Effect of Spin-Off on Equity Awards.

        At the time of the spin-off, then outstanding unvested KLX equity-based awards granted prior to the date of the spin-off will be equitably adjusted to reflect the dilutive impact of the spin-off, but will otherwise not participate in the spin-off. Following the spin-off, all unvested KLX equity-based awards held by KLX employees and KLX Energy Services employees will continue to vest in accordance with their terms based on their respective holders' continued service with KLX or KLX Energy Services, as applicable.

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2018 KLX Equity Awards.

        In accordance with the merger agreement, KLX may grant its annual 2018 KLX Restricted Stock Awards, KLX PSU Awards or KLX RSU Awards (the "2018 Awards") to its employees under the KLX Long Term Incentive Plan (the "LTIP") in the ordinary course of business consistent with past practice following the date of the merger agreement. However, in the event that the effective time of the merger occurs on or prior to the first anniversary of the grant date of the 2018 Awards, only one-third of the 2018 Awards will be accelerated in connection with the consummation of the merger and become eligible to receive the merger consideration, and the remaining two-thirds will be forfeited for no consideration.

Effect on KLX if the Merger is not Completed (see page 45)

        If the merger agreement is not adopted by KLX stockholders or if the merger is not completed for any other reason, KLX stockholders will not receive any payment for their shares of common stock. Instead, KLX will remain an independent public company, KLX common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC on account of KLX common stock. In addition, under specified circumstances, KLX may be required to pay Boeing a termination fee, or may be entitled to receive a termination fee from Boeing, upon the termination of the merger agreement, as described further below.

Recommendation of the KLX Board (see page 62)

        After consideration of various factors, the KLX Board unanimously (i) determined that it is in the best interests of KLX stockholders that KLX enter into the merger agreement, (ii) approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation and the spin-off) and (iii) resolved that the merger agreement be submitted for consideration to KLX stockholders at a special meeting of KLX stockholders and recommended that KLX stockholders vote to adopt the merger agreement and the transactions contemplated thereby. A description of factors considered by the KLX Board in reaching its decision to adopt the merger agreement can be found in "The Merger Proposal (Proposal 1)—Recommendation of the KLX Board and Reasons for the Merger" beginning on page 62.

The KLX Board unanimously recommends that KLX stockholders vote:

    "FOR" the merger proposal;

    "FOR" the named executive officer merger-related compensation proposal on a non-binding, advisory basis; and

    "FOR" the adjournment proposal.

Opinion of Goldman Sachs & Co. LLC (see page 67 and Annex B)

        At a meeting of the KLX Board held on April 30, 2018, Goldman Sachs & Co. LLC ("Goldman Sachs") delivered its oral opinion to the KLX Board, subsequently confirmed in writing, to the effect that, as of April 30, 2018 and based upon and subject to the factors and assumptions set forth therein, the $63.00 in cash per share to be paid to the holders (other than Boeing and its affiliates) of shares of KLX common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

        The full text of the written opinion of Goldman Sachs, dated April 30, 2018, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and

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its opinion for the information and assistance of the KLX Board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of KLX common stock should vote with respect to the merger or any other matter. Pursuant to an engagement letter between KLX and Goldman Sachs under which Goldman Sachs was engaged to serve as financial advisor to the KLX Board, KLX has agreed to pay Goldman Sachs a transaction fee that is estimated, based on the information available as of the date of announcement, to be approximately $33.5 million, $5.0 million of which became payable to Goldman Sachs upon the announcement of the execution of the merger agreement, $3.5 million of which is payable in connection with the spin-off and the remainder of which is contingent upon consummation of the transactions.

Interests of KLX's Executive Officers and Directors in the Merger (see page 77)

        When considering the recommendation of KLX Board that you vote "FOR" the merger proposal, you should be aware that, aside from their interests as KLX stockholders, KLX's directors and executive officers have interests in the merger that are different from, or in addition to, the interests of other KLX stockholders generally. The KLX Board was aware of such interests during its deliberations on the merits of the merger and in deciding to recommend that KLX stockholders vote "FOR" the merger proposal at its meeting on April 30, 2018.

        With respect to directors serving on the KLX Board, these interests include the impact of the transaction on the KLX directors' outstanding equity awards and the provision of indemnification and insurance arrangements pursuant to the merger agreement and KLX's certificate of incorporation and bylaws.

        With respect to our executive officers, these interests relate to the possible receipt of the following types of payments and benefits that may be triggered by or otherwise relate to the merger (assuming, where applicable, that the executive officer's employment was terminated by us without "cause" or by the executive for "good reason" (each, as defined in the applicable employment agreement or severance plan) contemporaneously with the closing of the merger):

    certain potential transaction bonus payments and other benefits;

    accelerated vesting of then-outstanding equity awards;

    pro rata annual bonuses for the fiscal year in which the effective time of the merger occurs;

    possible cash severance payments and other termination benefits pursuant to certain executive officers' employment agreements or, for corporate level employees, the KLX Change of Control Severance Plan;

    accelerated vesting of certain KLX contributions pursuant to the KLX Inc. Deferred Compensation Plan; and

    the provision of indemnification and insurance arrangements pursuant to the merger agreement and KLX's certificate of incorporation and bylaws.

        If the merger proposal is approved by KLX stockholders, the shares of KLX common stock held by our directors and executive officers will be treated in the same manner as outstanding shares of common stock held by all other KLX stockholders entitled to receive the per share merger consideration.

Financing of the Merger

        Boeing intends to utilize cash on hand and debt to consummate the merger and the other transactions contemplated by the merger agreement, including the payment of the merger consideration, the repayment of certain existing indebtedness of KLX, the payment of all fees and

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expenses payable by Boeing in accordance with the merger agreement and the payment of any other amounts required to be paid by Boeing or Merger Sub in connection with the consummation of the transactions contemplated by the merger agreement. The consummation of the merger is not subject to any financing conditions.

Regulatory Clearances and Approvals Required for the Merger (see page 84)

        Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), KLX, Boeing and Merger Sub cannot complete the merger until KLX, Boeing and Merger Sub have given notification and furnished information to the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "DOJ"), and until the applicable waiting period under the HSR Act has expired or has been terminated. On May 14, 2018, KLX and Boeing each filed a premerger notification and report form under the HSR Act. KLX, Boeing and Merger Sub are also required to obtain approvals, clearances or consents in several other countries before completing the merger. Such parties will work cooperatively toward obtaining these regulatory clearances.

        Under the merger agreement, each of KLX, Boeing and Merger Sub is required to use its reasonable best efforts to cooperate with each other and 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 the merger 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 and to cause the merger to be consummated as promptly as practicable in accordance with the terms of the merger agreement. In addition, each of KLX, Boeing and Merger Sub is required to use its reasonable best efforts to defend through litigation on the merits any claim asserted in court by any person 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 under the merger agreement.

        Notwithstanding the foregoing, Boeing is not required to propose, negotiate, commit to or effect, by consent decree, hold separate orders or otherwise, (i) the sale, divestiture, license or disposition, in whole or in part of, or suffer any restriction on the operation of, Boeing's or its subsidiaries' assets, properties or businesses or (ii) the sale, divestiture, license or disposition, in whole or part, of any of KLX's assets, properties or businesses to be acquired by Boeing pursuant to the merger agreement. If (i) the merger has not been consummated on or before April 30, 2019 (as may be extended to July 30, 2019 under the terms of the merger agreement) and either Boeing or KLX terminates the merger agreement at such time and the only condition not satisfied is that certain antitrust regulatory approvals have not been obtained or a governmental authority has issued an order prohibiting the merger under antitrust laws or (ii) either Boeing or KLX terminates the merger agreement because a U.S. governmental authority has prohibited the merger or the spin-off under antitrust laws, Boeing will pay to KLX a termination fee of $175 million.

        For more information, see the section entitled "The Merger Agreement—Efforts to Complete the Merger" beginning on page 106 and "The Merger Agreement—Termination Fees and Expenses" beginning on page 114.

Material U.S. Federal Income Tax Consequences of the Merger (see page 127)

        For U.S. federal income tax purposes, the merger will be treated as a taxable sale. You should read the section entitled "Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 127 and consult your tax advisors regarding the U.S. tax consequences of the merger to you in your particular circumstances.

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Appraisal Rights (see page 85)

        If the merger is effected, KLX stockholders are entitled to appraisal rights under the DGCL in connection with the merger, provided that such stockholders meet all of the conditions and follow all of the requirements set forth in Section 262 of the DGCL. This means that KLX stockholders who do not wish to accept the merger consideration and meet all of the conditions set forth in Section 262 of the DGCL are entitled to have the fair value of their shares of KLX common stock as of the effective time of the merger determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration. The ultimate amount determined by the Delaware Court of Chancery in an appraisal proceeding to be the fair value per share of KLX common stock as of the effective time of the merger may be less than, equal to or more than the merger consideration that a KLX stockholder will receive under the merger agreement if the merger is effected.

        To exercise appraisal rights, a KLX stockholder of record must deliver a written demand for appraisal to KLX before the vote is taken on the adoption of the merger agreement, such stockholder must not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement and such stockholder must continue to hold the shares of KLX common stock of record from the date of making the demand for appraisal through the effective time of the merger. A KLX stockholder's failure to follow exactly the procedures specified under the DGCL may result in the loss of such stockholder's appraisal rights. See "The Merger Proposal (Proposal 1)—Appraisal Rights" beginning on page 85 and the text of Section 262 of the DGCL reproduced in its entirety as Annex C to this proxy statement. If you hold your shares of KLX common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, because the demand for appraisal rights must be made by the record holder, you should consult with your bank, broker or other nominee to determine the appropriate procedures for such bank, broker or other nominee to make a demand for appraisal on your behalf. Stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.


Expected Timing of the Merger

        We expect to complete the merger in the third quarter of 2018. However, the merger is subject to various regulatory clearances and approvals and other conditions, and it is possible that factors outside of the control of KLX or Boeing could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the date of the special meeting and the completion of the merger. We expect to complete the merger promptly following the receipt of all required clearances and approvals and the satisfaction or, to the extent permitted, waiver of the other conditions to the consummation of the merger.

Restrictions on Solicitation of Acquisition Proposals (see page 102)

        The merger agreement provides that, until the earlier of the effective time of the merger and the termination of the merger agreement, we are subject to restrictions on our ability to initiate or solicit third party proposals relating to alternative transactions or to provide information to and engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by KLX stockholders at the special meeting described further in this proxy statement and except as related solely to the spin-off or a sale of the ESG Business or any of the assets or operations thereof). Specifically:

    KLX must cease, cause its subsidiaries to cease and instruct and cause its officers, directors and other representatives to cease, and cause to be terminated all discussions, negotiations, solicitations, encouragement and communications with any persons with respect to any acquisition proposal (as defined below) (other than the transactions contemplated by the merger agreement with Boeing and Merger Sub);

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    KLX may not, and may not authorize or permit any of its representatives to, directly or indirectly through another person,

    engage in any communication or initiate, solicit, facilitate or encourage any action that would constitute or would reasonably be expected to lead to an acquisition proposal,

    engage in or continue negotiations or discussions with, or provide any information or data to, any person (other than Boeing or any of its affiliates or representatives) relating to or that would reasonably be expected to lead to any acquisition proposal,

    approve, endorse, recommend, execute or enter into any alternative acquisition agreement, or

    resolve or agree to do any of the foregoing; and

    KLX must terminate all access by third parties to any data room (virtual or actual) containing any information relating to KLX (excluding the ESG Business) and request the destruction or return of all non-public information previously provided by or on behalf of KLX, any of its subsidiaries or their representatives to any and all such third parties.

        Notwithstanding the foregoing, at any time prior to receiving KLX stockholder approval of the merger proposal, if KLX receives a bona fide written acquisition proposal that did not result directly or indirectly from a breach of the non-solicitation provisions in the merger agreement (other than breaches that are inadvertent, de minimis and not intended to result in an acquisition proposal), KLX may contact the person who has made such acquisition proposal in order to clarify the terms of such acquisition proposal so that the KLX Board (or any committee thereof) may inform itself about such acquisition proposal, furnish information concerning its business, properties or assets to such person pursuant to a confidentiality agreement with confidentiality terms that are not less favorable to KLX than those contained in the confidentiality agreement executed between Boeing and KLX, and negotiate and participate in discussions and negotiation with such person concerning such acquisition proposal, if the KLX Board determines in good faith (after consultation with outside financial advisors and legal counsel) that such acquisition proposal constitutes, or could reasonably be expected to lead to or result in, a superior proposal (as defined below), and the KLX 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.


KLX Board Recommendation and Adverse Recommendation Change

        Under the terms of the merger agreement, the KLX Board has agreed to recommend that KLX stockholders vote in favor of the merger proposal. Under the merger agreement, the KLX Board and any committee thereof may not take any of the following actions (any such action, an "adverse recommendation change"):

    withdraw, qualify, withhold or modify, fail to make, or publicly propose to withdraw, qualify, withhold or modify, its recommendation in favor of the merger proposal;

    adopt, approve or recommend or publicly propose to adopt, approve or recommend any acquisition proposal, alternative acquisition agreement or superior proposal;

    fail to recommend against any tender offer or exchange offer for shares of KLX common stock within ten business days after commencement of such offer;

    approve or recommend or publicly propose to adopt or recommend any acquisition proposal or superior proposal or fail to include a recommendation in favor of the merger proposal in this proxy statement;

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    fail to publicly reaffirm the recommendation in favor of the merger proposal within three business days after receipt of a written request by Boeing to provide such affirmation; or

    adopt or approve, or publicly propose to adopt or approve, or allow KLX to execute or enter into, any agreement, arrangement or understanding that reflects, or would reasonably be expected to lead to, an acquisition proposal or would require KLX to abandon or terminate the merger or the other transactions contemplated by the merger agreement (an "alternative acquisition agreement").

        Notwithstanding the foregoing, if, at any time prior to the receipt of stockholder approval of the merger proposal, the KLX Board receives an acquisition proposal that did not result directly or indirectly from a breach of the non-solicitation provisions in the merger agreement (other than breaches thereof that are inadvertent, de minimis and not intended to result in an acquisition proposal), that is not withdrawn, and that the KLX Board determines in good faith (after consultation with outside financial advisors and legal counsel) constitutes a superior proposal, the KLX Board may cause KLX to terminate the merger agreement and simultaneously enter into a definitive alternative acquisition agreement in respect of such superior proposal if:

    the KLX 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;

    KLX has previously notified Boeing in writing that it intends to terminate the merger agreement and provided Boeing an unredacted copy of the proposed definitive alternative acquisition agreement between KLX and the person making such superior proposal;

    for a period of four business days following such written notice, KLX shall have discussed and negotiated in good faith and made KLX's representatives available to discuss and negotiate in good faith (in each case to the extent Boeing desires to negotiate) with Boeing's representatives any proposed modifications to the terms and conditions of the merger agreement or the transactions contemplated by the merger agreement so that the failure to take such action would no longer be inconsistent with the KLX Board's fiduciary duties under applicable law (it being understood and agreed with Boeing 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 business days following delivery of such new notice from KLX to Boeing and (2) the expiration of the original four business day period); and

    no earlier than the end of such negotiation period, the KLX Board shall have determined in good faith, after considering the terms of any proposed amendment or modification to the merger agreement, that the acquisition proposal that is the subject of the notice described above still constitutes a superior proposal.

        In addition, prior to obtaining stockholder approval, the KLX Board may withdraw, qualify, withhold or modify, fail to make, or publicly propose to withdraw, qualify, withhold or modify its recommendation of the merger proposal, in response to any material change, event, effect, occurrence, consequence or development relating to KLX that (i) is unknown and not reasonably foreseeable as of the date of entry into the merger agreement, (ii) does not relate to any acquisition proposal, any inquiry, indication of interest, proposal or offer that would reasonably be expected to lead to an acquisition proposal and (iii) becomes known to the KLX Board prior to KLX stockholder approval of the merger proposal (excluding any change, event, effect, occurrence, consequence or development relating to (A) Boeing or Merger Sub or any KLX competitor or (B) the market price or trading volume of the KLX stock, the ratings or the ratings outlook for KLX or any of its subsidiaries) (an "intervening event"), if

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    the KLX 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,

    KLX has notified Boeing in writing that it intends to effect such an adverse recommendation change and the facts underlying the KLX Board's determination that an intervening event has occurred and the facts underlying the reason for the adverse recommendation change,

    for a period of four business days following the delivery of such written notice, KLX shall have discussed and negotiated in good faith and made KLX's representatives available to discuss and negotiate in good faith (in each case to the extent Boeing desires to negotiate) with Boeing's representatives any proposed modifications to the terms and conditions of the merger agreement or the transactions contemplated by the merger agreement so that the failure to take such action would no longer be inconsistent with the KLX Board's fiduciary duties under applicable law (it being understood and agreed with Boeing 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 business days following delivery of such new notice from KLX to Boeing and (2) the expiration of the original four business days period described above) and

    no earlier than the end of such negotiation period, the KLX 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 the merger agreement, that the failure to take such action would still be inconsistent with its fiduciary duties under applicable law.

Conditions to the Closing of the Merger (see page 111)

        The merger agreement provides that 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 KLX, Boeing and Merger Sub at or prior to the closing of the following conditions:

    the holders of a majority of the outstanding shares of KLX common stock entitled to vote thereon shall have adopted the merger agreement and approved of the merger at a stockholders meeting duly called and held for such purposes;

    the registration statement on Form 10 related to the spin-off (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 KLX Energy Services common stock shall have been obtained and be in effect, the shares of KLX Energy Services common stock shall have been approved for listing on 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 Form 10 is declared effective by the SEC, whether or not the information statement in connection with the spin-off has in fact been mailed);

    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 will 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 of Turkey, the European Union, Israel, Colombia or South Korea shall have been obtained; and

    no governmental authority having jurisdiction over KLX shall have issued or entered any order after the date of the merger agreement, and no applicable law shall have been enacted or

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      promulgated after the date of the merger 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 contemplated by the merger agreement and the spin-off agreements (or the agreements governing the sale of the ESG Business).

        The obligations of Boeing and Merger Sub to effect the merger are subject to the satisfaction or (to the extent permitted by applicable law) written waiver by Boeing at or prior to the closing of the merger of the following additional conditions:

    each of our representations and warranties in the merger agreement shall be true and correct, generally subject to certain materiality or material adverse effect qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

    KLX shall have performed or complied in all material respects with its obligations required under the merger agreement to be performed or complied with on or prior to the closing of the merger;

    since the date of the merger agreement, there shall not have occurred any material adverse effect on KLX;

    Boeing shall have received at the closing of the merger a certificate signed by an executive officer of KLX certifying as to the matters set forth in the three bullets above;

    KLX 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 effective time; and

    the spin-off shall have been (i) duly and validly authorized by all necessary corporate action by KLX and KLX Energy Services, (ii) approved by the KLX Board and (iii) consummated, or shall be consummated, contemporaneously with the effective time of the merger.

        The obligation of KLX to effect the merger is subject to the satisfaction or (to the extent permitted by applicable law) written waiver by KLX at or prior to the closing of the merger of the following additional conditions:

    each of the representations and warranties of Boeing and Merger Sub in the merger agreement shall be true and correct, generally subject to certain materiality or material adverse effect qualifiers, as of the effective time of the merger or the date in respect of which such representation or warranty was specifically made;

    Boeing and Merger Sub shall have performed or complied in all material respects with each of their respective obligations required under the merger agreement to be performed or complied with on or prior to the closing of the merger; and

    KLX shall have received at the closing of the merger a certificate signed by an executive officer of Boeing certifying as to the matters set forth in the two bullet points immediately above.

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Termination of the Merger Agreement (see page 112)

        Notwithstanding anything contained in the merger agreement to the contrary, the merger agreement may be terminated at any time prior to the effective time by mutual written consent of each of Boeing and KLX. In addition, the merger agreement may be terminated at any time prior to the effective time by either Boeing or KLX if:

    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 the merger agreement pursuant to this provision is not 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 the merger 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 such termination date (A) the condition related to antitrust approval is the only condition that remains unsatisfied or which has not been waived by the party then entitled to give such waiver (other than the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) and 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 such termination date)), or (B) with respect to the antitrust approvals required to be received in the U.S., Turkey, the European Union, Israel, Colombia and South Korea, 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 Boeing or KLX until 5:00 p.m. (New York time) on July 30, 2019 (the "final termination date" and each of the initial termination date and final termination date, a "termination date");

    any U.S. 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 contemplated by the merger agreement or the spin-off agreements (or the agreements governing the sale of the ESG Business), and in the case of such an order, such order shall have become final and non-appealable; provided that the right to terminate the merger agreement pursuant to this provision shall not be available to a party if the issuance of such order was proximately caused by the failure of such party, and in the case of Boeing, including the failure of Merger Sub, to perform or comply with any of its obligations under the merger agreement; or

    approval of the merger proposal by the KLX stockholders shall not have been obtained upon a vote taken thereon at a KLX stockholder meeting duly convened therefor or at any adjournment or postponement thereof.

        KLX may also terminate the merger agreement if:

    the inaccuracy of any of Boeing's or Merger Sub's respective representations or warranties or the breach or failure to perform any of Boeing's or Merger Sub's covenants or other obligations set forth in the merger agreement (A) would result in the failure of a condition to KLX's obligation to consummate the merger and (B) is not capable of being cured by Boeing or Merger Sub, as applicable, by the termination date or, if capable of being cured, shall not have been cured by Boeing or Merger Sub on or before the earlier of (x) the termination date and (y) the date that is 30 calendar days following KLX's delivery of written notice to Boeing of such inaccuracy, breach or failure to perform; provided that KLX shall not have the right to terminate the merger agreement pursuant to this provision if KLX is then in material breach of any of its representations, warranties, covenants or other obligations set forth in the merger agreement; or

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    at any time prior to receipt of KLX stockholder approval of the merger proposal and upon the substantially concurrent payment of a $105 million termination fee, KLX shall have made an adverse recommendation change and entered into a definitive agreement with respect to a superior proposal in compliance with the applicable provisions of the merger agreement; provided that KLX shall not have the right to terminate the merger agreement pursuant to this provision unless KLX has complied in all material respects with the provisions in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes.

        Boeing may also terminate the merger agreement if:

    the inaccuracy of any of KLX's representations or warranties, or the breach or failure to perform any of KLX's covenants or other obligations set forth in the merger agreement (A) would result in the failure of a condition to each of Boeing's and Merger Sub's obligation to consummate the merger and (B) is not capable of being cured by KLX by the termination date or, if capable of being cured, shall not have been cured by KLX on or before the earlier of (x) the termination date and (y) the date that is 30 calendar days following Boeing's delivery of written notice to KLX of such inaccuracy, breach or failure to perform; provided that Boeing shall not have the right to terminate the merger agreement pursuant to this provision if Boeing or Merger Sub is then in material breach of any of its representations, warranties, covenants or other obligations set forth in the merger agreement;

    at any time prior to the receipt of KLX stockholder approval of the merger proposal, the KLX Board shall have made an adverse recommendation change or KLX shall have failed to include in the proxy statement a recommendation in favor of the merger proposal;

    KLX shall have breached in any material respect any of its obligations in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes; or

    at any time after 5:00 p.m. (New York time) on January 11, 2019, if the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) are the only conditions 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 closing of the merger, but that are capable of being satisfied as of such time (assuming the closing of the merger were to occur as of such time)); provided that the right to terminate the merger agreement pursuant to this provision is not available to Boeing if the inaccuracy of Boeing's representations or warranties or the failure of Boeing to perform or comply with any of its obligations under the merger agreement has been the proximate cause of the failure of the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business), as applicable.

Termination Fees (see page 114)

        We will be required to pay Boeing a termination fee equal to $70 million in cash in the following circumstances:

    the merger agreement is terminated by Boeing or KLX because KLX stockholder approval of the merger proposal is not obtained upon a vote taken thereon at the KLX stockholder meeting duly convened and within nine months after such termination, KLX enters into a definitive agreement with a person that made an acquisition proposal (provided that the reference to 20% in the definition of acquisition proposal is deemed to be 50% and in no case will a definitive agreement involving solely the sale of the ESG Business constitute an acquisition proposal); or

    the merger agreement is terminated by Boeing due to the inaccuracy of any of KLX's representations and warranties, or the breach of any of KLX's covenants or obligations in the merger agreement, which breach would result in the failure to satisfy a closing condition and is

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      not capable of being cured by KLX by the termination date or is not so cured and within nine months after such termination, KLX enters into a definitive agreement with a person that made an acquisition proposal (provided that the reference to 20% in the definition of acquisition proposal is deemed to be 50% and in no case will a definitive agreement involving solely the sale of the ESG Business alone constitute an acquisition proposal).

        We will be required to pay Boeing a termination fee equal to $105 million in cash in the following circumstances:

    the merger agreement is terminated by KLX where, at any time prior to receipt of KLX stockholder approval of the merger proposal, KLX shall have made an adverse recommendation change, entered into a definitive agreement with respect to a superior proposal in compliance with the applicable provisions of the merger agreement and complied in all material respects with the provisions in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes,

    the merger agreement is terminated by Boeing where, at any time prior to the receipt of KLX stockholder approval of the merger proposal, the KLX Board shall have made an adverse recommendation change or KLX shall have failed to include in the proxy statement a recommendation in favor of the merger proposal, or

    the merger agreement is terminated by Boeing where KLX shall have breached in any material respect any of its obligations in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes.

        We will be required to pay Boeing a termination fee equal to $175 million in cash if the merger agreement is terminated by Boeing at any time after 5:00 p.m. (New York time) on January 11, 2019, because the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) are the only conditions 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 closing of the merger, but that are capable of being satisfied as of such time (assuming the closing of the merger were to occur as of such time)) (provided that Boeing cannot terminate the merger agreement on this basis if the inaccuracy of Boeing's representations or warranties or the failure of Boeing to perform or comply with any of its obligations under the merger agreement has been the proximate cause of the failure of the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business)).

        Boeing will be required to pay KLX a termination fee equal to $175 million in cash in the following circumstances:

    the merger agreement is terminated by Boeing or KLX where the merger has not been consummated on or before April 30, 2019 (as may be extended to July 30, 2019 under the merger agreement) and at the time of such termination either (i) a governmental authority having jurisdiction over KLX shall have issued or entered any order, or enacted or promulgated a law, in each case, pursuant to applicable antitrust law and that is then in effect and has the effect of permanently restraining, enjoining or otherwise prohibiting the consummation of the merger, the spin-off or the other transactions contemplated by the merger agreement and the distribution agreement or (ii) the condition with respect to the receipt of antitrust approvals required in the U.S., Turkey, the European Union, Israel, Colombia and South Korea shall not have been satisfied and the condition related to antitrust approvals is the only condition that remains unsatisfied or which has not been waived by the party then entitled to give such waiver, or

    the merger agreement is terminated by Boeing or KLX where any U.S. governmental authority has issued or entered an order or any applicable law has been enacted or promulgated, in each case with respect to antitrust law, that has the effect of permanently restraining, enjoining or

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      otherwise prohibiting the merger or the spin-off and such order shall have become final and non-appealable.

Directors' and Officers' Indemnification and Insurance (see page 109)

        Boeing and Merger Sub have agreed in the merger agreement 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 KLX (the "D&O Indemnified Parties") as provided in KLX's certificate of incorporation and bylaws (in each case, as in effect on the date of the merger agreement) shall survive the merger and shall continue in full force and effect. For a period of six years from the effective time, the surviving corporation shall, and Boeing shall cause the surviving corporation to, maintain in effect exculpation, indemnification and advancement of expenses provisions equivalent to the provisions of KLX's 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.

        Prior to the effective time, KLX will (or, if KLX is unable to, after the effective time, Boeing will cause the surviving corporation to) purchase a six-year prepaid "tail" policy, with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under KLX'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 the merger agreement and the transactions or actions contemplated by the merger agreement), and Boeing will 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 under the merger agreement; provided, however, (i) that KLX will not pay, and the surviving corporation will not be required to pay, in excess of 300% of the last annual premium paid by KLX prior to the date of the merger agreement in respect of such "tail" policy and (ii) the material terms of such prepaid policies (including coverage and amount) will be no more favorable in the aggregate to such D&O Indemnified Parties than the insurance coverage otherwise required in the prior paragraph above.

        If KLX or the surviving corporation for any reason fails to obtain such "tail" insurance policies prior to, as of or after the effective time, Boeing shall, for a period of six 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 KLX with respect to matters arising on or before the effective time; provided further, however, that after the effective time, neither the surviving corporation nor Boeing shall be required to pay annual premiums in excess of 300% of the last annual premium paid by KLX prior to the date of the merger agreement in respect of the coverage required to be obtained pursuant to the merger agreement, but in such case shall purchase as much coverage as reasonably practicable for such amount.

Delisting and Deregistration of KLX Common Stock (see page 85)

        As promptly as practicable following the completion of the merger, KLX common stock will be delisted from Nasdaq and deregistered under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

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Market Prices of KLX Common Stock (see page [124])

        On April 30, 2018, the last trading day prior to the public announcement of the proposed merger, the closing price per share of KLX common stock on Nasdaq was $78.23. The closing price per share of KLX common stock on the Nasdaq on May 25, 2018, the most recent practicable date prior to the filing of this proxy statement, was $72.30 per share. You are encouraged to obtain current market prices of KLX common stock in connection with voting your shares of KLX common stock. The merger consideration, consisting of $63.00 in cash per share, without interest, is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off.


Spin-Off Transaction Agreements

        In connection with the spin-off, KLX and KLX Energy Services will enter into the distribution agreement, the employee matters agreement, the transition services agreement and the IP matters agreement (together, the "spin-off transaction agreements"). The summary of the material provisions of the distribution agreement, the employee matters agreement, the transition services agreement and the IP matters agreement, forms of each of which are attached to this proxy statement as Annex D, Annex E, Annex F and Annex G, respectively, and each of which is hereby incorporated by reference into this proxy statement, does not purport to be complete and may not contain all of the information about these agreements that is important to you. We encourage you to read carefully each of these agreements in its entirety.


Distribution Agreement

        KLX will enter into a distribution agreement with KLX Energy Services before KLX Energy Services' common stock is distributed to KLX stockholders. That agreement will set forth the principal actions to be taken in connection with the spin-off of the ESG Business from KLX. It will also set forth other agreements that govern certain aspects of KLX's relationship with KLX Energy Services following the spin-off.

The Distribution

        The distribution agreement will govern the rights and obligations of the parties regarding the proposed distribution. KLX will cause its agent to distribute all of the shares of KLX Energy Services on a pro rata basis to KLX stockholders who hold shares of KLX common stock as of the record date for the spin-off.

Conditions

        The distribution agreement will provide that the distribution is subject to several conditions that must be satisfied. The distribution agreement will provide that KLX will, in its sole discretion, determine the record date, the distribution date and the terms of the distribution and may, at any time prior to the completion of the distribution, decide to abandon or modify the distribution, subject to compliance with the terms of the merger agreement.

Termination

        Unless the merger agreement has been terminated, Boeing's consent is required to terminate the distribution agreement.

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Release of Claims

        KLX and KLX Energy Services will each release the other and its wholly owned subsidiaries and affiliates, and their respective stockholders (other than the public stockholders of KLX), directors, officers, agents and employees (in their respective capacities as such) from any claims against any of them that arise out of or relate to events or actions occurring or failing to occur or any conditions existing at or prior to the distribution. These releases will be subject to certain exceptions set forth in the distribution agreement.

Indemnification

        KLX, on the one hand, and KLX Energy Services, on the other hand, will agree to indemnify each other against certain liabilities, among others, in connection with their respective businesses.

        KLX Energy Services will indemnify KLX to the extent that KLX determines that it is required to account for any gain on the distribution for U.S. federal or corresponding state and local income tax purposes, as calculated in the manner described in the distribution agreement. KLX Energy Services will pay any such indemnity to KLX, at KLX Energy Services' option, in cash, by issuing shares of its common stock to KLX or a combination of cash and shares of its common stock. In the event that, prior to January 11, 2019, KLX Energy Services has not received any required consent or waiver from its lenders or bond holders to effect the spin-off due only to Boeing's failure to provide its consent to the related consent fee, KLX Energy Services' total indemnification obligation pursuant to this provision will not exceed $50 million.

Negative Free Cash Flow Reimbursement

        The distribution agreement will provide that KLX Energy Services will reimburse KLX for the amount of negative free cash flow of KLX Energy Services (defined as "FCF Net Amount" in the distribution agreement), if any, in the period from the date of execution of the merger agreement through the date of effectiveness of the spin-off.

KLX Energy Services Cash

        Subject to any payments pursuant to the immediately preceding paragraph, KLX Energy Services will be entitled to all cash generated by the operation of the ESG Business from May 1, 2018 through the distribution date.

Transaction Expenses

        Subject to the consummation of the merger, KLX Energy Services will reimburse KLX for certain expenses in excess of $10 million incurred in connection with the spin-off. All other transaction costs and expenses will be borne by KLX.

Non-Compete

        The distribution agreement will provide for a worldwide five-year non-compete obligation of KLX Energy Services pursuant to which KLX Energy Services may not, subject to certain carve-outs, provide services or 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 commercial, business jet, military and defense airframe manufacturers, airlines, aircraft leasing companies, MRO providers, domestic military depots or general aviation companies.

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Employee Matters Agreement

        Upon or prior to the consummation of the spin-off, KLX will enter into an employee matters agreement with KLX Energy Services that will set forth KLX's agreement with KLX Energy Services on the allocation of employees to KLX Energy Services and obligations and responsibilities regarding compensation, benefits and labor matters.

Assignment of Employees

        KLX will allocate all employees of KLX and its affiliates whose duties relate to the KLX Energy Services business, on or prior to the distribution date, to KLX Energy Services. Notwithstanding the foregoing, certain employees of KLX and its affiliates whose employment duties relate to the KLX Energy Services business will remain employed by KLX after the distribution date and will provide certain shared services to KLX and KLX Energy Services. Such employees will transfer to KLX Energy Services on or prior to completion of the merger. Except with respect to certain employees, the transfer of employment will not be deemed a severance of employment for purposes of any plan or arrangement of KLX, KLX Energy Services, or their respective subsidiaries and affiliates.

Equity Awards

        The employee matters agreement will provide that the outstanding KLX equity awards held by employees moving to KLX Energy Services in connection with the spin-off will be permitted to remain outstanding under the LTIP and continue vesting and be satisfied at the relevant time following the distribution date in accordance with the LTIP's rules and relevant award agreements, with continued service at KLX Energy Services considered to be continued service at KLX for the purposes of vesting of such awards. Outstanding KLX Restricted Stock Awards and KLX PSU Awards and KLX RSU Awards held by employees moving to KLX Energy Services that remain in the LTIP as well as similar awards held by employees remaining with KLX after the spin-off will be equitably adjusted to preserve the aggregate fair market value (and thus the aggregate intrinsic value) of the award immediately before the distribution by multiplying the number of shares of KLX common stock subject to each such KLX Restricted Stock Award or KLX PSU Awards and KLX RSU Awards immediately prior to the distribution by a fraction, the numerator of which is the closing price per share of KLX common stock trading regular way on the Nasdaq Global Select Market on the distribution date, and the denominator of which is the opening price per share of KLX common stock on the first trading day following the distribution date on the Nasdaq Global Select Market. Such outstanding equity awards otherwise will not participate in the spin-off.

Welfare Benefit Plans

        The employee matters agreement also addresses the treatment, with regard to welfare benefits, of employees remaining with KLX and employees transferring to KLX Energy Services in connection with the spin-off. In connection with the spin-off, KLX Energy Services will establish its own welfare benefit programs that are comparable to the welfare benefit programs maintained by KLX prior to the spin-off. Employees transferring to KLX Energy Services who participate in the KLX health and welfare plans will cease participation in such plans and will commence participation in the KLX Energy Services health and welfare plans. KLX will generally be responsible for all liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by KLX Energy Services participants under the KLX health and welfare plans prior to such transfer, and KLX Energy Services shall be so responsible for liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by KLX Energy Services participants under the KLX Energy Services health and welfare plans after such transfer.

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Non-Qualified Deferred Compensation Plans

        The employee matters agreement will provide that, in connection with the spin-off, KLX Energy Services will establish deferred compensation plans for eligible KLX Energy Services employees and directors similar to those maintained by KLX. Prior to and following the distribution of KLX Energy Services, KLX will retain all liability and responsibility in accordance with and pursuant to the KLX Inc. 2014 Deferred Compensation Plan, as amended.

Defined Contribution Plan

        The employee matters agreement will provide that, prior to the distribution date, KLX Energy Services will establish a tax qualified defined contribution plan that is comparable to the KLX tax qualified defined contribution plan and KLX and KLX Energy Services will cause the accounts and liabilities under the KLX plan of each KLX employee that is moving to KLX Energy Services to be transferred to the KLX Energy Services plan.

Annual Incentive Plans

        The employee matters agreement will provide that KLX Energy Services will assume all obligations to pay eligible KLX employees that are moving to KLX Energy Services 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. KLX Energy Services is expected to implement its own annual incentive plans for the fiscal year ending January 31, 2020 and beyond.


Transition Services Agreement

        Upon or prior to the consummation of the spin-off, KLX will enter into a transition services agreement with KLX Energy Services, under which KLX, certain of its subsidiaries or certain third party service providers contracted by KLX will provide KLX Energy Services with certain services for a limited time following the spin-off to help ensure an orderly transition following the distribution.

        The services to be provided by KLX include treasury (including payroll), internal audit, tax, accounting, human resources/benefits, legal, IT services and other administrative services.

        The transition services agreement provides for a term of not more than six months from the date of the closing of the merger.

