EXHIBIT 10.4

 

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is entered into effective as of
February 26, 2015 (the “Effective Date”), by and between KLX Inc., a Delaware
corporation (the “Company”), and John A. Cuomo (the “Executive”).

RECITALS

WHEREAS, the Company wishes to continue to employ the Executive and the
Executive wishes to accept such employment on the terms and conditions hereafter
set forth; and

WHEREAS, the Company and the Executive are currently parties to an employment
agreement dated on March 9, 2012 (the “Prior Agreement”) that the Executive
entered into with B/E Aerospace, Inc., a Delaware corporation (“B/E”) when it
was the parent company of the Company and B/E assigned the Prior Agreement to
the Company in connection with the spin-off; and

WHEREAS, the Company wishes to continue to secure for itself the experience,
abilities and services of the Executive and to prevent the loss of such
experience, services and abilities subject to the terms and conditions set forth
herein; and

WHEREAS, concurrently with the execution and delivery of this Agreement, the
Executive and the Company are entering into the KLX 2015 Proprietary Rights
Agreement, (the “2015 Proprietary Rights Agreement”), attached hereto as Exhibit
A, and hereby incorporated by reference; and

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto, each intending to be legally
hound, do hereby agree as follows:

1.Employment. Unless otherwise terminated pursuant to the provisions of Section
4 or 5 hereof, the Company shall employ the Executive and the Executive shall
perform services for and continue in the employment of the Company commencing on
the Effective Date until the third anniversary of the Effective Date, and the
Executive’s employment hereunder shall automatically be extended on the first
anniversary date of the Effective Date and on each subsequent anniversary of the
Effective Date for additional one (1) year periods until either the Company or
the Executive gives the other party at least thirty (30) days’ written notice
prior to the anniversary of the Effective Date of any such year of its or his
desire to not renew the then current term of this Agreement, unless the
Executive’s employment is terminated earlier pursuant to this Agreement as
hereinafter set forth.  For purposes of this Agreement, the term “Employment
Term” shall mean the initial three (3) year period and all extensions thereof,
if any, as aforesaid, provided that the

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Executive continues to be employed by the Company; provided, however that for
the purposes of Sections 4 and 5 of this Agreement, the Employment Term shall
run through the last day of the then current Employment Term (assuming for this
purpose the Executive’s continued employment through such last day).

2.Position and Duties. The Executive shall serve the Company in the capacity of
Vice President and General Manager, Aerospace Solutions Group and shall be
accountable to and shall have such other powers, duties and responsibilities,
consistent with such capacity, as may from time to time be prescribed by the
President or Chief Operating Officer of the Company, or his/their designee, in
his/their sole discretion. The Executive shall perform and discharge,
faithfully, diligently and to the best of his ability, such powers, duties and
responsibilities and shall comply with all of the Company’s policies and
procedures. The Executive shall devote substantially all of his working time and
efforts to the business and affairs of the Company.

3.Compensation.

(a)Salary. During the Employment Term, the Executive shall receive a salary (the
“Salary”) payable at the rate of $360,081.00 per annum. Such rate shall be
subject to adjustment from time to time by the Compensation Committee of the
Board of Directors (the “Compensation Committee”). The Salary shall be payable
biweekly or in accordance with the Company’s current payroll practices, less all
required deductions. The Salary shall be pro-rated for any period of service
less than a full year.

(b)Incentive Bonus. During the Employment Term, the Executive shall be eligible
to receive an incentive performance bonus of up to 75% of the Salary (the
“Target Bonus”) in accordance with the Company’s executive bonus plan then in
effect, as determined by the Compensation Committee at the end of the applicable
fiscal year in its sole discretion. The incentive bonus, if any, shall be paid
in accordance with Company policy, but in no event later than March 15th of the
year following the year in which the Executive earned such bonus.

(c)Expenses. During the Employment Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses incurred by
him on behalf of the Company in accordance with the Company’s policies and
procedures in effect from time to time.

(d)Benefits. During the Employment Term, the Executive shall be entitled to
participate in or receive benefits under any life or disability insurance,
health, pension, retirement, accident, and other employee benefit plans,
programs and arrangements made generally available by the Company to its
executives, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements in effect from time to
time. In accordance with the Company’s policies in effect from time to time
applicable to the Executive, the Executive shall also be entitled to paid
vacation in any fiscal year during the Employment Term as well as all paid
holidays given by the Company to its employees.

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(e)Automobile. During the Employment Term, the Executive shall receive an
automobile allowance (the “Automobile Allowance”) of $1,100 per month less
applicable taxes, payable in accordance with Company policy, but in no event
later than March 15th of the year following the year in which the Automobile
Allowance will accrue.

(f)Equity Awards.

(i)During the Employment Term, the Executive shall be eligible to participate in
the Company’s equity incentive plan as determined by the Compensation Committee
in its sole discretion. The grant timing, form and amount of the equity awards
shall be determined by the Compensation Committee in its sole discretion. The
equity awards shall be granted pursuant to and subject to the terms of the
Company’s Long-Term Incentive Plan (or any successor plan) and an award
agreement to be entered into between the Company and the Executive.

