Document:

EX-10.1

 Exhibit 10.1 

Dated 8 September 2015 

LIVANOVA PLC 
 VIVID
SEHGAL 
  
  

SERVICE AGREEMENT 
  

 
  
 

 
 99 Bishopsgate 

London EC2M 3XF 
 (44) 020 7710 1000
(Tel) 
 (44) 020 7374 4460 (Fax) 

www.lw.com 

 THIS AGREEMENT is made on 8 September 2015 

BETWEEN 
  

	(1)	LIVANOVA PLC, a company registered in England with registered number 09451374 and having its registered office at 1 Fetter Lane, London, EC4A 1BR (the “Company”); and 

 

	(2)	VIVID SEHGAL, residing at 35 Kent Avenue, Ealing, London W13 8BE (the “Executive”). 

BACKGROUND 
 The Company wishes to employ the Executive as
Chief Financial Officer on the terms and conditions of this Agreement and the Executive wishes to accept such employment. 
 IT IS AGREED as
follows: 
  

	1.	DEFINITIONS AND INTERPRETATION 

  

	1.1	Definitions 

 In this Agreement, unless the context otherwise requires: 

 

			
	“Basic Salary”	  	means the salary, as specified in Clause 6.1.1 or, as appropriate, the reviewed annual salary from time to time;
		
	“Board”	  	means the Board of directors of the Company from time to time or any duly authorised committee thereof, or where the relevant powers have been reserved to the Company’s members, its members from time to time;
		
	“Compensation Committee”	  	means the compensation committee appointed by the Board;
		
	“Confidential Information”	  	means all information which is identified or treated by the Company or any Group Company or any of the Group’s clients or customers as confidential or which by reason of its character or the circumstances or manner of its
disclosure is evidently confidential including (without prejudice to the foregoing generality) any information about the personal affairs of any of the directors (or their families) of the Company or any Group Company, business plans, proposals
relating to the acquisition or disposal of a company or business or proposed expansion or contraction of activities, maturing new business opportunities, research and development projects, designs, secret processes, trade secrets, product or
services development and formulae, know-how, inventions, sales statistics and forecasts, marketing strategies and plans, costs, profit and loss and other financial information (save to the extent published in audited accounts), prices and discount
structures and the names, addresses and contact and other details of: (a) employees and their terms of employment; (b) customers and potential customers, their requirements and their terms of business with the Company/Group; and (c) suppliers and
potential suppliers and their terms of business (all whether or not recorded in writing or in electronic or other format);
		
	“Employment”	  	means the employment of the Executive under this Agreement or, as the context requires, the duration of that employment;

  
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	“Group”	  	means together or separately the Company, any holding company of the Company and any subsidiaries and subsidiary undertakings of the Company or any such holding company (and the words “subsidiary” and “holding
company” shall have the meanings given to them in section 1159 of the Companies Act 2006 and “subsidiary undertaking” shall have the meaning given in section 1162 of the Companies Act 2006) from time to time;
		
	“Group Company”	  	means any company within the Group;
		
	“Health Care Scheme”	  	means the medical expenses insurance, permanent health insurance (“PHI”), critical illness insurance or other healthcare or disability scheme(s) or arrangement(s) as may be provided or introduced from time to time
by the Company (at the Company’s discretion) for the benefit of executives in the Group;
		
	“Intellectual Property Rights”	  	means any and all existing and future intellectual or industrial property rights in and to any Works (whether registered or unregistered), including all existing and future patents, copyrights, design rights, database rights, trade
marks, semiconductor topography rights, plant varieties rights, internet rights/domain names, know-how and any and all applications for any of the foregoing and any and all rights to apply for any of the foregoing in and to any Works;
		
	“Minority Holder”	  	means a person who either solely or jointly holds (directly or through nominees) any shares or loan capital in any company whose shares are listed or dealt in on a recognised investment exchange (as that term is defined by section
285 Financial Services and Markets Act 2000) provided that such holding does not, when aggregated with any shares or loan capital held by the Executive’s partner and/or his or his partner’s children under the age of 18, exceed 3% of the
shares or loan capital of the class concerned for the time being issued;
		
	“Share Incentives”	  	means any options or other rights that the Executive may have to purchase, hold or otherwise acquire shares or rights in respect of or relating to shares in the Company or a Group Company;
		
	“Termination Date”	  	means the date of termination of the Employment;
		
	“Works”	  	means any documents, materials, models, designs, drawings, processes, inventions, formulae, computer coding, methodologies, know-how, Confidential Information or other work, performed made, created, devised, developed or discovered
by the Executive in the course of the Employment (and whether or not made or discovered in the course of the Employment) either alone or with any other person in connection with or in any way affecting or relating to the business of the Company or
any Group Company or capable of being used or adapted for use therein or in connection therewith.