        In connection with any breach of the transition services agreement or otherwise with respect to the transition services, KLX's and its subsidiaries' maximum liability under the transition services agreement (and the sole remedy from KLX to KLX Energy Services with respect thereto) is a refund of the total fees paid for the applicable transition services. KLX Energy Services is generally required to indemnify KLX for any losses arising out of or in connection with the transition services, including KLX Energy Services' breach of the transition services agreement or exercise of its rights under such agreement.

        KLX Energy Services will have the right to terminate each service prior to the end of the term of the transition services agreement, and each party is entitled to terminate if the other party materially breaches any of its obligations under the agreement after notice and an opportunity to cure.


IP Matters Agreement

        Upon or prior to the consummation of the spin-off, KLX will enter into an IP matters agreement with KLX Energy Services, which will govern (1) the transfer of certain KLX trademarks from KLX to KLX Energy Services, which is to occur upon the consummation of the merger, and (2) the rights and

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obligations of each of KLX and KLX Energy Services with respect to the assigned KLX trademarks prior to and after the consummation of the merger.

Co-existence

        Following the spin-off but prior to the closing of the merger, KLX will grant KLX Energy Services an interim limited license to use such KLX trademarks in the form of "KLX Energy Services" in connection with the ESG Business. If the merger agreement is terminated after the distribution has been consummated, KLX and KLX Energy Services agree to enter into a long-term brand co-existence agreement with respect to the KLX trademarks.

Assignment

        Upon the closing of the merger, (1) KLX will assign such KLX trademarks and related rights to KLX Energy Services, and (2) KLX Energy Services agrees that it will not use such KLX trademarks within the fields of use in which the ASG Business operates.

Rebranding

        Following the closing of the merger, as soon as reasonably practicable, KLX shall (1) no later than 180 days after the closing of the merger, remove "KLX" from the names of any ASG Business entities containing "KLX", (2) no later than 180 days after the closing of the merger, cease using "KLX" on any real physical properties, equipment, and websites, and (3) no later than 365 days thereafter, remove "KLX" from all ASG Business products and marketing materials. For the 365 day period following the closing of the merger, KLX Energy Services will grant KLX a non-exclusive, irrevocable, royalty-free, non-transferable, non-sublicensable license to such the KLX trademarks to enable the ASG Business to rebrand and transition off usage of such KLX trademarks.

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

        The following are brief answers to certain questions that you may have regarding the merger, the special meeting and the proposals being considered at the special meeting. We urge you to carefully read the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the merger and the special meeting. Additional important information is also contained in the annexes attached to this proxy statement and the documents referred to or incorporated by reference into this proxy statement.

Q.
Why am I receiving these proxy materials?

A.
On April 30, 2018, KLX entered into the merger agreement providing for the merger of Merger Sub with and into KLX, pursuant to which KLX will survive the merger as a wholly owned subsidiary of Boeing. You are receiving this proxy statement in connection with the solicitation by the KLX Board of proxies from KLX stockholders to vote in favor of the merger proposal and the other matters to be voted on at the special meeting.

Q.
What is the proposed transaction?

A.
If the merger proposal is approved by KLX stockholders and the other conditions to the consummation of the merger contained in the merger agreement are satisfied or waived, Merger Sub will merge with and into KLX. KLX will be the surviving corporation in the merger and will be privately held as a wholly owned subsidiary of Boeing. As a result of the merger, KLX common stock will no longer be publicly traded, KLX common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and we will no longer file periodic reports with the SEC on account of KLX common stock.

    Boeing will acquire all of the issued and outstanding shares of KLX common stock, which at the effective time of the merger will consist only of KLX's Aerospace Solutions Group business. As a condition to the merger, prior to or simultaneously with the consummation of the merger, KLX will transfer its ESG Business to KLX Energy Services and effect a pro rata distribution of common stock representing 100% of the equity interests of KLX Energy Services to KLX stockholders as of the record date of such distribution. After the spin-off is completed, KLX Energy Services will be a separate, publicly held company that will own and operate KLX's ESG Business. The spin-off will be carried out in accordance with the terms of the distribution agreement, the employee matters agreement, the transition services agreement and the IP matters agreement.

Q.
What will I receive in the merger if it is completed?

A.
Under the terms of the merger agreement, if the merger is completed, you will be entitled to receive for each share of KLX common stock that you own immediately prior to the effective time, the merger consideration consisting of $63.00 in cash per share, without interest. You will not be entitled to receive shares in Boeing in connection with the merger. Following the merger, your shares of KLX common stock will be canceled and you will not own shares in the surviving corporation.

    The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off (the "spin-off record date") will receive in the spin-off. Immediately after the spin-off, KLX stockholders as of the spin-off record date will own 100% of the issued and outstanding shares of common stock of KLX Energy Services. The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX

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    stockholders are not being asked to vote on the spin-off. Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.

Q.
Will the shares of KLX Energy Services common stock be traded on an exchange?

A.
Immediately following the spin-off, KLX Energy Services will be a new publicly traded company 100% owned by KLX stockholders as of the spin-off record date. KLX will cause the KLX Energy Services common stock to be distributed in the spin-off to be approved for listing on Nasdaq prior to the consummation of the spin-off. The KLX Energy Services common stock will be traded on Nasdaq under the ticker symbol "KLXE."

Q.
Where and when is the special meeting, and who may attend?

A.
The special meeting will be held on [    ·    ], 2018 at [    ·    ] a.m., Eastern Time, at [    ·    ]. The meeting room will open at [    ·    ] a.m., Eastern Time, and registration will begin at that time. Stockholders who are entitled to vote may attend the meeting. Beneficial owners of shares held in "street name" who have not obtained a proxy from the holder of record but who wish to attend the meeting should bring a copy of an account statement reflecting their ownership of KLX common stock as of the record date. All stockholders and proxyholders should bring photo identification. Even if you plan to attend the special meeting in person, we encourage you to complete, sign, date and return the enclosed proxy card or vote electronically over the Internet or via telephone to ensure that your shares will be represented at the special meeting.

Q.
Does KLX intend to hold its 2018 annual meeting of stockholders?

A.
KLX has not determined whether it will hold its 2018 annual meeting of stockholders (the "2018 annual meeting") due to the merger proposal. If the merger is completed on the expected timetable, KLX does not intend to hold a 2018 annual meeting, since KLX would not have any public stockholders. However, if the merger is not completed on a timely basis, or if KLX is otherwise required to do so under applicable law, KLX would hold a 2018 annual meeting.

Q.
Who can vote at the special meeting?

A.
All KLX stockholders of record as of the close of business on [    ·    ], 2018, the record date for the special meeting, are entitled to receive notice of, attend and vote at the special meeting, or any adjournment or postponement thereof. Each share of KLX common stock is entitled to one vote on all matters that come before the meeting. At the close of business on the record date, there were [    ·    ] shares of KLX common stock issued and outstanding.

Q.
What matters will be voted on at the special meeting?

A.
At the special meeting, you will be asked to consider and vote on the following proposals:

to adopt the merger agreement (the "merger proposal");

to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by KLX to its named executive officers that is based on or otherwise relates to the merger (the "named executive officer merger-related compensation proposal"); and

to approve the adjournment of the special meeting, from time to time, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the merger proposal (the "adjournment proposal").

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      KLX will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

Q.
How does the KLX Board recommend that I vote on the proposals?

A.
KLX's Board unanimously recommends that you vote:

"FOR" the merger proposal;

"FOR" the named executive officer merger-related compensation proposal on a non-binding, advisory basis; and

"FOR" the adjournment proposal.

Q.
What vote is required to approve the merger proposal?

A.
The merger proposal will be approved if stockholders holding a majority of the shares of KLX common stock outstanding at the close of business on the record date and entitled to vote thereon vote "FOR" the proposal.

    The failure of any stockholder of record to submit a signed proxy card, grant a proxy electronically over the Internet or by telephone or to vote in person by ballot at the special meeting will have the same effect as a vote "AGAINST" the proposal to approve the merger agreement. If you hold your shares in "street name," the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote "AGAINST" the merger proposal. Abstentions will have the same effect as a vote "AGAINST" the merger proposal.

    As of [    ·    ], 2018, the record date for determining who is entitled to vote at the special meeting, there were approximately [    ·    ] shares of KLX common stock issued and outstanding. Each holder of KLX common stock is entitled to one vote per share of stock owned by such holder as of the record date.

Q.
What vote is required to approve the other proposals?

A.
Under KLX's bylaws, approval of the named executive officer merger-related compensation proposal and the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of KLX common stock present in person or represented by proxy at the special meeting, provided that a quorum is present. If no quorum is present at the special meeting, the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting is required to approve the adjournment proposal.

    The failure of any stockholder of record to submit a signed proxy card, grant a proxy electronically over the Internet or by telephone or to vote in person by ballot at the special meeting will not have any effect on the named executive officer merger-related compensation proposal or the adjournment proposal. If you hold your shares in "street name," the failure to instruct your bank, broker or other nominee how to vote your shares will not have any effect on the named executive officer merger-related compensation proposal or the adjournment proposal. Abstentions will have the same effect as a vote "AGAINST" either proposal.

Q.
How are KLX's directors and executives intending to vote?

A.
As of May 25, 2018, the directors and executive officers of KLX collectively owned and were entitled to vote 801,613 shares of KLX common stock, representing approximately 1.58% of the shares of KLX common stock outstanding on that date. KLX currently expects that these directors and executive officers will vote such shares of KLX common stock in favor of the foregoing proposals, although none of them has entered into any agreement obligating them to do so.

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Q.
Do you expect the merger to be taxable to KLX stockholders?

A.
For U.S. federal income tax purposes, the merger will be treated as a taxable sale. You should read the section entitled "Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 127 and consult your tax advisors regarding the U.S. tax consequences of the merger to you in your particular circumstances.

Q.
Do you expect the spin-off to be taxable to KLX stockholders?

A.
Assuming that the merger occurs as planned, the distribution of KLX Energy Services common stock in the spin-off will not qualify for tax-free treatment. Thus, holders will be treated as having received a distribution in an amount equal to the fair market value of the KLX Energy shares distributed, which we will generally treat (including for the purposes of withholding in the case of non-U.S. holders) as a dividend to the extent of KLX's accumulated and current year earnings and profits. To the extent that the value of KLX Energy shares distributed exceeds KLX's accumulated and current year earnings and profits, the excess will first reduce holders' basis in their KLX shares and thereafter be treated as capital gain. The amount of those earnings and profits is not determinable at this time, because it will depend on KLX's income for the entire tax year in which the distribution occurs, with such taxable year ending on the earlier of the date of the Merger or on January 31. We currently expect, however, that most, and possibly all, of the distribution will be treated as a return of capital, and so not taxed as a dividend. The information statement to be filed as an exhibit to the Form 10 that will be filed by KLX Energy Services with the SEC with respect to the spin-off will describe the U.S. federal income tax consequences to holders receiving shares of KLX Energy in the spin-off and discuss other federal income tax considerations relevant to the spin-off in further detail.

Q.
What other effects will the merger have on KLX?

A.
If the merger is completed, KLX common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and KLX will no longer be required to file periodic reports with the SEC with respect to KLX common stock, in each case in accordance with applicable law, rules and regulations. Following the completion of the merger, KLX common stock will no longer be publicly traded, and you will no longer have any interest in KLX's future earnings or growth. Each share of KLX common stock you hold will represent only the right to receive the merger consideration in cash, without interest.

Q.
When is the merger expected to be completed?

A.
Assuming timely satisfaction of necessary closing conditions, including the adoption by our stockholders of the merger agreement, the parties to the merger agreement expect to complete the merger in the third quarter of 2018. However, KLX cannot assure completion by any particular date, if at all. Because the merger is subject to a number of conditions, including the receipt of KLX stockholder approval of the merger proposal, the receipt of certain regulatory approvals and the consummation of the spin-off, the exact timing of the merger cannot be determined at this time, and we cannot guarantee that the merger will be completed.

Q.
What happens if the merger is not completed?

A.
If the merger proposal is not approved by KLX stockholders, or if the merger is not completed for any other reason, KLX stockholders will not receive any payment for their shares of KLX common stock in connection with the merger. Instead, KLX will remain an independent public company, and shares of KLX common stock will continue to be listed and traded on Nasdaq.

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    Further, if the merger is not completed as a result of the termination of the merger agreement under certain specified circumstances, KLX may be required to pay Boeing a termination fee. See "The Merger Agreement—Termination Fees and Expenses" beginning on page 114 for a discussion of the circumstances under which such fees may be payable. The spin-off may have occurred before the termination of the merger agreement or may still occur if the merger is not completed. However, we cannot guarantee that the spin-off will occur if the merger is not completed.

Q.
Do any of KLX's directors or officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?

A.
Yes. In considering the recommendation of the KLX Board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. The KLX Board was aware of and considered these differing interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in unanimously recommending that the merger agreement be adopted by KLX stockholders. See "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger" beginning on page 77.

Q.
Why am I being asked to consider and vote on the named executive officer merger-related compensation proposal?

A.
SEC rules require KLX to seek approval on a non-binding, advisory basis with respect to certain payments that will or may be made to KLX's named executive officers in connection with the merger. Approval of the named executive officer merger-related compensation proposal is not required to complete the merger.

Q.
Who is soliciting my vote?

A.
The KLX Board is soliciting your proxy, and KLX will bear the cost of soliciting proxies. Georgeson has been retained by KLX to assist with the solicitation of proxies. Georgeson will be paid approximately $9,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through banks, brokers or other nominees to beneficial owners of shares of KLX common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, or electronic mail or other electronic medium or, without additional compensation, by certain of KLX's directors, officers and employees.

Q.
What do I need to do now?

A.
We encourage you to carefully read and consider the information contained in and incorporated by reference into this proxy statement, including the attached annexes. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible to ensure that your shares will be represented and voted at the special meeting. If you hold your shares in "street name," please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your shares. Please do not send your stock certificates with your proxy card.

Q.
Should I send in my stock certificates now?

A.
No. After the merger is completed, under the terms of the merger agreement, you will receive shortly thereafter a letter of transmittal instructing you to send your stock certificates to the paying

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    agent in order to receive the cash payment of the merger consideration for each share of our common stock represented by the stock certificates. You should use the letter of transmittal to exchange your stock certificates for the cash payment to which you are entitled upon completion of the merger. Please do not send in your stock certificates now.

Q.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?

A.
If your shares are registered directly in your name with our transfer agent, you are considered, with respect to these shares, to be the "stockholder of record." In this case, this proxy statement and your proxy card have been sent directly to you by our transfer agent.

    If your shares are held through a bank, broker or other nominee, you are considered the "beneficial owner" of the shares of KLX common stock held in "street name." In this case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the special meeting unless you request and obtain a valid legal proxy from your bank, broker or other nominee.

Q.
How do I vote if my shares are registered directly in my name?

A.
If your shares are registered directly in your name with our transfer agent, you are considered a "stockholder of record" (also referred to in this proxy statement as a "registered stockholder") and there are four methods by which you may vote your shares at the special meeting:

Internet: To submit a proxy to vote over the Internet, go to www.investorvote.com/KLXI and follow the steps outlined on the secured website. You will need the number included on your proxy card to obtain your records and to create an electronic voting instruction form. If you submit your vote via proxy over the Internet, you do not have to mail in a proxy card. If you choose to submit your vote via proxy over the Internet, you must do so prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018.

Telephone: To submit a proxy to vote by telephone, call toll-free 1-800-652-VOTE (8683) within the U.S., U.S. territories and Canada on a touch-tone telephone. Please have your proxy card available for reference because you will need the validation details that are located on your proxy card in order to submit your vote by proxy by telephone. If you submit your vote via proxy by telephone, you do not have to mail in a proxy card. If you choose to submit your vote via proxy by telephone, you must do so prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018.

Mail: To submit a proxy to vote by mail, complete, sign and date a proxy card and return it promptly to the address indicated on the proxy card in the postage paid envelope provided.

In Person: You may attend the special meeting and vote your shares in person, rather than by submitting a proxy to vote your shares over the Internet, by telephone or by mail. You will be given a ballot when you arrive.

    Whether or not you plan to attend the special meeting, we urge you to submit a proxy to vote to ensure your vote is counted. You may still attend the special meeting and vote in person if you have already submitted a proxy. Please choose only one method to cast your vote by proxy. We encourage you to vote by submitting a proxy over the Internet or by telephone, both of which are convenient, cost-effective and reliable alternatives to returning a proxy card by mail. If you vote by submitting your proxy by telephone or over the Internet or you return your signed proxy card to us

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    before the special meeting, and you do not subsequently revoke your proxy, we will vote your shares as you direct in such proxy.

Q.
How do I vote if my shares are held in the name of my bank, broker or other nominee?

A.
If your shares are held by your bank, broker or other nominee, you are considered the beneficial owner of shares held in "street name," and you will receive a vote instruction form from your bank, broker or other nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner of shares held by a bank, broker or other nominee and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the bank, broker or other nominee that holds your shares authorizing you to vote in person at the special meeting.

Q.
If my broker holds my shares in "street name," will my broker vote my shares for me?

A.
No. Your bank, broker or other nominee will only be permitted to vote your shares on any proposal if you instruct your bank, broker or other nominee how to vote. You should follow the procedures provided by your bank, broker or other nominee regarding the voting of your shares of KLX common stock. Without instructions, your shares will not be voted, which will have the same effect as if you voted against the merger proposal, but will have no effect on the named executive officer merger-related compensation proposal or the adjournment proposal.

Q.
Can I change or revoke my proxy after it has been submitted?

A.
Yes. You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record of your shares, you may change or revoke your proxy by:

submitting another proxy over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018;

timely delivering a written notice that you are revoking your proxy to our Secretary;

timely delivering a valid, later-dated proxy; or

attending the special meeting and voting in person. Simply attending the special meeting will not, by itself, revoke your proxy.

    If you are the beneficial owner of shares held in "street name," you will have to follow the instructions provided by your bank, broker or other nominee to change or revoke your voting instructions provided to such bank, broker or other nominee.

Q.
How many shares of KLX common stock must be present to constitute a quorum for the special meeting?

A.
The presence at the special meeting, in person or by proxy, of a majority of the shares of KLX common stock issued and outstanding on the record date and entitled to vote at the meeting will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If a quorum does not exist, the chairman of the meeting or the stockholders, by the affirmative vote of a majority of the shares of KLX common stock present or represented by proxy at the special meeting may adjourn the special meeting to another place, date or time. Failure of a quorum to be present at the special meeting will necessitate an adjournment of the special meeting and may subject KLX to additional expense. As of the close of business on the record date, there were [    ·    ] shares of KLX common stock outstanding. Accordingly, [    ·    ] shares of KLX common stock must be present or represented by proxy at the special meeting to constitute a quorum.

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Q.
What is a proxy?

A.
A proxy is your legal designation of another person, referred to as a "proxy," to vote your shares of KLX common stock. The written document describing the matters to be considered and voted on at the special meeting is called a "proxy statement." The document used to designate a proxy to vote your shares of KLX common stock is called a "proxy card." The KLX Board has designated Michael F. Senft and Roger Franks and each of them with full power of substitution as proxies for the special meeting.

Q.
If a stockholder gives a proxy, how are the shares voted?

A.
Regardless of the method you choose to vote, the individuals named on the enclosed proxy card, or your proxies, will vote your shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your shares should be voted for or against or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

Q.
What if I abstain from voting on any proposal?

A.
For the merger proposal, you may vote "FOR," "AGAINST" or "ABSTAIN." Abstentions will not count as votes cast on the merger proposal but will still count for the purpose of determining whether a quorum is present. However, the vote to approve the merger proposal is based on the total number of shares of KLX common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you abstain, it will have the same effect as if you vote "AGAINST" the merger proposal.

    For the named executive officer merger-related compensation proposal and the adjournment proposal, you may vote "FOR," "AGAINST" or "ABSTAIN." Abstentions will have the same effect as if you vote "AGAINST" the named executive officer merger-related compensation proposal and the adjournment proposal, but will still count for the purpose of determining whether a quorum is present. Under KLX's bylaws, the named executive officer merger-related compensation proposal and the adjournment proposal each requires the affirmative vote of the holders of a majority of shares of KLX common stock present in person or represented by proxy at the special meeting, provided that a quorum is present. As a result, assuming a quorum is present at the special meeting, abstentions will have the same effect as if you vote "AGAINST" the named executed officer merger-related compensation proposal or the adjournment proposal. The failure to vote on the named executive officer merger-related compensation proposal or the adjournment proposal, however, will have no effect on the outcome of such proposals.

Q.
Will my shares be voted if I do not sign and return my proxy card or vote by telephone or over the Internet or in person at the special meeting?

A.
If you are a stockholder of record and you do not vote by submitting your proxy by telephone, vote by submitting your proxy over the Internet, attend the special meeting or sign and return your proxy card, your shares will not be voted at the special meeting and will not be counted as present for purposes of determining whether a quorum exists. The failure to return your proxy card or otherwise vote your shares at the special meeting will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal. However, the vote to approve the merger proposal is based on the total number of shares of KLX common stock outstanding as of the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to return your proxy card or otherwise fail to vote your shares at the special meeting, it will have the same effect as a vote "AGAINST" the merger proposal.

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Q.
What is a broker non-vote?

A.
Broker non-votes are shares held in "street name" by banks, brokers and other nominees, but with respect to which the bank, broker or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such bank, broker or nominee does not have discretionary voting power on such proposal. Under Nasdaq rules, banks, brokers and other nominees holding shares in "street name" do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement. Accordingly, if a beneficial owner of shares of KLX common stock held in "street name" does not give voting instructions to the bank, broker or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting. Assuming a quorum is present at the special meeting, the failure to issue voting instructions to your bank, broker or other nominee will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal because the vote to approve such matters is based on the number of shares whose holders are present in person or represented by proxy at the special meeting. However, the vote to approve the merger proposal is based on the total number of shares of KLX common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your bank, broker or other nominee, it will have the same effect as a vote "AGAINST" the merger proposal.

Q.
Will my shares held in "street name" or another form of record ownership be combined for voting purposes with shares I hold of record?

A.
No. Because any shares you may hold in "street name" will be deemed to be held by a different stockholder than any shares you hold of record, any shares held in "street name" will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.

Q.
What does it mean if I get more than one proxy card or voting instruction form?

A.
If your shares are registered differently or are held in more than one account, you will receive more than one proxy card or voting instruction form. Please complete and return all of the proxy cards or voting instruction forms you receive (or submit each of your proxies over the Internet or by telephone) to ensure that all of your shares are voted.

Q.
Am I entitled to exercise appraisal rights under the DGCL instead of receiving the per share merger consideration for my shares of KLX common stock?

A.
Yes. If you are a record holder of KLX common stock and do not vote in favor of the proposal to adopt the merger agreement, you are entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the merger if you take certain actions and meet certain conditions. See "The Merger Proposal (Proposal 1)—Appraisal Rights" beginning on page 85. In addition, a copy of Section 262 of the DGCL is attached to this proxy statement as Annex C.

Q.
What happens if I sell my shares of KLX common stock before the completion of the merger?

A.
If you transfer your shares of KLX common stock, you will have transferred your right to receive the merger consideration in the merger or to demand appraisal rights in connection with the merger. In order to receive the merger consideration or to exercise appraisal rights in connection

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    with the merger, you must hold your shares of KLX common stock through the effective time of the merger. Even if you sell or otherwise transfer your shares of KLX common stock after the record date for the special meeting, we encourage you to vote via the Internet or telephone or complete, date, sign and return the enclosed proxy.

Q.
What is householding and how does it affect me?

A.
The SEC's proxy rules and the DGCL permit companies and intermediaries, such as banks and brokers, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement to those stockholders, unless contrary instructions have been received. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies. Certain brokerage firms may have instituted householding for beneficial owners of common stock held through brokerage firms. If your family has multiple accounts holding common stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your bank, broker or other nominee, or KLX at the address and telephone number below.

Q.
Why is the separation important and why is the consummation of the spin-off a condition to the closing of the merger?

A.
Under the terms of the merger agreement, Merger Sub will merge with and into KLX, with KLX surviving the merger as a wholly owned subsidiary of Boeing, following which Boeing will own all of the issued and outstanding shares of KLX common stock. In connection with this acquisition, KLX's Energy Services Group business will be separated from KLX and transferred to KLX Energy Services so that, at the effective time of the merger, KLX will only own the ASG Business that Boeing has agreed to acquire. Accordingly, the separation of KLX's ESG business is an important step in the transactions agreed to by KLX and Boeing, and the consummation of the spin-off is a condition to the closing of the merger. Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.

Q.
When will KLX announce the voting results of the special meeting, and where can I find the voting results?

A.
KLX intends to announce the preliminary voting results at the special meeting and will report the final voting results of the special meeting in a Current Report on Form 8-K filed with the SEC within four business days after the special meeting. All reports that KLX files with the SEC are publicly available when filed.

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Q:
Who can help answer my other questions?

A:
If you have questions about the merger, require assistance in submitting your proxy or voting your shares, or need additional copies of this proxy statement or the enclosed proxy card, please contact Georgeson, which is acting as the proxy solicitation agent for KLX in connection with the merger.

Georgeson
1290 Avenue of the Americas, 9th Floor
New York, NY 10104
Domestic and Canadian Stockholders Call: 1-866-277-0928
International Stockholders Call: 1-781-575-2137
Bankers and Brokers May Call Collect: 1-866-277-0928

    If your bank, broker or other nominee holds your shares, you should also call your bank, broker or other nominee for additional information.

    Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        The proxy statement and the attached annexes contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These forward-looking statements include statements relating to: the expected timing, completion and effects of the proposed merger, the separation and the spin-off; management's beliefs about future events, transactions, strategies, operations and financial results; our expectations with respect to the costs and other anticipated financial impacts of the spin-off and the merger; future financial and operating results of KLX Energy Services and KLX; the ability of KLX, KLX Energy Services and Boeing to complete the contemplated transactions in connection with the merger and the spin-off; KLX's plans, objectives, expectations and intentions with respect to future operations and services; required approvals to complete the merger and the spin-off by our stockholders and by governmental regulatory authorities, and the timing and conditions for such approvals; the stock price of KLX Energy Services following the consummation of the transactions; the stock price of KLX prior to the consummation of the transactions; the satisfaction of the closing conditions to the proposed merger and the spin-off; and the timing of the completion of the merger and the spin-off. Such forward-looking statements often contain words such as "assume," "will," "anticipate," "believe," "predict," "project," "potential," "contemplate," "plan," "forecast," "estimate," "expect," "intend," "is targeting," "may," "should," "would," "could," "goal," "seek," "hope," "aim," "continue" and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are made based upon management's current expectations and beliefs and are not guarantees of future performance. Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable and are expressed in good faith, such expectations may not prove to be correct, and persons reading this proxy statement are therefore cautioned not to place undue reliance on these forward-looking statements, which speak only to expectations as of the date of this proxy statement. We do not undertake or plan to update or revise forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this proxy statement, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If we make any future public statements or disclosures which modify or impact any of the forward-looking statements contained in or accompanying this proxy statement, such statements or disclosures will be deemed to modify or supersede such statements in this proxy statement.

        There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking statements. These risks and uncertainties, which could have a material adverse effect on us and our stock price, include the occurrence of any event, change or other circumstances that could give rise to: the termination of the merger agreement; the inability to complete the proposed merger or the spin-off due to the failure to obtain stockholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger or the spin-off, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transactions contemplated by the merger agreement; risks related to disruption of management's attention from KLX's ongoing business operations due to the transactions contemplated by the merger agreement, the separation and the spin-off; the effect of the announcement of the proposed merger on KLX's relationships with its customers, operating results and business generally; the risk that the proposed merger and the spin-off will not be consummated in a timely manner; economic conditions adversely affecting our business or results; the outcome of any legal proceedings that may be instituted against us and others related to the merger agreement; the fact that receipt of the all-cash merger consideration would be taxable to KLX's stockholders that are treated as U.S. holders for U.S. federal income tax purposes; the fact that KLX's

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stockholders would forego the opportunity to realize the potential long-term value of the successful execution of KLX's current strategy as an independent company; the possibility that Boeing could, at a later date, engage in unspecified transactions, including restructuring efforts, special dividends or the sale of some or all of KLX's assets to one or more as yet unknown purchasers that could conceivably produce a higher aggregate value than that available to the stockholders in the merger; the fact that under the terms of the merger agreement, KLX is unable to solicit other acquisition proposals during the pendency of the merger; the fact that, under specified circumstances, KLX may be required to pay fees in the event the merger agreement is terminated and the effect this could have on KLX; the amount of the costs, fees, expenses and charges related to the merger agreement and the merger; risks that our stock price may decline significantly if the merger is not completed; the unsuccessful implementation of the spin-off; any developments related to antitrust investigations adversely affecting our financial condition, results, cash flows or reputation; pricing pressures from our customers adversely affecting our profitability; competition adversely affecting our sales, profitability or financial condition; any disruption in our information technology systems adversely impacting our business and operations; any inability to protect our intellectual property rights adversely affecting our business or our competitive position; costs or adverse effects on our business, reputation or results from governmental regulations; work stoppages or other labor issues adversely affecting our business, results or financial condition; and other risks and uncertainties set forth in KLX's Annual Report on Form 10-K for the fiscal year ended January 31, 2018 and subsequent quarterly reports on Form 10-Q or current reports on Form 8-K.

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THE PARTIES TO THE MERGER

KLX

KLX Inc.
1300 Corporate Center Way
Wellington, FL 33414
(561) 383-5100

        KLX, through its two operating segments, provides mission critical products and complex logistical solutions to support its customers' high value assets. KLX serves its customers in demanding environments that face high cost of downtime and require dependable, high quality just-in-time customer support. KLX's Aerospace Solutions Group is a leading distributor and value added service provider of aerospace fasteners and consumables, offering the broadest range of aerospace hardware and consumables and inventory and supply chain management services worldwide. Through its global facilities network and advanced information technology systems, KLX offers its services to commercial airline, business jet and defense original equipment manufacturers and their subcontractors, airlines, maintenance, repair and overhaul operators, fixed base operators and domestic military depots. KLX's Energy Services Group provides completion, intervention and production services to the major onshore oil and gas producing regions of the United States, including the Northeast Region (the Marcellus and Utica Shales as well as the Mid-Continent STACK and SCOOP) and Haynesville, the Rocky Mountains Region (the Bakken formation, Williston, DJ, Uinta and Piceance Basins and Niobrara Shale) and the Southwest Region (including the Permian Basin and Eagle Ford Shale), serving the leading companies engaged in the exploration and development of North American onshore unconventional oil and natural gas reserves.

        KLX's common stock is traded on the Nasdaq Global Select Market under the symbol "KLXI." KLX's corporate web address is www.klx.com. The information provided on the KLX website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to KLX's website provided in this proxy statement.

Boeing

The Boeing Company
100 N. Riverside Plaza
Chicago, IL 60606-1596
(312) 544-2000

        Boeing is the world's largest aerospace company and leading manufacturer of commercial airplanes and defense, space and security systems. Boeing is also the world leader in combined commercial airlines and government services with customers in more than 150 countries. Boeing's products and tailored services include commercial and military aircraft, satellites, weapons, electronic and defense systems, launch systems, advanced information and communication systems, and performance-based logistics and training. Boeing employs approximately 140,000 people across the United States and in more than 65 countries.

        Boeing's common stock is traded on the New York Stock Exchange under the ticker symbol "BA." Boeing's corporate web address is www.boeing.com. The information provided on the Boeing website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to Boeing's website provided in this proxy statement.

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Merger Sub

Kelly Merger Sub, Inc.
100 N. Riverside Plaza
Chicago, IL 60606-1596
(312) 544-2000

        Merger Sub is a Delaware corporation and a wholly owned subsidiary of Boeing, the sole purpose of which is to effect the merger. Upon completion of the merger, Merger Sub will merge with and into KLX, with Merger Sub ceasing to exist and KLX surviving as a wholly owned subsidiary of Boeing.

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THE SPECIAL MEETING

        This proxy statement is being provided to KLX stockholders as part of a solicitation by the KLX Board of proxies for use at the special meeting to be held at the time and place specified below, and at any properly convened meeting following an adjournment or postponement of the special meeting.

Date, Time and Place

        The special meeting is scheduled to be held on [    ·    ], 2018 at [    ·    ] a.m., Eastern Time, at [    ·    ].

Purpose of the Special Meeting

        At the special meeting, KLX stockholders will be asked to consider and vote on the following proposals:

    the merger proposal, which is further described in the sections entitled "The Merger Proposal (Proposal 1)" and "The Merger Agreement" beginning on pages 44 and 90, respectively;

    the named executive officer merger-related compensation proposal, which approval shall be on a non-binding, advisory basis, as further discussed under "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger" and "Advisory Vote on Named Executive Officer Merger-Related Compensation Proposal (Proposal 2)" beginning on pages 77 and 122, respectively; and

    the adjournment proposal, as further discussed under "Adjournment Proposal (Proposal 3)" on page 123.

        KLX will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

        KLX stockholders must approve the merger proposal as a condition to the completion of the merger. If KLX stockholders fail to approve the merger proposal, the merger will not occur. The vote on the named executive officer merger-related compensation proposal is a vote separate and apart from the vote to approve the merger proposal. Accordingly, a stockholder may vote to approve the merger proposal and vote not to approve the named executive officer merger-related compensation proposal, and vice versa. Because the vote on the named executive officer merger-related compensation proposal is only advisory in nature, it will not be binding on KLX, Boeing or the surviving corporation. Accordingly, because KLX is contractually obligated to pay such merger-related compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger proposal is approved, regardless of the outcome of the advisory vote.

        Other than the matters described above, KLX does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off. However, if any other matters are properly brought before the special meeting or any adjournment or postponement thereof for consideration, the holders of the proxies will have discretion to vote on such matters in accordance with their best judgment.

Recommendation of the KLX Board

        The KLX Board has unanimously determined that it is in the best interests of the stockholders of KLX to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation and the spin-off). A description of factors considered by the KLX Board in reaching its decision to approve and declare advisable the merger agreement can be found in "The Merger

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Proposal (Proposal 1)—Recommendation of the KLX Board and Reasons for the Merger" beginning on page 62.

        The KLX Board unanimously recommends that KLX stockholders vote "FOR" the merger proposal, "FOR" the named executive officer merger-related compensation proposal and "FOR" the adjournment proposal.

        KLX stockholders' approval of the merger proposal is a condition for the merger to occur. If KLX stockholders fail to approve the merger proposal by the requisite vote, the merger will not occur.

Record Date; Stockholders Entitled to Vote

        Only holders of KLX common stock at the close of business on [    ·    ], 2018, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, [    ·    ] shares of KLX common stock were issued and outstanding.

        Holders of KLX common stock are entitled to one vote for each share of KLX common stock they own at the close of business on the record date.

Quorum

        The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of KLX common stock issued and outstanding at the close of business on the record date and entitled to vote at the meeting will constitute a quorum. As a result, there must be [    ·    ] shares represented by proxy or by stockholders present and entitled to vote at the special meeting in order to have a quorum. There must be a quorum for business to be conducted at the special meeting. If a quorum does not exist, the chairman of the meeting or the stockholders, by the affirmative vote of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the meeting to another place, date or time. Failure of a quorum to be represented at the special meeting will necessitate an adjournment of the special meeting and may subject KLX to additional expense.

        If you submit your proxy over the Internet or by telephone or submit a properly executed proxy card, even if you abstain from voting, your shares will be counted as present for purposes of determining whether a quorum exists at the special meeting.

Required Vote

        Approval of the merger proposal requires the affirmative vote of a majority of the shares of KLX common stock outstanding at the close of business on the record date and entitled to vote thereon.

        Under KLX's bylaws, approval of the named executive officer merger-related compensation proposal and the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of KLX common stock present in person or represented by proxy at the special meeting, provided that a quorum is present. If no quorum is present at the special meeting, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the special meeting.

Abstentions and Broker Non-Votes

        An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted as present for purposes of determining whether a quorum exists. Abstaining from voting will have the same effect as a vote

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"AGAINST" the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal.

        If no instruction as to how to vote is given (including no instruction to abstain from voting) in an executed, duly returned and not revoked proxy, the proxy will be voted "FOR" (i) approval of the merger proposal, (ii) approval of the named executive officer merger-related compensation proposal, which approval shall be on a non-binding, advisory basis, and (iii) approval of the adjournment proposal.

        Broker non-votes are shares held in "street name" by banks, brokers and other nominees, but with respect to which the bank, broker or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such bank, broker or nominee does not have discretionary voting power on such proposal. Under Nasdaq rules, banks, brokers and other nominees holding shares in "street name" do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement. Accordingly, if a beneficial owner of shares of KLX common stock held in "street name" does not give voting instructions to the bank, broker or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting.

Failure to Vote

        If you are a stockholder of record and you do not sign and return your proxy card or vote over the Internet, by telephone or in person at the special meeting, your shares will not be voted at the special meeting, will not be counted as present in person or by proxy at the special meeting and will not be counted as present for purposes of determining whether a quorum exists.

        Under Nasdaq rules, banks, brokers and other nominees that hold shares in "street name" for their customers do not have discretionary voting authority with respect to the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal. Accordingly, if you are the beneficial owner of shares held in "street name" and you do not issue voting instructions to your bank, broker or other nominee, your shares will not be voted at the special meeting. Assuming a quorum is present at the special meeting, the failure to issue voting instructions to your bank, broker or other nominee will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal. However, the vote to approve the merger proposal is based on the total number of shares of KLX common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your bank, broker or other nominee, it will have the same effect as a vote "AGAINST" the merger proposal.

        A failure to have your shares present at the special meeting will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal (assuming a quorum is present). However, the vote to approve the merger proposal is based on the total number of shares of KLX common stock outstanding at the close of business on the record date and entitled to vote thereon, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to vote your shares, it will have the same effect as a vote "AGAINST" the merger proposal.

