Exhibit 10.4

 

EXECUTION COPY

 

TRANSACTION BONUS AND NONCOMPETITION

AGREEMENT

 

This Transaction Bonus and Noncompetition Agreement (this “Agreement”), dated as
of the 30th day of April, 2018, is by and between KLX Inc., a Delaware
corporation (the “Company”), and Roger M. Franks (the “Executive”).

 

WHEREAS, the Executive is employed as the Company’s General Counsel, Vice
President — Law and Human Resources pursuant to the terms and conditions of that
certain Amended and Restated Employment Agreement, dated as of December 22, 2015
(the “Employment Agreement”); and

 

WHEREAS, in an effort to (i) reward the Executive for his efforts towards the
success of the Company and the return to shareholders, (ii) incentivize the
Executive to facilitate the successful and satisfactory consummation of the
transactions contemplated under that certain Agreement and Plan of Merger, by
and among the Company, The Boeing Company and Kelly Merger Sub, Inc., dated as
of April 30, 2018 (the “Transaction”), and (iii) retain the Executive’s services
as the Company’s General Counsel, Vice President — Law and Human Resources
through the consummation of the Transaction, the Company wishes to enter into
this Agreement and provide for the compensation specified herein to be paid to
the Executive in connection with the consummation of the Transaction, subject to
all of the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the respective covenants
and agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree to the following:

 

1.                                      Transaction Bonus.

 

a)                                     Transaction Bonus. Subject to the
conditions set forth in this Agreement, upon the consummation of the
Transaction, the Executive shall receive a lump sum cash payment in an amount
equal to $3,330,000 (the “Transaction Bonus”).

 

b)                                     Tax Withholding. Payment of the
Transaction Bonus hereunder shall be subject to all applicable income and
employment taxes and any other amounts that the Company is required by any
applicable law to deduct and withhold therefrom.

 

c)                                      Other Benefits. The Transaction Bonus is
a special incentive payment to the Executive and shall not be taken into account
in computing the amount of salary or compensation for purposes of determining
any bonus, incentive, pension, retirement, death or other benefit under any
other bonus, incentive pension, retirement, insurance or other employee benefit
plan of the Company, unless such plan or agreement expressly provides otherwise.

 

d)                                     Conditions.

 

i)                                         Continued Employment. Unless directed
otherwise by the Company in writing, the Executive shall continue to perform the
Executive’s regular and customary duties and responsibilities to the Company and
its affiliates through the date of consummation of the

 

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Transaction. In the event of the Executive’s termination of employment prior to
the consummation of the Transaction, the Executive shall forfeit the Executive’s
right to receive the Transaction Bonus hereunder.  Notwithstanding the
foregoing, if the Executive’s employment is terminated prior to the consummation
of the Transaction by the Company for any reason other than for “Cause”, by the
Executive for “Good Reason”, or due to the Executive’s death or “Incapacity” (in
each case, as such term is defined in the Employment Agreement), the Executive
shall be entitled to receive the Transaction Bonus, subject to
Section 1(d)(ii) of this Agreement.

 

ii)                                      Consummation of Transaction. In the
event that the Transaction is abandoned or is otherwise not consummated for any
reason on or prior to December 31, 2019, this Agreement and the Executive’s
rights and obligations hereunder, including, without limitation, the Executive’s
obligations under Section 2(a) of this Agreement, shall be null and void and
without any further legal force or effect whatsoever.

 

e)                                      Code Section 280G. The Executive and the
Company each agree that the “Accounting Firm” (within the meaning of
Section 4(h)(vi)(A) of the Employment Agreement), for purposes of making all
calculations and determinations with respect to Sections 280G and 4999 of the
United States Internal Revenue Code of 1986, as amended, will be made by Golden
Parachute Tax Solutions, LLC, or such other independent public accountant as may
be selected by the Executive in the Executive’s sole discretion, whose
determination will be conclusive and binding for all purposes upon the Executive
and the Company.

 

2.                                      Noncompetition.

 

a)                                     Noncompetition. In consideration of the
benefits hereunder, the Executive agrees that during the Executive’s employment
with the Company and for a period of three (3) years thereafter in the event
that the Executive’s employment is terminated in accordance with Section 4(f) of
the Employment Agreement, the Executive will not engage in any employment,
consulting, or other activity in any business directly competitive with the
Company’s operations and services as of the date of the Executive’s termination
of employment, without the Company’s written consent, which consent shall not be
unreasonably withheld; provided, however, that nothing in this
Section 2(a) shall preclude the Executive from serving as a director of any
corporation or a partner or investor in a private equity firm.

 

b)                                     Reformation. If it is determined by a
court of competent jurisdiction in any state that any restriction in this
Section 2 is excessive in duration or scope or is unreasonable or unenforceable
under applicable law, it is the intention of the parties that such restriction
may be modified or amended by the court to render it enforceable to the maximum
extent permitted by the laws of that state.

 

c)                                      Equitable Relief and Other Remedies. The
Executive acknowledges and agrees that the Company’s remedies at law for a
breach or threatened breach of any of the provisions of this Section 2 would be
inadequate and, in recognition of this fact, the Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at law,
the Company shall be entitled to seek equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available, without the necessity
of showing actual monetary damages or the posting of a bond or other security. 
In the event of a material violation by the Executive of this Section 2, in
addition

 

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to any remedies which may then be available under applicable law or any
agreement between the Executive and the Company, any then outstanding equity
awards granted to the Executive under any equity compensation plan of the
Company or otherwise, whether vested or unvested, shall be subject to immediate
forfeiture and cancellation by the Company without any consideration being paid
therefor.