  
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	1.2	Interpretation and Construction 

 Save to the extent that the context or the express
provisions of this Agreement require otherwise, in this Agreement: 
  

	 	(a)	words importing the singular shall include the plural and vice versa; 

  

	 	(b)	words importing any gender shall include all other genders; 

  

	 	(c)	words importing the whole shall be treated as including reference to any part of the whole; 

  

	 	(d)	any reference to a Clause, the Schedule or part of the Schedule is to the relevant Clause, Schedule or part of the Schedule of or to this Agreement unless otherwise specified; 

 

	 	(e)	reference to this Agreement or to any other document is a reference to this Agreement or to that other document as modified, amended, varied, supplemented, assigned, novated or replaced from time to time;

  

	 	(f)	reference to a provision of law is a reference to that provision as extended, applied, amended, consolidated or re-enacted or as the application thereof is modified from time to time and shall be construed as including
reference to any order, instrument, regulation or other subordinate legislation from time to time made under it; 

  

	 	(g)	references to a “person” includes any individual, firm, company, corporation, body corporate, government, state or agency of state, trust or foundation, or any association, partnership or unincorporated body
(whether or not having separate legal personality) or two or more of the foregoing; 

  

	 	(h)	general words shall not be given a restrictive meaning because they are followed by words which are particular examples of the acts, matters or things covered by the general words and “including”,
“include” and “in particular” shall be construed without limitation; and 

  

	 	(i)	the meaning of any words coming after “other” or “otherwise” shall not be constrained by the meaning of any words coming before “other” or “otherwise where a wider construction is
possible. 

  

	1.3	Headings 

 The table of contents and the headings in this Agreement are included for
convenience only and shall be ignored in construing this Agreement. 
  

	2.	THE EMPLOYMENT 

  

	2.1	Appointment 

 The terms and effect of this Agreement are conditional on and shall only be
effective upon the closing of the merger between Sorin S.p.A. and Cyberonics, Inc. (“Closing”). If Closing does not occur, this Agreement will not come into effect and will not bind the parties. Subject to the provisions of this
Agreement, the Company employs the Executive and the Executive accepts employment as Chief Financial Officer of the Company with effect from Closing notwithstanding the date or dates of this Agreement. 

  
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	2.2	Work Permits and warranty 

  

	2.2.1	The Executive warrants to the Company that by virtue of entering into this Agreement he will not be in breach of any express or implied obligation to any third party, including any restrictive covenants.

  

	2.2.2	The Executive warrants that he is legally entitled to work in the United Kingdom and will throughout the Employment continue to hold a valid United Kingdom work permit if appropriate. The Executive warrants that he will
notify the Company in advance of any possible change to his immigration status, as soon as he becomes aware of any circumstances that might give rise to such change. Should the Company discover that the Executive does not have permission to live and
work in the United Kingdom or if any such permission is revoked, the Company reserves the right to terminate the Employment immediately and without notice or pay in lieu of notice and without referring to the warning stages of the Company’s
disciplinary procedure. 

  

	3.	DURATION OF THE EMPLOYMENT 

  

	3.1	Continuous Employment 

  

	3.1.1	The Executive’s continuous period of employment with the Company commenced on Closing, which is expected to take place on or around 15 October 2015. 

 

	3.1.2	No employment with any previous employer shall count as part of the Executive’s continuous period of employment. 

  

	3.2	Duration and Notice 

 Subject to the provisions of Clauses 3.3 and 17.1, the Employment
shall continue unless and until terminated at any time by: 
  

	 	(a)	the Company, which must give to the Executive not less than twelve months’ prior written notice of termination of the Employment; or 

 

	 	(b)	the Executive, who must give to the Company not less than twelve months’ prior written notice of termination of the Employment. 

 

	3.3	Payment in lieu of notice 

  

	3.3.1	The Company shall be entitled, at its sole discretion, to terminate the Employment immediately at any time by giving the Executive notice in writing. In these circumstances, subject to the terms of Clause 3.3.2, the
Company will subsequently make a payment to the Executive in lieu of notice, calculated in accordance with the provisions of Clauses 3.3.3 and 3.3.4 (the payment being referred to as a “Notice Payment”). 

 

	3.3.2	For the avoidance of doubt, the Company is not obliged to make a Notice Payment. If the Company shall decide not to make a Notice Payment, the Executive shall not be entitled to enforce that payment as a contractual
debt nor as liquidated damages. 

  

	3.3.3	The Notice Payment will be paid less all deductions that are required or permitted by law to be made including in respect of income tax, national insurance contributions and any sums due to the Company or any Group
Company. 

  

	3.3.4	Subject to the terms of Clause 3.4, the Notice Payment will consist of a sum equivalent to the Basic Salary which the Executive would have received in respect of any notice period outstanding on the Termination Date,
but will exclude any bonus, commission share of profit, pension contributions and any other benefits (including any benefits derived from any Share Incentives) that he would have received or would have accrued to him during that period.

  

	3.3.5	The Notice Payment is in full and final settlement of all and any rights and claims that the Executive may have against the Company arising out of the termination of his employment (including both contractual and
statutory employment claims). The Executive agrees to waive, release and discharge any and all such rights and claims and acknowledges that it is a condition of the payment of the Notice Payment that he will execute a settlement agreement (and any
other documents reasonably required by the Company) in a form reasonably acceptable to the Company in order to give effect to the release and waiver in this Clause 3.3. 

  
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	3.4	Payment in instalments 

  

	3.4.1	The Company may, at its sole discretion and subject to the terms of Clause 3.4.2, pay the Notice Payment in equal monthly instalments over a period of twelve months (the “Instalment Period”), the first
instalment payable at the end of the month in which the Termination Date occurs. 

  

	3.4.2	If the Executive commences alternative employment during the Instalment Period then the gross instalments of Notice Payment payable after that date will be reduced by a sum equal to the gross amount of the
Executive’s income from the alternative employment. 

  

	3.4.3	If the Executive obtains alternative employment that is to commence during the Instalment Period he will immediately advise the Company of that fact and of his gross monthly salary from that employment. If the Executive
fails to comply with this obligation, then from the date the Executive commences alternative employment, the Executive shall have no further entitlement to any payment of Notice Payment. 