Voting by KLX's Directors and Executive Officers

        At the close of business on May 25, 2018, directors and executive officers of KLX were entitled to vote 801,613 shares of KLX common stock, or approximately 1.58% of the shares of KLX common stock issued and outstanding on that date. KLX's directors and executive officers have informed us that they intend to vote their shares in favor of the merger proposal and the other proposals to be considered at the special meeting, although none of KLX's directors and executive officers is obligated to do so.

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Voting at the Special Meeting

        If your shares are registered directly in your name with our transfer agent, you are considered a "stockholder of record" (also referred to in this proxy statement as a "registered stockholder"), and there are four methods by which you may vote your shares at the special meeting. You may attend the special meeting and vote your shares in person, rather than signing and returning your proxy card, or you may cause your shares to be voted by authorizing the persons named as proxies on the proxy card to vote your shares at the special meeting by returning the proxy card through the Internet, by telephone or by mail,. If you choose to submit a proxy to vote your shares over the Internet or by telephone, there is no need for you to mail back your proxy card. Although KLX offers four different voting methods, KLX encourages you to submit a proxy to vote either over the Internet or by telephone to ensure that your shares are represented and voted at the special meeting.

    To Submit a Proxy to Vote Over the Internet:  To submit a proxy to vote over the Internet, go to www.investorvote.com/KLXI and follow the steps outlined on the secured website. You will need the number included on your proxy card to obtain your records and to create an electronic voting instruction form. If you submit your proxy to vote over the Internet, you do not have to mail in a proxy card. If you choose to submit your vote via proxy over the Internet, you must do so prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018.

    To Submit a Proxy by Telephone:  To submit a proxy to vote by telephone, call toll-free 1-800-652-VOTE (8683) within the U.S., U.S. territories and Canada on a touch-tone telephone. Please have your proxy card available for reference because you will need the validation details that are located on your proxy card in order to submit your vote by proxy by telephone. If you submit your proxy to vote by telephone, you do not have to mail in a proxy card. If you choose to submit your vote via proxy by telephone, you must do so prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018.

    To Vote in Person:  If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting.

    To Submit a Proxy by Mail:  To submit a proxy to vote by mail, complete, sign and date the proxy card and return it promptly to the address indicated on the proxy card in the postage paid enveloped provided. If you sign and return your proxy card without indicating how you want your shares of KLX common stock to be voted with regard to a particular proposal, your shares of KLX common stock will be voted in favor of such proposal. If you return your proxy card without a signature, your shares will not be counted as present at the special meeting and cannot be voted.

        If your shares are held by your bank, broker or other nominee, you are considered the beneficial owner of shares held in "street name" and you will receive a vote instruction form from your bank, broker or other nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the bank, broker or other nominee that holds your shares authorizing you to vote in person at the special meeting.

        If you sign your proxy, but do not indicate how you wish to vote, your shares will be voted "FOR" the merger proposal, "FOR" the named executive officer merger-related compensation proposal, and "FOR" adjournment proposal.

        Stockholders who are entitled to vote at the special meeting may attend the special meeting. Beneficial owners who have not obtained a proxy but who wish to attend the special meeting should bring a copy of an account statement reflecting their ownership of KLX common stock as of the record date. All stockholders and proxyholders should bring photo identification.

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Revocation of Proxies

        You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record of your shares, you may revoke your proxy by:

    submitting another proxy over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on [    ·    ], 2018;

    timely delivering a written notice that you are revoking your proxy to our Secretary;

    timely delivering a valid, later-dated proxy; or

    attending the special meeting and voting in person. Simply attending the special meeting will not, by itself, revoke your proxy.

        If you are the beneficial owner of shares held in "street name," you should contact your bank, broker or other nominee with questions about how to change or revoke your voting instructions.

Solicitation of Proxies

        The KLX Board is soliciting your proxy, and KLX will bear the cost of soliciting proxies. Georgeson has been retained by KLX to assist with the solicitation of proxies. Georgeson will be paid approximately $9,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through banks, brokers and other nominees to the beneficial owners of shares of KLX common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by certain of KLX's directors, officers and employees, without additional compensation.

Adjournment

        In addition to the merger proposal and the named executive officer merger-related compensation proposal, KLX stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting for the purpose of soliciting additional votes in favor of the merger proposal, if there are not sufficient votes at the time of the special meeting to approve the merger proposal. If a quorum is not present, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the special meeting to another place, date or time. In addition, the special meeting could be postponed before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional votes, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals.

        The KLX Board unanimously recommends a vote "FOR" the adjournment proposal, if necessary or appropriate, to solicit additional proxies.

Other Information

        You should not return your stock certificate (if any) or send documents representing KLX common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of KLX common stock for the consideration to be paid to the former KLX stockholders in connection with the merger.

Questions

        If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Georgeson, our proxy solicitor, by calling 1-866-277-0928 (for domestic and Canadian stockholders) or 1-781-575-2137 (for international stockholders).

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THE MERGER PROPOSAL (PROPOSAL 1)

        The following summary describes certain material provisions of the merger agreement. The complete text of the merger agreement is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We urge you to read the merger agreement carefully and in its entirety.


Structure of the Merger

        Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time, Merger Sub will merge with and into KLX, the separate corporate existence of Merger Sub will cease and KLX will survive the merger as the surviving corporation and a wholly owned subsidiary of Boeing. As a result of the merger, KLX common stock will no longer be publicly traded, KLX common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and KLX will no longer file periodic reports with the SEC on account of KLX common stock. If the merger is completed, you will not own any shares of the capital stock of the surviving corporation.


Merger Consideration—What KLX Stockholders Will Receive in the Merger

        Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, each outstanding share of KLX common stock (other than any shares that may be held in the treasury of KLX, by Boeing or by any direct or indirect wholly owned subsidiary of Boeing, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL) will be automatically converted into the right to receive $63.00 in cash, without interest. After the merger is completed, holders of KLX common stock will have only the right to receive a cash payment in respect of their shares of KLX common stock and will no longer have any rights as holders of KLX common stock, including voting or other rights. Shares of KLX common stock held by us as treasury stock or held, directly or indirectly, by Boeing or Merger Sub will be cancelled at the effective time.

        The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. Immediately after the spin-off, stockholders of KLX of record as of the record date of the spin-off will own 100% of the issued and outstanding shares of common stock of KLX Energy Services. The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off. Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.


Treatment of KLX Equity Awards

        The merger agreement provides that outstanding equity-based awards issued under KLX's equity incentive plans will be treated as set forth below:

        KLX Restricted Stock Awards.    Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX Restricted Stock Award that is outstanding immediately prior to the effective time will, 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 KLX Restricted Stock Award will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX

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common stock represented by such KLX Restricted Stock Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest.

        KLX PSU Awards and KLX RSU Awards.    Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX PSU Award and each KLX RSU Award, in each case, subject to time-based, performance or other vesting restrictions, that is outstanding immediately prior to the effective time, will, to the extent not vested, become fully vested, provided that to the extent that such award is subject to performance conditions, any performance conditions will be deemed to have been satisfied at the maximum level and (ii) each KLX PSU Award and KLX RSU Award, in each case, whether payable in cash or shares of KLX common stock, will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX PSU Award or KLX RSU Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest. Any payment in respect of any KLX PSU Award and KLX RSU Award, in each case, which immediately prior to such cancellation was treated as "deferred compensation" subject to section 409A of the Internal Revenue Code will be converted to the merger consideration and paid on the applicable settlement date for such KLX RSU Award or KLX PSU Award if required in order to comply with section 409A of the Internal Revenue Code.

        Effect of Spin-off on Equity Awards.    At the time of the spin-off, then outstanding KLX equity-based awards granted prior to the date of the spin-off will be equitably adjusted to reflect the dilutive impact of the spin-off, but will otherwise not participate in the spin-off. Following the spin-off, all KLX equity-based awards held by KLX employees and KLX Energy Services employees will continue to vest in accordance with their terms based on their respective holders' continued service with KLX or KLX Energy Services, as applicable.

        2018 KLX Equity Awards.    In accordance with the merger agreement, KLX may grant its annual 2018 KLX Restricted Stock Awards, KLX PSU Awards or KLX RSU Awards to its employees under the LTIP in the ordinary course of business consistent with past practice following the date of the merger agreement. However, in the event that the effective time of the merger occurs on or prior to the first anniversary of the grant date of the 2018 Awards, only one-third of the 2018 Awards will be accelerated in connection with the consummation of the merger and become eligible to receive the merger consideration, and the remaining two-thirds will be forfeited for no consideration.


Effects on KLX if the Merger is Not Completed

        If the merger proposal is not approved by KLX stockholders or if the merger is not completed for any other reason, KLX stockholders will not receive any payment for their shares in connection with the merger. Instead, KLX will remain an independent public company and shares of KLX common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act and we will continue to file periodic reports with the SEC on account of KLX common stock. In addition, if the merger is not completed, KLX expects that management will operate KLX's business in a manner similar to that in which it is being operated today and that KLX stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the highly competitive industry in which KLX operates and adverse economic conditions.

        Furthermore, if the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, it is possible that the price of KLX common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of KLX common stock would return to the price at which it trades as of the date of this proxy statement. Accordingly, if the merger

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is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of KLX common stock. Further, if the merger proposal is not approved by KLX stockholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to KLX will be offered or that KLX's business, prospects or results of operations will not be adversely impacted.

        The spin-off may occur prior to a termination of the merger agreement or, if the merger is not completed, the spin-off may still occur, but we cannot guarantee that the spin-off will occur if the merger is not completed.

        If the merger agreement is terminated under certain specified circumstances, KLX may be required to pay Boeing a termination fee. In some cases, Boeing may be required to pay KLX a termination fee. See "The Merger Agreement—Termination Fees and Expenses" beginning on page 114 for a discussion of the circumstances under which such fee may be payable.


Background of the Merger

        As part of the KLX's ongoing strategic planning process, the KLX Board and KLX management regularly review and assess KLX's businesses and operations, and periodically review and assess various potential strategic alternatives available to enhance value for KLX's stockholders. As part of such review, KLX from time-to-time has examined its competitive position and evaluated various potential alternatives, including the continued execution of its strategy as a stand-alone publicly traded company, the acquisition of one or more businesses, divestitures, dividends, share repurchases, a sale of KLX as a whole to a third party or some other business combination. In addition, KLX from time-to-time has held discussions with such potential strategic transaction partners.

        The following chronology sets forth a summary of the material events leading up to the execution of the merger agreement.

        In late August 2017, in light of industry dynamics discussed below, KLX management began informally discussing KLX's industry position with Goldman Sachs, KLX's investment banker. Goldman Sachs agreed to prepare materials to assist KLX in its review of its industry position.

        On September 25, 2017, the KLX Board held a telephonic meeting, in which members of KLX management and representatives of KLX's outside legal counsel, Freshfields Bruckhaus Deringer US LLP ("Freshfields"), participated. During this meeting, the KLX Board, with input from KLX management, discussed KLX's industry positioning, potential acquisition targets and the benefit of understanding KLX's position in the marketplace in light of the current environment in the aerospace industry, including the trends in consolidation and competition, the changes in the distribution market generally and the likely effect of these factors on KLX. KLX management and the KLX Board further discussed the fact that market conditions were favorable for a strategic transaction (based on, among other factors, trading multiples of peer companies, precedent transaction multiples and the low cost of capital) and expressed a desire to continue to review the feasibility of a process relating to a sale of KLX or other strategic transaction, and the potential participants in such a process. The KLX Board then directed Goldman Sachs to discuss with third parties, as part of its regular outreach, publicly available information about KLX and its business. KLX management did not request authorization to begin a formal sale process at this time. At the conclusion of this meeting, the KLX Board authorized KLX management to seek Goldman Sachs's assistance in analyzing KLX's position within its industry.

        On September 28, 2017, Goldman Sachs made a presentation to KLX management regarding KLX's historical growth, the strengths of its business, its financial profile within its industry and its financial position relative to its peers.

        Beginning in October 2017, as authorized by the KLX Board, Goldman Sachs conducted discreet outreach to third parties to update them on KLX, its business and its position in the industry. The

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parties that Goldman Sachs contacted included financial sponsors and participants in the aerospace and defense, distribution and logistics, and e-commerce industries that Goldman Sachs and KLX management believed could potentially present a strategic fit with KLX and that Goldman Sachs and KLX management believed were likely to find KLX's financial profile within its industry and its financial position relative to its peers attractive. The strategic parties contacted included a number of multi-industry companies that were looking to expand into new platforms through acquisitions.

        By letter dated November 8, 2017, Freshfields was officially engaged by KLX to act as its legal advisor in connection with KLX's review of potential strategic alternatives.

        On November 10, 2017, the KLX Board held a telephonic meeting in which representatives of Goldman Sachs and Freshfields also participated. Freshfields reviewed the directors' fiduciary duties under Delaware law. Goldman Sachs then updated the KLX Board on its discussions with third parties. Goldman Sachs reported that it had spoken to three categories of parties: (1) distribution and logistics and e-commerce companies; (2) aerospace and defense companies; and (3) financial sponsors. Mr. Amin J. Khoury, Chairman and CEO of KLX, reported that he had subsequently been contacted by the CEO of a logistics company, referred to as Party B, who indicated that his company wished to conduct more detailed due diligence on KLX should an opportunity for a strategic transaction arise.

        Goldman Sachs then reviewed with the KLX Board a potential timeline for a formal process in respect of such a strategic transaction, and suggested that interested parties would likely need six to eight weeks to complete their due diligence review of KLX. KLX management advised that any decision on launching a formal process should occur only after completion of KLX's 2018 budget. At the conclusion of this meeting, the KLX Board authorized Goldman Sachs to continue its work in assisting KLX with its strategic review and to begin preparing marketing materials that could ultimately be distributed to interested parties should KLX launch a formal process in respect of a strategic transaction.

        On December 6, 2017, a representative of Goldman Sachs reported to members of KLX management that he had spoken to representatives of Boeing on December 5, 2017, and that such representatives indicated that they would be interested in learning more about, and exploring a possible strategic transaction with, KLX should the opportunity arise. Goldman Sachs also reported that it had a positive call with a private equity firm, referred to as Party X, which expressed an interest in exploring an acquisition of KLX as a whole.

        On December 7, 2017, the KLX Board held a meeting at which members of KLX management were present. Mr. Khoury presented the results of operations of KLX for the three and nine months ended October 31, 2017, including the financial results of operations for each of the ASG Business and ESG Business. Mr. Khoury reviewed two product line expansion opportunities for the ASG Business. Mr. Khoury also presented to the KLX Board a review of KLX's 2018 budget, which was approved by a vote of the KLX Board. Finally, Mr. Khoury provided an update on Goldman Sachs's work in assisting KLX with the review of its industry position.

        Throughout early and mid-December, Goldman Sachs continued to hold discussions with third parties. This included outreach to parties with expertise investing in oilfield services businesses.

        Also during this period, as instructed by the KLX Board, Goldman Sachs began disseminating confidentiality and non-disclosure agreements to third parties that had expressed an interest in receiving further information about KLX. Each of the confidentiality and non-disclosure agreements contained a standstill provision that would automatically fall away upon, among other things, the entry by KLX into a binding definitive agreement with any third party to consummate a transaction.

        As part of KLX's strategic review and throughout the eventual formal process conducted in connection therewith and described in further detail below, 44 parties were contacted in total, 25

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parties were sent confidentiality and non-disclosure agreements and, ultimately, 22 parties executed confidentiality and non-disclosure agreements with KLX.

        On December 18, 2017, KLX management and representatives of Goldman Sachs met with representatives of Party B in Wellington, Florida to discuss Party B's interest in a potential transaction involving KLX.

        On December 19, 2017, KLX and Boeing executed a confidentiality and non-disclosure agreement.

        On December 20, 2017, KLX management and representatives of Goldman Sachs met with Boeing management and representatives of Citigroup Global Markets Inc. ("Citi"), Boeing's financial advisor, in Plano, Texas. During the meeting, KLX management provided information about the performance and outlook of KLX's business, including separate breakdowns of the ASG and ESG Businesses. KLX management and Boeing management also held preliminary discussions regarding the potential benefits of a business combination as Boeing had expressed interest in a strategic transaction involving the ASG Business or involving KLX after a separation of the ESG Business.

        On December 22, 2017, the KLX Board held a telephonic meeting. Members of KLX management and representatives of Goldman Sachs and Freshfields participated in the meeting. Goldman Sachs representatives provided the KLX Board with an update on Goldman Sachs's work in connection with KLX's review of its industry position. Goldman Sachs updated the KLX Board on discussions that Goldman Sachs and members of KLX management had held with Party B and with Boeing and reported that, at that time, six other strategic parties and financial sponsors had either executed, or were negotiating, confidentiality and non-disclosure agreements in order to obtain confidential information about KLX. Goldman Sachs noted that some parties had indicated an interest in a strategic transaction involving KLX as a whole and others, including Boeing, had indicated an interest in such a transaction involving either the ASG Business only or the ESG Business only.

        The KLX Board then discussed the work that would be required to set up a process for a review of KLX's strategic alternatives in respect of the ESG Business. Mr. Khoury stated that in order for KLX to prepare for a potential strategic transaction, including a separate process involving the ESG Business, KLX would need the assistance of additional KLX employees. He also stated that the risk of leaks would increase as KLX began circulating confidentiality agreements to a number of interested parties. In light of these considerations, among others, the Board discussed issuing a press release stating that KLX was undertaking a review of strategic alternatives.

        After this discussion, Goldman Sachs exited the meeting. At this point, Mr. Khoury explained the terms of the engagement letter pursuant to which it was proposed that KLX formally engage Goldman Sachs to assist with KLX's strategic review, including the fees to which Goldman Sachs would be entitled if KLX executed any strategic transaction, either during the term of the Goldman Sachs engagement or during the 12 months following the termination of such engagement. Mr. Khoury proposed that the KLX Board authorize KLX to engage Goldman Sachs on the terms discussed.

        At the close of this meeting, the KLX Board resolved to (1) engage Goldman Sachs to assist KLX with its strategic review on the terms presented to the KLX Board, (2) engage Deloitte to conduct a carve-out audit of the ESG Business in preparation for a potential sale or other strategic transaction involving the ESG Business and (3) issue a press release stating that KLX was undertaking a formal process to explore strategic alternatives for KLX focused on maximizing stockholder value.

        On December 22, 2017, KLX executed an engagement letter with Goldman Sachs on the terms presented to the KLX Board.

        On December 22, 2017, KLX issued a press release announcing that KLX was undertaking a formal process to explore strategic alternatives for KLX focused on maximizing stockholder value. The press release stated that such strategic alternatives could include, among others, a sale of KLX as a

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whole or a sale of a division or divisions thereof, a business combination or continuing as a standalone entity executing on its business plan. The press release detailed KLX's engagement of Goldman Sachs as financial advisor and of Freshfields as legal advisor in connection with a potential strategic transaction.

        In late December 2017, the compensation committee of the KLX Board retained Proskauer Rose LLP ("Proskauer") as independent legal counsel to provide advice regarding potential bonus payments to KLX's senior executives in connection with a potential strategic transaction. KLX had previously disclosed in its annual proxy statement to stockholders that, in order to ensure that the interests of KLX stockholders and KLX's senior executives are aligned in the event of a potential strategic transaction that would constitute a change of control of KLX, the compensation committee of the KLX Board had concluded that it would favorably consider discretionary strategic transaction bonuses for such executives, which payments would be in addition to amounts payable to such executives under their existing employment agreements.

        In late December 2017, Goldman Sachs engaged in discussions with a second potential strategic bidder in the aerospace industry, referred to as Party C, regarding its interest in a potential strategic transaction with KLX. In these discussions, Goldman Sachs provided an update on KLX's business, as well as KLX's strategic review process. A follow-up discussion was scheduled for early January, when KLX's business would be discussed in more detail. Throughout these discussions, Party C expressed an interest in acquiring the ASG Business only.

        Throughout January and February 2018, 15 interested parties (each of which had executed a confidentiality agreement with KLX) attended meetings with KLX management to discuss KLX's business. On January 25, 2018, KLX management, representatives from Goldman Sachs and representatives from Freshfields met with Boeing in Wellington, Florida to discuss additional business and tax due diligence topics.

        From the last week of January 2018 through the first week of February 2018, KLX management had two meetings in New York with parties interested in the ASG Business only (with Party C and with a financial sponsor, referred to as Party A) and four meetings in various cities with parties interested in the ESG Business only. Goldman Sachs attended all of these meetings.

        On January 22, 2018, the CEO of Party B contacted Mr. Khoury to indicate that Party B would no longer participate in KLX's strategic review process.

        On January 31, 2018, at the direction of KLX management and following review and comment by management and KLX's advisors, a process letter was distributed by Goldman Sachs to 15 interested parties (three strategic parties and 12 financial sponsors). The process letter requested that the interested parties submit preliminary indications of interest by February 13, 2018 regarding a potential acquisition of (1) 100% of the outstanding common stock of KLX in a single transaction, (2) only the ESG Business or (3) only the ASG Business.

        On February 12, 2018, representatives of Party C discussed KLX's financial model with members of KLX management and representatives of Goldman Sachs. The representatives of Party C present at this meeting expressed interest in a potential strategic transaction involving the ASG Business. However, in mid-February 2018, Party C advised Goldman Sachs that it would not further consider a potential strategic transaction with KLX at that time given its other priorities.

        On February 13 and February 14, 2018, Goldman Sachs received five initial indications of interest: two parties (Party A and Boeing) submitted an indication of interest with respect to the ASG Business; and three parties (a special purpose acquisition company referred to as Party Y, Party X and a financial sponsor referred to as Party Z) submitted an indication of interest with respect to the ESG Business. None of the five parties submitted an indication of interest to acquire KLX as a whole (including both

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the ASG and ESG Businesses). The indications of interest for the ASG Business were structured as an acquisition of KLX but were each conditioned on a sale of the ESG Business.

        The indication of interest from Party A proposed to acquire the issued and outstanding shares of common stock of KLX for $68.00 per share and included an assumption of $350 million of cash proceeds from the sale of the ESG Business. The indication of interest from Boeing proposed to purchase 100% of the issued and outstanding shares of common stock of KLX for $68.00 per share and included an assumption of $400 million of net cash proceeds from the sale of the ESG Business. The indications of interest received for the ESG Business offered purchase prices in a range from $250 million to $400 million and were based on an estimate of ESG EBITDA (without taking into account any synergies) of $73 million for 2018.

        On February 21, 2018, the KLX Board held a telephonic meeting. Members of KLX management and representatives of Goldman Sachs and Freshfields also participated in the meeting. Goldman Sachs provided an update on its work in connection with KLX's review of strategic alternatives. Goldman Sachs noted that over the course of its outreach in late 2017 and early 2018, it and/or KLX had engaged with 28 interested parties, both strategic and financial. Of these parties, 12 specifically indicated an interest in the ESG Business only. Goldman Sachs discussed the companies and institutions contacted, the interested parties, and the management meetings held. Goldman Sachs further detailed the five indications of interest received (two for the ASG Business (from Party A and Boeing) and three for the ESG Business (from Party X, Party Y and Party Z)) and discussed for each the offer price and form of consideration, the valuation assumptions and methodology (including assumptions relating to the sale of the ESG Business in the indications of interest from Party A and Boeing), the expected sources of financing, premium and multiple calculations, timing to signing and key due diligence areas, advisors engaged and key approvals needed.

        After this report, the KLX Board engaged in a discussion with Goldman Sachs regarding the financial aspects of the indications of interest received from Boeing and Party A, and Goldman Sachs provided financial analyses and information to the KLX Board. The KLX Board also engaged in a discussion about how any cash that would be received from a sale of the ESG Business would be treated by Party A and Boeing. Following these discussions, the KLX Board determined that none of the five indications of interest received was sufficiently attractive from a financial point of view but that further discussion with all parties who had submitted such indications was warranted.

        The KLX Board decided to proceed with the next phase of the strategic review process, in which all five potentially interested parties who submitted indications of interest would be invited to conduct further due diligence, to mark-up transaction documentation and to submit a final offer.

        Later on February 21, 2018, Mr. Khoury received a call from Gary Roberts, Vice President and General Manager of the ESG Business, who told Mr. Khoury that a representative of a financial sponsor, referred to as Party W, had contacted Mr. Roberts about the possibility of a strategic transaction involving the ESG Business. On February 24, 2018, KLX and Party W signed a confidentiality agreement.

        Also on February 21, 2018, a representative from Goldman Sachs had a discussion with a representative from a financial sponsor, referred to as Party V, about the possibility of an acquisition of KLX's ESG business. On February 23, 2018, KLX entered into a confidentiality agreement with Party V.

        On February 22, 2018, a representative from Goldman Sachs spoke with a representative from Boeing and indicated that Boeing would need to improve the economic terms of Boeing's proposal in order for KLX to further consider a potential combination with Boeing. Goldman Sachs further noted that Boeing's assumption as to the cash to be received in a sale of the ESG Business was higher than the bids for the ESG business received to date. Boeing indicated that it would need another four to six

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weeks to complete its due diligence process before it could submit a definitive bid for the ASG Business.

        On February 27, 2018, Mr. Khoury met with representatives of Party A to discuss a potential business combination with one of Party A's portfolio companies. Representatives from Goldman Sachs were also present at this meeting. Mr. Khoury also indicated to Party A that its existing bid was not sufficiently attractive and that its price assumption for the ESG Business was too high based on bids received to date.

        During this period, representatives of Goldman Sachs also contacted those parties that had submitted an indication of interest for the ESG Business and indicated that they needed to increase their offers for the ESG Business from the prices stated in the indications of interest submitted.

        On February 27, 2018, Party W submitted an indication of interest with respect to the acquisition of the ESG Business, that was within the range of the indications of interest received from Party X, Party Y and Party Z.

        On February 28, 2018, Goldman Sachs was informed by the CEO of Party Y that it would no longer participate in KLX's strategic review process.

        On March 1, 2018, a representative of a financial sponsor, referred to as Party U, notified Goldman Sachs that Party U was interested in acquiring the ESG Business directly rather than through Party Y (a special purpose acquisition company of which Party U was the sponsor). After discussions with KLX management, where Party U verbally confirmed that its view on value was consistent with Party Y's proposal, Party U was included in the process.

        In late February 2018, KLX opened virtual data rooms (one related to the ASG Business for the parties interested in the ASG Business and another related to the ESG Business for the parties interested in the ESG Business) to the six bidders that had submitted an indication of interest and to their advisors. KLX also executed a "clean team" agreement with Boeing's outside counsel, Kirkland & Ellis ("Kirkland"), and opened a separate "clean room" in accordance with that agreement to which Kirkland would be granted access.

        During late February and throughout March 2018, at the direction of KLX's management, representatives of KLX (together with representatives of Goldman Sachs and Freshfields) held several calls with the six interested parties (Party A and Boeing, with respect to the ASG Business, and Party U, Party W, Party X and Party Z, with respect to the ESG Business) to answer questions that had arisen in the course of their due diligence review.

        In the first week of March 2018, KLX held separate meetings with executives of Party X, executives of Party U and executives of Party W at the headquarters of the ESG Business in order to discuss the ESG Business.

        On March 7, 2018, the KLX Board held a regular meeting in which members of KLX management participated. Among other things, the KLX Board reviewed projected transaction costs and expenses associated with the review of strategic alternatives, including, if approved by the compensation committee of the KLX Board, proposed transaction bonuses that might be paid to KLX senior management upon a change of control of KLX.

        On March 7, 2018, the auction drafts of the merger agreement and the Equity Purchase Agreement regarding the potential sale of the ESG Business (the "equity purchase agreement") were delivered to interested parties.

        On March 10, 2018, Mr. Khoury received a call from an executive of Party U, informing KLX that Party U wanted to negotiate an exclusive strategic transaction with respect to the ESG Business and that Party U had retained outside counsel who would contact Freshfields. KLX advised Party U that

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the value of the offer and the magnitude of the at-risk capital would be, among others, important factors in considering any offer by Party U.

        On March 13, 2018, members of KLX management and representatives of Party A met to conduct a management meeting and site visit with respect to the ASG Business. That evening, representatives of Party A had dinner with executives of the ASG Business in Florida.

        On March 14, 2018, members of KLX management and representatives of Boeing met to discuss the operations of the ASG Business and to conduct a site visit at the ASG Business headquarters in Miami. The next day, members of KLX management met with representatives of Boeing in Miami to discuss remaining elements of Boeing's financial due diligence.

        On March 14, 2018, a draft of KLX's disclosure schedules to the merger agreement were made available to Party A. On March 19, 2018, a version of these disclosure schedules was provided to Citi for distribution to Boeing.

        On March 14, 2018, an executive from Party U sent Mr. Khoury an exclusivity agreement relating to the sale of the ESG Business. The letter detailed Party U's proposal that Party U be granted an exclusive right to negotiate a potential acquisition of the ESG Business that would extend until 11:59 PM (Central Time) on April 15, 2018. As consideration for this exclusivity, Party U proposed to provide 1% of its proposed purchase price of $330 million as a down payment, which would not be returned to Party U in the event the two parties did not successfully consummate a strategic transaction. The executive from Party U indicated that Party U had formally retained counsel to advise Party U on a strategic transaction. On March 15, 2018, Mr. Khoury communicated to Party U that KLX would continue its process and that Goldman Sachs and Freshfields would contact them and their counsel with respect to that process.

        From March 15 through March 28, 2018, KLX continued to conduct due diligence calls and management discussions and to facilitate site visits with Party X and Party U relating to the ESG Business and at key ESG Business sites, and with Boeing and Party A relating to the ASG Business and at key ASG Business sites.

        On March 19, 2018, a representative of Party Z contacted Goldman Sachs to indicate that Party Z would no longer participate in KLX's strategic review process.

        On March 21, 2018, Goldman Sachs sent letters to Boeing and Party A detailing the next steps in the process. These letters specified a deadline of April 4, 2018 (12:00 PM Eastern Time) for the submission of a final markup of the draft merger agreement previously provided to the bidders and a deadline of April 11, 2018 (12:00 PM Eastern Time) for the submission of a written definitive proposal to Goldman Sachs. This timeline was set, in part, based on indications received from both Boeing and Party A regarding the time they needed to complete their due diligence and, with respect to Party A, to finalize its financing arrangements. The letters indicated that a definitive offer should assume that (1) the ESG Business would be sold on a cash-free, debt-free basis with no post-closing adjustments to the purchase price and (2) the amount in cash provided to the ASG buyer on a sale of the ESG Business (with the balance, if any, to be for the account of KLX stockholders, as provided for in the draft merger agreement) would be $300 million. Further, the bidders were told that their definitive offers must include, in addition to the proposed purchase price, a description of all material assumptions on which the offer was based and sources and certainty of financing.

        On March 23, 2018, Goldman Sachs sent letters to the three bidders that were interested in acquiring the ESG Business (Party U, Party W and Party X). These letters specified a deadline of April 2, 2018 (12:00 PM Eastern Time) for the submission of a final mark-up of the draft equity purchase agreement previously provided to the bidders and a deadline of April 9, 2018 (12:00 PM Eastern Time) for the submission of a written definitive proposal to Goldman Sachs. These letters indicated that a definitive offer must clearly include: (1) the purchase price to be paid for the ESG

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Business on a cash-free, debt-free basis; (2) a description of all material assumptions on which the definitive offer was based; and (3) the sources and certainty of financing.

        On March 28, 2018, the KLX Board conducted a telephonic meeting, in which representatives of Goldman Sachs and Freshfields participated. Goldman Sachs provided an update on its work in connection with KLX's review of strategic alternatives, the two parties that submitted indications of interest for the ASG Business and the three parties that submitted indications of interest for the ESG Business and who remained in the ESG process, including a discussion of the due diligence activities engaged in by the respective bidders and management's participation therein. Goldman Sachs also presented financial analyses and information regarding KLX and the ASG Business and the ESG Business.

        The KLX Board engaged in a discussion with Goldman Sachs about the financial analyses and information provided and the two indications of interest received from Party A and Boeing, including a discussion of the likely treatment of the price to be received for the ESG Business and about the analysis that Goldman Sachs had performed on each of the bids.

        Mr. Khoury then requested that Goldman Sachs leave the meeting so that the KLX Board and Freshfields could discuss a letter provided by Goldman Sachs, which summarized the nature of Goldman Sachs's relationships with bidders that remained in the process as of March 23, 2018 (Boeing, Party A, Party W, Party X and Party U). The KLX Board, after discussion with Freshfields, concluded that none of the relationships disclosed would interfere with Goldman Sachs's ability to fulfill its responsibilities.

        During the first two weeks of April 2018, KLX continued to conduct due diligence calls and site visits with the five interested parties.

        On April 2, 2018, representatives of Freshfields held a telephonic meeting with representatives of Party A's outside counsel to discuss matters related to expenses and employees, including severance arrangements.

        On April 4, 2018, representatives of Freshfields held a call with outside counsel for Party X to discuss aspects of the equity purchase agreement, working capital matters, financing, indemnification, transaction expenses and certain matters related to employees.

        On April 5, 2018, representatives of KLX and representatives of Freshfields held a telephonic discussion with representatives of Party U and its outside counsel to discuss the capital expenditure plan and the operating budget for the ESG Business and Party U's request for a capital expenditures adjustment (which could impact the proceeds payable to KLX).

        On April 7, 2018, both Boeing and Party A submitted revised drafts of the merger agreement.

        On April 9, 2018, Party X submitted a definitive offer to Goldman Sachs for the purchase of the ESG Business. The definitive offer proposed to acquire 100% of the ESG Business for $250 million in cash, subject to certain assumptions related to the tax treatment of the transaction, working capital and capital expenditures. Party X also provided a draft of an equity commitment letter supporting the purchase price Party X offered and noted that, while it would ultimately seek other financing for the transaction, it would do so between signing and closing and that Party X would not subject the transaction to a financing contingency.

        On April 9, 2018, Freshfields held a call with Party A's outside counsel to discuss the merger agreement as revised by Party A, including certain mechanics related to the transaction structure and the process related to the sale of the ESG Business.

        On April 9, 2018, Freshfields held a call with representatives of Boeing and representatives of Kirkland to discuss the revised merger agreement Boeing submitted on April 7, 2018, including with

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respect to the sale of the ESG Business, termination fees and antitrust conditions, tax matters, conditions to closing and representations and warranties.

        On April 10, 2018, KLX received a draft of the equity purchase agreement from Party U with respect to the purchase of the ESG Business. Over the next few days, Party U also submitted various draft debt commitment papers related to its anticipated proposal. None of the draft debt commitment letters submitted was in final form, and most contained various contingencies. The revised draft equity purchase agreement from Party U provided for a purchase price of $305 million, subject to a capital expenditures adjustment.

        On April 11, 2018, representatives of Freshfields held a telephonic discussion with Party X's outside counsel to discuss the equity purchase agreement as revised by Party X, including purchase price adjustments, antitrust issues, closing conditions, termination fees and indemnities.

        On April 12, 2018, representatives of Freshfields held a telephonic discussion with representatives of Party U and its outside counsel to receive an update on the sources and status of Party U's financing.

        On April 13, 2018, KLX received a revised offer from Boeing, proposing to purchase 100% of the issued and outstanding shares of common stock of KLX for $69.00 per share, representing an enterprise value of $4.4 billion. This offer assumed (i) at least $300 million of net cash proceeds from the sale of the ESG Business and (ii) the absence of any post-transaction liabilities or obligations in respect of the ESG Business. Boeing stated that its revised offer reflected an increase of over $3.00 per share over its initial proposal, which had assumed that KLX would obtain $400 million in net proceeds from the sale of the ESG Business and did not reflect a number of additional costs that Boeing stated it had identified since its initial proposal. In light of these adjustments, Boeing stated its belief that the revised offer represented an approximately 5% improvement over its initial proposal.

        On April 13, 2018, a representative of Goldman Sachs provided an update to KLX management regarding a discussion with Boeing about the purchase price in Boeing's revised offer for the ASG Business, in which Goldman Sachs had communicated to Boeing that Boeing's offer did not fully reflect the highest value for KLX.

        On April 13, 2018, a representative from Goldman Sachs had a discussion with a representative of Party A regarding the status of Party A's due diligence, financing and revised offer for the ASG Business. The representative of Party A indicated that Party A would likely submit an offer in a range from $69.00 - $69.50 per share for KLX (assuming receipt of $300 million from the sale of the ESG Business) but that it was still in the process of securing its financing.

        On April 13, 2018, the KLX Board conducted a telephonic meeting. KLX management and representatives of Goldman Sachs and Freshfields also participated. Freshfields reviewed the fiduciary duties of the KLX Board under Delaware law. Goldman Sachs provided an update with respect to the activities undertaken with Boeing and Party A and the two parties that submitted formal bids for the ESG Business (Party U and Party X). The KLX Board also discussed differences in the nature of the bidders and their offers, the regulatory analysis of Boeing's bid in light of its participation in the industry and Party A's need for financing. The KLX Board engaged in a discussion with Goldman Sachs about the current offer valuations for the ASG Business and the ongoing discussion with Boeing and Party A. Goldman Sachs provided an update on the revised offer received from Boeing earlier that day, as well as on the discussions with Party A regarding its likely offer range. Goldman Sachs noted that Boeing indicated it could act quickly and only had confirmatory due diligence remaining, whereas Party A had not yet submitted a formal offer and had requested an additional two weeks in which to finalize its financing and complete further due diligence. Goldman Sachs further noted that Boeing's revised offer requested a period of exclusivity through April 25, 2018.

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        Goldman Sachs also provided an overview of the formal bids received from Party U and Party X for the ESG Business. The KLX Board engaged in a discussion with Goldman Sachs about the current offer valuations for the ESG Business, the certainty to closing of each based on the financing commitments received and the ongoing discussions with Party U and Party X. Goldman Sachs also presented to the KLX Board an updated analysis of KLX's historical stock performance.