(ii)Notwithstanding any provision in the applicable award documents, and as
additional consideration for the Executive’s non-competition and
non-solicitation covenants for the benefit of the Company set forth in Section 6
of this Agreement, the Executive’s time-vested equity awards shall, subject to
applicable law, accelerate and become immediately vested and unrestricted and,
as applicable, become immediately exercisable and remain exercisable through the
remainder of their term following the occurrence of any of the following events:
(A) the termination of the Executive’s employment without Cause pursuant to
Section 4(e), (B) the Executive’s termination due to Incapacity pursuant to
Section 4(c), (C) the Executive’s death, or (D) upon a Change of Control
Termination (as defined in Section 5, below). Nothing in this Section 3(f)(ii)
shall alter the terms of any equity awards subject to performance-based vesting.

4.Termination and Compensation Thereon.

(a)Termination. Subject to the terms and conditions of this Agreement, the
Executive’s employment pursuant to this Agreement may be terminated either by
the Executive or the Company at any time and for any reason. The term
“Termination Date” shall mean the date upon which the Executive’s employment is
terminated (i) by his death, (ii) by his Incapacity (as defined in Section
4(c)), (iii) otherwise in accordance with this Agreement, or (iv) for any other
reason, the Executive incurs a Separation from Service (as defined in Section
14(c)).

(b)Death.  The Executive’s employment shall terminate upon his death.  In such
event, the Company shall, within thirty (30) days following the date of death,
pay to such person as the Executive shall have designated in a notice filed with
the Company, or, if no such person shall have been designated, to the
Executive’s estate, a lump-sum amount equal to the sum of (A) a prorated portion
of 75% of the Executive’s then current Salary, with the prorated amount to be
determined based on the number of days that the Executive was employed by the
Company in the year during which the Termination Date occurs, (B) the
Executive’s Salary for the remainder of the Employment Term, (C) the maximum
annual contribution under the Company’s deferred

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compensation plan of seven and a half percent (7.5%) of the Executive’s total
base salary and annual cash bonus (with such maximum amount to be determined in
accordance with the terms of the applicable deferred compensation plan) that
would have been made during the remainder of the Employment Term and (D) two (2)
times the Executive’s Target Bonus, in the case of each of clauses (B), (C) and
(D) at the rates in effect as of the Termination Date (the lump sum amount
determined in accordance with this Section 4(b), the “Termination Amount”).

(c)Incapacity. If, in the reasonable judgment of the Chief Executive Officer of
the Company, as a result of the Executive’s incapacity due to physical or mental
illness, the Executive shall have been absent from his full-time duties as
described hereunder for the entire period of six (6) consecutive months
(“Incapacity”), the Executive’s employment shall terminate at the end of the six
(6)-month period. In such event, upon the Termination Date, the Company shall
pay to the Executive a lump-sum amount equal to the Termination Amount. The lump
sum payment shall be made within sixty (60) days following the Termination Date,
provided that prior to the payment date the Executive or his designated
appointee signs a waiver and release of claims agreement in the form provided by
the Company in its discretion and such waiver and release becomes effective and
irrevocable in its entirety prior to such date. If the waiver and release does
not become effective and irrevocable on or prior to the payment date set forth
in the preceding sentence, the Company shall have no further obligations
pursuant to Section 4(c). The Company’s obligation to pay the Executive his
Salary and benefits (to the extent not previously paid) shall terminate if the
Executive subsequently takes other employment to the extent of the Executive’s
salary and benefits from such subsequent employment. Any dispute between the
Company’s President or Chief Operating Officer and the Executive with respect to
the Executive’s Incapacity shall be settled by reference to a competent medical
authority mutually agreed to by the Company’s President or Chief Operating
Officer and the Executive, whose decision shall be limited to a determination of
whether the Company’s President or Chief Operating Officer had exercised
reasonable judgment in making a determination of the Executive’s Incapacity and
shall be binding on all parties, without any right to appeal.

(d)Termination by the Company for Cause; Resignation by the Executive.

(i)If the Company terminates the Executive’s employment for Cause or the
Executive resigns or terminates his employment for any reason, the Company shall
have no further obligations to the Executive hereunder after the Termination
Date, except for unpaid Salary and benefits accrued through the Termination
Date.

(ii)For purposes of this Agreement, “Cause” shall mean (i) the Executive’s
failure, refusal or neglect to perform and discharge his powers, duties,
obligations or responsibilities as an employee of the Company (including duties
prescribed hereunder or by the President and Chief Operating Officer pursuant to
Section 2 above), violation of Company policies, breach of the terms of this
Agreement or the 2015 Proprietary Rights Agreement, or breach of any fiduciary
duties or duties of loyalty the Executive may have because of any position the
Executive holds with the Company or any subsidiary or

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affiliate thereof; (ii) conviction of, or plea of nolo contendere to, a felony
or any other crime involving the Executive’s personal dishonesty or moral
turpitude or that could reflect negatively upon the Company or any of its
subsidiaries or affiliates; (iii) the Executive’s indictment by a grand jury for
acts detrimental to the Company’s best interests; or (iv) the Executive’s
engagement in willful misconduct (including any willful violation of federal
securities laws), negligence, act of dishonesty, violence or threat of violence,
in each case that would reasonably be expected to result in injury to the
Company or any of its subsidiaries or affiliates.