 

	4.	HOURS AND PLACE OF WORK 

  

	4.1	Hours of work 

 The Executive agrees that he shall work normal business hours together
with such additional hours as are necessary for the proper performance of his duties. No payment will be made for any additional hours worked by the Executive. 
  

	4.2	Working Time Regulations 

  

	4.2.1	The Executive has autonomous decision making powers. The duration of his working time is not measured or predetermined. 

  

	4.3	Place of work 

  

	4.3.1	The Executive’s place of work will initially be at the Company’s offices at 5 Merchant Square, Paddington, London, W2 1AY but the Company may require the Executive to work at any other location within or
outside the UK for such periods as the Company may from time to time require. The Executive will be given reasonable notice of any change in his permanent place of work. 

 

	4.3.2	The Executive will not be required to be absent from the United Kingdom for a period exceeding one month at any one time. 

  
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	5.	SCOPE OF THE EMPLOYMENT 

  

	5.1	Duties of the Executive 

 During the Employment the Executive shall: 

 

	 	(a)	undertake and carry out to the best of his ability such duties and exercise such powers in relation to the Group’s business as may from time to time be assigned to or vested in him by the Board including where
those duties require the Executive to work for any Group Company; 

  

	 	(b)	in the discharge of those duties and the exercise of those powers observe and comply with all lawful resolutions, regulations and directions from time to time made by, or under the authority of, the Board and promptly
upon request, give a full account to the Board or a person duly authorised by the Board of all matters with which he is involved. He will provide the information in writing if requested; 

 

	 	(c)	comply with the Articles of Association (as amended from time to time) of any Group Company of which he is a director; 

  

	 	(d)	do, or refrain from doing, such things as are necessary or expedient to ensure compliance by himself and any Group Company with applicable law and regulations; 

 

	 	(e)	ensure compliance with the UK Corporate Governance Code, as applicable from time to time; 

  

	 	(f)	act in accordance with all statutory, fiduciary and common law duties that he owes to the Company and any Group Company; 

  

	 	(g)	refrain from doing anything which would cause him to be disqualified from acting as a director; 

  

	 	(h)	do, or refrain from doing, such things as are necessary or expedient to ensure compliance by himself and any Group Company with applicable law and regulations and all other regulatory authorities relevant to any Group
Company and any codes of practice issued by any Group Company (as amended from time to time); 

  

	 	(i)	unless prevented by ill-health, holidays or other unavoidable cause, devote the whole of his working time, attention and skill to the discharge of his duties under this Agreement; 

 

	 	(j)	faithfully and diligently perform his duties and at all times use his best endeavours to promote and protect the interests of the Group; 

 

	 	(k)	promptly disclose to the Board full details of any wrongdoing by the Executive or any other employee of any Group Company where that wrongdoing is material to that employee’s employment by the relevant company or
to the interests or reputation of any Group Company; 

  

	 	(l)	not incur on behalf of the Company or any Group Company any capital expenditure in excess of such sum as may be authorised from time to time by resolution of the Board; and 

 

	 	(m)	not enter into on behalf of the Company or any Group Company any commitment, contract or arrangement which is otherwise than in the normal course of the Company’s or the relevant Group Company’s business or is
outside the scope of his normal duties or authorisations or is of an unusual or onerous or long-term nature. 

  

	5.2	Directorships and Directors and Officers insurance 

  

	5.2.1	The Executive may be required to act as a director of the Company and other Group Companies (either executive or non-executive) as the Board requires from time to time. The Company reserves the right on giving written
notice to the Executive to terminate any office of directorship immediately at any time. 

  

	5.2.2	The Company shall for the duration of the Employment and for a period of not less than six calendar years following the Termination Date, maintain directors’ and officers’ insurance for the benefit of the
Executive in respect of those liabilities which he may incur as a director or officer of the Company or any Group Company and for which such insurance is normally available. 

  
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	5.3	Right to suspend duties and powers 

  

	5.3.1	The Company reserves the right in its absolute discretion to suspend all or any of the Executive’s duties and powers on terms it considers expedient or to require him to perform only such duties, specific projects
or tasks as are assigned to him expressly by the Company (including the duties of another position of equivalent status) in any case for such period or periods and at such place or places (including, without limitation, the Executive’s home) as
the Company in its absolute discretion deems necessary (the “Garden Leave”). During any period of Garden Leave the terms and conditions set out in this Agreement shall continue to apply to the Executive. 

 

	5.3.2	The Company may, at its sole discretion, require that during the Garden Leave the Executive shall not: 

  

	 	(a)	enter or attend the premises of the Company or any Group Company; 

  

	 	(b)	contact or have any communication with any client or prospective client or supplier of the Company or any Group Company in relation to the business of the Company or any Group Company; 

 

	 	(c)	contact or have any communication with any employee, officer, director, agent or consultant of the Company or any Group Company in relation to the business of the Company or any Group Company; 

 

	 	(d)	remain or become involved in any aspect of the business of the Company or any Group Company except as required by such companies; or 

 

	 	(e)	work either on his own account or on behalf of any other person. 

  

	5.3.3	During Garden Leave, the Executive will continue to receive his Basic Salary and benefits but will not accrue any bonus, commission or share of profit. 

 

	5.3.4	For the avoidance of doubt, the Company may exercise its powers under this Clause 5.3 at any time during the Employment including after notice of termination has been given by either party. 