        During this telephonic meeting, Mr. Khoury suggested that, in light of the disappointing bids received for the ESG Business relative to public market valuations for comparable companies, especially in the context of the positive outlook for the ESG Business, an alternative to the sale of the ESG Business ought to be considered in the form of a spin-off of the ESG Business, as that could potentially deliver more value to KLX stockholders. The KLX Board engaged in a discussion with Goldman Sachs about the potential value to stockholders represented by the spin-off, such as the potential for future value increases assuming continued market improvement, possible downsides to pursuing a spin-off, such as uncertainty in the energy market and how the timing of a spin-off might affect a strategic transaction for the ASG Business. Freshfields also answered questions regarding the KLX Board's fiduciary duties under Delaware law. After such discussion, the KLX Board expressed support for exploring a potential spin-off of the ESG Business while continuing discussions with Party X and Party U.

        At the end of the meeting, the KLX Board proposed that Goldman Sachs revert to the participants in the strategic review process and indicate that KLX expected to see upward price revisions in revised offers to be submitted alongside further revised draft merger agreements and equity purchase agreements. The KLX Board discussed whether Goldman Sachs should give the parties a range of valuations to meet and noted that Goldman Sachs should encourage Party A to finalize any work outstanding so it could submit a formal offer. The KLX Board further proposed that Goldman Sachs consider potential scenarios related to the contemplated spin-off transaction of the ESG Business and that Freshfields begin to explore the regulatory requirements associated with that contemplated transaction.

        On April 15, 2018, a representative from Goldman Sachs, after discussion with KLX management, indicated to a representative from Citi that Boeing should consider an upward price revision to at least $72.50 per share, and that KLX expected to be protected by a meaningful antitrust reverse termination fee in the event that Boeing failed to consummate the transaction after signing of the merger agreement for regulatory reasons. On April 16, 2018, a representative from Goldman Sachs indicated to a representative from Party A that the process was quickly moving forward with another bidder and urged Party A to finalize any outstanding work so that it could submit a finalized offer as soon as possible.

        On April 15, 2018, Freshfields also sent revised versions of the equity purchase agreement to the two parties interested in the ESG Business (Party X and Party U).

        On April 16, 2018, a representative from Citi spoke to a representative from Goldman Sachs and stated that Boeing would raise its offer to $70.00 per share (assuming $300 million in net proceeds from the sale of the ESG Business and Boeing retaining the value of any tax benefits that would arise from the sale of the ESG Business), subject to termination fees and other material transaction terms being negotiated and KLX granting Boeing exclusivity through April 27, 2018 with respect to a sale of the ASG Business. That same day, Citi sent an exclusivity letter to Goldman Sachs, which provided that KLX would negotiate a sale of the ASG Business on an exclusive basis with Boeing and cease all existing discussions and negotiations with any other entity with respect to a strategic transaction related to the ASG Business (but specifically excluding discussions relating to the ESG Business).

        Goldman Sachs updated KLX management and Freshfields regarding its call with the representative of Citi. KLX management instructed Goldman Sachs to respond asking for a revised draft of the merger agreement from Boeing and to negotiate for a purchase price of $71.00 per share.

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        Following that discussion, a representative from Goldman Sachs called a representative from Citi to propose an offer of $71.00 per share for KLX and to request Boeing's revised draft of the merger agreement. The representative from Citi stated that Boeing would not increase its offer beyond $70.00 per share for KLX and indicated that Boeing's comments to the merger agreement would be forthcoming.

        On April 16, 2018, Party A submitted a revised draft of the merger agreement but did not submit a bid for the purchase of the ASG Business. In a discussion with Goldman Sachs, Party A indicated that it needed additional time to secure its financing and reiterated that its potential bid would likely be in the range of $69.00 - $69.50 per share.

        On April 17, 2018, a representative from Goldman Sachs spoke with Party A and told them that KLX had received a higher offer from another party. Party A indicated to Goldman Sachs that, at that time, it was still unable to make a definitive bid and that it expected its offer would be $69.50 per share.

        On April 17, 2018, a representative of Citi indicated to a representative of Goldman Sachs that Boeing wanted to participate in face-to-face negotiations with KLX and its advisors and reaffirmed that Boeing was willing to work quickly to execute definitive documentation if it was granted exclusivity.

        Later that day, a representative of Goldman Sachs spoke again with a representative of Citi, at which point the Citi representative stated that Boeing would not meet with KLX in person unless KLX agreed to enter into an exclusivity agreement with Boeing continuing through April 27, 2018, as previously proposed.

        Goldman Sachs subsequently communicated to Party A on April 17, 2018 that KLX was considering entering into an exclusivity agreement with another bidder. Party A reiterated that it needed further time to finalize its financing and remained unable to submit a definitive bid at such time.

        Also later on April 17, 2018, KLX management and representatives from Goldman Sachs and Freshfields discussed the request from Boeing to enter into an exclusivity agreement. The participants discussed Party A's inability to submit a definitive bid at such time and the lack of certainty of the offer price from Party A due to the extent and nature of Party A's financing. Those factors were weighed against Boeing's offer and Boeing's readiness to move quickly towards executing a definitive merger agreement. After this discussion, Mr. Khoury communicated with each of the members of the KLX Board individually and informed them that KLX intended to execute an exclusivity agreement with Boeing, pursuant to which KLX and its representatives would agree to cease all existing negotiations, discussions and communications with any other person or entity with respect to any alternative strategic transaction (to that being contemplated with Boeing), other than a transaction involving solely the ESG Business, until 11:59 PM (Eastern Time) on April 27, 2018. Later that day, KLX executed such exclusivity agreement with Boeing.

        Also on April 17, 2018, KLX management held a call with representatives from Goldman Sachs and Freshfields at which Goldman Sachs discussed the viability of and considerations related to the spin-off. Goldman Sachs discussed the ESG Business's anticipated revenue and EBITDA for 2018 and 2019, the expected reaction from the market following a possible announcement of a spin-off, comparable publicly traded entities and the potential costs associated with a spin-off.

        During this time period, revised proposals for the ESG Business were received. On April 17, 2018, Party U submitted a revised proposal for the ESG Business, which reflected a purchase price of $320 million and fewer requested capital expenditure adjustments. The funding for this proposal remained uncertain. On April 18, 2018, Party X submitted a revised offer, which reflected a purchase price of $325 million and contemplated additional financing. Both ESG bidders indicated to Goldman

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Sachs that their valuations were constrained as debt financing remained difficult for oilfield-related businesses.

        On April 18 and 19, 2018, KLX management met with representatives of Boeing (including Mr. Kent Fisher, Boeing's vice president of corporate development) at Freshfields' offices in New York. Representatives of Goldman Sachs, Freshfields, Citi and Kirkland also participated in these meetings.

        On the first day of meetings, KLX and Boeing discussed the potential spin-off of the ESG Business in light of disappointing offers received for the ESG Business, including the impact of any such spin-off on the proposed transaction terms. The parties also addressed open issues on the merger agreement and negotiated various provisions, including those dealing with termination fees, termination rights, conditions to closing, employee retention agreements, interim operating covenants and certain tax matters. In the context of various termination provisions, the parties negotiated termination fees (including a termination fee if the spin-off did not occur by January 11, 2019, if Boeing had already received regulatory approval for the merger). Boeing also agreed to a $175 million reverse termination fee in the event that antitrust approval was not obtained and to shorten the time period for regulatory approval from 18 months to 15 months.

        On April 18, 2018, Party A submitted a revised proposal to purchase KLX for $70.00 per share. This purchase price assumed $300 million in proceeds from a sale of the ESG Business as well as the retention by KLX of tax losses triggered by such sale. As KLX was bound by the exclusivity agreement with Boeing, neither KLX nor its representatives responded to this proposal.

        On April 19, 2018, during the morning of the second day of negotiations with Boeing, the KLX Board conducted a telephonic meeting in which KLX management and representatives of Goldman Sachs and Freshfields participated. Goldman Sachs reviewed the process that had been conducted to date and summarized the upward price movements in bids from Party A and Boeing that had occurred during the course of the process. Freshfields reviewed the fiduciary duties of the KLX Board under Delaware law. Mr. Khoury reviewed with the KLX Board Boeing's position that it would not increase its valuation further and that it would not meet or enter into further negotiations unless KLX agreed to negotiate exclusively with Boeing, that Party A had not yet submitted a formal bid and indicated it would need more time to finalize its bid, and, given those facts, KLX had entered into an exclusivity agreement with Boeing. Goldman Sachs provided an update to the KLX Board of the previous day's discussions with Boeing and its advisors.

        Goldman Sachs also provided the KLX Board with an update on the bid that Party A submitted on April 18, 2018. Goldman Sachs informed the KLX Board of its view that it was unlikely that Party A would be able to increase its offer given its financing structure, that it required any tax loss incurred upon a sale of ESG to remain as an asset of the ASG Business and that it was unaware from any conversations with KLX that a spin-off was being considered.

        The KLX Board then discussed how best to maximize the value of KLX's assets, the potential value represented by the proposed spin-off and the timing of the two transactions—a sale of KLX following either a sale of the ESG Business or a spin-off. Mr. Khoury also discussed the need to ensure that the ESG Business was well capitalized at the time of a spin-off and that the retention of tax attributes by the ESG Business would be of significant value to the ESG Business going forward, anticipating that these issues would be the subject of discussion in the second day of in-person negotiations with Boeing. KLX management and the KLX Board discussed the benefits of the timing of selling the ASG Business, given the strength of the aerospace industry and the attractive offer from Boeing, as well as the drawbacks to the timing of selling the ESG Business, given rapidly improving market conditions in the energy industry, the public market valuations of comparable companies based upon forecasted 2018 and 2019 financial performance and the positive outlook of the ESG Business in light of, among other things, updated EBITDA projections for that business. These factors were considered by the KLX Board and weighed against the bids received to date (which were impacted by

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the bidders' difficulties in obtaining financing due to the fact that their bids were based largely on performance during the trailing twelve month period and current quarter annualized financial results, as well as fixed asset liquidation values that, in each case, KLX management did not believe captured the current going concern value of the ESG Business or its prospects). This juxtaposition further informed the KLX Board's conclusion that the spin-off provided greater value to stockholders when compared with a sale of the ESG Business at this time. Members of the KLX Board expressed their support for the spin-off of the ESG Business.

        The KLX Board concluded the meeting by authorizing management to negotiate the best strategic transaction possible, assuming a spin-off of the ESG Business, subject in all cases to approval by the KLX Board of any changes in price and of final contractual terms.

        During the second day of negotiations between KLX and Boeing, the parties discussed the effect of a spin-off of the ESG Business on Boeing's offer of $70.00 per share for KLX, as Boeing would not receive $300 million in cash from an ESG sale that it had assumed and would not receive tax benefits related to such a sale that Boeing stated were also assumed in its proposed valuation. Management of KLX also discussed the need to capitalize the ESG Business at the time of the spin-off and its desire to maintain for the benefit of the ESG Business any tax losses generated upon the spin-off of the ESG Business. The parties agreed that, given the amount of cash from the sale of the ESG Business assumed in Boeing's offer for KLX, the price for KLX after giving effect to the spin-off was $64.00 per share. In negotiations, the parties agreed that the ESG Business could be capitalized with $50 million of cash prior to completing the spin-off and that any tax loss generated from the spin-off would be an asset of the ESG Business, provided that if a tax gain was generated in connection with the spin-off, the ESG Business would indemnify KLX for any taxes paid on such gain payable in either stock or cash, at the option of the ESG Business. Given those negotiations, the parties agreed that the per share offer price for KLX, assuming the spin-off with the benefit of the $50 million cash contribution and with the value of the tax loss to be for the account of the ESG Business, would be $63.00 per share.

        On April 20, 2018, the KLX Board conducted another telephonic meeting in which KLX management and representatives of Goldman Sachs and Freshfields also participated. During this meeting, Goldman Sachs and Freshfields updated the KLX Board on the negotiations that had taken place with Boeing in New York and on the agreements that had been reached, in particular with respect to (1) the per share price of $63.00, (2) the retention of the tax loss by the ESG Business for the benefit of KLX stockholders (which KLX management believed would shelter $32 million per year of income over the next nine years) and (3) the fact that KLX would capitalize the ESG Business with $50 million in connection with the spin-off. During the meeting, the KLX Board was informed that Boeing requested an extension of the exclusivity agreement from Friday (April 27, 2018) to Monday (April 30, 2018). Mr. Khoury informed the KLX Board that the Chairman and CEO of Boeing, Mr. Dennis A. Muilenburg, had called him the day before to express his support for the prospect of adding KLX to Boeing's business.

        In order to preserve the progress achieved through the in-person negotiations with Boeing and in recognition of the time required to finalize a strategic transaction, the KLX Board voted to authorize management to continue to negotiate a sale of the ASG Business to Boeing and to extend the exclusivity agreement with Boeing so that it would expire at 11:59 PM (Eastern Time) on April 30, 2018. In making such determination, the KLX Board considered, among other things, the terms and viability of Party A's bid, the progress in the negotiations with Boeing and the uncertainty that would ensue if the exclusivity period expired and KLX re-engaged with Party A.

        On April 20, 2018, and over the course of the next several days, KLX granted certain Boeing personnel access to the virtual data room's "clean room" in order to finalize its due diligence.

        On April 21, 2018, Boeing and KLX executed an extension of the exclusivity letter previously executed on April 17, 2018, which extended the period of exclusivity to 11:59 PM (Eastern Time) on

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April 30, 2018, in order to provide the parties time to complete negotiations with respect to a potential strategic transaction between KLX and Boeing.

        On April 23, 2018, members of Boeing's senior management contacted Mr. John Cuomo, Vice President and General Manager of the ASG Business, to discuss Mr. Cuomo's willingness to remain with KLX following the effective time of the merger. Mr. Cuomo retained Wilson Sonsini Goodrich & Rosati P.C. ("Wilson Sonsini") to advise him regarding the terms of any future employment with KLX following the effective time of the merger. Mr. Cuomo subsequently informed KLX management of the possibility that he would continue to work for KLX following the effective time of the merger.

        On April 23, 2018, Freshfields circulated to KLX, Boeing and Kirkland a list of outstanding issues to be negotiated between the parties. On April 24, 2018, Freshfields and representatives of KLX held a telephonic discussion regarding the issues list. In the afternoon of April 24, 2018, representatives of KLX, representatives of Freshfields, representatives of Boeing and representatives of Kirkland held another discussion on the issues list.

        On April 24, 2018, the representatives from KLX and Boeing discussed outstanding items in the merger agreement by phone. Both parties' legal counsel participated in the discussions.

        Between April 24, 2018 and April 27, 2018, Freshfields and Kirkland held a series of conference calls to discuss outstanding issues pertaining to antitrust filings, taxes and the transaction documents generally and exchanged a series of drafts of the merger agreement and ancillary agreements, including documentation affecting the spin-off. During this period, the open issues on which discussions between the parties focused included, among others: the timing of the spin-off; conditionality in the merger agreement; the ESG Business tax indemnity; transaction expenses; the necessity of operating the ESG Business in the ordinary course of business during the period between signing and closing; obtaining the consent of lenders under KLX's credit facility; and obtaining consent of KLX's noteholders under KLX's notes (in both cases, in order to permit the consummation of the spin-off earlier than at the closing of the merger); the right to cash flow generated in the ESG Business during the period between signing the merger agreement and the consummation of a potential transaction for the ESG Business; employee awards and severance matters; and the level of guaranteed employee compensation during a period following closing.

        On April 25, 2018, Mr. Fisher contacted Mr. Khoury to convey that Boeing wanted to terminate Mr. Khoury's consulting agreement with KLX, dated May 25, 2017, which would otherwise have become effective upon closing of the merger agreement. In exchange for terminating this consulting agreement, Boeing suggested that Mr. Khoury would receive a one-time cash payment, payable upon closing of the merger. Mr. Fisher stated that finalization of this arrangement was for Boeing a condition to signing the merger agreement. Mr. Khoury was represented in ensuing negotiations with Boeing by Paul, Weiss, Rifkind, Wharton & Garrison LLP ("Paul Weiss"). Paul Weiss also represented senior management of KLX in their discussions with the compensation committee of the KLX Board.

        On April 27, 2018, the KLX Board conducted a telephonic meeting. Representatives of Goldman Sachs and Freshfields also participated. The representatives of Goldman Sachs discussed in detail the financial features of the contemplated strategic transaction with Boeing. They provided financial analyses and information regarding KLX, the ASG Business, and the aerospace and defense industry, including recent transaction multiples data.

        Goldman Sachs also discussed the spin-off and the contemplated distribution of shares in a publicly traded entity comprising the ESG Business, including their expectations as to how shares in such a publicly traded entity would trade in the short-term and long-term. They discussed several methods of valuing the ESG Business and concluded that the spin-off represented a higher value to stockholders when compared to a sale based on the offers received from bidders for the ESG Business. The KLX Board then engaged in a discussion with Goldman Sachs about the overall value to

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stockholders represented by a merger and subsequent spin-off, other practical considerations involved in a spin-off as an alternative to a sale and how the timing of a spin-off would affect a strategic transaction for the ASG Business.

        Also at the meeting, Freshfields discussed the KLX Board's fiduciary duties under Delaware law, discussed in detail the transaction documents and provided an update on the progress of negotiations with Boeing. The presentation by Freshfields in respect of the transaction documents focused on, among other topics, potential regulatory risks associated with the transaction and how they had been addressed in the merger agreement, fiduciary protections included in the merger agreement and termination rights afforded to the parties. Freshfields also discussed the several ancillary agreements being negotiated in connection with the spin-off. Following each of the presentations by Goldman Sachs and Freshfields, the directors asked a number of questions and a discussion ensued. Following this discussion, Mr. Khoury advised that Boeing was interested in retaining Mr. Cuomo and confirmed Mr. Cuomo's willingness to remain with KLX pursuant to the terms of an employment agreement to be negotiated and executed at or immediately prior to signing of the merger agreement.

        On April 27, 2018, the compensation committee of the KLX Board held a telephonic meeting in which its independent counsel, Proskauer, participated. A representative of Proskauer began the meeting by previewing for the committee the proposed meeting agenda items regarding the consideration of potential transaction bonus payments to KLX senior management and reviewed with the committee their discussions of such payments at prior committee meetings held on February 16, 2018, March 6, 2018 and March 16, 2018. At these prior meetings, the committee had reviewed certain reports and analyses with its independent compensation consultant, Pearl Meyer, regarding transaction bonus market practice and the compensation the executives would otherwise be entitled to receive upon a change in control transaction pursuant to existing agreements. Freshfields participated at the beginning of the meeting to provide an update on communications between KLX and Boeing regarding potential transaction bonus payments to senior management under consideration by the committee. Freshfields reported that KLX had previously disclosed to Boeing that the compensation committee was considering a potential transaction bonus of up to one percent (1%) of the transaction value (including the value of the ESG Business spin-off or sale) and had made available to Boeing the Section 280G analyses and calculations relating to the proposed bonus payments (which analyses and calculations were previously prepared for KLX senior management and shared with compensation committee members), as well as a form of transaction bonus agreement that was being considered. The representative of Freshfields informed the committee that neither Boeing nor any of its representatives had objected to or raised any concerns regarding the proposed transaction bonus payments or the forms of agreements.

        Following Freshfields' departure from the meeting, the committee members continued their discussion regarding potential transaction bonus payments to senior management in connection with a strategic transaction with Boeing in recognition of KLX's strong performance and return to stockholders. Among other topics, the committee members agreed that, provided certain conditions were met, senior management should receive transaction bonuses payable at the close of the transaction in order to (1) reward senior management for their efforts towards the success of KLX and the returns to its stockholders, including a recognition of the financial return achieved for KLX stockholders by the proposed sale of the aeronautics portion of the business to Boeing and the introduction of the alternative approach of a spin-off of the ESG Business, (2) reward them for their willingness to enter into restrictive covenant agreements with KLX on terms satisfactory to Boeing, (3) incentivize senior management to facilitate the successful and satisfactory consummation of the transactions contemplated under the proposed merger agreement with Boeing, including a successful spin-off or sale of the ESG Business, and (4) retain senior management's services through the consummation of the merger and spin-off transactions. The approval of the transaction bonus payments

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was conditioned on the execution by KLX of the merger agreement with Boeing and Boeing not requiring a purchase price reduction in respect of such bonuses.

        Between April 24, 2018 and April 28, 2018, Mr. Cuomo and his counsel, Wilson Sonsini, negotiated with members of Boeing management regarding the terms of his future employment. On April 28, 2018, Mr. Cuomo notified KLX's senior management that he had accepted Boeing's offer of employment. On April 29, 2018, Mr. Cuomo formally accepted Boeing's offer by countersigning and delivering an offer letter outlining the terms of his employment.

        Over the weekend of April 27, 2018 to April 30, 2018, KLX, Boeing, Kirkland and Freshfields, and various combinations of the foregoing parties, held several negotiation and drafting calls to finalize the terms of the proposed transactions and resolve outstanding issues. The topics discussed over this weekend included, among other things: the operation of the ESG Business during the period between signing and closing; responsibility for transaction expenses associated with the spin-off and transaction expenses in general; the standard of the bring-down of certain representations and warranties; termination fees; tax-related indemnities associated with the spin-off; the requirement to obtain noteholder and lender consent in order to consummate the spin-off earlier than the closing of the merger; and employee compensation.

        In the afternoon of April 30, 2018, Freshfields circulated an execution version of the merger agreement to the KLX Board, KLX senior management and Goldman Sachs, which also included an update to previous drafts received and reviewed by the KLX Board.

        Later that day, the KLX Board conducted a telephonic meeting. Representatives of Goldman Sachs and Freshfields also participated in the meeting. Freshfields provided an overview of the negotiation process since the last board meeting and discussed changes made to the draft of the merger agreement since the last board meeting, including changes made to accommodate Boeing's specific requests in relation to the bring-down at closing of certain representations and warranties. Freshfields also provided an overview of changes in the merger agreement since the last board meeting relating to the treatment of KLX employees. During these discussions, the directors asked questions relating to specific terms in the merger agreement, including interim operating covenants, the treatment of employees, termination provisions, representations and warranties and conditions to closing. Freshfields also provided an overview of the changes to the distribution agreement and other ancillary agreements related to the spin-off and discussed transitional arrangements for the ESG Business if the spin-off occurred prior to the merger closing. Freshfields also informed the KLX Board that Boeing had recently requested that Mr. Khoury terminate his post-merger consulting arrangements for a sum to be paid at closing and that Boeing had stated that such an agreement on termination was a condition to it signing the merger agreement. Freshfields summarized the proposed terms of such termination and informed the KLX Board that such terms had been negotiated between Mr. Khoury's counsel Paul Weiss and Boeing's counsel Kirkland. The directors raised several questions pertaining to the terms of the agreements and the negotiation process. Freshfields then reviewed the Board's fiduciary duties under Delaware law.

        Goldman Sachs then reviewed with the KLX Board its financial analysis of the merger consideration provided for in the merger agreement and delivered to the KLX Board its oral opinion, which was subsequently confirmed in writing, to the effect that, as of such date and based upon and subject to the factors and assumptions set forth in its written opinion, the $63.00 in cash per share to be paid to the holders (other than Boeing and its affiliates) of shares of KLX common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders.

        After further discussion, the KLX Board approved the merger, the merger agreement, the spin-off, the ancillary agreements and the amendment to the employment agreement of the CEO of KLX, subject to finalization of the ancillary documents in a form satisfactory to management of KLX.

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        Later in the evening of April 30, 2018, KLX and Boeing executed and delivered the merger agreement.

        Early in the morning on May 1, 2018, KLX and Boeing each publicly announced the entry into the merger agreement.


Recommendation of the KLX Board and Reasons for the Merger

Recommendation of the KLX Board

        The KLX Board unanimously recommends that KLX stockholders vote "FOR" the merger proposal.

        By unanimous vote, the KLX Board, at a meeting held on April 30, 2018, with the advice and assistance of KLX management and KLX's legal counsel and financial advisor, determined that it is advisable and in the best interests of KLX and KLX stockholders to enter into the merger agreement and unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and resolved to recommend the adoption of the merger agreement by KLX stockholders and to submit the adoption of the merger agreement to a vote at a meeting of KLX stockholders. The KLX Board unanimously recommends that KLX stockholders vote "FOR" the merger proposal, "FOR" the named executive officer merger-related compensation proposal and "FOR" the adjournment proposal.

        When you consider the KLX Board's recommendation, you should be aware that KLX's directors and executive officers may have interests in the merger that may be different from, or in addition to, those of KLX stockholders. For more information about such interests, see below under the heading "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger."

    Reasons for the Merger

        In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement and the related spin-off transaction documents, the KLX Board consulted with KLX's senior management, its outside legal counsel and its financial advisor and considered a number of substantive factors and potential benefits of the merger. In recommending that KLX stockholders vote their shares of KLX common stock in favor of adoption of the merger agreement and the merger, the KLX Board considered the following material factors and potential benefits of the merger and the other transactions contemplated by the merger agreement (not necessarily in order of relative importance), each of which it believed supported its decision:

    The KLX Board's familiarity with KLX's business, operations, assets, properties, business strategy and competitive position, and the nature of the industries in which KLX operates, industry trends and economic and market conditions, both on a historical and on a prospective basis;

    The financial condition and prospects of KLX, as well as the risks involved in achieving those prospects and the risks and uncertainties associated with operating KLX's business, including:

    current industry dynamics and the future of the aerospace industry generally, including risks described in KLX's filings with the SEC;

    certain macroeconomic factors, including the impact of growth driven by air travel demand for OEM and aftermarket services, growth in U.S. defense spending budgets, improvements in the energy industry and how these factors impact KLX; and

    KLX's current financial plan;

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    The extensive and thorough process that KLX undertook to review its industry position and to evaluate its strategic alternatives, which KLX first disclosed publicly on December 22, 2017, and included the assistance of KLX's financial advisor, Goldman Sachs;

    That, prior to authorizing execution of the merger agreement, the KLX Board, with the assistance of management and advice from KLX's financial and legal advisors, had considered alternatives, including continuing to operate KLX under its current structure, approaching other potential acquisition targets and the possibility of strategic transactions involving the entire business or only a portion of the business with third parties (other than Boeing and including competitors), and in this regard, specifically considered the risks and uncertainties associated with each such alternative;

    Following review and consideration of KLX's business plan and the prospects of KLX on a standalone basis, as well as the prospects of KLX Energy Services after giving effect to the proposed transaction, the KLX Board's belief that the consummation of the merger and the spin-off would deliver superior value to KLX stockholders when compared to KLX on a standalone basis (taking into account the risks inherent in the stand-alone strategy, including with respect to the capital structure and scale of KLX on a stand-alone basis) and the pursuit of other potentially actionable strategies or transactions;

    The fact that, following extensive negotiations, KLX was able to increase Boeing's purchase price to $63.00 in cash for KLX (after giving effect to the spin-off), which, after consultation with its financial advisor, the KLX Board believes was the maximum price at which Boeing would transact;

    The KLX Board's assessment that the merger consideration of $63.00 per share in cash to be paid in the merger represented the highest valuation ascribed to the ASG Business in the process that KLX undertook to explore its strategic alternatives and was attractive in comparison to KLX's value on a standalone basis (in each case after giving effect to the spin-off);

    The fact that the per share value of $63.00 per share to be received by KLX stockholders pursuant to the merger represents a valuation of the ASG Business at a multiple of 15.7 times KLX's LTM EBITDA for the 2017 fiscal year and 14.3 times KLX's estimated adjusted EBITDA for the 2018 fiscal year.

    That the merger consideration would be paid solely in cash, which provides certainty and immediate liquidity and value to KLX stockholders and enabled KLX stockholders to realize an attractive per share equity value;

    The fact that no party submitted any proposal to acquire KLX that was not conditioned on the separate disposal of the ESG Business and that KLX preserved the ability to spin-off KLX Energy Services to KLX stockholders;

    The KLX Board's assessment that, after reviewing proposals from third parties to acquire the ESG Business, the KLX Energy Services common stock to be received by KLX stockholders in the spin-off represented the highest valuation ascribed to the ESG Business in the process that KLX undertook to explore its strategic alternatives and would provide such stockholders with the opportunity to continue to participate in any future earnings or growth of the ESG Business and to benefit from any appreciation in the value of the ESG Business, including any appreciation in value that could be realized as a result of improvements to the operations of the ESG Business or as a standalone strategic asset after the spin-off;

    The benefits that KLX and its advisors were able to obtain during extensive negotiations with Boeing, including, with respect to the ASG Business, a significant increase in Boeing's offer price per share (after giving effect to the spin-off) and improved terms of the merger agreement,

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      and with respect to the ESG Business, $50 million to capitalize KLX Energy Services prior to the spin-off and the retention of certain tax benefits by KLX Energy Services;

    The financial analyses reviewed and discussed with the KLX Board by representatives of KLX's financial advisor, Goldman Sachs, at numerous meetings of the KLX Board;

    Goldman Sachs' oral opinion rendered to the KLX Board on April 30, 2018, which was subsequently confirmed in writing, to the effect that, as of the date thereof and based upon and subject to the factors and assumptions set forth in Goldman Sachs' written opinion, the $63.00 in cash per share to be paid to the holders (other than Boeing and its affiliates) of shares of KLX common stock pursuant to the merger agreement was fair, from a financial point of view, to such holders, as more fully described below under the heading "The Merger Proposal (Proposal 1)—Opinion of Goldman Sachs & Co. LLC" and as set forth in the full text of such opinion attached to this proxy statement as Annex B;

    The business reputation and capabilities of Boeing and its management;

    The structure, terms and conditions of the merger, the merger agreement and related transaction documents, including:

    The ability of the KLX Board to withdraw or modify its recommendation of the merger or the merger agreement, or to recommend, adopt or approve a "Company Acquisition Proposal" that constitutes a "Superior Proposal" or upon the occurrence of an "Intervening Event" (as such terms are defined in the merger agreement and described in this proxy statement under the heading "The Merger Agreement—Restrictions on Solicitation of Acquisition Proposals"), in each case, if the failure to take such action would be inconsistent with the KLX Board's fiduciary duties and subject to payment by KLX of a termination fee of $105 million to Boeing (as discussed in this proxy statement under the headings "The Merger Agreement—Restrictions on Solicitation of Acquisition Proposals," "The Merger Agreement—Termination of the Merger Agreement" and "The Merger Agreement—Termination Fees and Expenses");

    The KLX Board's assessment that the termination fee described above was reasonable in light of, among other matters, the benefits of the merger to KLX stockholders, the number of parties whom Goldman Sachs contacted in connection with KLX's review of strategic alternatives, the number of parties who ultimately participated in KLX's strategic review process, the market range for such termination fees in similar transactions with similar facts and circumstances and that a termination fee of such size would not be a meaningful deterrent to third parties making alternative acquisition proposals;

    The fact that in the event of a failure of the merger to be consummated due to Boeing's failure to obtain antitrust clearance, Boeing will pay KLX a reverse termination fee of $175 million without KLX having to establish damages (as discussed in this proxy statement under the headings "The Merger Agreement—Termination of the Merger Agreement" and "The Merger Agreement—Termination Fees and Expenses");

    That there is no financing condition to the completion of the merger;

    That the merger agreement permitted KLX to sell the ESG Business to a third party in lieu of the spin-off at KLX's election made within 30 days of signing the merger agreement;

    The fact that the merger agreement has customary terms for the acquisition of a U.S. publicly traded company and was the product of extensive arm's-length negotiation by KLX and its professional advisors and Boeing and its professional advisors;

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      The fact that Boeing committed to providing KLX employees with continuation of certain benefits and salary for a period of time after the merger is completed; and

      That the merger agreement is subject to adoption by, and the merger is subject to the approval of, KLX stockholders;

    That KLX stockholders who vote against the merger may be entitled to demand appraisal of the fair value of their shares under the DGCL (as discussed in this proxy statement under the heading "The Merger Proposal (Proposal 1)—Appraisal Rights");

    That KLX Energy Services would be capitalized with $50 million cash prior to the spin-off and would have the ability to obtain further liquidity from equity and debt sources prior to or following the completion of the spin-off;

    That the merger agreement was unanimously approved by the KLX Board, which, with the exception of the Chairman and CEO, is comprised entirely of independent directors who are not employees of KLX or any of its subsidiaries, and which retained and received advice from KLX's outside financial and legal advisors in evaluating, negotiating and recommending the terms of the merger agreement; and

    The KLX Board's assessment that prolonging the strategic review process further could have resulted in the loss of a favorable opportunity to successfully consummate a transaction on terms favorable to KLX stockholders and would have distracted senior management from implementing KLX's business plan.

        The KLX Board also considered and balanced against the potential benefits of the merger and the other transactions contemplated by the merger agreement a number of uncertainties and risks concerning the merger and the other transactions contemplated by the merger agreement, including the following (not necessarily in order of relative importance):

    That the spin-off of the ESG Business would be taxable to KLX and that the spin-off and the merger will be taxable to KLX stockholders for U.S. federal income tax purposes;

    That, as KLX will no longer exist as an independent public company, KLX stockholders will forgo any future increase in the ASG Business's value that might result from the ASG Business's earnings or possible growth within KLX as an independent company;

    That it may not be possible to accurately estimate the value of KLX Energy Services common stock in advance of an active trading market for it;

    The possibility that the share price of KLX Energy Services could decline after the spin-off to KLX stockholders, reducing the overall value proposition of the transaction;

    That, under specified circumstances, KLX may be required to pay a termination fee in the event the merger agreement is terminated (as discussed in this proxy statement under the headings "The Merger Agreement—Termination of the Merger Agreement" and "The Merger Agreement—Termination Fees and Expenses");

    The possibility that the $105 million termination fee payable by KLX to Boeing if the KLX Board withdraws or modifies its recommendation of the merger or the merger agreement, or recommends, adopts or approves a "Company Acquisition Proposal" that constitutes a "Superior Proposal" or upon the occurrence of an "Intervening Event" (as such terms are defined in the merger agreement and described in this proxy statement under the heading "The Merger Agreement—Restrictions on Solicitation of Acquisition Proposals"), could discourage other potentially-interested parties from making a competing offer (although the KLX Board believed that all potentially interested parties were contacted in connection with KLX's review of its

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      strategic alternatives and the termination fee was reasonable in amount and would not unduly deter any other party that might be interested in making a competing proposal);

    The fact that KLX will only be able to distribute the shares of KLX Energy Services to KLX stockholders if it has sufficient surplus out of which such a distribution may be made as required under applicable law;

    The risk that the spin-off (or the sale of the ESG Business to a third party in lieu thereof if KLX had so elected within 30 days of the date of signing the merger agreement) could be completed, but the merger could fail to close such that KLX would continue to operate as a standalone company without the ESG Business and, in such scenario, that KLX's management bandwidth would be constrained running two separate publicly traded companies;

    The fact that the consummation of the spin-off prior to the completion of the merger will require the consent of the holders of KLX's 5.875% Senior Notes due 2022 and the consent of the lenders under KLX's credit agreement with JPMorgan Chase Bank;

    If the merger is not consummated, KLX will be required to pay its own expenses associated with the merger agreement and the transactions contemplated thereby;

    The significant costs involved in connection with entering into and completing the merger, the spin-off and the transactions contemplated thereby, and the substantial time and effort of management required to complete the merger, which may disrupt KLX's business operations;

    The risk that the announcement and pendency of the merger may harm relationships with KLX's employees, customers, suppliers and strategic partners and may divert management and employee attention away from the day-to-day operation of KLX's business;

    The restrictions on the conduct of KLX's business prior to the completion of the merger, which could delay or prevent KLX from realizing certain business opportunities or taking certain actions with respect to KLX's operations it would otherwise take absent the pending merger;

    That the merger and the related transactions require regulatory approval to complete such transactions and the risk that the applicable governmental agencies may seek to impose unfavorable terms or conditions, or otherwise fail to grant, such approvals;

    The fact that the $175 million reverse termination fee is only required to be paid by Boeing in certain instances where the merger agreement is terminated (as discussed in this proxy statement under the headings "The Merger Agreement—Termination of the Merger Agreement" and "The Merger Agreement—Termination Fees and Expenses");

    The possibility that the merger might be delayed or might not be consummated and the adverse impact such event would have on KLX and its business;

    That KLX stockholders may not approve the transaction;

    That, even if the merger agreement is adopted by, and the merger is approved by, KLX stockholders, there can be no assurance that all other conditions to the parties' obligations to complete the merger will be satisfied;

    That KLX's directors and executive officers may have interests in the merger that may be different from, or in addition to, those of KLX stockholders (for more information about such interests, see below under the heading "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger"); and

    Risks of the type and nature described under the section titled "Cautionary Statement Regarding Forward-Looking Statements."

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        While the KLX Board considered potentially positive and potentially negative factors, the KLX Board concluded that, overall, the potentially positive factors outweighed the potentially negative factors. Accordingly, the KLX Board unanimously determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, KLX and its stockholders.

        The foregoing discussion is not intended to be an exhaustive list of the information and factors considered by the KLX Board in its consideration of the merger, but includes the material positive factors and material negative factors considered by the KLX Board in that regard. In view of the number and variety of factors and the amount of information considered, the KLX Board did not find it practicable to, and did not make specific assessments of, quantify or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, individual members of the KLX Board may have given different weights to different factors. Based on the totality of the information presented, the KLX Board collectively reached the unanimous decision to approve and declare advisable the merger agreement and the merger in light of the factors described above and other factors that the members of the KLX Board felt were appropriate.

        Portions of this explanation of KLX's reasons for the merger and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled "Cautionary Statement Regarding Forward-Looking Statements."