(e)Termination without Cause. The Company may terminate the
Executive’s employment hereunder at any time without Cause. In such event, the
Company shall pay to the Executive a lump sum amount equal to the Termination
Amount on the sixtieth (60th) day following the Termination Date.
Notwithstanding the foregoing, no payments shall be made pursuant to this
Section 4(e) unless the Executive signs a waiver and release agreement in the
form provided by the Company in its sole discretion and such waiver and release
becomes effective and irrevocable in its entirety within 60 days following the
Termination Date. If the waiver and release does not become effective and
irrevocable on or prior to the payment date set forth above in this Section
4(e), the Company shall have no further obligations pursuant to Section 4(e)).

(f)Benefit Continuation.  If the Executive’s employment is terminated pursuant
to Sections 4(b), 4(c), 4(e) or 5(c) then the Company shall provide the
Executive and, as applicable, his eligible spouse and eligible dependents with
continued participation in the medical, dental and health benefit plans (except
for the executive medical reimbursement plan) then generally available to the
Company’s executive officers on similar terms and conditions as active
executives, from the Termination Date until the earlier of (i) the first (1st)
anniversary of the Termination Date and (ii) the date the Executive becomes
eligible for comparable benefits provided by a third party; provided, however,
that the continuation of such benefits shall be subject to the continued
availability of and respective terms of the applicable plan, as in effect from
time to time, and the timely payment by the Executive of his allocable share of
the applicable premiums in effect from time to time. The Executive shall be
solely responsible for all taxes related to the receipt of post employment
medical, dental and health benefits.

5.Change of Control. 

(a)   Change of Control Payments.  In the event of a Change of Control of the
Company (as defined below) during the Employment Term, the Executive shall be
eligible to receive, subject to his continued employment with the Company (or
with any successor to the Company or any entity assigned this Agreement pursuant
to Section 16 of this Agreement) through each applicable payment date (as set
forth in Section 5(b)),  payments equal to the sum of (A) a prorated portion of
75% of the Executive’s then current Salary, with the prorated amount to be
determined based on the number of days that the Executive was employed by the
Company prior to the

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Change of Control Date during the year that the Change of Control occurs, (B)
the Executive’s Salary for the remainder of the Employment Term, (C) the maximum
annual contribution under the Company’s deferred compensation plan of seven and
a half percent (7.5%) of the Executive’s total base salary and annual cash bonus
(with such maximum amount to be determined in accordance with the terms of the
applicable deferred compensation plan) that would have been made during the
remainder of the Employment Term and (D) two (2) times the Executive’s Target
Bonus, in the case of each of clauses (B), (C) and (D) at the rates in effect as
of the Change of Control Date (the aggregate amount determined in accordance
with this Section 5(a), the “Change of Control Amount”).    For purposes of
determining the Company’s obligations under this Section 5 the date on which a
Change of Control is effective shall be referred to as the “Change of Control
Date.” 

(b)      Change of Control Payment Dates.  The Change of Control Amount shall be
paid to the Executive, subject to the Executive’s employment through each
applicable payment date, in equal biweekly installments beginning on the first
regular payroll date following the Change of Control Date and ending at the end
of the Employment Term (as in effect as of the Change of Control Date).

(c)      Change of Control Termination.  In the event that the Executive has a
Separation from Service due to the Executive’s employment being terminated by
the Company without Cause or due to the Executive’s death or Incapacity (a
“Change of Control Termination”) prior to the payment of the full Change of
Control Amount, the Executive shall be entitled to a lump sum payment equal to
the unpaid portion of the Change of Control Amount on the sixtieth (60th) day
following the date of the Change of Control Termination.  Notwithstanding the
foregoing, no payments shall be made pursuant to this Section 5(c) in connection
with a termination of employment without Cause or due to the Executive’s
Incapacity unless the Executive signs a waiver and release agreement in the form
provided by the Company in its sole discretion and such waiver and release
becomes effective and irrevocable in its entirety within 60 days following the
date that the Executive’s employment terminates. If the waiver and release does
not become effective and irrevocable on or prior to the payment date set forth
in this Section 5(c), the Company shall have no further obligations pursuant to
this Section 5.  If the Executive’s employment is terminated by the Company for
Cause or due to the Executive’s resignation for any reason, the Executive shall
forfeit the remaining portion of the Change of Control Amount and the Company
shall have no further obligations pursuant to this Section 5.

(d)      Definition of Change of Control.  For purposes of this Agreement, a
“Change of Control” shall mean a “change in control event” within the meaning of
the default rules under Section 409A of the U.S. Internal Revenue Code of 1986,
as amended, and the regulations and guidance promulgated thereunder (“Section
409A”).  The obligations of the Company pursuant to this Section 5 shall survive
any termination of this Agreement or the Executive’s employment.

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(e)        No Termination Payments.  In the event of a Change of Control,
whether or not any payments are made pursuant to this Section 5, the Executive
shall not be entitled to any compensation or benefits pursuant to Section 4
(except for accrued Salary and any benefits continuation provided pursuant to
Section 4(f) following a Change of Control Termination), including, without
limitation, any payments relating to a Termination Amount. 

6.Covenants of the Executive. In consideration of the receipt and execution of
this Agreement, including all of the benefits set forth herein that are beyond
or in addition to the benefits the Executive was previously entitled or eligible
to receive (each benefit separately and cumulatively being sufficient
consideration for the Executive’s covenants contained in this Section 6), and
the Executive’s continued employment as the Vice President and General Manager,
Aerospace Solutions Group (also separately being sufficient consideration for
the Executive’s covenants contained in this Section 6), the Executive agrees as
follows:

(a) Non-Competition.