 

	5.4	Joint appointments 

 The Company shall be at liberty to appoint any other person or
persons to act jointly with the Executive in any position to which he may be assigned from time to time. 
  

	6.	REMUNERATION 

  

	6.1	Basic Salary 

  

	6.1.1	During the Employment the Company shall pay the Executive a Basic Salary of not less than £320,000 per annum. The Basic Salary shall accrue from day to day and be payable by credit transfer in equal monthly
instalments in arrears on or around the last day of each calendar month or otherwise as arranged from time to time. 

  

	6.1.2	The Basic Salary shall be inclusive of all director’s fees (if any) to which the Executive may become entitled including all remuneration and director’s fees in respect of services rendered by the Executive to
any Group Company. 

  
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	6.2	Salary review 

 The Basic Salary shall be reviewed annually, the first review to take
effect following the first Compensation Committee quarterly meeting of each calendar year commencing in 2016, however the Compensation Committee is not obliged to increase the Basic Salary at any review. 

 

	6.3	Discretionary bonus 

  

	6.3.1	The Company may, at its sole discretion, pay the Executive a bonus in respect of each financial year of the Company (the “Bonus”). The Executive’s target bonus is a sum equal to 75% of his Basic
Salary for that financial year. The terms and amount of this bonus (and whether it is paid in cash or in other forms, such as shares or share options) will be approved from time to time and notified to the Executive by the Compensation Committee in
its sole discretion. 

  

	6.3.2	The actual amount of any Bonus payable will be determined by reference to the Compensation Committee in its sole discretion and will be determined by the achievement of both Company performance objectives and personal
performance objectives. The Board will determine appropriate performance targets at the beginning of each financial year. The Bonus will be paid by the Company after receipt by it of the audited financial statements of the Company for the financial
year in question. 

  

	6.3.3	The Bonus will only be paid if the Executive is in Employment (and has not received or served notice of termination of employment) at the date the Bonus is due for payment. Upon the termination of the Executive’s
employment or (if earlier) upon either party giving notice under Clause 3 or the Company exercising its rights under Clause 17, the Executive will have no rights as a result of this Agreement or any alleged breach of it to any compensation under or
in respect of any Bonus. For the avoidance of doubt, the Bonus will not accrue, nor will the Executive have any legitimate expectation as to the size or form of the Bonus, until the Company pays it to him. There are no circumstances whether in
reliance on express or implied terms or otherwise where the Executive can require pay out of a particular sum or payment in a particular form or claim compensation for loss of such a Bonus. 

 

	6.4	Corporate Governance 

 All payments and/or benefits payable to the Executive are subject
to and conditional upon: (i) the terms of applicable law, regulation and governance codes that regulate or govern executive pay from time to time; and (ii) the consent of the shareholders of the Company, as appropriate as determined by the
Board (together “Remuneration Governance”). The Company reserves the right to amend, reduce, hold back, defer, claw back and alter the structure of any payments and benefits payable to the Executive in order to comply with
Remuneration Governance. 

  
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	7.	EXPENSES 

  

	7.1	Out-of-pocket expenses 

 The Company shall reimburse to the Executive (against receipts
or other appropriate evidence as the Board may require) the amount of all out-of-pocket expenses reasonably and properly incurred by him in the proper discharge of his duties hereunder to the extent that such expenses are incurred in accordance with
the Company’s business expenses policy from time to time. 
  

	7.2	Company credit/charge cards 

 In the event that the Company issues a Company sponsored
credit or charge card to the Executive he shall use such card only for expenses reimbursable under Clause 7.1 and shall return it to the Company when so requested and in any event immediately on termination of the Employment howsoever arising. 

 

	8.	DEDUCTIONS 

 The Executive agrees that the Company may deduct from any sums due to him
under this Agreement any sums due by him to the Company including, without limitation, any debits to his Company credit or charge card not authorised by the Company, the Executive’s pension contributions (if any), any overpayments, loans or
advances made to him by the Company, the cost of repairing any damage or loss to the Company’s property caused by him and any losses suffered by the Company as a result of any negligence or breach of duty by the Executive. 

 

	9.	COMPANY CAR 

  

	9.1	Car allowance 

 The Executive may use his own vehicle or rent a vehicle for the
Company’s business, in which case he will be paid a car allowance of £1,100 per month towards this cost. The car allowance will be subject to deduction of tax and National Insurance contributions. 

 

	10.	PENSION SCHEME 

  

	10.1	The Scheme 

  

	10.1.1	The Executive is eligible to join the Company’s pension scheme (the “Scheme”), subject to its rules in force from time to time. Details of the Scheme are available from the Company. Pursuant to the
Scheme, the Company will make an annual contribution to the Scheme in respect of the Executive. The contribution shall be paid to the Scheme at such time or times during the year as the Company shall decide at its discretion. 

 

	10.1.2	When the Company becomes subject to the employer duties in the Pensions Act 2008, the Company reserves the right to amend the Executive’s pension arrangements in place in its absolute discretion. The Company will
inform the Executive of any changes to his pension arrangements at that time. 

  

	10.1.3	A copy of the current explanatory booklet giving details of the Scheme is available from the HR department. 

  

	10.1.4	The Scheme is not a contracted-out scheme for the purposes of the Pension Schemes Act 1993. 

  

	10.2	Company’s right to amend and terminate 

  

	10.2.1	The Company may at any time terminate the Scheme or the Executive’s membership of it subject to providing him with membership of an equivalent pension scheme. 