Opinion of Goldman Sachs & Co. LLC

        At a meeting of the KLX Board held on April 30, 2018, Goldman Sachs rendered its oral opinion to the KLX Board, subsequently confirmed in writing, to the effect that, as of April 30, 2018 and based upon and subject to the factors and assumptions set forth therein, the $63.00 in cash per share to be paid to the holders (other than Boeing and its affiliates) of shares of KLX common stock pursuant to the merger agreement was fair from a financial point of view to such holders.

        The full text of the written opinion of Goldman Sachs, dated April 30, 2018, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. Goldman Sachs provided advisory services and its opinion for the information and assistance of the KLX Board in connection with its consideration of the merger. The Goldman Sachs opinion is not a recommendation as to how any holder of KLX common stock should vote with respect to the merger or any other matter.

        In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

    the merger agreement (including the attachments thereto);

    KLX's registration statement on Form 10 dated August 29, 2014 relating to the spin-off of KLX from B/E Aerospace, Inc.;

    annual reports to stockholders and Annual Reports on Form 10-K of KLX for the four fiscal years ended January 31, 2018;

    certain interim reports to stockholders and Quarterly Reports on Form 10-Q of KLX;

    certain other communications from KLX to its stockholders;

    certain publicly available research analyst reports for KLX;

    certain internal financial analyses and forecasts for KLX excluding the ESG Business prepared by its management, as approved for Goldman Sachs' use by KLX, which are referred to as the "Forecasts;" and

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    certain internal analyses prepared by the management of KLX relating to the net operating losses of KLX, as approved for Goldman Sachs' use by KLX, which are referred to as the "Tax Analyses."

        Goldman Sachs also held discussions with members of the senior management of KLX regarding their assessment of the past and current business operations, financial condition and future prospects of KLX; reviewed the reported price and trading activity for the shares of KLX common stock; compared certain financial and stock market information for KLX with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the distribution industry and the aerospace and defense industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

        For purposes of rendering its opinion, Goldman Sachs, with KLX's consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with KLX's consent that the Forecasts and the Tax Analyses were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of KLX. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of KLX or any of its subsidiaries, including KLX Energy Services, LLC, and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transactions contemplated by the merger agreement and the spin-off transaction agreements (which includes, among other things, the merger and the distribution to KLX's stockholders of the outstanding shares of common stock of KLX Energy Services in accordance with the terms of the distribution agreement (the "distribution" and, together with the merger, are referred to in this section and in the section captioned "Summary—Opinion of Goldman Sachs & Co. LLC" beginning on page 7 of this proxy statement collectively as the "transactions")) will be obtained without any adverse effect on KLX or on the expected benefits of the transactions in any way meaningful to its analysis. Goldman Sachs has also assumed that the transactions will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

        Goldman Sachs' opinion does not address the underlying business decision of KLX to engage in the transactions or the relative merits of the transactions as compared to any strategic alternatives that may be available to KLX, nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs' opinion addresses only the fairness from a financial point of view to the holders (other than Boeing and its affiliates) of shares of KLX common stock, as of the date of the opinion, of the $63.00 in cash per share to be paid to such holders pursuant to the merger agreement. Goldman Sachs' opinion does not express any view on, and does not address, any other term or aspect of the merger agreement or the transactions (including the distribution) or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transactions, including the spin-off transaction agreements, or any election made, or consideration payable, in connection therewith, the distribution, the fairness of the transactions to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of KLX, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of KLX, or class of such persons in connection with the transactions, whether relative to the $63.00 in cash per share to be paid to the holders (other than Boeing and its affiliates) of shares of KLX common stock pursuant to the merger agreement or otherwise. Goldman Sachs' opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of the date of, the

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opinion and, Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. In addition, Goldman Sachs does not express any opinion as to the prices at which the shares of KLX Energy Services will trade at any time or as to the impact of the transactions on the solvency or viability of KLX, KLX Energy Services or Boeing or the ability of KLX, KLX Energy Services or Boeing to pay their respective obligations when they come due. Goldman Sachs' opinion was approved by a fairness committee of Goldman Sachs.

        The following is a summary of the material financial analyses delivered by Goldman Sachs to the KLX Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs' financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before April 25, 2018 and is not necessarily indicative of current market conditions.

        Implied Multiples Analysis.    Goldman Sachs calculated the implied equity value of KLX, which we refer to as the "Implied Equity Value," by multiplying the $63.00 in cash price per share of KLX common stock to be paid pursuant to the merger agreement by the total number of fully diluted shares of KLX common stock as of April 23, 2018, calculated using information provided by KLX management and reflecting the treatment of any dilutive securities in accordance with the merger agreement. The Implied Equity Value was $3,261 million. Goldman Sachs then calculated the implied enterprise value of KLX, which we refer to as the "Implied Enterprise Value," by adding to the Implied Equity Value the amount of KLX's net debt (defined as total debt less cash and cash equivalents) of $945 million as of January 31, 2018, as provided by KLX management, and $50 million of cash to be contributed by KLX to KLX Energy Services prior to the closing of the merger to capitalize KLX Energy Services pursuant to the merger agreement. The Implied Enterprise Value was $4,256 million.

        Using that information, Goldman Sachs calculated the Implied Enterprise Value as a multiple of:

    KLX's earnings before interest, taxes, depreciation and amortization for the year ended January 31, 2018, as provided by KLX management, which is referred to below as "2017 EBITDA;"

    estimates of KLX's earnings before interest, taxes, depreciation and amortization, as adjusted to add back certain non-recurring items, which we refer to as "Adjusted EBITDA," for the year ending January 31, 2019, as derived from the Forecasts, which is referred to below as "2018 Adjusted EBITDA;" and

    estimates of KLX's earnings before interest, taxes, depreciation and amortization for the year ending January 31, 2020, as derived from the Forecasts, which is referred to below as "2019 EBITDA."

        The results of these calculations are as follows:

Implied Enterprise Value as a Multiple of:
  Multiple  

2017 EBITDA

    15.7x  

2018 Adjusted EBITDA

    14.3x  

2019 EBITDA

    13.2x  

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        Selected Companies Analysis.    Goldman Sachs reviewed and compared certain financial information for KLX to corresponding financial information, ratios and public market multiples for the following publicly traded companies in the distribution industry (referred to as "Distribution Peers") and the aerospace and defense industry (referred to as "Select MRO Player and Aerospace Supplier Peers" and, together with the Distribution Peers, collectively referred to as the "selected companies"):

    Distribution Peers:

    Applied Industrial Technologies, Inc.;

    Fastenal Company;

    Genuine Parts Company;

    MSC Industrial Direct Co., Inc.;

    Wesco Aircraft Holdings, Inc.;

    WESCO International, Inc.; and

    W.W. Grainger, Inc.

    Select MRO Player and Aerospace Supplier Peers:

    AAR Corp.;

    BBA Aviation Plc;

    Esterline Technologies Corporation;

    Heico Corporation;

    MTU Aero Engines Holding AG;

    Meggitt PLC;

    MOOG Inc.; and

    Woodward, Inc.

        Although none of the selected companies is directly comparable to KLX, the companies included were chosen because they are publicly traded companies with operations that for purposes of analysis may be considered similar to certain operations of KLX.

        Goldman Sachs calculated and compared various financial multiples and ratios based on information it obtained from SEC filings, Bloomberg market data and Institutional Brokers' Estimate System ("IBES") estimates as of April 25, 2018 and, in the case of KLX, both IBES estimates and the Forecasts. With respect to its analysis, Goldman Sachs calculated for KLX and the selected companies:

    Enterprise Value (which is defined as the equity value, calculated using the fully diluted number of shares, plus total debt, less total cash and cash equivalents), which we refer to as "EV;" and

    EV as multiples of, in the case of KLX, 2018 Adjusted EBITDA and 2019 EBITDA and, in the cases of the selected companies, estimated adjusted earnings before interest, taxes, depreciation and amortization, which we refer to as "adjusted EBITDA," calendarized for the years ended January 31, 2019 and January 31, 2020 (or, in the case of the adjusted EBITDA for Genuine Parts Company, December 31, 2019), which are referred to below in all cases as "2018 EV/adjusted EBITDA" and "2019 EV/adjusted EBITDA," respectively.

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        The results of these analyses are summarized as follows:

 
  2018 EV/adjusted
EBITDA
  2019 EV/adjusted
EBITDA(1)
 
 
  Range   Median   Range   Median  

Distribution Peers

    9.7x - 13.2x     11.2x     8.9x - 12.3x     10.3x  

Select MRO Player and Aerospace Supplier Peers

    8.6x - 23.1x     10.4x     8.0x - 21.4x     9.7x  

(1)
2019 EV/adjusted EBITDA multiple not available for Applied Industrial Technologies, Inc.

        Based on its review of the Distribution Peers and its professional judgment and experience, Goldman Sachs applied a reference range of 2018 EV/adjusted EBITDA multiples of 10.0x to 13.5x to KLX's 2018 Adjusted EBITDA to derive a reference valuation range per share of KLX common stock of $38.25 to $58.50 (rounded to the nearest $0.25).

        Based on its review of the Select MRO Player and Aerospace Supplier Peers and its professional judgment and experience, Goldman Sachs applied a reference range of 2018 EV/adjusted EBITDA multiples of 10.0x to 13.0x to KLX's 2018 Adjusted EBITDA to derive a valuation range per share of KLX common stock of $38.25 to $55.50 (rounded to the nearest $0.25).

        Illustrative Discounted Cash Flow Analysis.    Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on KLX. Using discount rates ranging from 9.0% to 10.0%, reflecting estimates of KLX's weighted average cost of capital, Goldman Sachs discounted to present value as of January 31, 2018 (i) estimates of unlevered free cash flow for KLX for the period from January 31, 2018 through January 31, 2023, as reflected in the Forecasts, and (ii) a range of illustrative terminal values for KLX, which were calculated by applying perpetuity growth rates ranging from 2.5% to 3.5% to a terminal year estimate of the unlevered free cash flow to be generated by KLX, as reflected in the Forecasts (which analysis implied exit terminal year Adjusted EBITDA (which is adjusted to add back stock-based compensation expense) multiples ranging from 9.5x to 13.0x). Goldman Sachs derived the illustrative discount rate range by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including the company's target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the company, as well as certain financial metrics for the U.S. financial markets generally. The range of perpetuity growth rates was estimated by Goldman Sachs utilizing its professional judgment and experience, taking into account the Forecasts and market expectations regarding long-term real growth of gross domestic product and inflation. In addition, using an illustrative discount rate of 9.5%, reflecting an estimate of KLX's weighted average cost of capital, Goldman Sachs discounted to present value as of January 31, 2018 the estimated cash tax benefits of KLX's federal net operating losses ("NOLs") and its amortization of goodwill for the period from January 31, 2018 through January 31, 2032, at an effective tax rate of 24% as per KLX management, as set forth in the Tax Analyses.

        Goldman Sachs then derived the range of illustrative enterprise values for KLX by adding the range of present values it derived above and the present value it derived for the estimated cash tax benefits of the federal NOLs and goodwill amortization. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for KLX the amount of net debt of KLX as of January 31, 2018, as provided by KLX management, and the amount of cash to be contributed to capitalize KLX Energy Services pursuant to the merger agreement, to derive a range of illustrative equity values for KLX. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding shares of KLX common stock, as provided by KLX

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management as of April 23, 2018, to derive a range of illustrative present values per share of KLX common stock ranging from $48.50 to $69.50 (rounded to the nearest $0.25).

        Selected Transactions Analysis.    Goldman Sachs analyzed certain information relating to the following selected transactions in the distribution and the aerospace and defense industries since 2006 using information obtained from public filings, press releases and Wall Street research. For each of the selected transactions, Goldman Sachs calculated and compared the enterprise value of the target company disclosed publicly at the time of the announcement as a multiple of the target company's adjusted EBITDA for the twelve-month period ended prior to the transaction's announcement, which is referred to below as "EV/LTM adjusted EBITDA." While none of the companies in the distribution or the aerospace and defense industries that participated in the selected transactions is directly comparable to KLX, the companies that participated in the selected transactions are companies with operations that, for the purposes of analysis, may be considered similar to certain of KLX's results, market size and product profile.

        The following tables present the results of these analyses:

    Distribution Selected Transactions:

Date Announced
  Target   Acquirer   EV/LTM adjusted EBITDA  

May 2006

  Aviall, Inc.   The Boeing Company     14.7x  

October 2007

  Hagemeyer, N.V.   Rexel S.A.     14.1x  

August 2014

  Berlin Packaging LLC   Oak Hill Capital Partners     14.0x  

July 2006

  DT Group A/S   Wolseley plc     11.7x  

May 2014

  The Hillman Companies, Inc.   CCMP Capital, LLC     11.6x  

January 2006

  Hughes Supply, Inc.   The Home Depot, Inc.     11.3x  

July 2015

  Interline Brands, Inc.   The Home Depot, Inc.     11.3x  

November 2017

  Stark Group   Lone Star Funds     10.3x  

June 2007

  HD Supply, Inc.   Bain Capital Partners, LLC, The Carlyle Group and Clayton, Dubilier & Rice, Inc.     10.2x (1)

April 2015

  ProBuild Holdings LLC   Builders FirstSource, Inc.     10.1x  

May 2012

  Interline Brands, Inc.   Goldman Sachs Capital Partners     9.7x  

September 2013

  Edgen Group Inc.   Sumitomo Corp.     9.5x  

August 2017

  Allied Building Products Corp.   Beacon Roofing Supply, Inc.     8.7x  

      Median     11.3x (2)

(1)
Based on an enterprise value at the time of announcement and that was later adjusted in August 2007 resulting in an EV/LTM adjusted EBITDA multiple of 8.4x.

(2)
Median of Distribution Selected Transactions involving strategic acquirers. The median EV/LTM adjusted EBITDA multiple of Distribution Selected Transactions involving sponsor acquirers is 10.9x. The overall median EV/LTM adjusted EBITDA multiple of Distribution Selected Transactions involving strategic acquirers and sponsor acquirers is 11.3x.

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    Aerospace and Defense Selected Transactions:

Date Announced
  Target   Acquirer   EV/LTM adjusted EBITDA  

May 2017

  Zodiac Aerospace S.A.   Safran S.A.     21.0x (1)

September 2017

  Rockwell Collins, Inc.   United Technologies Corp.     15.9x  

July 2015

  Cytec Industries Inc.   Solvay S.A.     15.2x  

September 2017

  Orbital ATK, Inc.   Northrop Grumman Corporation     14.3x  

October 2016

  B/E Aerospace, Inc.   Rockwell Collins, Inc.     14.0x (2)

March 2015

  RTI International Metals, Inc.   Alcoa Inc.     13.1x  

September 2010

  McKechnie Aerospace Holdings Inc.   TransDigm Group Incorporated     12.9x  

September 2011

  Goodrich Corp.   United Technologies Corp.     12.9x  

August 2013

  ARINC Inc.   Rockwell Collins, Inc.     12.6x  

August 2015

  Precision Castparts Corp.   Berkshire Hathaway Inc.     12.3x  

May 2014

  Aeroflex Holding Corp.   Cobham plc     11.4x  

December 2012

  Avio S.p.A.   General Electric Company     8.5x  

      Median     13.0x  

(1)
Based on EV/LTM adjusted EBITDA multiple for the year ended December 31, 2016 at the time of the transaction's initial announcement in January 2017. Target's adjusted EBITDA level depressed compared to historical levels due to underperformance of business. The terms of the transaction were revised in May 2017.

(2)
EV/LTM adjusted EBITDA multiple was 13.6x based on enterprise value of $8,300 million at the time of the transaction's announcement. At the transaction's closing, the EV/LTM adjusted EBITDA multiple was 14.0x based on an increased enterprise value of $8,600 million as a result of stock component of the consideration.

        Based on its review of the selected transactions in the distribution industry and its professional judgment and experience, Goldman Sachs applied an illustrative EV/LTM adjusted EBITDA multiple range of 10.0x to 15.0x to KLX's 2017 EBITDA, which indicated an implied valuation range per share of KLX common stock of $33.00 to $59.00 (rounded to the nearest $0.25).

        Based on its review of the selected transactions in the aerospace and defense industry and its professional judgment and experience, Goldman Sachs applied an illustrative EV/LTM adjusted EBITDA multiple range of 11.5x to 16.0x to KLX's 2017 EBITDA, which indicated an implied valuation range per share of KLX common stock of $40.75 to $64.25 (rounded to the nearest $0.25).

        The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs' opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to KLX or Boeing or the contemplated transaction.

        Goldman Sachs prepared these analyses for purposes of Goldman Sachs' providing its opinion to the KLX Board as to the fairness from a financial point of view to the holders (other than Boeing and its affiliates) of shares of KLX common stock, as of the date of the opinion, of the $63.00 in cash per share to be paid to such holders pursuant to the merger agreement. These analyses do not purport to

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be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of KLX, Boeing, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

        The merger consideration was determined through arm's-length negotiations between KLX and Boeing and was approved by the KLX Board. Goldman Sachs provided advice to KLX during these negotiations. Goldman Sachs did not, however, recommend any specific amount of consideration to KLX or the KLX Board or that any specific amount of consideration constituted the only appropriate consideration for the merger.

        As described above, Goldman Sachs' opinion to the KLX Board was one of many factors taken into consideration by the KLX Board in making its determination to approve the merger agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B.

        Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities in which they invest or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of KLX, Boeing, any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transactions. Goldman Sachs acted as financial advisor to KLX in connection with, and participated in certain of the negotiations leading to the transactions. During the two-year period ended April 30, 2018, the Investment Banking Division of Goldman Sachs has not been engaged by KLX or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs has received compensation. Goldman Sachs has provided certain financial advisory or underwriting services to Boeing and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted: as joint bookrunner in connection with the issuance of Boeing's 3.375% Global Notes due 2046 (aggregate principal amount of $400 million), 2.250% Global Notes due 2026 (aggregate principal amount of $400 million) and 1.875% Global Notes due 2023 (aggregate principal amount of $400 million) in May 2016; as joint bookrunner in connection with the issuance of Boeing's 3.650% Global Notes due 2047 (aggregate principal amount of $300 million), 2.800% Global Notes due 2027 (aggregate principal amount of $300 million) and 2.125% Global Notes due 2022 (aggregate principal amount of $300 million) in February 2017; and as joint bookrunner in connection with the issuance of Boeing's 3.625% Global Notes due 2048 (aggregate principal amount of $350 million), 3.550% Global Notes due 2038 (aggregate principal amount of $350 million), 3.250% Global Notes due 2028 (aggregate principal amount of $350 million) and 2.800% Global Notes due 2023 (aggregate principal amount of $350 million) in February 2018. During the two year period ended April 30, 2018, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to Boeing and/or its affiliates of approximately $1.2 million. Goldman Sachs may also in the future provide investment banking services to KLX, Boeing and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

        The KLX Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transactions. Pursuant to a letter agreement dated December 22, 2017 as amended April 24, 2018, KLX engaged Goldman Sachs to act as its financial advisor in connection with the contemplated transactions.

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The engagement letter between KLX and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of announcement, of approximately $33.5 million, $5.0 million of which became payable to Goldman Sachs upon the announcement of the execution of the merger agreement, $3.5 million of which is payable in connection with the spin-off, and the remainder of which is contingent upon consummation of the transactions. In addition, KLX has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys' fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.


Financial Projections

        KLX does not as a matter of course make public projections as to future performance, earnings or other results and is especially cautious of making financial forecasts for extended periods because of the unpredictability of the underlying assumptions and estimates. Our management has prepared certain non-public, unaudited, stand-alone, financial forecasts regarding KLX's anticipated future operations following the consummation of the spin-off, which we refer to as "Projections", described below. Our management provided the Projections to the KLX Board for review in connection with the KLX Board's evaluation of the proposed merger and directed Goldman Sachs, our financial advisor, to use and rely upon the Projections in connection with its financial analyses and opinion to the KLX Board as described above under "Opinion of Goldman Sachs & Co. LLC". Our management also provided a portion of the Projections to the prospective purchasers, including Boeing, that participated in the Company's process to review strategic alternatives.

        The Projections were developed for internal use and for our financial advisors, were not prepared with a view toward public disclosure and do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or U.S. Generally Accepted Accounting Principles ("GAAP"). Our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to the Projections and does not express an opinion or any form of assurance related thereto. The summaries of the Projections are not being included in this proxy statement to influence any KLX stockholder's decision whether to vote for the merger proposal, but are being included because they were made available to the KLX Board, Boeing and our financial advisors for their respective evaluation of the proposed merger.

        The Projections, while presented with numerical specificity, necessarily were based on numerous estimates, variables and assumptions that are inherently uncertain and many of which are beyond our control. Because the Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The assumptions upon which the Projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. The Projections also reflect assumptions as to certain business decisions that are subject to change. Furthermore, the Projections do not take into account any circumstances or events occurring after the date they were prepared, including the announcement of the potential acquisition of KLX by Boeing pursuant to the merger agreement or our compliance with our covenants under the merger agreement. Important factors that may affect actual results and result in the Projections not being achieved include, but are not limited to, the risk factors described in our annual report on Form 10-K for the fiscal year ended January 31, 2018, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, the Projections may be affected by our ability to achieve strategic goals, objectives and targets over the applicable period.

        The Projections are forward-looking statements. For information on factors that may cause our future financial results to materially vary, see the section entitled "Cautionary Statement Regarding Forward-Looking Statements" beginning on page 35 of this proxy statement.

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        There can be no assurance that the Projections would be realized following the consummation of the merger, and actual results may vary materially from those shown. The inclusion of the Projections in this proxy statement should not be regarded as an indication that we or any of our affiliates, advisors or representatives considered or consider the Projections to be predictive of actual future events, and they should not be relied upon as such. Neither we nor any of our affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the Projections, and none of them undertakes any obligation to update or otherwise revise or reconcile the Projections to reflect circumstances existing after the respective dates on which they were prepared or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are shown to be in error. We do not intend to make publicly available any update or other revision to the Projections, except as otherwise required by applicable law. Neither we nor any of our affiliates, advisors, officers, directors or representatives has made or makes any representation to any KLX stockholder or other person regarding our ultimate performance compared to the information contained in the Projections or that the Projections will be achieved. We have made no representation to Boeing in the merger agreement or otherwise concerning the accuracy or reliability of the Projections.

        Certain of the measures included in the Projections may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by KLX may not be comparable to similarly titled amounts used by other companies.

        The following table is a summary of the Projections:

 
  Fiscal Year(1)  
 
  2018   2019   2020   2021   2022  

Revenues

  $ 1,537   $ 1,575   $ 1,650   $ 1,733   $ 1,819  

EBITDA(2)

    298 (3)   322     347     373     400  

EBIT(2)

    263 (3)   285     310     335     361  

Free cash flow

    287 (4)   286     314     339     368  

Note:

(1)
The Company's fiscal year end is January 31.

(2)
EBITDA and EBIT include non-cash compensation expense.

(3)
2018 EBITDA and EBIT exclude one-time costs of $22 million associated with the transition of facility of the ASG Business.

(4)
2018 free cash flow adds back one-time costs of $22 million associated with the transition of facility of the ASG Business.

        EBITDA is a non-GAAP operating financial measure defined as earnings before interest, tax, depreciation and amortization.

        EBIT is a non-GAAP operating financial measure defined as earnings before interest and income taxes.

        Free cash flow is a non-GAAP operating financial measure defined as net cash flow from operations minus capital expenditures and excludes the effect of any interest expense.

        In addition, the following table shows the estimated amount of unlevered free cash flows of the ASG Business that were calculated by Goldman Sachs using the Projections and information provided by the management of KLX, which calculations were reviewed and approved by KLX for Goldman Sachs' use in connection with the illustrative discounted cash flow analyses as described above under

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"The Merger Proposal (Proposal 1)—Opinion of Goldman Sachs & Co. LLC" on page 67. These calculations were not included in the forecasted financial information provided to Boeing.

 
  Fiscal Year  
 
  2018   2019   2020   2021   2022  

Unlevered free cash flow

  $ 222   $ 222   $ 243   $ 260   $ 282  

        Unlevered free cash flow is a non-GAAP operating financial measure defined as tax-effected EBIT (which, for 2018 as noted above, excludes one-time costs of $22 million associated with the transition of facility of the ASG Business) plus depreciation and amortization, less capital expenditures and less changes in net working capital. The components are the same as free cash flow as set forth in the Projections except that EBIT is tax-effected in the calculation of unlevered free cash flow set forth above.


Interests of KLX's Executive Officers and Directors in the Merger

        In considering the recommendations of the KLX Board with respect to the merger, KLX stockholders should be aware of the benefits available to the executive officers and directors of KLX in connection with the merger. These individuals have certain interests in the merger that may be different from, or in addition to, the interests of KLX stockholders generally. The KLX Board was aware of these interests and considered them, among other matters, in making the recommendations included in this proxy statement.

Treatment of KLX Equity-Based Awards

        KLX's directors and executive officers have received awards of restricted stock, performance stock units and/or restricted stock units. The merger agreement provides that such outstanding equity-based awards issued under KLX's equity incentive plans will be treated as set forth below:

KLX Restricted Stock Awards.

        Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX Restricted Stock Award that is outstanding immediately prior to the effective time will, 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 KLX Restricted Stock Award will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX Restricted Stock Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest.

KLX PSU Awards and KLX RSU Awards.

        Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX PSU Award and each KLX RSU Award, in each case, subject to time-based, performance or other vesting restrictions, that is outstanding immediately prior to the effective time will, to the extent not vested, become fully vested, provided that to the extent that such award is subject to performance conditions, any performance conditions will be deemed to have been satisfied at the maximum level and (ii) each KLX PSU Award and KLX RSU Award, in each case, whether payable in cash or shares of KLX common stock, will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger

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consideration and the number of shares of KLX common stock represented by such KLX PSU Award or KLX RSU Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest. Any payment in respect of any KLX PSU Award and KLX RSU Award, in each case, which immediately prior to such cancellation was treated as "deferred compensation" subject to section 409A of the Internal Revenue Code will be converted to the merger consideration and paid on the applicable settlement date for such KLX RSU Award or KLX PSU Award if required in order to comply with section 409A of the Internal Revenue Code.

2018 KLX Equity Awards.

        In accordance with the merger agreement, KLX may grant its 2018 Awards to its employees under the LTIP in the ordinary course of business consistent with past practice following the date of the merger agreement. However, in the event that the effective time of the merger occurs on or prior to the first anniversary of the grant date of the 2018 Awards, only one-third of the 2018 Awards will be accelerated in connection with the consummation of the merger and become eligible to receive the merger consideration, and the remaining two-thirds will be forfeited for no consideration.

Effect of Spin-off on Equity Awards.

        At the time of the spin-off, then outstanding unvested KLX equity-based awards granted prior to the date of the spin-off will be equitably adjusted to reflect the dilutive impact of the spin-off but will otherwise not participate in the spin-off. Following the spin-off, all outstanding unvested KLX equity-based awards held by KLX employees and KLX Energy Services employees will continue to vest in accordance with their terms based on their respective holders' continued service with KLX or KLX Energy Services, as applicable.

        The value of KLX Restricted Stock Awards, PSU Awards and RSU Awards, in each case, held by KLX's executive officers and directors and to be cashed out in the merger (assuming the effective time of the merger occurs on May 25, 2018), is included in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

Transaction Bonus and Noncompetition Agreements.

        In connection with ensuring that the interests of KLX stockholders and KLX's senior executives are aligned in the event of a transaction that would constitute a change of control of KLX, as KLX had previously disclosed in its annual proxy statement to KLX stockholders, the compensation committee and the KLX Board have each previously concluded that it would favorably consider a discretionary transaction bonus at such time for certain senior executives of KLX. Accordingly, on April 30, 2018, KLX entered into transaction bonus and noncompetition agreements with each of Amin Khoury, Tom McCaffrey, Mike Senft and Roger Franks. The transaction bonus agreements provide that, upon and subject to the completion of the merger, Messrs. Khoury, McCaffrey, Senft and Franks will receive transaction bonuses equal to $20,720,000, $9,620,000, $3,330,000 and $3,330,000, respectively. The transaction bonus agreements provide that, during each of the executives' employment with KLX and for a period of three (3) years subsequent to each of the executives' termination of employment with KLX, the executives will not engage in any employment, consulting or other activity in any business directly competitive with KLX's operations and services as of the date of the effective time, without KLX's written consent, which consent will not be unreasonably withheld, except that the executives are not precluded from serving as a director of any corporation or a partner or investor in any private equity firm. The transaction bonus agreements also provide the executives with fully paid customary and market outplacement services following their termination of employment for a period of up to 12 months.

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        In the event that Messrs. Khoury, McCaffrey, Senft or Franks experiences a termination of employment due to death or "incapacity," terminates their employment with KLX for "good reason" or is terminated prior to the effective time by KLX for any reason other than for "cause" (in each case, as such term is defined in the applicable executive's employment agreement), the transaction bonus agreements provide that such terminated executive will remain eligible to receive the transaction bonus. Payment of the transaction bonuses is conditioned upon the completion of the merger on or prior to December 31, 2019.

        The value of the transaction bonuses for Messrs. Khoury, McCaffrey, Senft and Franks (assuming, and subject to, the effective time of the merger occurring on or prior to December 31, 2019) is included in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

Annual Incentive Award.

        The compensation committee of the KLX Board may, in its sole discretion, authorize the cash payment of a pro rata annual bonus under KLX's annual incentive plan to each of Messrs. McCaffrey, Senft and Franks for the fiscal year in which the effective time of the merger occurs, in respect of the period of active service of such executives for such fiscal year, the amount of which is to be determined assuming the annualization of KLX's performance for the portion of the fiscal year in which the effective time occurs. Any such pro rata annual bonus will be payable by KLX in cash upon the effective time.

        The value of the pro rata annual bonus to each of Messrs. McCaffrey, Senft and Franks (assuming the effective time of the merger occurs on May 25, 2018, which is the latest practicable date prior to the filing of this proxy statement), is included in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

Employment Agreements and Amendment.

        KLX is a party to amended and restated employment agreements with each of Messrs. Khoury, McCaffrey, Senft, Franks and John Cuomo. Pursuant to the employment agreements, as of the effective time, each of Messrs. Khoury's, McCaffrey's, Senft's, Cuomo's and Franks' employment with KLX will terminate, and each will receive (i) any accrued and unpaid salary and benefits (including automobile allowance and vacation for each executive, other than Mr. Khoury) through the date of termination, (ii) any earned but unpaid bonuses for any fiscal periods ending prior to the date of termination and (iii) a lump-sum amount equal to the sum of (A) a prorated portion of 75% of the executive's then current base salary (175%, in the case of Mr. Khoury, and 150%, in the case of Mr. McCaffrey), with the prorated amount to be determined in respect of the period of active service for the fiscal year during which the termination date occurs, (B) the executive's base salary for the remainder of the employment term, (C) in the case of Messrs. Khoury, McCaffrey and Senft, the retirement contributions that would have been made during the remainder of the employment term (which, for Mr. Khoury, will be at the rate in effect on January 31, 2017) and in the case of Messrs. Cuomo and Franks, the maximum annual contribution under KLX's deferred compensation plan of 7.5% of Messrs. Cuomo's and Franks' total base salary and annual cash bonus that would have been made during the remainder of the employment period (determined in accordance with the terms of the applicable deferred compensation plan) and (D) two times the executive's target bonus. In addition to the foregoing payments and benefits, Mr. Khoury will be entitled to a pro rata portion of his annual bonus for the fiscal year in which the effective time of the merger occurs in respect of the period of his active service for such fiscal year, based on assumed performance achievement at the maximum performance pay out level applicable for the fiscal year of termination. In addition, any equity awards

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granted to the executives that would not have vested on or prior to the termination date will receive the treatment of KLX equity-based awards as described above in the section captioned "The Merger Agreement—Treatment of KLX Equity Awards" beginning on page 92 of this proxy statement.

        On April 30, 2018, at the request of Boeing and as a condition to Boeing's execution of the merger agreement, KLX entered into an employment agreement amendment with Mr. Khoury, effective upon, and subject to, the completion of the merger. The employment agreement amendment addresses certain matters relating to Mr. Khoury's contemplated employment by KLX Energy Services, as well as the elimination of KLX's and Mr. Khoury's obligations pursuant to the consulting agreement by and between KLX and Mr. Khoury, which would otherwise have become effective for a period of five years following Mr. Khoury's termination of employment. In consideration for the elimination of the consulting arrangement and the valuable benefits to which Mr. Khoury otherwise would have been entitled thereunder, Mr. Khoury agreed to accept a lump sum cash payment of $7,500,000.

        The value of the severance payments and benefits, and the value of payments to be made pursuant to the employment agreement amendment (assuming the effective time of the merger occurs on May 25, 2018, which is the latest practicable date prior to the filing of this proxy statement), is included in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

Change of Control Severance Plan.

        The KLX Board adopted the Change in Control Severance Plan for Corporate Level Employees, which provides certain executive officers, other than the named executive officers, with financial assistance in the event that they experience a qualifying termination of employment within a specified period following the effective time of the merger. Qualifying terminations of employment under the plan include terminations of employment by KLX without "cause" (other than due to the executive officer's death or disability) or by the eligible executive officer with "good reason" (in each case, as defined in the plan). If an eligible executive officer has an effective and executed agreement with KLX or its affiliates that provides for specific severance in connection with a termination of employment that are in addition to the benefits provided by the plan, the payments and benefits provided by the plan will be reduced by the payments and benefits under such agreement. In the event that certain KLX executive officers who are participants in the plan experience a qualifying termination of employment on or before the second anniversary of the effective time of the merger, such executive officers would be eligible to receive a lump sum payment equal to 24 months of their base salary.

        The value of the potential severance payments to KLX's executive officers pursuant to the plan (assuming the effective time of the merger occurs on May 25, 2018, which is the latest practicable date prior to the filing of this proxy statement, and a contemporaneous qualifying termination of employment) is included in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

KLX Inc. Deferred Compensation Plan.

        KLX sponsors the 2014 Deferred Compensation Plan, which is a nonqualified deferred compensation plan pursuant to which certain senior executives of KLX are eligible to defer a portion of their base salary, cash bonus and equity-based awards. Certain KLX contributions credited to the accounts of certain executive officers (other than the named executive officers) under the plan are subject to vesting restrictions that will lapse upon the completion of the merger. The accounts of all of our named executive officers are currently fully vested without regard to the pending merger.

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        The value of the accelerated amounts in respect of the accounts of certain executive officer participants in the plan (other than the named executive officers), assuming the effective time of the merger occurs on May 25, 2018, which is the latest practicable date prior to the filing of this proxy statement, is included in the table contained in "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement.

Summary of Potential Transaction Payments to Executive Officers and Directors of KLX.

        The following table indicates the dollar amounts potentially payable to KLX's executive officers and directors under the compensation arrangements described above upon the effective time of the merger, assuming the effective time of the merger occurs on May 25, 2018, which is the latest practicable date prior to the filing of this proxy statement, and a contemporaneous qualifying termination of employment.


Merger-Related Compensation Table

 
  Cash(1)   Equity(2)   Pension/
NQDC(3)
  Perquisites/
Benefits(4)
  Total  

Executive Officer

                               

Amin J. Khoury
Chairman and Chief Executive Officer

  $ 40,904,472   $ 27,209,744       $ 30,000   $ 68,144,216  

Thomas P. McCaffrey
President and Chief Operating Officer

  $ 16,745,313   $ 17,853,569       $ 30,000   $ 34,628,882  

Michael F. Senft
Vice President—Chief Financial Officer

  $ 7,177,296   $ 5,655,354       $ 30,000   $ 12,862,650  

John Cuomo
Vice President and General Manager, Aerospace Solutions Group

  $ 2,254,590   $ 4,590,954       $ 8,000   $ 6,853,544  

Roger Franks
General Counsel, Vice President—Law and Human Resources, Secretary

  $ 5,594,186   $ 4,254,350       $ 151,000   $ 9,999,536  

All other executive officers as a group (3 individuals)(5)

  $ 2,818,195   $ 5,788,672   $ 181,923   $ 80,856   $ 8,869,646  

Non-Employee Directors(5)

   
 
   
 
   
 
   
 
   
 
 

John T. Collins

      $ 260,135           $ 260,135  

Peter V. Del Presto

      $ 257,533           $ 257,533  

Richard G. Hamermesh

      $ 234,469           $ 234,469  

Benjamin A. Hardesty

      $ 255,581           $ 255,581  

Stephen M. Ward, Jr

      $ 216,755           $ 216,755  

Theodore L. Weise

      $ 255,581           $ 255,581  

John T. Whates, Esq. 

      $ 258,183           $ 258,183  

(1)
Amounts in this column represent the value of (i) the potential cash severance payments payable upon a qualifying termination following the effective time of the merger under the employment agreements for Messrs. Khoury, McCaffrey, Senft, Cuomo and Franks, and all other executive officers as a group, assuming base salaries remain unchanged from current levels, in an amount equal to $12,684,472, $6,716,256, $3,646,737, $2,254,590, $2,090,976 and $2,818,195, respectively, (ii) the potential transaction bonuses to each of Messrs. Khoury, McCaffrey, Senft and Franks in an amount equal to $20,720,000, $9,620,000, $3,330,000 and $3,330,000, respectively, (iii) the contemplated pro rata annual bonus under KLX's annual incentive plan to each of

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    Messrs. McCaffrey, Senft and Franks for the fiscal year in which the effective time occurs, in an amount equal to $409,056, $200,559 and $173,210, respectively and (iv) in the case of Mr. Khoury, the lump sum cash payment of $7,500,000 in respect of the buy-out of the consulting arrangement, which was agreed to at the request of Boeing and as a condition to Boeing's execution of the merger agreement.