(i)The Executive shall not during the Executive’s employment with the Company
and for two (2) years after the Termination Date (the “Non-Compete Restrictive
Period”), directly or indirectly:

(A)compete in the United States or on the internet with respect to
any “Competing Product or Service,” which is defined to mean those products
or services offered and/or under development by the Company or any of its
subsidiaries or affiliates during the Executive’s employment (both during the
term of this Agreement and any periods prior to this Agreement whereby Executive
was employed by the Company or its predecessors) with the Company of which the
Executive has knowledge, or any product or service competitive with or intended
to compete with such products or services, or any product or service of the
Company or any of its subsidiaries or affiliates which the Executive acquired
knowledge of as a result of, arising out of, or from his employment with the
Company (including its predecessors); and

(B)own, invest in, make loans to, operate, manage, control, participate in,
consult with, or advise, any entity or person that provides a Competing Product
or Service with the Company in the United States or on the internet. This
covenant shall not prevent the Executive from having passive investments of less
than five percent (5%) of the outstanding equity securities of any entity listed
for trading on a national stock exchange (as defined in the Securities Exchange
Act of 1934) or any recognized automatic quotation system.

(ii)If the Executive breaches any covenant contained in this Section 6(a),
the Executive agrees and acknowledges that the Non-Compete Restrictive Period
shall be extended during the time of such breach. The Executive further agrees
and acknowledges that, in the event of the Executive’s breach of any covenants
contained in this Section 6(a), the Non-Compete

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Restrictive Period may, to extent permitted by law, be extended for up to two
(2) years, which shall commence upon either (x) a determination by the Company
that the Executive has stopped breaching such covenants, or (y) the date of a
court’s or arbitrator’s final determination that the Executive breached a
covenant contained in Section 6(a).

(b)Non-Solicitation.

(i)As a separate and independent covenant, the Executive agrees that he
shall not during his employment with the Company and for two (2) years after the
Termination Date (the “Non-Solicitation Restrictive Period”), directly or
indirectly:

 

(A)contact, solicit, perform services for, or accept work or business (in any
capacity other than as a Company employee) from any clients or customers of the
Company, its subsidiaries or affiliates, with whom the Executive has worked or
had contact during the Executive’s employment with the Company, or of whom the
Executive had knowledge of due to his employment or access to the Company’s
confidential information and/or trade secrets;

 

(B)contact, solicit or accept contact from any clients, subcontractors,
consultants, vendors, suppliers or independent contractors of the Company, its
subsidiaries or affiliates, for the purpose of interfering with, causing,
inviting, or encouraging any such persons or entities from altering or
terminating their business relationship or association with the Company, its
subsidiaries or affiliates. This applies to any clients, subcontractors,
consultants, vendors, suppliers or independent contractors with whom the
Executive has worked or had contact during his employment with the Company, or
of whom the Executive had knowledge due to his employment or access to the
Company’s confidential information and/or trade secrets; or

 

(C)contact, solicit or accept contact from any employee of the Company, its
subsidiaries or affiliates for the purpose of interfering with their employment
with the Company, its subsidiaries or affiliates, or inviting or encouraging
them to terminate their employment with the Company, its subsidiaries or
affiliates or which has the effect of altering or terminating their employment
with the Company, its subsidiaries or affiliates.

(ii)If the Executive breaches any covenant contained in this Section 6(b),
the Executive agrees and acknowledges that the Non-Solicitation Restrictive
Period shall be extended during the time of such breach. The Executive further
agrees and acknowledges that, in the event of the Executive’s breach of any
covenants contained in this Section 6(b), the Non-Solicitation Restrictive
Period may, to the extent permitted by law, be extended for up to two (2) years,
which shall commence upon either (x) a determination by the Company that the
Executive has stopped breaching such covenants, or (y) the date of a

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court’s or arbitrator’s final determination that the Executive breached a
covenant contained in Section 6(b).

7.Amendments. No amendment to this Agreement or any schedule hereto shall be
effective unless it shall be in writing and signed by each party hereto.

8.Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given when delivered personally or sent by telecopy or three
(3) days after being mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

If to the Company, to it at:

KLX, Inc.

1300 Corporate Center Way

Wellington, FL 33414

Attention: Chief Operating Officer

If to the Executive, to him at:

John A. Cuomo

11 Island Avenue, #1501 Miami Beach, Florida 33139

9.Entire Agreement. This Agreement and the 2015 Proprietary Rights Agreement
constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties hereto, including, without limitation the Prior Agreement. The
non-solicitation and non-competition provisions in this Agreement and in the
2015 Proprietary Rights Agreement shall be deemed separate and distinct
provisions and each applicable time period shall run concurrently in accordance
with its terms for the benefit of the Company.

10.Headings. The headings in this Agreement are for convenience of reference
only and shall not alter or otherwise affect the meaning hereof

11.Counterparts. This Agreement may be executed in any number of counterparts
which together shall constitute one instrument.

12.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Florida.

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13.Withholding. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.

14.Section 409A.