  
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	11.	OTHER INSURANCE & BENEFITS 

  

	11.1	Health Care Scheme 

 Without prejudice to the terms of Clauses 3 and 17, the Executive
(and his spouse and children up to the age of 18 in respect of private medical insurance) shall be entitled during the Employment, to participate in any Health Care Scheme subject to the following terms and conditions: 

 

	 	(a)	the Executive’s (and his family’s participation as applicable) is subject to the Company’s rules regarding eligibility and the rules, terms and conditions of the relevant Scheme, both in force from time
to time, copies of which shall be available from Human Resources; 

  

	 	(b)	the Company reserves the right to terminate the Executive’s (or his family’s, as applicable) or the Company’s participation in any of the Schemes, substitute a new scheme for an existing Scheme and/or
alter the level or type of benefits available under any Scheme; 

  

	 	(c)	if a scheme provider (e.g. an insurance company or pensions provider) refuses for any reason (whether under its own interpretation of the rules, terms and conditions of the relevant insurance policy or otherwise) to
accept a claim and/or provide the relevant benefit(s) to the Executive (or his family) under the applicable Scheme, the Company shall not be liable to provide (or compensate the Executive for the loss of) such benefit(s) nor shall it be obliged to
take action against the provider to enforce any rights under the Scheme; 

  

	 	(d)	the fact that the termination of the Employment under Clauses 3 and 17 may result in the Executive or his family ceasing to be eligible to receive or continue to receive benefits under any Scheme does not remove the
Company’s right to terminate the Employment; and 

  

	 	(e)	the Executive’s acceptance of such variations to his terms and conditions of employment as may from time to time be required by the Company. 

 

	11.2	Payments 

  

	11.2.1	All payments under the Schemes will be subject to the deductions required by law. 

  

	11.2.2	Where payments are made under a PHI scheme or critical illness scheme, all other payments or benefits provided to or in respect of the Executive will cease from the start of those payments (if they have not done so
already), unless the Company is fully reimbursed by the relevant insurance provider for the cost of providing the benefit. 

  

	11.3	Medical examinations 

 At any reasonable time during the Employment the Company may
require the Executive to undergo a medical examination by a medical practitioner appointed by the Company and at the Company’s expense. The Executive will consent to such examination and to the results being made available to the Company. 

 

	12.	HOLIDAYS 

  

	12.1	The holiday year 

 The Company’s holiday year runs from 1st January to 31st
December. Holidays can only be taken with the prior permission of the Chief Executive Officer of the Company. 

  
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	12.2	Annual entitlement 

  

	12.2.1	The Executive’s annual entitlement to paid holidays is to those public or customary holidays recognised by the Company in any holiday year of which there are eight in total and in addition 24 contractual days
holiday. In addition, the Executive shall be entitled to one additional day of holiday per year of continuous service (assessed as at 1st January each year) up to a maximum of 5 additional days. 

 

	12.2.2	Entitlement to contractual holidays is accrued pro rata throughout the holiday year. The Executive will be entitled to take public and customary holidays on the days that they are recognised by the Company during the
holiday year. 

  

	12.2.3	The Executive is not entitled to carry any unused holiday entitlement forward to the next holiday year without the permission of the Company. 

 

	12.3	Holiday entitlement on termination 

  

	12.3.1	Upon notice of termination of the Employment being served by either party, the Company may require the Executive to take any unused holidays accrued in the holiday year in which the termination takes place at that time
during any notice period. Alternatively, the Company may, at its discretion, on termination of the Employment, make a payment in lieu of accrued contractual holiday entitlement. 

 

	12.3.2	The Executive will be required to make a payment to the Company in respect of any holidays taken in excess of his holiday entitlement accrued at the Termination Date. Any sums so due may be deducted from any money owing
to the Executive by the Company. 

  

	13.	ABSENCE 

  

	13.1	Absence due to sickness or injury 

  

	13.1.1	If the Executive is absent from work due to sickness or injury he shall: 

  

	 	(a)	immediately inform the Company of his sickness or injury; and 

  

	 	(b)	In respect of absence due to sickness, injury or accident that continues for more than 7 consecutive days (including weekends) the Executive must provide the Company with a note of fitness to work stating the reason for
the absence. Thereafter notes of fitness to work must be provided to the Company to cover the remainder of the period of continuing sickness absence.

  

	13.1.2	Failure to follow the requirements referred to in Clause 13.1.1 may result in disciplinary action and loss of Statutory Sick Pay and/or Company Sick Pay pursuant to Clause 13.2. 

 

	13.2	Payment of salary during absence 

  

	13.2.1	Subject to the Executive complying with the terms of Clause 13.1.1, the Company may, at its sole discretion, continue to pay Basic Salary during any period of absence due to sickness or injury for up to a maximum of
three months in any period of twelve consecutive months (the twelve month period being referred to as the “Entitlement Period”) unless the Employment is terminated in terms of Clauses 3 or 17. The first Entitlement Period will begin
on the first day of absence and any subsequent Entitlement Period will start on the first day of any absence occurring outside an enduring Entitlement Period. 

  

	13.2.2	Payment of the Basic Salary in terms of Clause 13.2.1 shall be made less: 

  

	 	(a)	an amount equivalent to any Statutory Sick Pay payable to the Executive; 

  
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	 	(b)	any sums which may be received by the Executive under any insurance policy effected by the Company; and 

  

	 	(c)	any other benefits or sums which the Executive receives, such as under a PHI or other insurance scheme, in terms of the Employment or under any relevant legislation. 