(2)
Amounts in this column represent the value of the accelerated vesting and payment, as applicable, of KLX equity awards as follows:

    Executive Officers

    Mr. Khoury: (i) $132,453 for the full accelerated vesting and payment of unvested restricted stock; (ii) $25,226,917 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $1,850,374 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    Mr. McCaffrey: (i) $3,276,347 for the full accelerated vesting and payment of unvested restricted stock; (ii) $13,394,876 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $1,182,346 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    Mr. Senft: (i) $893,483 for the full accelerated vesting and payment of unvested restricted stock; (ii) $4,336,193 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $425,678 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    Mr. Cuomo: (i) $1,150,148 for the full accelerated vesting and payment of unvested restricted stock; (ii) $3,100,803 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $340,003 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    Mr. Franks: (i) $783,371 for the full accelerated vesting and payment of unvested restricted stock; (ii) $3,155,823 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $315,156 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    All Other Executive Officers as a Group (3 individuals): (i) $2,109,497 for the full accelerated vesting and payment of unvested restricted stock; (ii) $3,266,876 for the accelerated vesting and payment of, performance stock unit awards and restricted stock unit awards, including any such awards deferred under any of KLX's deferred compensation plans; and (iii) $412,299 for the accelerated vesting and payment of one-third of the value of the contemplated 2018 Awards.

    Non-Employee Directors

    Amounts represent the value of the accelerated vesting and payment of unvested restricted stock.

    Such accelerated vesting and payment will occur solely as a result of the effective time of the merger, without regard to whether there is a corresponding termination of service. Consistent with the requirements of Instruction 1 to Item 402(t)(2) of Regulation S-K, the aggregate values

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    of the equity awards are based on the per share merger consideration of $63.00, and assuming an equitable adjustment to the number of shares underlying outstanding equity awards to reflect the dilutive impact of the spin-off, using an adjustment ratio of approximately 1.1476, based on the closing price of KLX common stock on the Nasdaq of $72.30 on May 25, 2018, the latest practicable date prior to the filing of this proxy statement.

(3)
This amount includes the value of the accelerated vesting of company contributions for two executive officers under the KLX Inc. Deferred Compensation Plan.

(4)
These amounts include the value of the in-kind benefits that may be provided upon a qualifying termination following the effective time of the merger, including outplacement services, continued health, dental, vision and life insurance benefits.

(5)
Not subject to non-binding advisory vote on named executive officer merger-related compensation.

John Cuomo Employment Agreement.

        On April 28, 2018, Boeing presented an offer letter to John A. Cuomo outlining the terms of his future employment (the "offer letter"). On April 29, 2018, Mr. Cuomo countersigned and delivered the offer letter. Pursuant to the offer letter, Mr. Cuomo would, subject to the satisfaction of certain employment requirements and contingent upon the closing of the merger, become employed as Vice President, Aerospace Services Group, with Boeing Global Services on an at-will basis. The offer letter sets forth Mr. Cuomo's annual base salary as well as target annual incentive opportunity and certain other benefits. Mr. Cuomo would also be eligible for grants of incentive equity that are subject to vesting requirements.

Indemnification of Directors and Executive Officers; Directors' and Officers' Insurance .

        Boeing and Merger Sub have agreed in the merger agreement 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 D&O Indemnified Parties as provided in KLX's certificate of incorporation and bylaws (in each case, as in effect on the date of the merger agreement) shall survive the merger and shall continue in full force and effect. For a period of six years from the effective time, the surviving corporation shall, and Boeing shall cause the surviving corporation to, maintain in effect the exculpation, indemnification and advancement of expenses equivalent to the provisions of KLX's 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.

        Prior to the effective time, KLX will (or, if KLX is unable to, after the effective time, Boeing will cause the surviving corporation to) purchase a six-year prepaid "tail" policy, with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under KLX'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 the merger agreement and the transactions or actions contemplated by the merger agreement), and Boeing will 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 under the merger agreement; provided, however, (i) that KLX will not pay, and the surviving corporation will not be required to pay, in excess of 300% of the last annual premium paid by KLX prior to the date of the merger agreement in respect of such "tail" policy and (ii) the material terms of such prepaid policies (including coverage and amount) are no

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more favorable in the aggregate to such D&O Indemnified Parties than the insurance coverage otherwise required in the prior paragraph above. If KLX or the surviving corporation for any reason fails to obtain such "tail" insurance policies prior to, as of or after the effective time, Boeing shall, for a period of six 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 KLX with respect to matters arising on or before the effective time; provided further, however, that after the effective time, neither the surviving corporation nor Boeing shall be required to pay annual premiums in excess of 300% of the last annual premium paid by KLX prior to the date of the merger agreement in respect of the coverage required to be obtained pursuant to the merger agreement, but in such case shall purchase as much coverage as reasonably practicable for such amount.

        The indemnification and insurance covenants described above are intended to be for the benefit of, and are enforceable by, each of the D&O Indemnified Parties and their respective heirs only if the merger 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.


Regulatory Clearances and Approvals Required for the Merger

U.S. Antitrust.

        Under the HSR Act, we cannot complete the merger until we have given notification and furnished information to the FTC and the Antitrust Division of the DOJ and until the applicable waiting period has expired or has been terminated. On May 14, 2018, KLX and Boeing each filed a premerger notification and report form under the HSR Act. KLX and Boeing are also required to obtain approvals, clearances or consents in several other countries before completing the merger. The parties will work cooperatively toward obtaining these regulatory clearances.

General.

        Under the merger agreement, each of the parties is required to use its reasonable best efforts to cooperate with each other and 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 the merger 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 by the merger agreement unless otherwise set forth in the merger agreement), and to cause the merger to be consummated as promptly as practicable in accordance with the terms of the merger agreement.

        In addition, each of the parties is required to 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.

        Notwithstanding the foregoing, Boeing is not required to propose, negotiate, commit to or effect, by consent decree, hold separate orders or otherwise, (i) the sale, divestiture, license or disposition, in whole or in part of, or suffer any restriction on the operation of, Boeing's or its subsidiaries' assets, properties or businesses or (ii) the sale, divestiture, license or disposition, in whole or part of any of KLX's assets, properties or businesses to be acquired by Boeing pursuant to the merger agreement.

        The approval of any regulatory application or completion of regulatory review merely implies the satisfaction of certain regulatory criteria, which do not include review of the merger from the

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standpoint of the adequacy of the consideration to be received by KLX stockholders. Further, regulatory approvals or reviews do not constitute an endorsement or recommendation of the merger.


Material U.S. Federal Income Tax Consequences of the Merger

        The merger will be treated as a taxable sale of KLX shares. You should read the section entitled "Material U.S. Federal Income Tax Consequences of the Merger" beginning on page 127 and consult your tax advisors regarding the U.S. tax consequences of the merger to you in your particular circumstances.

Accounting Treatment.

        The merger will be accounted for as a "purchase transaction" for purposes of financial accounting.


Delisting and Deregistration of KLX Common Stock

        As promptly as practicable following the completion of the merger, the shares of KLX common stock currently listed on Nasdaq will cease to be listed on Nasdaq and will be deregistered under the Exchange Act.


Appraisal Rights

        If the merger is completed, KLX stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided that they comply with the conditions and requirements established therein.

        Under Section 262 of the DGCL, KLX stockholders of record who do not wish to accept the merger consideration provided for in the merger agreement have the right to demand appraisal of their shares of KLX common stock and to receive payment in cash of the fair value of their shares of KLX common stock as of the effective time, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be such fair value (or, in certain circumstances described below, on the difference between the amount determined to be the fair value and the amount paid to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding), provided that they comply with the conditions and requirements established in Section 262 of the DGCL. The "fair value" per share of your shares of KLX common stock as determined by the Delaware Court of Chancery in an appraisal proceeding may be more or less than, or the same as, the merger consideration that you are otherwise entitled to receive under the terms of the merger agreement. KLX stockholders who do not vote in favor of the merger proposal who properly demand appraisal for their shares in compliance with the provisions of Section 262 of the DGCL, who do not withdraw such demand or otherwise waive or lose their right to appraisal and who comply with the other requirements to exercise appraisal rights under the DGCL will be entitled to appraisal rights under the DGCL. Strict compliance with the statutory procedures in Section 262 of the DGCL is required. Failure to follow precisely any of the statutory requirements may result in the loss of your appraisal rights.

        This section is intended only as a brief summary of certain provisions of the Delaware statutory procedures that a stockholder must follow in order to seek and perfect appraisal rights. We urge you to carefully read Section 262 of the DGCL, which is attached to this proxy statement as Annex C, in its entirety for a more complete understanding of the Delaware statutory procedures that a stockholder must follow in order to seek and perfect appraisal rights. The following summary does not constitute any legal or other advice, nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262 of the DGCL.

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        Under Section 262 of the DGCL, where a merger agreement is to be submitted for adoption at a meeting of stockholders, KLX must notify the stockholders who were stockholders of record on the record date for notice of such meeting with respect to shares for which appraisal rights are available, not less than 20 days before the meeting to vote on the merger, that appraisal rights will be available. A copy of Section 262 of the DGCL must be included with such notice. This proxy statement constitutes KLX's notice to our stockholders that appraisal rights are available in connection with the merger and the full text of Section 262 of the DGCL is attached to this proxy statement as Annex C, in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL contained in Annex C. Failure to comply timely and properly with the requirements of Section 262 of the DGCL may result in the loss of your appraisal rights under the DGCL. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of KLX common stock, KLX believes that if a stockholder is considering exercising such rights, such stockholder should seek the advice of legal counsel.

        If you wish to demand appraisal of your shares of KLX common stock, you must satisfy each of the following conditions:

    you must deliver to KLX a written demand for appraisal of your shares of KLX common stock before the vote is taken to approve the merger proposal, which must reasonably inform us of the identity of the holder of record of shares of KLX common stock who intends to demand appraisal of his, her or its shares of KLX common stock;

    you must not vote or submit a proxy in favor of the merger proposal;

    you must hold your shares on the date of making the demand for appraisal and must continuously hold such shares through the effective time of the merger; and

    you (or the surviving corporation) must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares of KLX common stock within 120 days after the effective time. The surviving corporation is under no obligation to file any such petition and has no present intention of doing so. Accordingly, it is your obligation to initiate all necessary action to perfect your appraisal rights in respect of your shares of KLX common stock within the time prescribed in Section 262 of the DGCL.

        If you fail to comply with any of these four conditions and the merger is completed, your shares of KLX common stock will be converted into the right to receive payment of the merger consideration for your shares of KLX common stock as provided for in the merger agreement, but you will lose your appraisal rights with respect to your shares of KLX common stock.

        A holder of shares of KLX common stock wishing to exercise appraisal rights must hold of record the shares of KLX common stock on the date the written demand for appraisal is made and must continue to hold the shares of KLX common stock of record through the effective time. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted "FOR" the merger proposal, and it will result in the loss of the stockholder's right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must either submit a proxy containing instructions to vote "AGAINST" the merger proposal or abstain from voting on the merger proposal. Voting against or failing to vote for the merger proposal by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote on the merger proposal.

        All demands for appraisal should be addressed to KLX Inc., 1300 Corporate Center Way, Wellington, Florida 33414, and must be delivered before the vote is taken to approve the merger proposal at the special meeting and must be executed by, or on behalf of, the record holder of the

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shares of KLX common stock for which appraisal is demanded. The demand must reasonably inform KLX of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares of KLX common stock in connection with the merger. A stockholder's failure to deliver to KLX the written demand for appraisal prior to the taking of the vote on the merger proposal at the special meeting will result in the loss of appraisal rights.

        Only a holder of record of shares of KLX common stock is entitled to demand an appraisal of the shares registered in that holder's name. Accordingly, to be effective, a demand for appraisal by a holder of KLX common stock must be made by, or on behalf of, the record stockholder. The demand should set forth, fully and correctly, the record stockholder's name as it appears on the stockholder's stock certificate(s) or in the transfer agent's records, in the case of uncertificated shares, should specify the stockholder's mailing address and the number of shares registered in the stockholder's name. The demand must state that the person intends thereby to demand appraisal of the stockholder's shares in connection with the merger. The demand cannot be made by the beneficial owner if he or she does not also hold the shares of KLX common stock of record. The beneficial holder must, in such cases, have the registered owner, such as a bank, broker or other nominee, submit the required demand in respect of those shares of KLX common stock. If you hold your shares of KLX common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee and obtaining notice of the effective time.

        If shares of KLX common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal must be made in that capacity. If the shares of KLX common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, broker or other nominee, who holds shares of KLX common stock as a nominee for others, may exercise his or her right of appraisal with respect to the shares of KLX common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of KLX common stock as to which appraisal is sought. Where no number of shares of KLX common stock is expressly mentioned, the demand will be presumed to cover all shares of KLX common stock held in the name of the record owner. If a stockholder holds shares of KLX common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record owner.

        Within 10 days after the effective time, the surviving corporation must give notice of the date that the merger became effective to each KLX record stockholder who has demanded appraisal in accordance with Section 262 of the DGCL and who did not vote in favor of the merger proposal. At any time within 60 days after the effective time, any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the stockholder's demand and accept the consideration specified by the merger agreement for that stockholder's shares of KLX common stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time will require the written approval of the surviving corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however that the limitation set forth in this sentence will not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding

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as a named party to withdrawn such stockholder's demand for appraisal and accept the merger consideration within 60 days of the effective time. If the surviving corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only the appraised value of his, her or its shares of KLX common stock determined in any such appraisal proceeding, plus interest, if any, which value could be less than, equal to or more than the consideration offered pursuant to the merger agreement.

        Within 120 days after the effective time, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of KLX common stock held by all such stockholders. Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made upon the surviving corporation. The surviving corporation has no obligation to file such a petition, has no present intention to file a petition and holders should not assume that the surviving corporation will file a petition. Accordingly, it is the obligation of KLX stockholders to initiate all necessary petitions to perfect their appraisal rights in respect of shares of KLX common stock within the time prescribed in Section 262 of the DGCL and the failure of a stockholder to file such a petition within the period specified in Section 262 of the DGCL could nullify the stockholder's previous written demand for appraisal. In addition, within 120 days after the effective time, any stockholder who has properly complied with the requirements of Section 262 of the DGCL and who did not vote in favor of the merger proposal will be entitled to receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares of KLX common stock not voted in favor of the merger proposal and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be mailed within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of KLX common stock held either in a voting trust or by a nominee on behalf of such person for which appraisal has been properly demanded may, in such person's own name, file a petition for appraisal or request from the surviving corporation such statement.

        If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation will be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares of KLX common stock and with whom agreements as to the value of their shares of KLX common stock have not been reached. After notice to stockholders who have demanded appraisal from the Register in Chancery, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery will conduct a hearing upon the petition and determine those stockholders who have become entitled to the appraisal rights provided by Section 262 of the DGCL. The Delaware Court of Chancery may require stockholders who have demanded appraisal of their shares of KLX common stock to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings, and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder. In addition, the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of KLX common stock entitled to appraisal exceeds 1% of the outstanding shares of KLX common stock or (2) the value of the consideration provided in the merger for such total number of shares of KLX common stock exceeds $1 million.

        After determination of the stockholders entitled to appraisal of their shares of KLX common stock, the Delaware Court of Chancery will appraise the shares of KLX common stock, determining

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their fair value as of the effective time after taking into account all relevant factors exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value (or, in certain circumstances described below, on the difference between the amount determined to be the fair value and the amount paid to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding). When the fair value has been determined, the Delaware Court of Chancery will direct the payment of such value (with interest, if any), in the case of holders of uncertificated stock forthwith, and, in the case of holders of shares represented by certificates, upon surrender by those stockholders of the certificates representing their shares of KLX common stock. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective time through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery and (2) interest theretofore accrued, unless paid at that time.

        You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the merger, is not an opinion as to fair value under Section 262 of the DGCL. Although we believe that the per share merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share merger consideration. Moreover, we do not anticipate offering more than the per share merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding that, for purposes of Section 262 of the DGCL, the "fair value" of a share of KLX common stock is less than the per share merger consideration. In determining "fair value," the Delaware Court of Chancery is required to take into account all relevant factors. Section 262 of the DGCL provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger."

        Costs of the appraisal proceeding (which do not include attorneys' fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery, as it deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys' fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of KLX common stock entitled to appraisal. Any stockholder who demanded appraisal rights will not, after the effective time, be entitled to vote shares of KLX common stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares of KLX common stock, other than with respect to payment as of a record date prior to the effective time. If no petition for appraisal is filed within 120 days after the effective time, or if the stockholder otherwise fails to perfect, successfully withdraws or loses such holder's right to appraisal, then the right of that stockholder to appraisal will cease and that stockholder will be deemed to have been converted at the effective time into the right to receive the merger consideration (without interest) for his, her or its shares of KLX common stock pursuant to the merger agreement.

        Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the loss of a stockholder's appraisal rights.

        In view of the complexity of Section 262 of the DGCL, KLX stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

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THE MERGER AGREEMENT

        The following discussion sets forth the principal terms of the merger agreement. The complete text of the merger agreement is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not by this discussion, which is summary by nature. You are encouraged to read the merger agreement carefully in its entirety, as well as this proxy statement and any documents incorporated by reference herein, before making any decisions regarding the merger. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section entitled "Where You Can Find More Information," beginning on page 131.


The Merger

        Upon the terms and subject to the conditions of the merger agreement, and in accordance with the DGCL, at the effective time, Merger Sub will be merged with and into KLX, whereupon the separate existence of Merger Sub will cease, KLX will continue as the surviving corporation and a direct or indirect, wholly owned subsidiary of Boeing and Boeing will own all of the issued and outstanding shares of KLX common stock. Prior to the effective time, KLX intends to effect a pro rata distribution of common stock representing 100% of the equity interests of KLX Energy Services to KLX stockholders as of the record date of such distribution, which will become a public company upon the completion of the spin-off and will own and operate the ESG Business.


Closing and Effectiveness of the Merger

        Upon the terms and subject to the conditions set forth in the merger agreement, unless KLX and Boeing otherwise agree in writing, the closing of the merger and the consummation of the spin-off will take place concurrently (unless the spin-off has been consummated as of an earlier date) on a date to be specified by KLX and Boeing but no later than the third business day after the satisfaction or waiver of the conditions specified in the merger agreement (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) (the "closing date"). The merger will become effective at the time that a certificate of merger with respect to the merger has been duly filed with the Delaware Secretary of State or at such other date and time as is agreed between Boeing and KLX and specified in the certificate of merger.


Merger Consideration

        Each share of KLX common stock issued and outstanding immediately prior to the effective time (other than any shares of KLX common stock held by KLX as treasury stock or held, directly or indirectly, by Boeing or Merger Sub immediately prior to the effective time, and other than shares of KLX common stock owned by stockholders who have not voted in favor of the adoption of the merger agreement or consented thereto in writing, have properly exercised and perfected their demand for appraisal rights under the DGCL and have not effectively withdrawn or lost such rights) will be converted into the right to receive from Boeing, in accordance with the terms of the merger agreement, $63.00 per share, without interest. Each share of KLX common stock to be converted into the right to receive the merger consideration will no longer be outstanding and will be automatically canceled and will cease to exist, and the holders of certificates or book-entry shares that, immediately prior to the effective time, represented such KLX common stock, will cease to have any rights with respect to such KLX common stock other than the right to receive, upon surrender of such certificates or book-entry shares in accordance with the merger agreement, the merger consideration.

        Each share of KLX common stock held by KLX as treasury stock or held, directly or indirectly, by Boeing or Merger Sub immediately prior to the effective time will automatically be canceled and

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retired and will cease to exist, and no consideration or payment will be delivered in exchange therefor or in respect thereof. In addition, to the extent that holders of KLX common stock are entitled to appraisal rights under Section 262 of the DGCL, shares of KLX 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 the merger agreement or consented thereto in writing, has properly exercised and perfected his, her or its demand for appraisal rights and has not effectively withdrawn or lost such holder's rights to appraisal, will not be converted into the right to receive the merger consideration, but the holders of such dissenting shares will be entitled to receive such consideration as may be determined pursuant to Section 262 of the DGCL (it being understood and acknowledged that at the effective time, such dissenting shares will no longer be outstanding, will automatically be canceled and will cease to exist, and such holder will 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).

        Pursuant to the merger agreement, Boeing, KLX, the surviving corporation and the paying agent (who shall be a nationally recognized financial institution reasonably acceptable to Boeing and KLX) will 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 spin-off) pursuant to the merger agreement such amounts as Boeing, KLX, the surviving corporation or the paying agent are required to deduct and withhold with respect to the making of such payments under the Internal Revenue 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 such payments. Any amounts so withheld will be treated for all purposes of the merger agreement as having been paid to the person in respect of which such deduction and withholding was made by Boeing, KLX, the surviving corporation or the paying agent, as the case may be.

        The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. Immediately after the consummation of the spin-off, KLX stockholders of record as of the spin-off record date will own 100% of the issued and outstanding shares of KLX Energy Services common stock. The merger consideration is in addition to, and separate from, the shares of KLX Energy Services that KLX stockholders as of the record date of the spin-off will receive in the spin-off. KLX stockholder approval is not required to complete the spin-off and, accordingly, KLX stockholders are not being asked to vote on the spin-off. Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.


Exchange Procedures

        At or prior to the effective time, Boeing shall deposit or cause to be deposited with the paying agent cash in an aggregate amount necessary to pay the merger consideration (exclusive of any amounts payable in respect of specified incentive equity, which shall be paid as set forth in the merger agreement and the "Treatment of KLX Equity Awards" section below). Promptly following the effective time (and in any event not later than the third business day thereafter), Boeing will 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 KLX common stock (i) a letter of transmittal, which shall specify that delivery will be effected, and risk of loss and title to the certificates or book-entry shares, as applicable, will pass only upon proper delivery of the certificates (or affidavits of loss in lieu thereof) or book-entry shares to the paying agent, and which shall be in the form and have such other provisions as Boeing may reasonably specify, and (ii) instructions 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 KLX common stock previously represented by such certificates or book-entry shares.

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        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, the holder of such certificate or book-entry share will be entitled to receive in exchange therefor, and Boeing will 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 KLX common stock previously represented by such certificate or book-entry shares. The paying agent will 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. Without prejudice to any rights in respect of the spin-off and subject to any dissenters' rights or amounts payable to any governmental authority, after the effective time and until so surrendered, each certificate and book-entry share will represent only the right to receive the merger consideration payable in respect of the shares of KLX common stock represented thereby.


Treatment of KLX Equity Awards

        The merger agreement provides that outstanding equity-based awards issued under KLX's equity incentive plans will be treated as set forth below:

        KLX Restricted Stock Awards.    Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX Restricted Stock Award that is outstanding immediately prior to the effective time will, 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; provided further that Boeing will not assume any such award and (ii) each KLX Restricted Stock Award will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX Restricted Stock Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest.

        KLX PSU Awards and KLX RSU Awards.    Without prejudice to any rights in respect of the spin-off, as of the effective time, (i) each KLX PSU Award and each KLX RSU Award, in each case, subject to time-based, performance or other vesting restrictions, that is outstanding immediately prior to the effective time will, to the extent not vested, become fully vested, provided that to the extent that such award is subject to performance conditions, any performance conditions will be deemed to have been satisfied at the maximum level and (ii) each KLX PSU Award and KLX RSU Award, in each case, whether payable in cash or shares of KLX common stock, will 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 corporation's general payroll practices, a lump sum cash payment with respect thereto equal to the product of the merger consideration and the number of shares of KLX common stock represented by such KLX PSU Award or KLX RSU Award, less any applicable withholding or other taxes or other amounts required by applicable law to be withheld, without interest. Any payment in respect of any KLX PSU Award and KLX RSU Award, in each case, which immediately prior to such cancellation was treated as "deferred compensation" subject to section 409A of the Internal Revenue Code will be converted to the merger consideration and paid on the applicable settlement date for such KLX RSU Award or KLX PSU Award if required in order to comply with section 409A of the Internal Revenue Code. For the avoidance of doubt, Boeing will not assume any KLX PSU Award or any KLX RSU Award.

        KLX Employee Stock Purchase Plan (the "KLX ESPP").    As soon as practicable following the date of the merger agreement, the KLX Board (or, if applicable, any committee thereof administering the

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KLX ESPP) must provide that: (i) any outstanding option period(s) under the KLX ESPP must terminate and each option to purchase KLX common stock thereunder will be deemed to have been exercised in accordance with the terms of the KLX ESPP upon the earlier to occur of (A) the day that is four 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) may commence under the KLX ESPP after the date of the merger agreement; (ii) no individual participating in the KLX ESPP may 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 the merger agreement or (B) except to the extent required by applicable law, make separate non-payroll contributions to the KLX ESPP on or following the date of the merger agreement; (iii) no individual who is not participating in the KLX ESPP as of the date of the merger agreement may commence participation in the KLX ESPP following the date of the merger agreement; (iv) no new offerings will commence, nor will any existing offerings be extended, following the date of the merger agreement; and (v) subject to the consummation of the merger, the KLX ESPP will terminate, effective immediately prior to the effective time.

        2018 KLX Equity Awards.    KLX may award its annual 2018 KLX Restricted Stock Awards, KLX PSU Awards or KLX RSU Awards to its employees under the LTIP in the ordinary course of business consistent with past practice following the date of the merger agreement. However, in the event that the effective time occurs on or prior to the first anniversary of the grant date of the 2018 Awards, only one-third of the 2018 Awards will be accelerated in connection with the consummation of the merger and become eligible to receive the merger consideration, and the remaining two-thirds will be forfeited for no consideration.


Representations and Warranties

        The merger agreement contains representations and warranties that we, on the one hand, and Boeing and Merger Sub, on the other hand, have made to one another (in some cases, as of specific dates) relating to our business (with certain limited exceptions, generally excluding KLX Energy Services, its subsidiaries and assets and the ESG Business) and their respective businesses. The assertions embodied in those representations and warranties were made solely for purposes of the merger agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the merger agreement. Accordingly, KLX stockholders should not rely on representations and warranties as characterizations of the actual state of facts or circumstances and should bear in mind that the representations and warranties were made solely for the benefit of the parties to the merger agreement, were negotiated for purposes of allocating contractual risk among the parties to the merger agreement rather than to establish matters as facts, may be qualified by disclosures made by one party to the merger agreement to the other parties thereto and may be subject to contractual standards of materiality different from those generally applicable to stockholders. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be reflected in our public disclosures. This description of the representations and warranties is included to provide KLX stockholders with information regarding the terms of the merger agreement. The representations and warranties in the merger agreement and their description in this proxy statement should be read in conjunction with the other information contained in the reports, statements and filings we publicly file with the SEC.

        Our representations and warranties relate to, among other things:

    our and our subsidiaries' due organization, valid existence, good standing, qualification to do business and similar corporate matters;

    our organizational documents;

    our and our subsidiaries' capitalization and capital structure;

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    our corporate power and authority to execute, deliver and perform our obligations under the merger agreement and to consummate the transactions contemplated by the merger agreement and the spin-off agreements (and any agreements governing the sale of the ESG Business);

    the authorization, execution, delivery and enforceability of the merger agreement and the spin-off agreements (and any agreements governing the sale of the ESG Business);

    the absence of conflicts with our (and our subsidiaries') organizational documents, applicable law (assuming that certain consents, registrations, declarations, filings and notices have been obtained or made) or our and our subsidiaries' contracts, in each case as a result of the execution and delivery of the merger agreement or the spin-off agreements (and any agreements governing the sale of the ESG Business) and the consummation of the transactions contemplated thereby;

    the absence of rights of termination, acceleration or cancellation of, or requirements for the consent of, notice to or filing with any third party pursuant to any of the terms or provisions of any contract to which KLX or any of its subsidiaries is a party, in each case as a result of the execution, delivery and performance of the merger agreement or the spin-off agreements (and any agreements governing the sale of the ESG Business) and the consummation of the transactions contemplated thereby;

    the absence of any consent, approval, license, permit, order, action or authorization of, registration, declaration or filing with or notice to, any governmental authority in connection with the execution, delivery and performance of the merger agreement or the consummation of the transactions contemplated by the merger agreement or the spin-off agreements (and any agreements governing the sale of the ESG Business), assuming that certain consents, registrations, declarations, filings and notices have been obtained or made;

    SEC filings, financial statements, indebtedness, SEC comments, Sarbanes-Oxley and Nasdaq listing requirements, internal control over financial reporting, disclosure controls and procedures, officer certifications and off-balance sheet arrangements;

    the absence of certain material changes and effects since January 31, 2018;

    the absence of undisclosed liabilities;

    the absence of certain material proceedings, suits, claims, charges, complaints, settlements, hearings, audits, examinations or actions and decrees, orders, judgments, injunctions, temporary restraining orders, writs, determinations, rulings, settlements or stipulations or other orders in any proceeding or similar requirements by or with any governmental authority involving us or our subsidiaries;

    the absence of any proceeding or 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;

    franchises, grants, authorizations, licenses, permits, easements and other authorizations necessary to own, lease and operate properties and assets;

    compliance with applicable law;

    compliance with export control laws;

    this proxy statement and the spin-off registration statement;

    our employee benefit plans;

    labor and employment matters;

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    tax matters;

    our material contracts;

    intellectual property and computer systems;

    real property, personal property, and sufficiency of assets;

    environmental matters;

    government contracts;

    insurance matters;

    applicability of Section 203 of the DGCL;

    investment bankers, brokers and finders;

    our receipt of an opinion from Goldman Sachs to the effect that, as of the date of the merger agreement 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 KLX common stock pursuant to the merger agreement is fair from a financial point of view to such holders;

    compliance with anti-bribery and anti-corruption laws;

    relationships with large customers and suppliers; and

    affiliate transactions.

        Some of our representations and warranties are qualified as to materiality or by exceptions related to the absence of a material adverse effect. Under the merger agreement, a "material adverse effect" with respect to KLX 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 KLX and its subsidiaries, assuming and having given effect to the consummation of the spin-off (or the sale of the ESG Business), taken as a whole (KLX and its subsidiaries, assuming and giving such effect to the spin-off or such sale, "KLX Ex-ESG"), or (ii) prevents or materially interferes with, hinders or delays the consummation of the transactions contemplated by the merger agreement and the spin-off agreements (or the agreements governing the sale of the ESG Business); provided, however, that none of the following events, changes, circumstances, states of fact, conditions, occurrences or effects, either alone or in combination, will constitute, or be considered in determining whether there has been, a material adverse effect:

    any acts of God, earthquakes, floods, hurricanes, tropical storms or other natural disasters;

    any outbreak or escalation of war or major hostilities or any act of terrorism;

    changes after the date of the merger agreement in applicable law or GAAP or the interpretation thereof;

    changes that generally affect the industries and markets in which KLX Ex-ESG operates;

    changes in general economic conditions or political or regulatory conditions in general;

    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;

    any failure, in and of itself, of KLX 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

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      otherwise excluded by this proviso may be taken into account in determining whether a material adverse effect has occurred or would reasonably be expected to occur);

    any change in the price or trading volume of KLX's securities or other financial instruments or change in KLX'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 material adverse effect has occurred or would reasonably be expected to occur);

    any action specifically required to be taken pursuant to the merger agreement or the spin-off agreements (or the agreements governing the sale of the ESG Business);

    any specific action taken or failed to be taken at the express written direction of, or with the express written consent of, Boeing or Merger Sub; or

    the spin-off (or the distribution of the proceeds from the sale of the ESG Business), the public announcement or other disclosure with respect to the transactions contemplated by the merger agreement and the spin-off agreements (or the agreements governing the sale of the ESG Business) or the identity of Boeing 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 the first six bullets immediately above will be taken into account in determining whether a 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 KLX Ex-ESG as compared to other participants in the industries and markets in which KLX Ex-ESG operates.

        Boeing and Merger Sub also make a number of representations and warranties to us regarding various matters pertinent to the merger and their respective businesses. Such representations and warranties relate to, among other things:

    due organization, valid existence, good standing, qualification to do business and similar corporate matters;

    organizational documents;

    corporate power and authority to execute, deliver and perform their obligations under the merger agreement and to consummate the transactions contemplated by the merger agreement, and the authorization, execution, delivery and enforceability of the merger agreement;

    the absence of conflicts with organizational documents, applicable law (assuming that certain consents, registrations, declarations, filings and notices have been obtained or made) or contracts, in each case as a result of the execution and delivery of the merger agreement and the consummation of the transactions contemplated by the merger agreement;

    the absence of rights of termination, acceleration or cancellation of, or requirements for the consent of, notice to or filing with any third party pursuant to any of the terms or provisions of any contract to which Boeing or Merger Sub is a party, in each case as a result of the execution and delivery of the merger agreement and the consummation of the transactions contemplated thereby;

    the absence of any consent, approval, license, permit, order, action or authorization of, registration, declaration or filing with or notice to, any governmental authority in connection with the execution, delivery and performance of the merger agreement or the consummation of the transactions contemplated by the merger agreement, assuming that certain consents, registrations, declarations, filings and notices have been obtained or made;

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    the absence of any proceeding or 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;

    information of Boeing or Merger Sub for inclusion or incorporation by reference in this proxy statement;

    investment bankers, brokers and finders;

    the sufficiency of Boeing's funds to consummate the merger, to pay the aggregate merger consideration and all fees and expenses related to the transactions contemplated by the merger agreement and to pay all costs, fees and expenses related to the refinancing of KLX's indebtedness (after giving effect to the spin-off);

    none of Boeing, Merger Sub or any of their affiliates being (during the three years preceding the date of the merger agreement) an "interested stockholder" of KLX as defined in Section 203 of the DGCL; and

    none of Boeing, Merger Sub or their respective affiliates owning (directly or indirectly, beneficially or of record) any KLX common stock or rights to acquire KLX common stock (other than pursuant to the merger agreement).

        Some of Boeing's and Merger Sub's representations and warranties are qualified as to materiality or by exceptions related to the absence of a material adverse effect on the ability of Boeing or Merger Sub to consummate the transactions contemplated by the merger agreement.

        The representations and warranties of each of the parties to the merger agreement will terminate at the effective time.


Conduct of Business Pending the Merger

        We have agreed to restrictions on the operation of our business until the earlier of the effective time and the date on which the merger agreement is terminated. Except as may be required by applicable law, as may be consented to in writing by Boeing (which consent may not be unreasonably withheld, delayed or conditioned), as expressly required or expressly permitted pursuant to the merger agreement or the spin-off agreements (or the agreements governing the sale of the ESG Business), or as disclosed to Boeing pursuant to the merger agreement, (i) subject to the restrictions set forth in clause (ii) below, we will, and will cause our subsidiaries to, conduct our and our subsidiaries' business in the ordinary course of business and in a manner consistent with past practice and, to the extent consistent therewith, use our reasonable best efforts to preserve our assets and business organization and maintain satisfactory relationships with material customers, suppliers, distributors, regulators, landlords and other business partners and (ii) we will not, and will cause our subsidiaries (other than KLX Energy Services and its subsidiaries, except as set forth below) not to, directly or indirectly:

    amend or otherwise change our certificate of incorporation or bylaws (or such equivalent organizational or governing documents of any of our subsidiaries (other than KLX Energy Services and its subsidiaries));

    adjust, split, combine, subdivide, reclassify, redeem, repurchase or otherwise acquire or amend the terms of KLX's or any of its subsidiaries' (other than KLX Energy Services and its 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 KLX's or any of its subsidiaries' capital stock or other equity interests;

    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 KLX's or its subsidiaries'

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      (other than KLX Energy Services and its 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 KLX's or any of its subsidiaries' (other than KLX Energy Services and its subsidiaries) capital stock or other equity interests or other securities; provided, however, that KLX may issue shares upon the settlement of any KLX RSU Award or KLX PSU Award outstanding as of the date of the merger agreement and in accordance with the merger agreement and the applicable KLX RSU Award or KLX PSU Award, as made available to Boeing;

    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 KLX's or any of its subsidiaries' capital stock or other equity interests, other than cash dividends and distributions paid by any subsidiary of KLX to KLX or any wholly owned subsidiary of KLX (other than KLX Energy Services and its subsidiaries); provided, however, that nothing in this provision prohibits KLX from consummating the spin-off or distributing the proceeds of a sale of the ESG Business;

    (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 of the merger agreement or made available to Boeing 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 KLX or any of its subsidiaries to any of the current or former employees, directors or other individual service providers of KLX 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 KLX benefit plan is not then out of compliance with applicable law or as part of KLX'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 KLX benefit plan (including any plan that would be a KLX benefit plan if in effect as of the date of the merger agreement);

    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 KLX Ex-ESG (and not KLX Energy Services or any of its subsidiaries or the ESG Business) and (y) the value of such stock, assets, business, person or such division does not exceed $35 million individually or $50 million 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 KLX Ex-ESG or, to the extent any such agreement or arrangement is entered into by KLX Energy Services or its subsidiaries or the ESG Business, such agreement or arrangement may not involve the acquisition by KLX of equity interests in any person and (y) the value of such interest does not exceed $35 million individually or $50 million in the aggregate;

    sell, transfer, lease, sell and lease back, license, mortgage, incur any encumbrance (other than certain permitted encumbrances) on or otherwise transfer or abandon any material portion of the assets, business, properties or rights of KLX or any of its subsidiaries, except (A) sales of inventory in the ordinary course of business and consistent with past practice, (B) transfers among KLX and its subsidiaries (other than non-cash transfers to KLX Energy Services or any of its subsidiaries) or (C) disposition of obsolete assets or expired inventory in the ordinary course of business and consistent with past practice;

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    (A) other than drawings on existing credit facilities pursuant to the terms of such facilities as in effect on the date of the merger agreement, 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 KLX or its wholly owned subsidiaries) for an amount in excess of $1 million, 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 KLX or any direct or indirect wholly owned subsidiary of KLX) in excess of $1 million;

    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 KLX Ex-ESG) or waive any material rights under any material contract or material government contract or enter into or agree to enter into any contract that, if entered into prior to the date of the merger agreement, would be a material contract or material government contract; provided that the foregoing shall not limit KLX's ability to (A) renew any material contract that is on terms that are not materially less favorable to KLX than the current material contract, (B) accept and agree to any modification to a 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 material government contract issued as a result of a government bid in the ordinary course of business consistent with past practice;

    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);

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

    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 KLX's audited financial statements for the year ended January 31, 2018;

    commence, compromise, settle or agree to settle any claim, investigation or proceeding, other than (x) settlements that result solely in monetary obligations involving payment by KLX or any of its subsidiaries of the amounts reserved in accordance with GAAP with respect to such claim, investigation or proceeding on KLX's consolidated financial statements for the year ended January 31, 2018, (y) settlements that result solely in obligations of KLX Energy Services or (z) certain stockholder litigation related to the merger;

    except as required pursuant to the terms of KLX's tax sharing agreement with B/E Aerospace, Inc.: (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 Internal Revenue Code (or any similar provision of state, local or non-U.S. law) with respect to any material tax; or (F) surrender any right to claim a material tax refund;

    adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of KLX or any of its subsidiaries;

    agree to any provision that (A) would impose a non-competition or exclusivity obligation on the surviving corporation, Boeing or any of their respective affiliates or subsidiaries after the effective time or limits in any respect the ability of KLX Ex-ESG or would limit in any respect

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      the ability of Boeing or any of its affiliates after the effective time, to operate its business in any geographic area, (B) would, after the effective time, restrict KLX, Boeing 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 KLX Ex-ESG or its affiliates to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or businesses;

    fail to keep in force any material insurance policy or replacement providing insurance coverage with respect to the assets, operations and activities of KLX and its subsidiaries as are in effect on the date of the merger agreement;

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

    enter into, materially amend or terminate any contract that would reasonably be expected to involve annual payments by KLX or its subsidiaries in excess of $25 million in the 12 months ending January 31, 2019;

    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;

    materially amend or terminate the KLX ESPP or any KLX equity plan;

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

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


Certain Covenants Related to the ESG Business

        The merger agreement contains various agreements by KLX with respect to the spin-off and the spin-off documents. Specifically:

    Under the terms of the merger agreement, KLX has agreed to comply, and agreed to cause its subsidiaries to comply, in all material respects with all obligations and covenants under the spin-off agreements. For purposes of the merger agreement, spin-off agreements include the distribution agreement, the employee matters agreement, the transition services agreement and the IP matters agreement, each in the form agreed to by Boeing and KLX (the "agreed form spin-off agreements"), and 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 Form 10 and any other required SEC filing) (the "ancillary spin-off agreements"), provided that no ancillary spin-off agreement will constitute a "spin-off agreement" if (i) any of the terms in such agreement are or would reasonably be expected to be more adverse to Boeing, 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 require any amendment, supplement or modification to this proxy statement or other SEC filings other than de minimis or solely ministerial amendments, supplements or modifications or require any stockholder approval other than the stockholder approval of the merger proposal as contemplated by the merger agreement.