 

(a)If any amounts that become due under Sections 4 or 5 of this Agreement
constitute “nonqualified deferred compensation” within the meaning of Section
409A, payment of such amounts shall not commence until the Executive incurs a
Separation from Service if and only if necessary to avoid accelerated taxation
or tax penalties in respect of such amounts.

 

(b)Notwithstanding any provision of this Agreement to the contrary, if Executive
is a “Specified Employee” (as defined below) he shall not be entitled to any
payments upon a Separation from Service until the earlier of (i) the date which
is the first (1st) business day following the date that is six (6) months after
the Executive’s Separation from Service for any reason other than death or (ii)
the Executive’s date of death. The provisions of this Section 14(b) shall only
apply if required to comply with Section 409A.

(c)For purposes of this Agreement, “Separation from Service” shall have the
meaning set forth in Section 409A(a)(2)(A)(i) and determined in accordance with
the default rules under Section 409A. “Specified Employee” shall have the
meaning set forth in Section 409A(a)(2)(B)(i), as determined in accordance with
the uniform methodology and procedures adopted by the Company and then in
effect.

(d)It is intended that the terms and conditions of this Agreement comply with
Section 409A. If any provision of this Agreement contravenes any regulations or
United States Treasury guidance promulgated under Section 409A, or could cause
any amounts or benefits hereunder to be subject to taxes, interest and penalties
under Section 409A, the Company may, in its sole discretion and without the
Executive’s consent, modify the Agreement to: (i) comply with, or avoid being
subject to, Section 409A, (ii) avoid the imposition of taxes, interest and
penalties under Section 409A, and/or (iii) maintain, to the maximum extent
practicable, the original intent of the applicable provision without
contravening the provisions of Section 409A. This Section 14(d) does not create
an obligation on the part of the Company to modify this Agreement and does not
guarantee that the amounts or benefits owed under this Agreement will not be
subject to interest and penalties under Section 409A.

(e)Anything in this Agreement to the contrary notwithstanding, no reimbursement
payable to the Executive pursuant to any provisions of this Agreement or
pursuant to any plan or arrangement of the Company group covered by this
Agreement shall be paid later than the last day of the calendar year following
the calendar year in which the related expense was incurred, except to the
extent that the right to reimbursement does not provide for a “deferral of
compensation” within the meaning of Section 409A. No amount reimbursed during
any calendar year shall affect the amounts eligible for reimbursement in any
other calendar year.

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15.Enforceability; Waiver. If any arbitrator or court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then such invalidity or unenforceability shall have no effect on the other
provisions of this Agreement, which shall remain valid, binding and enforceable
and in full force and effect, and such invalid or unenforceable provision shall
be construed, blue-penciled or reformed by the court or arbitrator in a manner
so as to give the maximum valid and enforceable effect to the intent of the
parties expressed in such provision. The Executive’s or the Company’s failure to
insist upon strict compliance with any provision hereof or any other provision
of this Agreement or the failure to assert any right that the Executive or the
Company may have hereunder, shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement. Similarly, the
waiver by any party hereto of a breach of any provision of this Agreement by the
other party will not operate or be construed as a waiver of any other or
subsequent breach by such other party.

16.Assignment. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and permitted assigns.
This Agreement may be assigned by the Company. The Executive may not assign or
delegate his duties under this Agreement without the Company’s prior written
approval.

17.Survival. The obligations of the Executive pursuant to the 2015 Proprietary
Rights Agreement, the respective obligations of the parties pursuant to Sections
3(f) and 6 of this Agreement, and the entitlements of the Executive and
obligations of the Company pursuant to Sections 4 and 5 of this Agreement, shall
each survive any termination or expiration of this Agreement, or any termination
or resignation of the Executive’s employment, as the case may be.

 

 

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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
effective as of the date first written above.

 

 

EXECUTIVE

 

 

 

 

 

 /s/ John A. Cuomo

 

John A. Cuomo

 

 

 

 

 

 

 

KLX INC.

 

 

 

 

 

By:

 /s/ Roger Franks

 

Name:

Roger Franks

 

Title:

General Counsel

 

 

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EXHIBIT A

 

KLX 2015 Proprietary Rights Agreement

 

 

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KLX 2015 PROPRIETARY RIGHTS AGREEMENT

 

This Proprietary Rights Agreement (“Agreement”) is intended to set forth in
writing my responsibility to KLX Inc. and/or any of its subsidiaries or
affiliated businesses (collectively the “Company”) during my employment,
consultancy, and/or tenure as an independent contractor with the Company and
thereafter. I recognize that the Company is engaged in a continuous program of
research, development and production respecting its business, present and
future. As part of my employment, consultancy, and/or tenure as an independent
contractor with the Company, I have certain obligations relating to business,
confidential and/or proprietary information of the Company, as well as to
inventions which I may develop during my employment, consultancy, and/or tenure
as an independent contractor with the Company.

 

I acknowledge and agree that:

 

1.Agreement, Effective Date.  This Agreement shall be effective on, the first
day of my employment, consultancy, and/or tenure as an independent contractor
with the Company and shall continue in effect throughout my employment,
consultancy, and/or tenure as an independent contractor (the “Agreement
Period”). As an inducement to and in consideration of my acceptance and/or
continuation of employment, consultancy, and/or tenure as an independent
contractor with the Company, and the Company’s compensating me for services and
extending to me certain other benefits of a compensatory nature, but without any
obligation on the Company’s part to continue such employment, compensation or
benefits for any specified period whatsoever, I agree to protect, safeguard and
maintain the integrity and confidentiality of the Company’s valuable assets and
legitimate business interests in accordance with the terms and conditions set
forth in this Agreement.