 

	13.3	Absence caused by third party negligence 

 If the Executive’s absence is caused by
the negligence of a third party in respect of which damages are recoverable, then all sums paid by the Company during the period of absence in terms of Clause 13.2 shall constitute loans to the Executive who shall: 

 

	 	(a)	notify the Company immediately of all the relevant circumstances and of any claim, compromise, settlement or judgment made or awarded; and 

 

	 	(b)	if the Company so requires, refund to it an amount determined by the Company, not exceeding the lesser of: 

  

	 	(i)	the amount of damages recovered by him in respect of loss of earnings during the period of absence under any compromise, settlement or judgment; and 

 

	 	(ii)	the sums advanced to him by the Company in respect of the period of incapacity. 

  

	14.	RESTRICTIONS DURING EMPLOYMENT 

  

	14.1	Disclosure of other interests 

 The Executive shall disclose to the Board any interest of
his own (or that of his partner or of any child of his or of his partner under eighteen years of age): 
  

	 	(a)	in any trade, business or occupation whatsoever which is in any way similar to any of those in which the Company or any Group Company is involved; and 

 

	 	(b)	in any trade, business or occupation carried on by any supplier or customer of the Company or any Group Company whether or not such trade, business or occupation is conducted for profit or gain. 

 

	14.2	Restrictions on other activities and interests of the Executive 

  

	14.2.1	During the Employment the Executive shall not at any time, without the prior written consent of the Board, either alone or jointly with any other person, carry on or be directly or indirectly employed, engaged,
concerned or interested in any business, prospective business or undertaking other than a Group Company. Nothing contained in this Clause 14.2.1 shall preclude the Executive from being a Minority Holder unless the holding is in a company that is a
direct business competitor of the Company or any Group Company in which case, the Executive shall obtain the prior consent of the Board to the acquisition or variation of such holding. 

 

	14.2.2	If the Executive, with the consent of the Board, accepts any other appointment he must keep the Company accurately informed of the amount of time he spends working under that appointment. 

 

	14.3	Transactions with the Company 

 Subject to any regulations issued by the Company, the
Executive shall not be entitled to receive or obtain directly or indirectly any discount, rebate, commission or any other form of 

  
 12 

 
gift or gratuity (any of these referred to as a “Gratuity”) as a result of the Employment or any sale or purchase of goods or services effected or other business transacted
(whether or not by him) by or on behalf of the Company or any Group Company and if he (or any person in which he is interested) obtains any Gratuity he shall account to the Company for the amount received by him (or a due proportion of the amount
received by the person having regard to the extent of his interest therein). 
  

	14.4	Dealing in securities 

 The Executive shall comply with every rule of law (including but
not limited to the insider dealing provisions contained in Part V of the Criminal Justice Act 1993), the UK Financial Conduct Authority’s listing rules’ Model Code for transactions in securities by directors of listed companies, certain
employees and persons connected with them and every regulation of the Company for the time being in force in relation to dealings in shares or other securities of the Company or any Group Company. Under Rule 4 of the Model Code, the person to whom
notice should be given and from whom acknowledgement must be received before the Executive may deal in securities shall be the Company Secretary of the Company from time to time or such other person as shall be notified to the Executive. The
Executive also acknowledges that under the provisions of the Model Code the Executive must seek to ensure compliance with the Model Code by persons connected with the Executive (within the meaning of section 96B and Schedule 11B of the Financial
Services and Markets Act 2000) including, without limitation, the Executive’s spouse and dependent children, and by investment managers acting on the Executive’s behalf or on behalf of connected persons. The Executive undertakes to procure
that dealings by or on behalf of such persons are in compliance with the Model Code. 
  

	14.5	Compliance with the code on Corporate Governance 

 The Executive shall comply, to the
extent that the Board considers appropriate for a company the size of the Company, with the provisions of “The UK Corporate Governance Code” a corporate governance code issued by the Financial Reporting Council (as amended from time to
time). 
  

	15.	CONFIDENTIALITY AND COMPANY DOCUMENTS 

  

	15.1	Restrictions on disclosure and use of Confidential Information 

 The Executive must not
either during the Employment (except in the proper performance of his duties) or at any time (without limit) after the Termination Date: 
  

	 	(a)	divulge or communicate to any person; 

  

	 	(b)	use for his own purposes or for any purposes other than those of the Company or any Group Company; or 

  

	 	(c)	through any failure to exercise due care and diligence, cause any unauthorised disclosure of; 

any Confidential Information. The Executive must at all times use his best endeavours to prevent publication or disclosure of any Confidential
Information. These restrictions shall cease to apply to any information which shall become available to the public generally otherwise than through the default of the Executive. 

  
 13 

	15.2	Protection of Company documents and materials 

 All notes, records, lists of customers,
suppliers and employees, correspondence, computer and other discs or tapes, data listings, codes, keys and passwords, designs, drawings and other documents or material whatsoever (whether made or created by the Executive or otherwise and in whatever
medium or format) relating to the business of the Company or any Group Company or any of its or their clients (and any copies of the same): 
  

	 	(a)	shall be and remain the property of the Company or the relevant Group Company or client; and 

  

	 	(b)	shall be handed over by the Executive to the Company or the relevant Group Company or client on demand by the Company and in any event on the termination of the Employment; 

provided that following the termination of the Employment, the Executive shall be provided with reasonable access to Board Minutes and agendas
of the Company or any Group Company relating to a period during which he was a director of the Company or such Group Company that shall nevertheless remain confidential. 
  