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    In addition, under the terms of the merger agreement, KLX agreed that, at all times until January 11, 2019 and, if directed by Boeing, thereafter until termination of the merger agreement, KLX will, and will cause its subsidiaries to, use its 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 with respect to the preparation and filing of the Form 10 and other documents required to be filed with the SEC, (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 Boeing, fully enforcing rights and obligations under the spin-off agreements, and not taking any action (other than any action expressly required under the merger agreement or by the spin-off agreements) that would or would reasonably be expected to increase the time required for, or reduce KLX's ability to cause, the spin-off to occur in any material respect. KLX is required to keep Boeing reasonably informed of material developments in connection with the spin-off.

    To the extent requested by KLX, Boeing and Merger Sub have agreed to use their reasonable best efforts to cooperate with KLX in its efforts to cause the consummation of the spin-off.

    KLX agreed in the merger agreement that it would not, and would cause its subsidiaries, KLX Energy Services and their respective subsidiaries not to, terminate, amend, modify or waive any provision of any agreed form spin-off agreement without the prior written consent of Boeing; provided that such consent will not be unreasonably withheld, conditioned or delayed so long as (i) any such termination, amendment, modification or waiver is not more adverse to KLX Energy Services, 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 this proxy statement or any other required SEC 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 any stockholder approval other than the stockholder approval of the merger proposal as contemplated by the merger agreement.

    KLX is permitted in the merger agreement to 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 Boeing, the surviving corporation or any of their respective subsidiaries and (ii) any transactions contemplated thereby would not require (A) any amendment, supplement or modification to this proxy statement or any other required SEC 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) any stockholder approval other than the stockholder approval of the merger proposal as contemplated by the merger agreement.

    No earlier than three business days prior to the date of the spin-off, KLX must contribute, transfer or otherwise pay $50 million to KLX Energy Services.

    KLX and its subsidiaries must cause KLX Energy Services and its subsidiaries to (i) comply with their respective reimbursement obligations under the distribution agreement (or the agreement pursuant to which the ESG Business is sold) in respect of a negative balance in the FCF Net Amount (as defined in the distribution agreement) and (ii) not permit any of the terms of any sale of the ESG Business to be or reasonably expected to be more adverse to Boeing, 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.

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        Under the terms of the merger agreement, KLX was required to notify Boeing by May 30, 2018 if KLX elected to enter into an agreement to sell the ESG Business in lieu of consummating the spin-off. KLX did not make such election by May 30, 2018, and pursuant to the terms of the merger agreement, KLX will not be entitled to sell the ESG Business to a third party in lieu of the spin-off without Boeing's prior written consent. KLX is required to enter into the distribution agreement with KLX Energy Services by July 14, 2018.


Restrictions on Solicitation of Acquisition Proposals

Non-Solicitation Provisions and Exceptions.

        From the date of the merger agreement until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, we are subject to restrictions on our ability to initiate or solicit third party proposals relating to alternative transactions or to provide information to or engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by KLX stockholders at the special meeting described further in this proxy statement and except as related solely to the spin-off or a sale of the ESG Business or any of the assets or operations thereof). Specifically:

    KLX must cease, cause its subsidiaries to cease and 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 acquisition proposal (as defined below) (other than the transactions contemplated by the merger agreement with Boeing and Merger Sub);

    KLX is not permitted to, and is not permitted to authorize or permit any of its representatives to, directly or indirectly through another person:

    engage in any communication or initiate, solicit, facilitate or encourage any action that would constitute or would reasonably be expected to lead to an acquisition proposal;

    engage in or continue negotiations or discussions with, or provide any information or data to, any person (other than Boeing or any of its affiliates or representatives) relating to or that would reasonably be expected to lead to any acquisition proposal;

    approve, endorse, recommend, execute or enter into any alternative acquisition agreement; or

    resolve or agree to do any of the foregoing; and

    KLX must (and did), within one business day of the date of the merger agreement and thereafter, terminate all access by third parties to any data room (virtual or actual) containing any information relating to KLX Ex-ESG and request the destruction or return of all non-public information previously provided by or on behalf of KLX, any of its subsidiaries or their representatives to any and all such third parties.

        Notwithstanding the provisions in the merger agreement relating to acquisition proposals:

    at any time prior to receiving stockholder approval of the merger proposal, if KLX receives a bona fide written acquisition proposal that did not result directly or indirectly from a breach of the non-solicitation provisions in the merger agreement (other than breaches that are inadvertent, de minimis and not intended to result in an acquisition proposal), KLX may contact the person who has made such acquisition proposal in order to clarify the terms of such acquisition proposal so that the KLX Board (or any committee thereof) may inform itself about such acquisition proposal, furnish information concerning its business, properties or assets to such person pursuant to a confidentiality agreement with confidentiality terms that are not less

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      favorable to KLX than those contained in Boeing's confidentiality agreement, and negotiate and participate in discussions and negotiation with such person concerning such acquisition proposal, in each case if the KLX Board determines in good faith (after consultation with outside financial advisors and legal counsel) that such acquisition proposal constitutes, or could reasonably be expected to lead to or result in, a superior proposal, and the KLX 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;

    nothing contained in the merger agreement shall prohibit KLX or the KLX Board from 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; and

    nothing contained in the merger agreement shall prohibit KLX or the KLX Board from making any disclosure to KLX stockholders if the KLX Board determines in good faith (after consultation with outside legal counsel) that the failure of the KLX Board to make such disclosure would be inconsistent with its fiduciary duties under applicable law; provided, however, that (A) in no event shall this provision affect the obligations specified with respect to superior proposals and intervening events (as defined below) discussed below and (B) any such disclosure (other than issuance by KLX of a "stop, look and listen" pursuant to Rule 14d-9(f) of the Exchange Act or similar communication to KLX stockholders or a factually accurate public statement by KLX that only describes KLX's receipt of an acquisition proposal and the operation of the merger agreement with respect thereto) that addresses or relates to the approval, recommendation or declaration of advisability by the KLX Board with respect to the merger agreement or an acquisition proposal shall be deemed to be an adverse recommendation change.

        KLX (A) must promptly (and in any case within 24 hours) provide Boeing notice of the receipt of any acquisition proposal and any confidentiality agreement entered into with any third party and must disclose the identity of the third party and the terms of such acquisition proposal, (B) must promptly (and in any case within 24 hours) make available to Boeing copies of all information of KLX and the same access provided by KLX to such third party but not previously made available to Boeing and (C) must keep Boeing informed on a reasonably prompt (and at Boeing's request, which will not be more frequently than daily) basis of the status and material details of (including amendments and proposed amendments to and the negotiation or discussion of) any such acquisition proposal, or such other inquiry, offer or proposal.

        KLX agreed in the merger agreement 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 KLX or any subsidiary of KLX 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 KLX agreed to 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; provided, however, that nothing herein will 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 KLX. Any breach of the provisions in the merger agreement regarding nonsolicitation, acquisition proposals and superior proposals by any subsidiary or representative of KLX will be deemed to be a breach of such provisions by KLX.

        Notwithstanding the foregoing, the provisions regarding alternative proposals and adverse recommendation changes shall not in any way limit or prohibit any action taken by KLX in furtherance of its efforts to consummate the spin-off, including holding discussions, negotiations and

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communications with, or providing non-public information unrelated to KLX Ex-ESG to, any persons in connection with the spin-off (including to potential financing sources).

KLX Board Recommendation and Adverse Recommendation Change

        Under the terms of the merger agreement, subject to certain exceptions, the KLX Board has agreed to recommend that KLX stockholders vote in favor of the merger proposal. Under the merger agreement, the KLX Board and any committee thereof may not take any of the following actions (any such action, an adverse recommendation change):

    withdraw, qualify, withhold or modify, fail to make, or publicly propose to withdraw, qualify, withhold or modify, its recommendation in favor of the merger proposal;

    adopt, approve or recommend or publicly propose to adopt, approve or recommend any acquisition proposal, alternative acquisition agreement or superior proposal;

    fail to recommend against any tender offer or exchange offer for shares of KLX common stock within ten business days after commencement of such offer;

    approve or recommend or publicly propose to adopt or recommend any acquisition proposal or superior proposal or fail to include a recommendation in favor of the merger proposal;

    fail to publicly reaffirm the recommendation in favor of the merger proposal within three business days after receipt of a written request by Boeing to provide such affirmation; or

    adopt or approve, or publicly propose to adopt or approve, or allow KLX to execute or enter into, any contract, agreement, arrangement or understanding that reflects, or would reasonably be expected to lead to, an acquisition proposal or would require KLX to abandon or terminate the merger or the other transactions contemplated by the merger agreement (an alternative acquisition agreement).

        Notwithstanding the foregoing, the KLX Board may take the following actions in connection with a superior proposal or an intervening event (as defined below), subject to specified terms as further described below.

        If, at any time after the date of the merger agreement and prior to the receipt of KLX stockholder approval of the merger proposal, the KLX Board first receives an acquisition proposal that did not result directly or indirectly from a breach of the non-solicitation provisions in the merger agreement (other than breaches thereof that are inadvertent, de minimis and not intended to result in an acquisition proposal), that is not withdrawn, and that the KLX Board determines in good faith (after consultation with outside financial advisors and legal counsel) constitutes a superior proposal, the KLX Board may cause KLX to, concurrently with the payment of a $105 million fee by KLX to Boeing, terminate the merger agreement and simultaneously enter into a definitive alternative acquisition agreement in respect of such superior proposal if:

    the KLX 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;

    KLX has previously notified Boeing in writing that it intends to terminate the merger agreement and has provided Boeing an unredacted copy of the proposed definitive alternative acquisition agreement between KLX and the person making such superior proposal;

    for a period of four business days following such written notice, KLX shall have discussed and negotiated in good faith and made KLX's representatives available to discuss and negotiate in good faith (in each case to the extent Boeing desires to negotiate) with Boeing's representatives any proposed modifications to the terms and conditions of the merger agreement or the

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      transactions contemplated by the merger agreement so that the failure to take such action would no longer be inconsistent with the KLX 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 business days following delivery of such new notice from KLX to Boeing and (2) the expiration of the original four business day period); and

    no earlier than the end of such negotiation period, the KLX Board shall have determined in good faith, after considering the terms of any proposed amendment or modification to the merger agreement, that the acquisition proposal that is the subject of the notice described above still constitutes a superior proposal.

        Other than in connection with a superior proposal (which shall be subject to the provisions described in the prior paragraph), prior to KLX obtaining stockholder approval of the merger proposal, the KLX Board may withdraw, qualify, withhold or modify, fail to make or publicly propose to withdraw, qualify, withhold or modify its recommendation of the merger proposal, in response to an intervening event (as defined below), only if:

    the KLX 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;

    KLX has notified Boeing in writing that it intends to effect such an adverse recommendation change and the facts underlying the KLX Board's determination that an intervening event has occurred and the facts underlying the reason for the adverse recommendation change;

    for a period of four business days following the delivery of such written notice, KLX shall have discussed and negotiated in good faith and made KLX's representatives available to discuss and negotiate in good faith (in each case to the extent Boeing desires to negotiate) with Boeing's representatives any proposed modifications to the terms and conditions of the merger agreement or the transactions contemplated by the merger agreement so that the failure to take such action would no longer be inconsistent with the KLX 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 business days following delivery of such new notice from KLX to Boeing and (2) the expiration of the original four business days period described above); and

    no earlier than the end of such negotiation period, the KLX 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 the merger agreement, that the failure to take such action would still be inconsistent with its fiduciary duties under applicable law.

Certain Definitions

        In this proxy statement, an "acquisition proposal" refers to any inquiry, indication of interest, proposal or offer from any person (other than Boeing, 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 KLX or any of its subsidiaries, pursuant to which any such person would own or control, directly or indirectly, 20% or more of the voting power of KLX or any of its subsidiaries, (ii) sale, lease, license, dissolution, liquidation or other disposition, directly or indirectly, of assets of KLX or any subsidiary of KLX (excluding the sale of inventory held for sale in the ordinary course of business) representing 20% or more of the consolidated assets, revenues or net income of KLX and its subsidiaries taken as a

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whole, or to which 20% or more of KLX'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 20% or more of the voting power of KLX, (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 20% or more of the voting power of KLX or (v) any combination of the foregoing; provided that in no event shall the spin-off or any other proposal solely with respect to KLX Energy Services, the ESG Business or any of the assets or operations thereof constitute an acquisition proposal.

        In this proxy statement, a "superior proposal" means a bona fide written acquisition proposal (with all references to "20%" in the definition of "acquisition proposal" deemed to be "a majority" for purposes of the definition of "superior proposal") that (i) would be reasonably likely to be consummated if accepted, and (ii) is more favorable to KLX and its stockholders, solely in their capacity as such, from a financial point of view, than the transactions contemplated by the merger agreement, taking into account (a) all financial considerations (including the form of consideration), (b) the identity of the third party making such 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 acquisition proposal, (d) the legal and regulatory approvals, termination fee and expense reimbursement provisions reasonably deemed relevant by the KLX Board or any committee thereof and (e) any revisions to the terms of the merger agreement and the merger proposed by Boeing during the notice period set forth in the merger agreement; provided that, in no event will an acquisition proposal be deemed to be a superior proposal solely by excluding a condition to the consummation thereof relating to the ESG Business.

        In this proxy statement, an "intervening event" means any material change, event, effect, occurrence, consequence or development relating to KLX that (a) is unknown and not reasonably foreseeable as of the date of the merger agreement, (b) does not relate to any acquisition proposal, any inquiry, indication of interest, proposal or offer that would reasonably be expected to lead to an acquisition proposal and (c) becomes known to the KLX Board prior to KLX stockholder approval of the merger proposal; provided that in no event shall the following constitute an intervening event: any change, event, effect, occurrence, consequence or development relating to (i) Boeing or Merger Sub or any of their affiliates or any competitor of KLX or (ii) the market price or trading volume of the equity securities of KLX, the ratings or the ratings outlook for KLX or any of its subsidiaries by any applicable rating agency or any analyst's recommendations or ratings with respect to KLX, 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.


Efforts to Complete the Merger

        Each of the parties to the merger agreement will use its reasonable best efforts to cooperate with each other and 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 the merger 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 by the merger agreement unless otherwise set forth in the merger agreement), and to cause the merger to be consummated as promptly as practicable in accordance with the terms of the merger agreement.

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        In addition, each of the parties to the merger agreement will 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.

        KLX and Boeing agreed in the merger agreement that they will prepare and file any filing required under the HSR Act as promptly as practicable, but in any event no later than ten business days after the date of the merger agreement (and which has been filed), and Boeing agreed that it will prepare and file all other required antitrust notifications as soon as reasonably practicable after the date of the merger agreement. No party may request or otherwise seek early termination of any applicable waiting periods under applicable antitrust law without the other party's prior written consent.

        Notwithstanding the foregoing, Boeing is not required to propose, negotiate, commit to or effect, by consent decree, hold separate orders or otherwise, (i) the sale, divestiture, license or disposition, in whole or in part, or suffer any restriction on the operation, of Boeing's or its subsidiaries' assets, properties or businesses or (ii) the sale, divestiture, license or disposition, in whole or part, of the assets, properties or businesses to be acquired by Boeing pursuant to the merger agreement.

        To the extent permitted by applicable law, each party must 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 the merger agreement and the transactions contemplated by the merger agreement and the agreements related to the spin-off (and any purchase agreement related to the sale of the ESG Business) and permit the other to review in advance any proposed material communication by such party to any governmental authority. None of the parties will 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 any required antitrust notification the parties have agreed are required in connection with the merger 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 any such required antitrust 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 Boeing or KLX, as applicable.

        Notwithstanding anything to the contrary in the merger agreement, Boeing 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 by the merger agreement 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, provided that Boeing will consult with and consider in good faith the comments of KLX in connection with any filing, communication, defense, litigation, negotiation or strategy.


Employee Benefits

        During the period beginning at the effective time and ending on December 31, 2019 (the "continuation period"), Boeing will, or will cause a subsidiary of Boeing to, provide to each employee who is actively employed by KLX or any of its subsidiaries immediately prior to the effective time (each, a "covered employee") for so long as such covered employee remains an employee of Boeing or any of its subsidiaries during the continuation period, compensation that is comparable in the aggregate (as determined by Boeing, including taking into consideration compensation that is accelerated under

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the terms of the merger agreement) to the compensation provided to such covered employee by KLX and its subsidiaries immediately prior to the effective time. In addition, Boeing agreed in the merger agreement to cause KLX 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 Boeing.

        In the event any covered employee first becomes eligible to participate under any Boeing employee benefit plan following the effective time, Boeing shall, or shall cause a subsidiary of Boeing 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 Boeing employee benefit plan providing medical, dental or vision benefits to the same extent such limitation would have been waived or satisfied under any similar KLX benefit plan the covered employee participated in immediately prior to coverage under the Boeing 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 Boeing employee benefit plan during the plan year in which the effective time occurs, to the same extent such credit was given under any similar KLX benefit plan that such covered employee participated in immediately prior to coverage under the Boeing employee benefit plan, in satisfying any applicable deductible or out-of-pocket requirements under the Boeing employee benefit plan for the plan year in which the effective time occurs.

        As of the effective time, Boeing will recognize, or will cause a subsidiary of Boeing to recognize, all service of each covered employee prior to the effective time, to KLX (or any predecessor entities of KLX 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 KLX 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 time shall not be recognized to the extent that such service credit would result in a duplication of benefits for the same period of service.

        Nothing set forth in the merger agreement will (i) confer upon any person any right to continue in the employ or service of Boeing, KLX (after giving effect to the spin-off) or any of their respective affiliates, or interfere with or restrict in any way the rights of Boeing, KLX (after giving effect to the spin-off) 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, or (ii) restrict the right of Boeing, KLX (after giving effect to the spin-off) or any of their respective affiliates to amend, modify or terminate any benefit or compensation plan, program, agreement, contract, policy or arrangement.

        Furthermore, nothing set forth in the merger agreement will create any right in any other person, including employees, former employees, any participant or any beneficiary thereof, in any KLX benefit plan, or to continued employment with KLX, Boeing or their respective subsidiaries or affiliates, and nothing set forth in the merger agreement will be treated as an amendment or other modification of any KLX benefit plan or any other employee benefit plan of KLX, Boeing, or any of their respective subsidiaries or affiliates or shall prohibit Boeing or any of its subsidiaries or affiliates from amending or terminating any employee benefit plan.

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Directors' and Officers' Indemnification and Insurance

        Boeing and Merger Sub have agreed in the merger agreement 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 D&O Indemnified Parties as provided in KLX's certificate of incorporation and bylaws (in each case, as in effect on the date of the merger agreement) shall survive the merger and shall continue in full force and effect. For a period of six years from the effective time, the surviving corporation shall, and Boeing shall cause the surviving corporation to, maintain in effect the exculpation, indemnification and advancement of expenses equivalent to the provisions of KLX's 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.

        Prior to the effective time, KLX will (or, if KLX is unable to, after the effective time, Boeing will cause the surviving corporation to) purchase a six-year prepaid "tail" policy with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under KLX'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 the merger agreement and the transactions or actions contemplated by the merger agreement), and Boeing will 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 under the merger agreement; provided, however, (i) that KLX will not pay, and the surviving corporation will not be required to pay, in excess of 300% of the last annual premium paid by KLX prior to the date of the merger 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 such D&O Indemnified Parties than the insurance coverage otherwise required in the prior paragraph above. If KLX or the surviving corporation for any reason fails to obtain such "tail" insurance policies prior to, as of or after the effective time, Boeing shall, for a period of six 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 KLX with respect to matters arising on or before the effective time; provided further, however, that after the effective time, neither the surviving corporation nor Boeing shall be required to pay annual premiums in excess of 300% of the last annual premium paid by KLX prior to the date of the merger agreement in respect of the coverage required to be obtained pursuant to the merger agreement, but in such case shall purchase as much coverage as reasonably practicable for such amount.

        The indemnification and insurance covenants described above are intended to be for the benefit of, and will be enforceable by, each of the D&O Indemnified Parties and their respective heirs only if the merger 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.


Other Covenants and Agreements

        The merger agreement contains other covenants and agreements relating to, among other things:

Consent Solicitation With Respect to and Satisfaction and Discharge of KLX Notes.

        KLX will use its reasonable best efforts to, as promptly as reasonably practicable, effect a consent solicitation seeking the consent of the holders of KLX's 5.875% Senior Notes due 2022 to amendments or waivers to the indenture governing the notes, which would permit the consummation of the spin-off

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prior to the closing of the merger; provided that KLX will not agree to a consent fee in connection with such consent without Boeing's prior written consent, which shall not be unreasonably withheld, conditioned or delayed. Whether or not the noteholder consent is obtained, (i) on a date specified by Boeing, KLX will issue a conditional notice of redemption for all of the outstanding aggregate principal amount of the notes, (ii) Boeing will, upon the closing of the merger, be responsible for the payment of an amount sufficient to satisfy and discharge the indenture governing the notes, (iii) KLX will take such other reasonable actions that are necessary or customary to effect the satisfaction and discharge of the indenture and the redemption of the notes, and (iv) KLX will satisfy and discharge the indenture in accordance with the terms of the indenture and redeem the notes in accordance with the indenture.

Payoff Letter.

        At least two business days prior to the closing of the merger, KLX will cause the agent under the Amended and Restated Credit Agreement, dated as of May 19, 2015 (the "existing credit agreement"), among KLX, the lenders party thereto and 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 (i) 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 of the merger (and the daily accrual thereafter) (the "payoff amount"), (ii) state that upon receipt of the payoff amount under the payoff letter, the existing credit agreement and all related loan documents shall be terminated, as applicable, and (iii) provide that all encumbrances and all guarantees (if any) in connection therewith relating to the assets and properties of KLX 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 of the merger unless otherwise agreed by KLX.

Intercompany Arrangements.

        Excluding certain agreements related to the spin-off, KLX will cause any intercompany contracts, arrangements, financing agreements or intercompany loans between KLX Energy Services, on the one hand, and KLX and any of its affiliates or subsidiaries (other than KLX Energy Services), on the other hand, to be terminated, effective no later than the closing.

Notification of Certain Matters.

        Subject to applicable law, from and after the date of the merger agreement until the earlier of the effective time and the termination of the merger agreement in accordance with its terms, KLX and Boeing must notify each other of certain developments, including in respect of notices or communications received from any governmental authority, claims, investigations or proceedings commenced or threatened relating to the merger agreement, the merger or the spin-off or any sale of KLX Energy Services or inaccuracies or breaches of representations and warranties or covenants that would be reasonably expected to cause conditions to the closing not to be satisfied.

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Conditions to the Closing of 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 KLX, Boeing and Merger Sub at or prior to the closing of the following conditions:

    the holders of a majority of the outstanding shares of KLX common stock entitled to vote thereon shall have adopted the merger agreement and approved of the merger proposal at a stockholders meeting duly called and held for such purposes;

    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 KLX Energy Services common stock shall have been obtained and be in effect, and such shares of KLX Energy Services common stock shall have been approved for listing on 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 Form 10 is declared effective by the SEC, whether or not the information statement in connection with the spin-off has in fact been mailed);

    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 will 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 of Turkey, the European Union, Israel, Colombia or South Korea shall have been obtained; and

    no governmental authority having jurisdiction over KLX shall have issued or entered any order after the date of the merger agreement, and no applicable law shall have been enacted or promulgated after the date of the merger 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 contemplated by the merger agreement and the spin-off agreements (or the agreements governing the sale of the ESG Business).

        The obligations of Boeing and Merger Sub to effect the merger are subject to the satisfaction or (to the extent permitted by applicable law) written waiver by Boeing at or prior to the closing of the following additional conditions:

    each of our representations and warranties regarding our capitalization shall be true and correct in all respects (other than de minimis inaccuracies) as of the date of the merger 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);

    each of our representations and warranties regarding our and our subsidiaries' due organization, valid existence, good standing, qualification to do business and similar corporate matters, our organizational documents, our capital structure, the authorization, execution, delivery and enforceability of the merger agreement and the spin-off agreements, and our investment bankers, brokers or finders shall be true and correct in all material respects without giving effect to any materiality or "material adverse effect" qualifications therein as of the date of the merger 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);

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    certain other representations and warranties shall be true and correct as set forth on a schedule to the merger agreement;

    each of our other representations and warranties contained in the merger agreement, without giving effect to any materiality or "material adverse effect" qualifications therein, shall be true and correct as of the date of the merger 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 to be true and correct, would not have a material adverse effect;

    KLX shall have performed or complied in all material respects with its obligations required under the merger agreement to be performed or complied with on or prior to the closing;

    since the date of the merger agreement, there shall not have occurred any material adverse effect on KLX;

    Boeing shall have received at the closing a certificate signed by an executive officer of KLX certifying as to the matters set forth in the six bullets above;

    KLX 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 effective time; and

    the spin-off (or the distribution of the proceeds of a sale of the ESG Business) shall have been (i) duly and validly authorized by all necessary corporate action by KLX and KLX Energy Services, (ii) approved by the KLX Board and (iii) consummated or shall be consummated contemporaneously with the merger becoming effective.

        The obligation of KLX to effect the merger is subject to the satisfaction or (to the extent permitted by applicable law) written waiver by KLX at or prior to the closing of the following additional conditions:

    each of the representations and warranties of Boeing and Merger Sub contained in the merger 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 and correct would not, individually or in the aggregate, prevent, materially delay or materially impair Boeing's or Merger Sub's ability to consummate the transactions contemplated by the merger agreement;

    Boeing and Merger Sub shall have performed or complied in all material respects with each of their respective obligations required under the merger agreement to be performed or complied with on or prior to the closing; and

    KLX shall have received at the closing a certificate signed by an executive officer of Boeing certifying as to the matters set forth in the two bullet points immediately above.


Termination of the Merger Agreement

        Notwithstanding anything contained in the merger agreement to the contrary, the merger agreement may be terminated at any time prior to the effective time by mutual written consent of each

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of Boeing and KLX. In addition, the merger agreement may be terminated at any time prior to the effective time by either Boeing or KLX if:

    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 the merger agreement pursuant to this provision is not 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 the merger 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 such termination date (A) the condition related to antitrust approval is the only condition that remains unsatisfied or which has not been waived by the party then entitled to give such waiver (other than the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) and 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 such termination date)), or (B) with respect to the antitrust approvals required to be received in the U.S., Turkey, the European Union, Israel, Colombia and South Korea, 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 Boeing or KLX until 5:00 p.m. (New York time) on July 30, 2019 (the "final termination date");

    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 contemplated by the merger agreement or the spin-off agreements (or the agreements governing the sale of the ESG Business), and in the case of such an order, such order shall have become final and non-appealable; provided that the right to terminate the merger agreement pursuant to this provision shall not be available to a party if the issuance of such order was proximately caused by the failure of such party, and in the case of Boeing, including the failure of Merger Sub, to perform or comply with any of its obligations under the merger agreement; or

    KLX stockholder approval of the merger proposal by a majority of the KLX stockholders shall not have been obtained upon a vote taken thereon at a KLX stockholder meeting duly convened therefor or at any adjournment or postponement thereof.

        KLX may also terminate the merger agreement if:

    the inaccuracy of any of Boeing's or Merger Sub's respective representations or warranties or the breach or failure to perform any of Boeing's or Merger Sub's covenants or other obligations set forth in the merger agreement, which breach or failure to perform (A) would result in the failure of a condition to KLX's obligation to consummate the merger and (B) is not capable of being cured by Boeing or Merger Sub, as applicable, by the termination date or, if capable of being cured, shall not have been cured by Boeing or Merger Sub on or before the earlier of (x) the termination date and (y) the date that is 30 calendar days following KLX's delivery of written notice to Boeing of such inaccuracy, breach or failure to perform; provided that KLX shall not have the right to terminate the merger agreement pursuant to this provision if KLX is then in material breach of any of its representations, warranties, covenants or other obligations set forth in the merger agreement; or

    at any time prior to receipt of stockholder approval of the merger proposal by a majority of the KLX stockholders and upon the substantially concurrent payment of a $105 million termination fee (it being understood that any purported termination pursuant to this provision shall be null and void if KLX does not timely pay such termination fee), KLX shall have made an adverse

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      recommendation change and entered into a definitive agreement with respect to a superior proposal in compliance with the applicable provisions of the merger agreement; provided that KLX shall not have the right to terminate the merger agreement pursuant to this provision unless KLX has complied in all material respects with the provisions in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes.

        Boeing may also terminate the merger agreement if:

    the inaccuracy of any of KLX's representations or warranties, or the breach or failure to perform any of KLX's covenants or other obligations set forth in the merger agreement, which breach or failure to perform (A) would result in the failure of a condition to Boeing's and Merger Sub's obligation to consummate the merger and (B) is not capable of being cured by KLX by the termination date or, if capable of being cured, shall not have been cured by KLX on or before the earlier of (x) the termination date and (y) the date that is 30 calendar days following Boeing's delivery of written notice to KLX of such inaccuracy, breach or failure to perform; provided that Boeing shall not have the right to terminate the merger agreement pursuant to this provision if Boeing or Merger Sub is then in material breach of any of its representations, warranties, covenants or other obligations set forth in the merger agreement;

    at any time prior to the receipt of KLX stockholder approval of the merger proposal by a majority of the KLX stockholders, the KLX Board shall have made an adverse recommendation change or KLX shall have failed to include in the proxy statement a recommendation in favor of the merger proposal;

    KLX shall have breached in any material respect any of its obligations in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes; or

    at any time after 5:00 p.m. (New York time) on January 11, 2019, if the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) are the only conditions 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 closing of the merger, but that are capable of being satisfied as of such time (assuming the closing of the merger were to occur as of such time)), provided that the right to terminate the merger agreement pursuant to this provision is not available to Boeing if the inaccuracy of Boeing's representations or warranties or the failure of Boeing to perform or comply with any of its obligations under the merger agreement has been the proximate cause of the failure of the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business), as applicable.


Termination Fees and Expenses

        We will be required to pay Boeing a termination fee equal to $70 million in cash in the following circumstances:

    the merger agreement is terminated by Boeing or KLX because KLX stockholder approval of the merger proposal is not obtained upon a vote taken thereon at the KLX stockholder meeting duly convened and, within nine months after such termination, KLX enters into a definitive agreement with a person that made an acquisition proposal (provided that the reference to 20% in the definition of acquisition proposal is deemed to be 50% and in no case will a definitive agreement involving solely the sale of the ESG Business constitute an acquisition proposal); or

    the merger agreement is terminated by Boeing due to the inaccuracy of any of KLX's representations and warranties, or the breach of any of KLX's covenants or obligations in the merger agreement, which breach would result in the failure to satisfy a closing condition and is not capable of being cured by KLX by the termination date or is not so cured and, within nine months after such termination, KLX enters into a definitive agreement with a person that made

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      an acquisition proposal (provided that the reference to 20% in the definition of acquisition proposal is deemed to be 50% and in no case will a definitive agreement involving solely the sale of the ESG Business alone constitute an acquisition proposal).

        We will be required to pay Boeing a termination fee equal to $105 million in cash in the following circumstances:

    the merger agreement is terminated by KLX where, at any time prior to receipt of KLX stockholder approval of the merger proposal, KLX shall have made an adverse recommendation change, entered into a definitive agreement with respect to a superior proposal in compliance with the applicable provisions of the merger agreement and complied in all material respects with the provisions in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes,

    the merger agreement is terminated by Boeing where, at any time prior to the receipt of stockholder approval of the merger proposal, the KLX Board shall have made an adverse recommendation change or KLX shall have failed to include in the proxy statement a recommendation in favor of the merger proposal, or

    the merger agreement is terminated by Boeing where KLX shall have breached in any material respect any of its obligations in the merger agreement related to non-solicitation, acquisition proposals and adverse recommendation changes.

        We will be required to pay Boeing a termination fee equal to $175 million in cash in the following circumstance: the merger agreement is terminated by Boeing at any time after 5:00 p.m. (New York time) on January 11, 2019, because the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business) are the only conditions 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 closing of the merger, but that are capable of being satisfied as of such time (assuming the closing of the merger were to occur as of such time)) (provided that Boeing cannot terminate the merger agreement on this basis if the inaccuracy of Boeing's representations or warranties or the failure of Boeing to perform or comply with any of its obligations under the merger agreement has been the proximate cause of the failure of the conditions related to the Form 10 and the spin-off (and the sale of the ESG Business)).

        Boeing will be required to pay KLX a termination fee equal to $175 million in cash in the following circumstances:

    the merger agreement is terminated by Boeing or KLX where the merger has not been consummated on or before April 30, 2019 (as may be extended to July 30, 2019 under the merger agreement) and at the time of such termination either (i) a governmental authority having jurisdiction over KLX shall have issued or entered any order, or enacted or promulgated a law, in each case, pursuant to applicable antitrust law and that is then in effect and has the effect of permanently restraining, enjoining or otherwise prohibiting the consummation of the merger, the spin-off or the other transactions contemplated by the merger agreement and the distribution agreement or (ii) the condition with respect to the receipt of antitrust approvals required in the U.S., Turkey, the European Union, Israel, Colombia and South Korea shall not have been satisfied and the condition related to antitrust approvals is the only condition that remains unsatisfied or which has not been waived by the party then entitled to give such waiver; or

    the merger agreement is terminated by Boeing or KLX where any U.S. governmental authority has issued or entered an order or any applicable law has been enacted or promulgated, in each case with respect to antitrust law, that has the effect of permanently restraining, enjoining or

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      otherwise prohibiting the merger or the spin-off and such order shall have become final and non-appealable.


Amendment and Waiver of the Merger Agreement

        Subject to the provisions of applicable law, the merger agreement may be amended by the parties thereto in writing at any time before or after receipt of KLX stockholder approval of the merger proposal. However, after stockholder approval of the merger proposal is obtained, there can be no amendment that by applicable law or in accordance with the rules of any stock exchange requires further approval by the KLX stockholders without such further approval of such stockholders.

        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 in the merger agreement or in any document delivered pursuant to the merger agreement and (c) waive compliance with any agreement or condition contained in the merger agreement. Such waivers are only valid if set forth in an instrument in writing signed on behalf of the party to be bound thereby.


Assignment of the Merger Agreement

        The merger agreement may not be assigned by operation of law or otherwise without the prior written consent of each of the other parties thereto, subject to Merger Sub's ability to assign its rights, interests and obligations under the merger agreement to other subsidiaries of Boeing provided that Boeing remains primarily liable for Merger Sub's obligations under the merger agreement.

        On June 1, 2018, the parties amended the merger agreement to add South Korea to the list of antitrust approvals required as a condition to closing. See "Condition to Closing the Merger" beginning on page [111].


Specific Performance

        The parties are entitled to seek injunction, specific performance and other equitable remedies to prevent breaches of the merger agreement and to enforce the terms thereof.