 

3.                                      Impact of Termination of Employment. 
Upon the Executive’s termination of employment pursuant to Section 4(f) of the
Employment Agreement, in addition to the payments described in Section 4(f) of
the Employment Agreement, the Company shall provide the Executive with
Company-paid customary and market outplacement services for a period of twelve
(12) months or until the Executive obtains substantially comparable employment,
whichever is shorter.

 

4.                                      General.

 

a)                                     Survival of Provisions. The obligations
contained in this Agreement shall survive the termination of the Executive’s
employment with the Company and shall be fully enforceable thereafter.

 

b)                                     No Right to Continued Employment. Nothing
in this Agreement shall confer upon the Executive any right to continued
employment with the Company or its affiliates or to interfere in any way with
the right of the Company or its affiliates to terminate the Executive’s
employment at any time.

 

c)                                      Code Section 409A Compliance. Although
the Company does not guarantee the tax treatment of any payment hereunder, the
intent of the parties is that payments under this Agreement be exempt from, or
comply with, Section 409A of the Code and the regulations and guidance
promulgated thereunder and, accordingly, to the maximum extent permitted, this
Agreement shall be interpreted in a manner consistent therewith.

 

d)                                     Governing Law; Jurisdiction. This
Agreement shall be construed, interpreted and enforced in accordance with the
laws of the State of Florida, without giving effect to the choice of law
principles thereof. Each of the parties agrees that any dispute between the
parties shall be resolved only in the courts of the State of Florida or the
United States District Court for the Southern District of Florida and the
appellate courts having jurisdiction of appeals in such courts. In that context,
and without limiting the generality of the foregoing, each of the parties hereto
irrevocably and unconditionally (a) submits in any proceeding relating to this
Agreement or the Executive’s employment by the Company or any affiliate, or for
the recognition and enforcement of any judgment in respect thereof (a
“Proceeding”), to the exclusive jurisdiction of the courts of the State of
Florida, the court of the United States of America for the Southern District of
Florida, and appellate courts having jurisdiction of appeals from any of the
foregoing, and agrees that all claims in respect of any such Proceeding shall be
heard and determined in such Florida State court or, to the extent permitted by
law, in such federal court, (b) consents that any such Proceeding may and shall
be brought in such courts and waives any objection that the Executive or the
Company may now or thereafter have to the venue or jurisdiction of any such
Proceeding in any such court or that such Proceeding was brought in an
inconvenient court and agrees not to plead or claim the same, (c) WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING

 

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OUT OF OR RELATING TO THIS AGREEMENT OR THE EXECUTIVE’S EMPLOYMENT BY THE
COMPANY OR ANY AFFILIATE OF THE COMPANY, OR THE EXECUTIVE’S OR THE COMPANY’S
PERFORMANCE UNDER, OR THE ENFORCEMENT OF, THIS AGREEMENT, (d) agrees that
service of process in any such Proceeding may be effected by mailing a copy of
such process by registered or certified mail (or any substantially similar form
of mail), postage prepaid, to such party, and (e) agrees that nothing in this
Agreement shall affect the right to effect service of process in any other
manner permitted by the laws of the State of Florida. Each party shall be
responsible for its own legal fees incurred in connection with any dispute
hereunder.

 

e)                                      Severability. In the event that any
provision of this Agreement shall be illegal or invalid for any reason, said
illegality or invalidity shall not affect the remaining parts hereof, but this
Agreement shall be construed and enforced as if such illegal and invalid
provision never existed.

 

f)                                       Non-Assignment; Successors. This
Agreement is personal to each of the parties hereto. Except as provided in this
Section 4(f), no party may assign or delegate any rights or obligations
hereunder without first obtaining the advanced written consent of the other
parties hereto. Any purported assignment or delegation by the Executive in
violation of the foregoing shall be null and void ab initio and of no force and
effect. The Company may assign this Agreement to a person or entity that is an
affiliate of the Company or to any successor to all or substantially all of the
business and/or assets of the Company, which assumes in writing, or by operation
of law, the obligations of the Company hereunder.

 

g)                                      Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.

 

h)                                     No Obligation; Company Discretion. No
provision of this Agreement shall be interpreted to impose an obligation on the
Company to accept, agree to or otherwise consummate the Transaction. The
decision to consummate the Transaction, and all terms and conditions of such
transaction, including the amount, timing and form of consideration to be
provided in connection therewith, shall be within the sole and absolute
discretion of the Company.

 

i)                                         Entire Agreement; Amendment. Except
as specifically contemplated herein, this Agreement constitutes the entire
agreement by the Executive and the Company with respect to the subject matter
hereof, and supersedes any and all prior agreements or understandings between
the Executive and the Company with respect to the subject matter hereof, whether
written or oral. Notwithstanding the foregoing, except to the extent
specifically contemplated herein, nothing herein is intended to supersede any
employment agreement, or any incentive, equity, compensation or benefit
arrangement between the Executive and the Company; provided, however, that to
the extent that there is any conflict between any such agreement or arrangement
and this Agreement, the terms of this Agreement shall control. This Agreement
may be amended or modified only by a written instrument executed by the
Executive and the Company.

 

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

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Roger M. Franks

 

Roger M. Franks

 

Transaction Bonus Agreement Signature Page

 

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KLX INC.

 

 

 

 

 

 

By:

/s/ Thomas P. McCaffrey

 

Name:

Thomas P. McCaffrey

 

Title:

President and Chief Operating Officer

 

Transaction Bonus Agreement Signature Page

 

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