	16.	INVENTIONS AND OTHER WORKS 

  

	16.1	Executive to further interests of the Company 

 The Company and the Executive agree that
the Executive may make or create Works during the Employment and agree that in this respect the Executive is obliged to further the interests of the Company and any Group Company. 

 

	16.2	Disclosure and ownership of Works 

 The Executive must immediately disclose to the
Company all Works and all Intellectual Property Rights. Both the Works and all Intellectual Property Rights will (subject to sections 39 to 43 Patents Act 1977) belong to and be the absolute property of the Company or any other person the Company
may nominate. 
  

	16.3	Protection, registration and vesting of Works 

 The Executive shall immediately on
request by the Company (whether during or after the Employment) and at the expense of the Company: 
  

	 	(a)	apply or join with the Company or any Group Company in applying for any Intellectual Property Rights or other protection or registration (“Protection”) in the United Kingdom and in any other part of the
world for, or in relation to, any Works; 

  

	 	(b)	execute all instruments and do all things necessary for vesting all Intellectual Property Rights or Protection when obtained and all right, title and interest to and in the same absolutely and as sole beneficial owner
in the Company or such Group Company or other person as the Company may nominate; and 

  

	 	(c)	sign and execute any documents and do any acts reasonably required by the Company in connection with any proceedings in respect of any applications and any publication or application for revocation of any Intellectual
Property Rights or Protection. 

  

	16.4	Waiver of rights by the Executive 

 The Executive hereby irrevocably and unconditionally
waives all rights under Chapter IV Copyright, Designs and Patents Act 1988 and any other moral rights which he may have in the Works, in whatever part of the world such rights may be enforceable including: 

 

	 	(a)	the right conferred by section 77 of that Act to be identified as the author of any such Works; and 

  

	 	(b)	the right conferred by section 80 of that Act not to have any such Works subjected to derogatory treatment. 

  
 14 

	16.5	Power of Attorney 

 The Executive hereby irrevocably appoints the Company to be his
attorney and in his name and on his behalf to execute any such act and to sign all deeds and documents and generally to use his name for the purpose of giving to the Company the full benefit of this Clause. The Executive agrees that, with respect to
any third parties, a certificate signed by any duly authorised officer of the Company that any act or deed or document falls within the authority hereby conferred shall be conclusive evidence that this is the case. 

 

	16.6	Statutory rights 

 Nothing in this Clause 16 shall be construed as restricting the rights
of the Executive or the Company under sections 39 to 43 Patents Act 1977. 
  

	17.	TERMINATION 

  

	17.1	Termination events 

 Notwithstanding any other provision of this Agreement, the Company
shall be entitled, but not bound, to terminate the Employment with immediate effect by giving to the Executive notice in writing at any time after the occurrence of any one or more of the following events: 

 

	 	(a)	if the Executive is guilty of any gross misconduct or behaviour which tends to bring himself or the Company or any Group Company into disrepute; or 

 

	 	(b)	if the Executive commits any material or persistent breach of this Agreement (in the case of a non-material persistent breach, having been given notice in writing of the breach and a reasonable opportunity to rectify
the breach) or fails to comply with any reasonable order or direction of the Board; or 

  

	 	(c)	if the Executive fails to perform his duties to the reasonable satisfaction of the Board (having been given notice in writing of: (i) the areas of underperformance, (ii) the improvements in performance that
are reasonably required by the Board; and (iii) a reasonable period of time to make the necessary improvements in performance; or 

  

	 	(d)	if he becomes insolvent or bankrupt or compounds with or grants a trust deed for the benefit of his creditors; or 

  

	 	(e)	if his behaviour (whether or not in breach of this Agreement) can reasonably be regarded as materially prejudicial to the interests of the Company or any Group Company, including if he is found guilty of any criminal
offence punishable by imprisonment (whether or not such sentence is actually imposed); or 

  

	 	(f)	if he has an order made against him disqualifying him from acting as a company director; or 

  

	 	(g)	if he becomes of unsound mind; or 

  

	 	(h)	if the Executive is found guilty of a serious breach of the rules or regulations as amended from time to time of the UK Listing Authority (including the Model Code for transactions in securities by directors), or any
other regulatory authority relevant to the Company or any Group Company or any code of practice issued by the Company or any Group Company (as amended from time to time); or 

 

	 	(i)	by giving not less than 3 months’ prior notice in writing (or termination immediately in writing and subsequently making a payment of Basic Salary in lieu of notice under Clause 3.4) if the Executive has been
prevented by reason of ill health, injury or some other reason beyond his control from performing his duties under this Agreement for a period or periods aggregating at least ninety days in the preceding period of twenty four consecutive months
provided that if at any time during the period of such notice and before the termination of the Employment the Executive shall provide a medical certificate satisfactory to the Board to the effect that he has fully recovered his physical and/or
mental health and that no recurrence of illness or incapacity can reasonably be anticipated, the Company shall withdraw the notice. 

  
 15 

	17.2	Company’s right to proceed 

 While the Company will endeavour to deal fairly with
allegations against the Executive, it reserves the right to proceed under Clause 17.1 without prior notice and without holding a hearing or inviting any representations from the Executive. 

 

	17.3	Termination on resignation as director 

 If the Executive resigns as a director of the
Company or any Group Company (otherwise than at the request of the Company), he shall be deemed to have terminated the Employment with effect from the date of his resignation and the Employment shall terminate at that time, unless the Company agrees
with the Executive that the Employment should continue, in which case the Employment may be subject to any terms and conditions stipulated by the Company in its absolute discretion. 