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SPIN-OFF TRANSACTION AGREEMENTS

        The merger agreement requires that, in connection with the spin-off, KLX and KLX Energy Services enter into the distribution agreement no later than July 14, 2018 and, concurrently therewith, KLX and KLX Energy Services will enter into the employee matters agreement, the transition services agreement, and the IP matters agreement. The summary of the material provisions of the distribution agreement, the employee matters agreement, the transition services agreement and the IP matters agreement, forms of each of which are attached to this proxy statement as Annex D, Annex E, Annex F and Annex G, respectively, and each of which is hereby incorporated by reference into this proxy statement, does not purport to be complete and may not contain all of the information about these agreements that is important to you. We encourage you to read carefully each of these agreements in its entirety


Distribution Agreement

        KLX will enter into a distribution agreement with KLX Energy Services before KLX Energy Services' common stock is distributed to KLX stockholders. That agreement will set forth the principal actions to be taken in connection with the spin-off of the ESG Business from KLX. It will also set forth other agreements that govern certain aspects of KLX's relationship with KLX Energy Services following the spin-off. In connection with the spin-off contemplated by the distribution agreement, a Form 10 registration statement will be filed that will contain additional detail regarding the spin-off.

        The Distribution.    The distribution agreement will govern the rights and obligations of the parties regarding the proposed distribution and spin-off. KLX will cause its agent to distribute all of the shares of KLX Energy Services on a pro rata basis to KLX stockholders who hold shares of KLX common stock as of the record date for the spin-off.

        Conditions.    The distribution agreement will provide that the distribution is subject to several conditions that must be satisfied, including, among others, the approval of the KLX Board, the effectiveness of the applicable Form 10, any necessary approvals of non-United States governmental authorities and no governmental authority with jurisdiction having issued or entered any order or enacted any applicable law after the date of the distribution agreement prohibiting consummation of the spin-off. The distribution agreement will provide that the KLX Board will, in its sole discretion, determine the record date, the distribution date and the terms of the distribution and may, at any time prior to the completion of the distribution, decide to abandon or modify the distribution, subject to compliance with the terms of the merger agreement.

        Termination.    Unless the merger agreement has been terminated, Boeing's consent is required to terminate the distribution agreement.

        Release of Claims.    KLX and KLX Energy Services will each release the other and its wholly owned subsidiaries and affiliates, and their respective stockholders (other than the public stockholders of KLX), directors, officers, agents and employees (in their respective capacities as such) from any claims against any of them that arise out of or relate to events or actions occurring or failing to occur or any conditions existing at or prior to the distribution. These releases will be subject to certain exceptions set forth in the distribution agreement including, among others, obligations under the spin-off transaction agreements and the merger agreement.

        Indemnification.    KLX, on the one hand, and KLX Energy Services, on the other hand, will agree to indemnify each other against certain liabilities, among others, in connection with their respective businesses and breaches of any of the spin-off transaction agreements.

        KLX Energy Services will indemnify KLX to the extent that KLX determines that it is required to account for any gain on the distribution for U.S. federal or corresponding state and local income tax purposes, as calculated in the manner described in the distribution agreement. KLX Energy Services

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will pay any such indemnity to KLX either, at KLX Energy Services' option, in cash, by issuing shares of its common stock (in respect of which KLX would have the benefit of two demand registrations as well as piggy-back registration rights) to KLX or a combination of cash and shares of its common stock. In the event that, prior to January 11, 2019, KLX Energy Services has not received any required consent or waiver from its lenders or bond holders to effect the spin-off only due to Boeing's failure to provide its consent to the related consent fee, KLX Energy Services' total indemnification obligation pursuant to this provision will not exceed $50 million.

        KLX Energy Services will also indemnify KLX for certain other liabilities including, among others, in respect of any guarantees or obligations that are required to be removed as described in the "Credit and Support Obligations" section below, but which are not so removed.

        The indemnification obligations under the distribution agreement will be subject to certain notice and control of defense provisions, as well as certain limitations and obligations regarding double recovery, payment, mitigation and amount of recovery.

        Negative Free Cash Flow Reimbursement.    The distribution agreement will provide that KLX Energy Services will reimburse KLX for the amount of negative free cash flow of KLX Energy Services (defined as "FCF Net Amount" in the distribution agreement), if any, in the period from the date of execution of the merger agreement through the date of effectiveness of the spin-off. The distribution agreement will provide that this amount will be calculated and, if applicable, paid over after consummation of the spin-off and subject to KLX's review of and, if necessary, upon resolution of any related dispute regarding KLX Energy Services' calculation of this amount.

        KLX Energy Services Cash.    Subject to any payments pursuant to the immediately preceding provision, KLX Energy Services will be entitled to all cash generated by the operation of the ESG Business from May 1, 2018 through the effective date of the spin-off.

        Credit and Support Obligations.    The distribution agreement will provide that KLX Energy Services will use its commercially reasonable efforts to have KLX and its subsidiaries (other than KLX Energy Services) removed as guarantor of or obligor of any ESG Business liability, and to the extent this is not completed prior to the distribution, KLX Energy Services or one of its subsidiaries will provide certain guarantees or other obligations related to such unremoved obligations and guarantees.

        Transaction Expenses.    Subject to the consummation of the merger, KLX Energy Services will reimburse KLX for certain expenses in excess of $10 million incurred in connection with the spin-off. All other transaction costs and expenses will be borne by KLX.

        Non-Compete.    The distribution agreement will provide for a worldwide 5-year non-compete obligation of KLX Energy Services pursuant to which KLX Energy Services may not, subject to certain carve-outs, provide services or 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 commercial, business jet, military and defense airframe manufacturers, airlines, aircraft leasing companies, MRO providers, domestic military depots or general aviation and other distributors.

        Certain Legal and Accounting Matters.    The distribution agreement will also provide for the control of certain shared legal matters, the use of pre-distribution privileged information and ownership of information, as well as the sharing of certain accounting and financial information and limited access rights related to the creation of certain financial statements.

        Disputes.    Any disputes under the distribution agreement (other than in respect of negative free cash flows, which will be addressed by a mutually agreeable accounting firm and other than in respect of non-monetary or equitable relief) will, if not successfully resolved by the parties, be referred to an arbitration panel.

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Employee Matters Agreement

        At the same time as entering into the distribution agreement, KLX will enter into an employee matters agreement with KLX Energy Services that will set forth KLX's agreement with KLX Energy Services on the allocation of employees to KLX Energy Services and obligations and responsibilities regarding compensation, benefits and labor matters.

        Assignment of Employees.    Under the employee matters agreement, KLX will allocate all employees of KLX and its affiliates whose duties relate to the KLX Energy Services business, on or prior to the distribution date, to KLX Energy Services. Notwithstanding the foregoing, certain employees of KLX and its affiliates whose employment duties relate to the KLX Energy Services business will remain employed by KLX after the distribution date and will provide certain shared services to KLX and KLX Energy Services. Such employees will transfer to KLX Energy Services on or prior to completion of the merger. Except with respect to certain employees, the transfer of employment will not be deemed a severance of employment for purposes of any plan or arrangement of KLX, KLX Energy Services, or their respective subsidiaries and affiliates.

        Equity Awards.    The employee matters agreement will provide that the outstanding KLX equity awards held by employees moving to KLX Energy Services in connection with the spin-off will be permitted to remain outstanding under the LTIP and continue vesting and be satisfied at the relevant time following the distribution date in accordance with the LTIP's rules and relevant award agreements, with continued service at KLX Energy Services considered to be continued service at KLX for the purposes of vesting of such awards. Outstanding KLX Restricted Stock Awards, KLX PSU Awards and KLX RSU Awards held by employees moving to KLX Energy Services that remain in the LTIP as well as similar awards held by employees remaining with KLX after the spin-off will be equitably adjusted to preserve the aggregate fair market value (and thus the aggregate intrinsic value) of the award immediately before the distribution by multiplying the number of shares of KLX common stock subject to each such KLX Restricted Stock Award or KLX PSU Awards and KLX RSU Awards immediately prior to the distribution by a fraction, the numerator of which is the closing price per share of KLX common stock trading regular way on the Nasdaq Global Select Market on the distribution date, and the denominator of which is the opening price per share of KLX common stock on the first trading day following the distribution date on the Nasdaq Global Select Market. Such outstanding equity awards otherwise will not participate in the spin-off.

        Welfare Benefit Plans.    The employee matters agreement also addresses the treatment, with regard to welfare benefits, of employees remaining with KLX and employees transferring to KLX Energy Services in connection with the spin-off. In connection with the spin-off, KLX Energy Services will establish its own welfare benefit programs that are comparable to the welfare benefit programs maintained by KLX prior to the spin-off. Employees transferring to KLX Energy Services who participate in the KLX health and welfare plans will cease participation in such plans and will commence participation in the KLX Energy Services health and welfare plans. KLX will generally be responsible for all liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by KLX Energy Services participants under the KLX health and welfare plans prior to such transfer, and KLX Energy Services shall be so responsible for liabilities relating to, arising out of or resulting from health and welfare coverage or claims incurred by KLX Energy Services participants under the KLX Energy Services health and welfare plans after such transfer.

        Non-Qualified Deferred Compensation Plans.    The employee matters agreement will provide that, in connection with the spin-off, KLX Energy Services will establish deferred compensation plans for eligible KLX Energy Services employees and directors similar to those maintained by KLX. Prior to and following the distribution, KLX will retain all liability and responsibility in accordance with and pursuant to the KLX Inc. 2014 Deferred Compensation Plan, as amended.

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        Defined Contribution Plan.    The employee matters agreement will provide that, prior to the distribution date, KLX Energy Services will establish a tax qualified defined contribution plan that is comparable to the KLX tax qualified defined contribution plan, and KLX and KLX Energy Services will cause the accounts under the KLX plan of each KLX employee that is moving to KLX Energy Services to be transferred to the KLX Energy Services plan.

        Annual Incentive Plans.    The employee matters agreement will provide that KLX Energy Services will assume all obligations to pay eligible KLX employees that are moving to KLX Energy Services 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. KLX Energy Services is expected to implement its own annual incentive plans for the fiscal year ending January 31, 2020 and beyond.

        No Third Party Beneficiaries.    Nothing set forth in the employee matters agreement will create any right in any other person, including employees, former employees, any participant or any beneficiary thereof, in any benefit plan, or to continued employment with KLX or KLX Energy Services, or their respective subsidiaries or affiliates and nothing set forth in the employee matters agreement will be treated as an amendment or other modification of any benefit plan or shall prohibit KLX or KLX Energy Services or any of its subsidiaries or affiliates from amending or terminating any employee benefit plan.


Transition Services Agreement

        At the same time as entering into the distribution agreement, KLX will enter into a transition services agreement with KLX Energy Services, under which KLX, certain of its subsidiaries or certain third party service providers contracted by KLX will provide KLX Energy Services with certain services for a limited time following the spin-off to help ensure an orderly transition following the distribution.

        The services to be provided by KLX include treasury (including payroll), internal audit, tax, accounting, human resources/benefits, legal, IT services and other administrative services.

        The transition services agreement provides for a term of not more than six months from the date of the closing of the merger.

        In connection with any breach of the transition services agreement or otherwise with respect to the transition services, KLX's and its subsidiaries' maximum liability under the transition services agreement (and the sole remedy from KLX to KLX Energy Services with respect thereto) is a refund of the total fees paid for the applicable transition services. KLX Energy Services is generally required to indemnify KLX for any losses arising out of or in connection with the transition services, including KLX Energy Services' breach of the transition services agreement or exercise of its rights under such agreement.

        KLX Energy Services will have the right to terminate each service prior to the end of the term of the transition services agreement, and each party is entitled to terminate if the other party materially breaches any of its obligations under the agreement after notice and an opportunity to cure.


IP Matters Agreement

        At the same time as entering into the distribution agreement, KLX will enter into an IP matters agreement with KLX Energy Services, which will govern (1) the transfer of certain KLX trademarks from KLX to KLX Energy Services, which is to occur upon the consummation of the merger, and (2) the rights and obligations of each of KLX and KLX Energy Services with respect to the assigned KLX trademarks prior to and after the consummation of the merger.

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Co-existence.

        Following the spin-off but prior to the closing of the merger, KLX will grant KLX Energy Services an interim limited license to use such KLX trademarks in the form of "KLX Energy Services" in connection with the ESG Business. If the merger agreement is terminated after the distribution has been consummated, KLX and KLX Energy Services agree to enter into a long-term brand co-existence agreement with respect to the KLX trademarks.

Assignment.

        Upon the closing of the merger, (1) KLX will assign such KLX trademarks and related rights to KLX Energy Services, and (2) KLX Energy Services agrees that it will not use such KLX trademarks within the fields of use in which the ASG Business operates.

Rebranding.

        Following the closing of the merger, as soon as reasonably practicable, KLX shall (1) no later than 180 days after the closing of the merger, remove "KLX" from the names of any ASG Business entities containing "KLX", (2) no later than 180 days after the closing of the merger, cease using "KLX" on any real physical properties, equipment, and websites, and (3) no later than 365 days thereafter, remove "KLX" from all ASG Business products and marketing materials. For the 365 day period following the closing of the merger, KLX Energy Services will grant KLX a non-exclusive, irrevocable, royalty-free, non-transferable, non-sublicensable license to such KLX trademarks to enable the ASG Business to rebrand and transition off usage of such KLX trademarks.

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ADVISORY VOTE ON NAMED EXECUTIVE OFFICER
MERGER-RELATED COMPENSATION PROPOSAL
(PROPOSAL 2)

The Proposal

        As required by Item 402(t) of Regulation S-K and Section 14A of the Exchange Act, KLX is providing its stockholders with the opportunity to cast a non-binding advisory vote on the named executive officer merger-related compensation that may become payable to its named executive officers in connection with the completion of the merger, as disclosed pursuant to Item 402(t) of Regulation S-K in the section captioned "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement. As required by Section 14A of the Exchange Act, KLX is asking its stockholders to vote on the adoption of the below resolution.

Vote Required and Board Recommendation

        Under KLX's bylaws, approval of the named executive officer merger-related compensation proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote thereon at the special meeting, provided a quorum is present.

        KLX believes that the information regarding named executive officer merger-related compensation that may become payable to its named executive officers in connection with the completion of the merger is reasonable and demonstrates that KLX's executive compensation program was designed appropriately and structured to ensure the retention of talented executives and a strong alignment with the long-term interests of KLX's stockholders. This vote is not intended to address any specific item of compensation, but rather the overall compensation that may become payable to KLX's named executive officers in connection with the completion of the merger. In addition, this vote is separate and independent from the vote of stockholders to approve the completion of the merger. KLX asks that its stockholders vote "FOR" the following resolution:

        "RESOLVED, that the named executive officer merger-related compensation, as disclosed pursuant to Item 402(t) of Regulation S-K in the section captioned "The Merger Proposal (Proposal 1)—Interests of KLX's Executive Officers and Directors in the Merger—Summary of Potential Transaction Payments to Executive Officers and Directors of KLX" beginning on page 81 of this proxy statement, is hereby APPROVED."

        This vote is advisory, and therefore, it will not be binding on KLX, nor will it overrule any prior decision or require the KLX Board (or any committee thereof) to take any action. However, the KLX Board values the opinions of KLX stockholders, and to the extent that there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, the KLX Board will consider stockholders' concerns and will evaluate whether any actions are necessary to address those concerns. The KLX Board will consider the approval of the foregoing resolution as advisory approval of the compensation that may become payable to KLX's named executive officers in connection with the completion of the merger.

        The KLX Board unanimously recommends that you vote "FOR" the named executive officer merger-related compensation proposal.

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ADJOURNMENT PROPOSAL
(PROPOSAL 3)

        KLX stockholders are being asked to approve a proposal that will give us authority from the stockholders to adjourn the special meeting for the purpose of soliciting additional proxies in favor of the merger proposal if there are not sufficient votes at the time of the special meeting to approve the merger proposal. If a quorum is not present, the chairman of the special meeting or the stockholders, by the affirmative vote of a majority of the shares of KLX common stock present at the special meeting, in person or by proxy, may adjourn the special meeting to another place, date or time.

        In addition, the KLX Board could postpone the special meeting before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, your shares will be voted in favor of the adjournment proposal. KLX does not intend to call a vote on this proposal if the merger proposal has been approved at the special meeting.

        Approval of the adjournment proposal requires the affirmative vote of the holders of a majority of the shares of KLX common stock present in person or by proxy at the special meeting, provided that a quorum is present. If no quorum is present at the special meeting, the chairman of the special meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of KLX common stock present or represented by proxy at the special meeting, may adjourn the special meeting. Abstentions will count for the purpose of determining whether a quorum is present. Assuming a quorum is present at the special meeting, abstentions will have the same effect as a vote against the adjournment proposal, but the failure to provide brokers with voting instructions or to vote will have no effect on the outcome of the adjournment proposal.

        The KLX Board unanimously recommends that KLX stockholders vote "FOR" the adjournment proposal.

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MARKET PRICES OF KLX COMMON STOCK

Market Information

        KLX common stock trades on Nasdaq under the symbol "KLXI." The following table shows the intraday high and low sales price of KLX common stock for each of our fiscal quarters in 2017 and 2016, for the first quarter of 2018 and for the second quarter of 2018 (through May 25, 2018).

Fiscal Year
  High   Low  

2016

             

First Quarter

  $ 34.29   $ 25.33  

Second Quarter

  $ 35.25   $ 28.65  

Third Quarter

  $ 39.00   $ 30.97  

Fourth Quarter

  $ 50.33   $ 33.17  

2017

             

First Quarter

  $ 52.40   $ 42.45  

Second Quarter

  $ 53.13   $ 46.01  

Third Quarter

  $ 55.76   $ 45.73  

Fourth Quarter

  $ 72.53   $ 52.82  

2018

             

First Quarter

  $ 82.50   $ 62.77  

Second Quarter (through May 25, 2018)

  $ 75.23   $ 69.61  

        The closing sales price of KLX common stock on Nasdaq on May 25, 2018, the latest practicable date before the printing of this proxy statement, was $72.30 per share. The closing sales price of KLX common stock on Nasdaq on April 30, 2018, the last trading day prior to the public announcement of the proposed merger, was $78.23 per share. You are urged to obtain current market quotations for KLX common stock when considering whether to approve the merger proposal. The merger consideration, consisting of $63.00 in cash per share, without interest, is in addition to the shares of KLX Energy Services that our stockholders as of the record date of the spin-off will receive in the spin-off.

Holders

        As of May 25, 2018, there were 1,421 record holders of KLX common stock.

Dividends

        In 2017, 2016 and 2015, KLX did not pay any stockholder dividends. Under the merger agreement, described in "The Merger Agreement—Conduct of Business Pending the Merger" on page 97, we are prohibited from declaring, setting aside, making or paying any dividend or other distribution on our common stock (other than any dividends or distributions to a subsidiary of KLX and other than as contemplated by the spin-off) prior to the completion of the merger.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The table below shows how much of our common stock was beneficially owned as of May 1, 2018 (unless another date is indicated) by (i) each person known by KLX to beneficially own more than 5% of our common stock, (ii) each director (who was serving as a director as of that date) and nominee for director, (iii) each named executive officer and (iv) all current directors and executive officers as a group.

 
  Common Stock Beneficially Owned  
Name of Beneficial Owner
  Number of Shares(1)   Percentage of
Outstanding Shares
 

Beneficial Owners of More than 5%:

             

BlackRock, Inc.(2)

   
6,758,972
   
13.7

%

55 East 52nd Street

             

New York, NY 10055

             

The Vanguard Group(3)

   
4,421,574
   
8.77

%

100 Vanguard Blvd.

             

Malvern, PA 19355

             

Dimensional Fund Advisors LP(4)

   
3,640,409
   
7.23

%

Building One

             

6300 Bee Cave Road

             

Austin, TX 78746

             

Directors and Executive Officers:

   
 
   
 
 

Amin J. Khoury+*(5)

   
338,917
   
**
 

John T. Collins*(6)

   
10,779
   
**
 

Peter V. Del Presto*(7)

   
11,253
   
**
 

Richard G. Hamermesh*(8)

   
11,010
   
**
 

Benjamin A. Hardesty*(9)

   
5,199
   
**
 

Stephen M. Ward, Jr.*(10)

   
10,173
   
**
 

Theodore L. Weise*(11)

   
5,199
   
**
 

John T. Whates, Esq.*(12)

   
5,656
   
**
 

Thomas P. McCaffrey+(13)

   
233,208
   
**
 

Michael F. Senft+(14)

   
21,147
   
**
 

John Cuomo+(15)

   
28,617
   
**
 

Roger Franks+(16)

   
8,429
   
**
 

All directors and executive officers as a group (fifteen persons)(17)

   
708,778
   
**
 

+ Named executive officer * Director of the Company ** Less than 1 percent

(1)
As of May 1, 2018, KLX had 50,741,488 shares of common stock outstanding.

(2)
Based solely on information in Schedule 13G/A, as of December 31, 2017, filed by BlackRock, Inc. on January 19, 2018.

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(3)
Based solely on information in Schedule 13G/A, as of December 31, 2017, filed by The Vanguard Group on February 9, 2018.

(4)
Based solely on information in Schedule 13G, as of December 31, 2017, filed by Dimension Fund Advisors LP on February 9, 2018.

(5)
Excludes 235,191 shares of our common stock underlying restricted stock awards, restricted stock units and performance stock units that do not vest within 60 days of May 1, 2018.

(6)
Excludes 3,598 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(7)
Excludes 3,562 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(8)
Excludes 3,584 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(9)
Excludes 3,535 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(10)
Excludes 3,339 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(11)
Excludes 3,535 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(12)
Excludes 3,571 shares of our common stock underlying restricted stock awards that do not vest within 60 days of May 1, 2018.

(13)
Includes 7,525 shares owned indirectly and excludes 156,739 shares of our common stock underlying restricted stock awards, restricted stock units, performance stock awards and performance stock units that do not vest within 60 days of May 1, 2018.

(14)
Excludes 45,485 shares of our common stock underlying restricted stock awards, restricted stock units and performance stock units that do not vest within 60 days of May 1, 2018.

(15)
Excludes 37,352 shares of our common stock underlying restricted stock awards, performance stock awards and performance stock units that do not vest within 60 days of May 1, 2018.

(16)
Excludes 34,610 shares of our common stock underlying restricted stock awards, restricted stock units, performance stock awards and performance stock units that do not vest within 60 days of May 1, 2018.

(17)
Excludes 589,603 shares of our common stock underlying restricted stock awards, restricted stock units, performance stock awards and performance stock units that do not vest within 60 days of May 1, 2018. Includes 680 shares of our common stock underlying restricted stock awards that will vest within 60 days of May 1, 2018.

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER

        The following is a summary of the material U.S. federal income tax consequences of the merger to "U.S. holders" and "Non-U.S. holders" (in each case, as defined below). It addresses U.S. holders and non-U.S. holders of KLX common stock whose shares will be converted into the right to receive cash in the merger. This summary deals only with U.S. holders or Non-U.S. holders that use the U.S. dollar as their functional currency and hold their KLX common stock as a capital asset.

        This summary does not address tax considerations applicable to investors subject to special rules, such as persons owning (either actually or constructively) 10% or more of KLX or KLX Energy's common stock, certain financial institutions, dealers or traders, insurance companies, tax exempt entities, persons holding their shares as part of a hedge, straddle, conversion, constructive sale or other integrated transaction, expatriates, or holders who acquired KLX common stock pursuant to the exercise of an employee stock option or other right or otherwise as compensation. Also, this summary does not address U.S. federal income tax considerations applicable to holders of options or other rights to purchase KLX common stock. It also does not discuss the tax considerations relevant to U.S. holders or Non-U.S. holders exercising their appraisal rights under Section 262 of the DGCL. It also does not address any U.S. state and local tax, or non-U.S. tax considerations.

        As used here, "U.S. holder" means a beneficial owner of KLX common stock that is, for U.S. federal income tax purposes, (i) a citizen or individual resident of the United States, (ii) a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia, (iii) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (iv) an estate the income of which is subject to U.S. federal income tax without regard to its source. For purposes of this discussion, a "Non-U.S. holder" is a beneficial owner of KLX or KLX Energy Services common stock (as applicable) that is, for U.S. federal income tax purposes, an individual, a corporation, a trust or an estate that is not a U.S. holder.

        The tax consequences to a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) exchanging its KLX common stock for the right to receive cash in the merger generally will depend on the status of the partnership and the activities of its partners. Partnerships holding KLX common stock should consult their own tax advisors about the U.S. federal income tax consequences to their partners from participating in the merger.

        This discussion assumes that KLX is not considered a United States real property holding company. This discussion also assumes that the merger will be completed as planned.

U.S. Holders

        For U.S. federal income tax purposes, the exchange of KLX common stock for cash by U.S. holders will be treated as a taxable sale. Such U.S. holders will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received and the U.S. holder's adjusted tax basis in such shares. A U.S. holder's adjusted tax basis generally will equal the price the U.S. holder paid for such shares, reduced by the value of ESG common shares distributed in the spin-off to the extent such distribution is not treated as a dividend because the distribution exceeds KLX's current and accumulated earnings and profits.

        Such gain or loss will be capital gain or loss and generally will be treated as long-term capital gain or loss if the U.S. holder has held the shares of KLX common stock for more than one year at the time of the effective time of the merger. Long-term capital gains of non-corporate U.S. holders (including individuals) are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

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        Special rules would apply to treat capital loss that otherwise would be short-term as long-term or to reduce adjusted basis in KLX common stock in the case of a U.S. holder treated as having received an extraordinary dividend upon the receipt of the KLX Energy Services common stock in the spin-off. U.S. holders receiving KLX Energy Services common stock in the spin-off should consult the information statement to be filed as an exhibit to the Form 10 that will be filed by KLX Energy Services with the SEC with respect to the spin-off and their own tax advisors regarding the possibility of receiving an extraordinary dividend and potential consequences thereof.

        U.S. holders receiving cash in lieu of a fractional share of KLX Energy Services common stock will recognize gain or loss between their adjusted tax basis in such share (as described above) and the amount of cash received in respect of such fractional share, as if such fractional share had actually been received and subsequently sold. Such gain or loss will be capital gain or loss and generally will be treated as short-term capital gain or loss.

        Capital gains earned by non-corporate U.S. holders may be subject to the 3.8% Medicare tax on net investment income.

Non-U.S. Holders

        Subject to the discussions under "Material U.S. Federal Income Tax Consequences of the Merger—Information Reporting and Backup Withholding" a Non-U.S. holder will generally not be subject to any U.S. federal income tax or withholding tax on any gain realized upon such holder's disposition of KLX common stock in the merger. Any gain on disposing of KLX common stock may be subject to U.S. net income tax (and in respect of corporate Non-U.S. Holders, branch profits tax) if the gain is effectively connected with a trade or business of the Non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base of the Non-US Holder within the United States). Additionally, a Non-U.S. holder that is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and meets certain other requirements, generally will be subject to a flat 30% tax on the amount by which gain derived from the sale, together with certain other U.S. source capital gains realized during such year, exceeds certain U.S. source capital losses realized during such year.

Information Reporting and Backup Withholding.

        In general, information reporting requirements may apply to merger consideration paid to U.S. holders and Non-U.S. holders, unless an exemption applies. Backup withholding tax may apply to amounts subject to reporting if the holder fails to provide an accurate taxpayer identification number or fails to report all interest and dividends required to be shown on its U.S. federal income tax returns. A U.S. holder or Non-U.S. holder generally can claim a credit against its U.S. federal income tax liability if any, for the amount of any backup withholding tax and a refund of any excess, provided that all required information is timely provided to the IRS. U.S. holders and Non-U.S. holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for establishing an exemption.

        THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR HOLDER. EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF THE MERGER IN LIGHT OF THE INVESTOR'S OWN CIRCUMSTANCES.

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FUTURE KLX STOCKHOLDER PROPOSALS

        KLX has not determined whether it will hold its 2018 annual meeting of stockholders due to the merger proposal. If the merger is not completed, KLX stockholders will continue to be entitled to attend and participate in KLX annual meetings of stockholders. If KLX holds its 2018 annual meeting of stockholders, any stockholder proposal intended for inclusion in the proxy materials for the 2018 annual meeting must have been received by our Secretary at our headquarters no later than May 26, 2018. Where a stockholder does not seek inclusion of the proposal in the proxy material and submits a proposal outside of the process described in Rule 14a-8 of the Exchange Act, the proposal must still comply with the procedural requirements in KLX's bylaws. Accordingly, if the date of the annual meeting is within 30 days before or 70 days after the anniversary of the prior meeting, then written notice must be sent to the Secretary of KLX not less than 90 nor more than 120 calendar days before the first anniversary of the prior year's annual meeting.

        This means that for the 2018 annual meeting, written notice must have been delivered between the close of business on April 26, 2018 and the close of business on May 26, 2018. If the date of the annual meeting, however, is not within 30 days before or 70 days after the anniversary of the prior year's meeting date, a stockholder proposal must be submitted by the close of business on the 10th day following the public announcement of the date of such meeting. A copy of the full text of the bylaw provisions discussed above may be obtained by writing to: Secretary, KLX Inc., 1300 Corporate Center Way, Wellington, Florida 33414, or by telephone at (561) 383-5100. Any stockholder suggestions for director nominations must be submitted by the dates by which other stockholder proposals are required to be submitted as set forth above.

        The summaries set forth above are qualified in their entirety by our bylaws and the process for submitting a stockholder proposal as described in Rule 14a-8 of the Exchange Act.

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MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

        The SEC has adopted rules that permit companies and intermediaries, such as brokers and banks, to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement, as applicable, addressed to those stockholders, unless contrary instructions have been received. This procedure, which is commonly referred to as "householding," reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies.

        Certain brokerage firms may have instituted householding for beneficial owners of our common stock held through brokerage firms. If your family has multiple accounts holding our common stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or KLX at the address and telephone number below.

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WHERE YOU CAN FIND MORE INFORMATION

        Investors will be able to obtain free of charge this proxy statement and other documents filed with the SEC at the SEC's website at www.sec.gov. In addition, this proxy statement and our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website at www.klx.com as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information located on, or hyperlinked or otherwise connected to, KLX's website referenced anywhere in this proxy statement is not, and shall not be deemed to be, a part of this proxy statement or incorporated into any other filings that we make with the SEC. Additional information regarding the spin-off will be contained in the Form 10 to be filed by KLX Energy Services with the SEC with respect to the spin-off.

        The SEC allows us to "incorporate by reference" documents we file with the SEC into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except that information that we file later with the SEC will automatically update and supersede this information. This proxy statement incorporates by reference the documents listed below that have been previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

    KLX's Annual Report on Form 10-K for the fiscal year ended January 31, 2018, which was filed with the SEC on March 19, 2018, as amended by Amendment No. 1 thereto on Form 10-K/A, filed with the SEC on March 22, 2018;

    KLX's Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2018, which was filed with the SEC on March 23, 2018; and

    KLX's Current Report on Form 8-K filed with the SEC on May 1, 2018.

        We also incorporate by reference into this proxy statement additional documents that KLX may file with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act, from the date of this proxy statement until the date of the special meeting; provided, however, that we are not incorporating by reference any additional documents or information furnished and not filed with the SEC. A copy of the materials that are incorporated by reference will be promptly delivered to any stockholder upon written request to: Secretary, KLX Inc., 1300 Corporate Center Way, Wellington, Florida 33414.

Participants in Solicitation

        KLX, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in such solicitation in connection with the proposed merger is set forth in the proxy statement filed with the SEC. Information about the directors and executive officers of KLX is set forth in its Annual Report on Form 10-K for the fiscal year ended January 31, 2018, which was filed with the SEC on March 19, 2018, and its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on May 26, 2017.

        These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement and other relevant materials filed with the SEC.

KLX Inc.
1300 Corporate Center Way
Wellington, Florida 33414
Tel. (561) 383-5100
www.klx.com

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        THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT.

        THIS PROXY STATEMENT IS DATED [    ·    ], 2018. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

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Annex A

April 30, 2018

THE BOEING COMPANY

KELLY MERGER SUB, INC.

and

KLX INC.



AGREEMENT AND PLAN OF MERGER




Table of Contents


CONTENTS

CLAUSE
  PAGE  
 

Article I Definitions

    A-2  

 


Article II The Merger


 

 

A-12

 
 

2.01

 

The Merger

    A-12  
 

2.02

 

The Closing

    A-13  
 

2.03

 

Effective Time

    A-13  
 

2.04

 

Certificate of Incorporation; Bylaws

    A-13  
 

2.05

 

Board of Directors; Officers

    A-13  
 

2.06

 

ESG Sale Election

    A-13  

 


Article III Effect of the Merger on capital stock


 

 

A-14

 
 

3.01

 

Effect on Securities

    A-14  
 

3.02

 

Exchange of Certificates

    A-15  
 

3.03

 

Company Equity Awards

    A-17  
 

3.04

 

Lost Certificates

    A-18  
 

3.05

 

Dissenting Shares

    A-19  
 

3.06

 

Transfers; No Further Ownership Rights

    A-19  

 


Article IV Representations and warranties of the Company


 

 

A-19

 
 

4.01

 

Organization; Qualification

    A-20  
 

4.02

 

Capitalization; Subsidiaries

    A-20  
 

4.03

 

Authority Relative to Agreement

    A-22  
 

4.04

 

No Conflict; Required Filings and Consents

    A-23  
 

4.05

 

Company SEC Reports; Financial Statements

    A-23  
 

4.06

 

Absence of Certain Changes or Events

    A-25  
 

4.07

 

No Undisclosed Liabilities

    A-25  
 

4.08

 

Litigation

    A-26  
 

4.09

 

Permits; Compliance with Applicable Laws

    A-26  
 

4.10

 

Information Supplied

    A-26  
 

4.11

 

Employee Benefit Plans; Labor

    A-27  
 

4.12

 

Taxes

    A-30  
 

4.13

 

Material Contracts

    A-32  
 

4.14

 

Trademarks, Patents and Copyrights

    A-34  
 

4.15

 

Real Property; Personal Property; Sufficiency of Assets

    A-35  
 

4.16

 

Environmental Matters

    A-36  
 

4.17

 

Government Contracts

    A-36  
 

4.18

 

Insurance

    A-37  
 

4.19

 

Takeover Statutes

    A-37  
 

4.20

 

Brokers

    A-37  
 

4.21

 

Opinion of Financial Advisor

    A-38  
 

4.22

 

Relations with Governments

    A-38  
 

4.23

 

Customers and Suppliers

    A-39  
 

4.24

 

Affiliate Transactions

    A-39  
 

4.25

 

No Other Representations or Warranties

    A-39  

 


Article V Representations and warranties of Parent and Merger Sub


 

 

A-39

 
 

5.01

 

Organization; Qualification

    A-40  
 

5.02

 

Authority Relative to Agreement

    A-40  
 

5.03

 

No Conflict; Required Filings and Consents

    A-40  
 

5.04

 

Information Supplied

    A-41  

A-i


Table of Contents

CLAUSE
  PAGE  
 

5.05

 

Brokers

    A-41  
 

5.06

 

Sufficient Funds

    A-41  
 

5.07

 

Share Ownership

    A-42  
 

5.08

 

No Other Representations or Warranties

    A-42  

 


Article VI Covenants and Agreements


 

 

A-42

 
 

6.01

 

Conduct of Business by the Company Pending the Merger

    A-42  
 

6.02

 

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

    A-47  
 

6.03

 

Regulatory Authorizations and Consents; Efforts

    A-49  
 

6.04

 

Access to Information; Confidentiality

    A-50  
 

6.05

 

No Solicitation by the Company

    A-51  
 

6.06

 

Directors' and Officers' Indemnification and Insurance

    A-54  
 

6.07

 

Notification of Certain Matters

    A-55  
 

6.08

 

Public Disclosure

    A-55  
 

6.09

 

Employee Benefits; Labor

    A-56  
 

6.10

 

Merger Sub

    A-57  
 

6.11

 

Rule 16b-3 Matters

    A-57  
 

6.12

 

State Takeover Laws

    A-57  
 

6.13

 

Stockholder Litigation

    A-58  
 

6.14

 

Company Notes

    A-58  
 

6.15

 

Payoff Letter

    A-59  
 

6.16

 

Intercompany Arrangements

    A-59  
 

6.17

 

IT Monitoring

    A-59  
 

6.18

 

Post-Signing Date Tax Letter

    A-60  

 


Article VII Conditions to the Merger


 

 

A-60

 
 

7.01

 

Conditions to the Obligations of Each Party to Effect the Merger

    A-60  
 

7.02

 

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

    A-60  
 

7.03

 

Conditions to Obligation of the Company to Effect the Merger

    A-61  
 

7.04

 

Frustration of Closing Conditions

    A-62  

 


Article VIII Termination, Amendment and Waiver


 

 

A-62

 
 

8.01

 

Termination

    A-62  
 

8.02

 

Effect of Termination

    A-64  
 

8.03

 

Termination Fees

    A-64  
 

8.04

 

Amendment

    A-66  
 

8.05

 

Extension; Waiver

    A-66  

 


Article IX General Provisions


 

 

A-67

 
 

9.01

 

Non-Survival of Representations and Warranties

    A-67  
 

9.02

 

Expenses

    A-67  
 

9.03

 

Notices

    A-67  
 

9.04

 

Interpretation; Certain Definitions

    A-68  
 

9.05

 

Severability

    A-69  
 

9.06

 

Assignment

    A-69  
 

9.07

 

Entire Agreement

    A-69  
 

9.08

 

No Third-Party Beneficiaries

    A-69  
 

9.09

 

Governing Law

    A-69  
 

9.10

 

Specific Performance

    A-69  
 

9.11

 

Consent to Jurisdiction

    A-70  
 

9.12

 

Counterparts

    A-70  
 

9.13

 

WAIVER OF JURY TRIAL

    A-70  

A-ii


Table of Contents


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:

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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.

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        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.

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        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).

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        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).

       &