 

2.Confidentiality. I will maintain in confidence and will not disclose or use,
either during or after the Agreement Period, any “Proprietary Information”,
whether or not in written form, except to the extent required to perform my
duties on behalf of the Company. Proprietary Information means all of the
following materials and information that I use, receive, have access to,
conceive or develop or have used, received, conceived or developed, in whole or
in part, in connection with my employment, consultancy, and/or tenure as an
independent contractor with the Company:

 

(i) Written materials of the Company;

 

(ii)The names and information relating to customers and prospective customers of
the Company and/or persons, firms, corporations or other entities with whom the
Company has provided goods or services at any time, including contact persons,
addresses and phone numbers, their characteristics and preferences and types of
services provided to or received from those customers and prospective customers;

 

(iii) The terms of various agreements between the Company and any third parties,
including without limitation, the terms of customer agreements, vendor or
supplier agreements, lease agreements, advertising agreements, fee arrangements,
terms of dealing and the like;

 

(iv) Any data or database, trading algorithms or processes, or other information
compiled by the Company, including, but not limited to, customer lists, customer
information, information concerning the Company, or any business in which the
Company is engaged or contemplates becoming engaged, any company with which the
Company engages in business, any customer, prospective customer or other person,
firm or corporation to whom or which the Company has provided goods or services
or to whom or which any employee of the Company has provided goods or services
on behalf of the Company, or any compilation, analysis, evaluation or report
concerning or deriving from any data or database, or any other information;

 

(v)All policies, procedures, strategies and techniques regarding the services
performed by the Company or regarding the training, marketing and sales of the
Company, either oral or written. The Company’s internal corporate policies and
practices related to its services, price lists, fee arrangements and terms of
dealings with customers or potential customers or vendors. Information relating
to formulas, records, research and development data, trade secrets, processes,
other methods of doing business, forecasts and business and marketing plans;

 

(vi)Any other information, data, know-how or knowledge of a confidential or
proprietary nature observed, used, received, conceived or developed by me in
connection with my employment, consultancy, and/or tenure as an independent
contractor by the Company, including and not limited to the Company’s
methodologies, price strategies, price lists, costs and quantities sold,
financial and sales information, including, but not limited to, the Company’s
financial condition, business interests, initiatives, objectives, plans or
strategies; internal information regarding personnel

 

 

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identity, skills, compensation, organizational charts, budgets or costs of
individual departments, and the compensation paid to those working for or who
provide services to the Company; and performance of investments, funds or
portfolio companies, including any “track record” or other financial performance
information or results;

 

(vii)All other non-public information regarding the amount and nature of the
capital and assets owned or controlled by, or net worth of, the Company and/or
any of the Company’s shareholders, members, partners, employees or investors;
the investments made, directly or indirectly, by the Company (including, but not
limited to, any partnerships, corporations or other entities in which the
Company may invest and the assets which any of those entities acquires); the
expected or actual rates of return or holding periods of any investment by the
Company; the respective interest in any investment of any of its shareholders,
members, partners or investors or the manner in which those interests are held;
the identities of the other persons or entities who participate in any
investment made by the Company; and financial statements, projections, budgets
and market information;

 

(viii)All discoveries, software (including, without limitation, both source code
and object code), models, drawings, photographs, specifications, trademarks,
formulas, patterns, devices, compilations and all other proprietary know-how and
technology, whether or not patentable or copyrightable, and all copies and
tangible embodiments of any of the foregoing, and that have been or will be
created for the Company by me, whether alone or with others;

 

(ix)The Company’s inventions, products, research and development, production
processes, manufacturing and engineering processes, machines and equipment,
finances, customers, marketing, and production and future business plans,
information belonging to customers or suppliers of the Company disclosed
incidental to my employment, consultancy, and/or tenure as an independent
contractor and any other information which is identified as confidential by the
Company; and

 

(x) “Trade Secrets”, which shall include, but not be limited to, information
regarding formulas, processes or methods that: (a) derive independent economic
value, actual or potential, from not being generally known to or readily
ascertainable by proper means, by other persons who can obtain economic value
from its disclosure or use; and (b) is the subject of reasonable efforts by the
Company to maintain its secrecy. “Trade Secrets” shall also include all other
information or data that qualifies as a trade secret under applicable law.

 

3.Inventions.

 

3.1Definition of Inventions used in this Agreement: the term “Invention” means
any new or useful art, discovery, contribution, finding or improvement, whether
or not patentable, and all related know-how. Inventions include, but are not
limited to, all designs, discoveries, formulas, processes, manufacturing
techniques, semiconductor designs, computer software, inventions, improvements
and ideas.

 

3.2 Disclosure and Assignment of Inventions.

 

(i)I will promptly disclose and describe to the Company all Inventions which I
may solely or jointly conceive, develop, or reduce to practice during the
Agreement Period (i) which relate, at the time of conception, development or
reduction to practice of the Invention, to the Company’s business or actual or
demonstrably anticipated research or development, (ii) which were developed, in
whole or in part, on the Company’s time or with the use of any of the Company’s
equipment, supplies, facilities or Trade Secrets, or (iii) which resulted from
any work I performed for the Company (the “Company Inventions”). I assign all my
right, title and interest worldwide in the Company Inventions and in all
intellectual property rights based upon the Company Inventions. However, I do
not assign or agree to assign any Inventions relating in any way to the Company
business or demonstrably anticipated research and development which were made by
me prior to my employment, consultancy, and/or tenure as an independent
contractor with the Company, which Inventions, if any, are identified on
Appendix “A” to this Agreement. Appendix “A” contains no confidential
information. I have no rights in any Inventions other than the inventions
specified in Appendix “A”. If no such list is attached, I have no such
Inventions or I grant an irrevocable, nonexclusive, royalty-free, worldwide
license to the Company to make, use and sell Inventions

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developed by me prior to my employment, consultancy, and/or tenure as an
independent contractor with the Company.

 

(ii)I recognize that Inventions relating to my activities while working for the
Company and conceived or made by me, along or with others, within one (1) year
after termination of the Agreement Period may have been conceived in significant
part while I was retained by the Company. Accordingly, I agree that such
Inventions shall be presumed to have been conceived during my employment,
consultancy, and/or tenure as an independent contractor with the Company and
assign such Inventions to the Company as a Company Invention unless and until I
have established the contrary. I agree to disclose promptly in writing to the
Company all Inventions made or conceived by me for one (1) year after the
Agreement Period, whether or not I believe such Inventions are subject to this
Agreement, to permit a determination by the Company as to whether or not the
Inventions should be the property of the Company. Any such information will be
received in confidence by the Company.

 

3.3 Nonassignable Inventions.  This Agreement does not apply to an invention
which qualifies fully as a nonassignable invention under the laws of the state
of Florida.

 

4.Use and Return of Proprietary Information and Trade Secrets:

 

(i)I agree that under no circumstance and at no time shall any of the
Proprietary Information and Trade Secrets be taken from the Company’s premises
and that under no circumstances and at no time shall any of the Proprietary
Information and Trade Secrets be duplicated, in whole or in part, without the
express written permission of the Company, which permission may be granted or
denied in the Company’s sole and absolute discretion;

 

(ii) I agree that, upon termination of my employment (if applicable) and/or
tenure as an independent contractor with the Company for any reason (regardless
of whether or not the Company retains me as a consultant) or at any other time
upon the Company’s request, I shall return to Company, without retaining any
copies, all Proprietary Information and Trade Secrets, as well as all other
Company’s documents and other materials, which are in my possession regardless
of the form in which any such materials are kept;

 

(iii)I covenant and agree that all right, title and interest in any Proprietary
Information and Trade Secrets shall be and shall remain the exclusive property
of the Company and shall be and hereby are vested and assigned by me to the
Company. I agree to promptly disclose to the Company all Proprietary Information
and Trade Secrets developed in whole or in part by me within the scope of this
Agreement. In relation to my employment, consultancy, and/or tenure as an
independent contractor or the performance of this Agreement, I have created or
may create certain work product for the Company that may be copyrighted or
copyrightable under the laws of the United States. To the extent that any such
work product is created, I will be considered to have created a Work Made for
Hire as defined in 17 U.S.C. § 101, and the Company shall have the sole right to
the copyright. In the event that any such work product created by me does not
qualify as a Work Made for Hire, I hereby assign the copyright and all rights,
throughout the world, in and to the work product to the Company, as provided for
in paragraph (v) below. I agree to turn over to the Company all physical
manifestations of the Proprietary Information and Trade Secrets in my possession
or under my control at the request of the Company;

 

(iv)I acknowledge that all documents, in hard copy or electronic form, received,
created or used by me in connection with my employment, consultancy, and/or
tenure as an independent contractor with the Company are and will remain the
property of the Company. I agree to return all such documents (including all
copies) promptly upon the termination of my employment, consultancy, and/or
tenure as an independent contractor, certify that no other documents remain, and
agree that, during or after my employment, consultancy, and/or tenure as an
independent contractor, I will not, under any circumstances, without the written
consent of the Company, disclose those documents to anyone outside the Company
or use those documents for any purpose other than the advancement of the
Company’s interests;

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(v)I agree to assist the Company, or its designee, at the Company’s expense, in
every proper way to secure the Company’s rights in the work product (including
Proprietary Information and/or Trade Secrets) and any rights relating thereto in
any and all countries, including the disclosure to the Company of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments which the Company
shall deem proper or necessary in order to apply for, register, obtain,
maintain, defend, and enforce such rights and in order to assign and convey to
the Company, its successors, assigns, and nominees the sole and exclusive
rights, title and interest in and to such work product and any rights relating
thereto, and testifying in a suit or other proceeding relating to such work
product and any rights relating thereto. I further agree that my obligation to
execute or cause to be executed, when it is in my power to do so, any such
instrument or papers shall continue after the termination of this Agreement. In
connection with my execution of this Agreement, I hereby irrevocably grant to
the Company an irrevocable power of attorney designating and appointing the
Company’s duly authorized officer as my agent and attorney in fact, should I
become unable because of my mental or physical incapacity or for any other
reason, to sign any documents with respect to any work product including,
without limitation, permitting the Company to apply for or pursue any
application for any United States or foreign patents or copyright registrations
covering such work product. In connection with such power of attorney, I permit
the agent to act for and on my behalf and stead to execute and file any papers,
oaths and to do all other lawfully permitted acts with respect to such work
product with the same legal force and effect as if executed or done by me.

 

5.Competitive Employment.  During the Agreement Period, including any extensions
thereof (as applicable), I agree that I will not directly or indirectly own,
manage, work for, provide services to, obtain financial interest in, control or
participate in the ownership, management or control of, or be employed or
engaged by or otherwise affiliated or associated as a consultant, director,
agent, independent contractor or otherwise with any other corporation,
partnership, proprietorship, firm, association or other entity that is engaged
in any manner in the business of the Company. 

 

I further agree that during the same period I will not directly or indirectly
own, manage, work for, provide services to, obtain financial interest in,
control or participate in the ownership, management or control of, or be
employed or engaged by or otherwise affiliated or associated as a consultant,
director, agent, independent contractor or otherwise with any business entity
that is not engaged in the business of the Company in any market in which the
Company conducts business or provides services where such other business entity
could utilize or gain a business or economic advantage through the use of
Confidential Information, Trade Secrets, my training by the Company, my
relationship with the Company’s customers, suppliers, vendors, clients or
investors or prospective customers, suppliers, vendors, clients or investors or
the Company’s goodwill.

 

I may make passive investments in publicly traded entities not to exceed 3% of
the outstanding voting securities of such public entity, provided, however, that
such investment do not prevent me from abiding by this Agreement, including this
Paragraph 5.

 

6.Non-solicitation.  During the Agreement Period and for a period of two (2)
years thereafter, I will not solicit or encourage, or cause others to solicit or
encourage, any employees, suppliers, vendors, or consultants of/to the Company
to terminate their employment or other relationship, as applicable, with the
Company.

 

7.Acts to Secure Proprietary Rights.  I agree to perform, during and after the
Agreement Period, all acts deemed necessary or desirable by the Company to
permit and assist it, at the Company’s expense, in perfecting and enforcing the
full benefits, enjoyment, rights and title throughout the world in the Company
Inventions. Such acts may include, but are not limited to, execution of
documents and assistance or cooperation in the registration and enforcement of
applicable patents and copyrights or other legal proceedings.

 

8.No Conflicting Obligations.  My performance of this Agreement does not and
will not breach any agreement to keep in confidence proprietary information,
knowledge or data acquired by me prior to my employment, consultancy, and/or
tenure as an independent contractor with the Company. I will not disclose,
induce, or permit the Company to, either directly or indirectly, use, any
confidential or proprietary information or material belonging to any previous
employer or other person or entity. I am not a party to any other agreement that
will interfere with my full compliance with this Agreement. I will not enter
into any agreement, whether written or oral, conflicting with the provisions of
this Agreement.

 

9.Survival. Notwithstanding the termination of the Agreement Period, this
Agreement shall survive such termination and continue in accordance with its
terms and conditions. Unless provided otherwise in a written contract with the

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Company, this Agreement does not in any way restrict my right or the right of
the Company to terminate my employment, consultancy, and/or tenure as an
independent contractor at any time, for any reason or for no reason.

 

10.Specific Performance.  A breach of any of the promises or agreements
contained herein will result in irreparable and continuing damage to the Company
for which there will be no adequate remedy at law, and the Company shall be
entitled to injunctive relief and/or a decree for specific performance, and such
other relief as may be proper (including monetary damages, if appropriate).

 

11.Waiver.  The waiver by the Company of a breach of any provision of this
Agreement by me will not operate or be construed as a waiver of any other or
subsequent breach by me.

 

12.Severability.  If any part of this Agreement is found invalid or
unenforceable, that part will be amended to achieve as nearly as possible the
same economic effect as the original provision and the remainder of this
Agreement will remain in full force.

 

13.Governing Law. This Agreement will be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of the state of Florida.

 

14.Entire Agreement.  Except for the Employment Agreement between you and the
Company, this Agreement and the Exhibits to this Agreement constitute the entire
agreement between the parties relating to this subject matter and supersede all
prior or simultaneous representations, discussions, negotiations and agreements,
whether written or oral, except for prior proprietary rights agreements which
shall for the period prior to the effective date of this agreement be deemed to
be in addition to, and not in lieu of, this Agreement for such prior period.
This Agreement may be amended or modified only with the written consent of both
me and the Company. No oral waiver, amendment or modification will be effective
under any circumstances whatsoever.

 

15.Assignment.  This Agreement may be assigned by the Company. I may not assign
or delegate my duties under this Agreement without the Company’s prior written
approval. This Agreement shall be binding upon my heirs, successors and
permitted assignees.

 

 

 

EMPLOYEE

 

 

 

Date:  2/26/2015     

 

 

 /s/ John A. Cuomo

 

 

(Name)

 

 

 

 

 

 

 

 John A. Cuomo

 

 

(Printed Name)

 

 

 

 

Date:  2/26/2015     

 

KLX INC.

 

 

 

 

 

 

By:

   /s/ Roger Franks

 

 

 

 

 

 

Title:

General Counsel, Vice President –

 

 

 

Law and Human Resources

 

 

 

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Appendix A to the 2015 Proprietary Rights Agreement

 

 

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