 

	17.4	No damages or payment in lieu of notice 

 In the event of the Employment being terminated
pursuant to Clause 17.1 or 17.3, the Executive shall not be entitled to receive any payment in lieu of notice nor make any claim against the Company or any Group Company for damages for loss of office or termination of the Employment. Regardless of
this, the termination shall be without prejudice to the continuing obligations of the Executive under this Agreement. 
  

	18.	EVENTS UPON TERMINATION 

  

	18.1	Obligations upon termination 

 Immediately upon the termination of the Employment
howsoever arising or immediately at the request of the Board at any time after either the Company or the Executive has served notice of termination of the Employment, the Executive shall: 

 

	 	(a)	deliver to the Company all Works, materials within the scope of Clause 15.2 and all other materials and property including credit or charge cards, mobile telephone, computer equipment, disks and software, passwords,
encryption keys or the like, keys, security pass, letters, stationery, documents, files, films, records, reports, plans and papers (in whatever format including electronic) and all copies thereof used in or relating to the business of the Company or
the Group which are in the possession of or under the control of the Executive; 

  

	 	(b)	resign (without claim for compensation) as a director and from all other offices held by him in the Company or any Group Company or otherwise by virtue of the Employment. For the avoidance of doubt, such resignations
shall be without prejudice to any claims the Executive may have against the Company or any Group Company arising out of the termination of the Employment; and 

  

	 	(c)	transfer without payment, to the Company, or as the Company may direct, any shares or other securities held by the Executive as nominee or trustee for the Company or any Group Company; 

  
 16 

 and should the Executive fail to do so the Company is hereby irrevocably authorised to appoint
some person to sign any documents and/or do all things in his name and on his behalf necessary to give effect thereto, 
  

	18.2	Loss of Share Incentives 

 On the termination of the Employment (howsoever arising,
including lawfully or unlawfully), the Executive shall not be entitled to any compensation or payment for the loss of the Share Incentives, bonus or any benefit which could have been derived from them, whether the compensation or payment is claimed
by way of a payment in lieu of notice, damages for wrongful dismissal, breach of contract or loss of office, or compensation for unfair dismissal, or on any other basis. 
  

	19.	RESTRICTIONS AFTER TERMINATION 

  

	19.1	Definitions 

 Since the Executive is likely to obtain Confidential Information in the
course of the Employment and personal knowledge of and influence over suppliers, customers, clients and employees of the Company and Group Companies, the Executive hereby agrees with the Company that in addition to the other terms of this Agreement
and without prejudice to the other restrictions imposed upon him by law, he will be bound by the covenants and undertakings contained in Clauses 19.2 to 19.5. In this Clause 19, unless the context otherwise requires: 

 

			
	“Customer”	  	means any person to which the Company distributed, sold or supplied Restricted Products or Restricted Services during the Relevant Period and with which, during that period either the Executive, or any employee under the direct or
indirect supervision of the Executive, had material dealings in the course of the Employment, but always excluding therefrom, any division, branch or office of such person with which the Executive and/or any such employee had no dealings during that
period;
		
	“Prospective Customer”	  	means any person with which the Company had discussions during the Relevant Period regarding the possible distribution, sale or supply of Restricted Products or Restricted Services and with which during such period the Executive, or
any employee who was under the direct or indirect supervision of the Executive, had material dealings in the course of the Employment, but always excluding therefrom any division, branch or office of that person with which the Executive and/or any
such employee had no dealings during that period;
		
	“Relevant Period”	  	means: (i) where the Employment is continuing, the period of the Employment; and (ii) where the Employment has terminated, the period of twelve months immediately preceding the Termination
Date;

  
 17 

			
	“Restricted Area”	  	 means:
  

(a)    the United Kingdom; and

 
 (b)    any other country in
the world where, on the Termination Date, the Company dealt in Restricted Products or Restricted Services;

		
	“Restricted Employee”	  	means any person who was a director, employee or consultant of the Company at any time within the Relevant Period who by reason of that position and in particular his seniority and expertise or knowledge of Confidential Information
or knowledge of or influence over the clients, customers or contacts of the Company is likely to cause damage to the Company if he were to leave the employment of the Company and become employed by a competitor of the Company;
		
	“Restricted Period”	  	means the period commencing on the Termination Date and, subject to the terms of Clause 19.4, continuing for twelve months;
		
	“Restricted Products”	  	means any product, device, equipment or machinery researched into, developed, manufactured, supplied, marketed, distributed or sold by the Company and with which the duties of the Executive were materially concerned or for which he
was responsible during the Relevant Period, or any products, equipment or machinery of the same type or materially similar to those products, equipment or machinery;
		
	“Restricted Services”	  	means any services (including but not limited to technical and product support, technical advice and customer services) researched into, developed or supplied by the Company and with which the duties of the Executive were materially
concerned or for which he was responsible during the Relevant Period, or any services of the same type or materially similar to those services;
		
	“Supplier”	  	means any supplier, agent, distributor or other person who, during the Relevant Period was in the habit of dealing with the Company and with which, during that period, the Executive, or any employee under the direct or indirect
supervision of the Executive, had material dealings in the course of the Employment.

  

	19.2	Restrictive covenants 

 Both during the Employment and during the Restricted Period, the
Executive will not, without the prior written consent of the Company (such consent not to be unreasonably withheld), whether by himself, through his employees or agents or otherwise and whether on his own behalf or on behalf of any person, directly
or indirectly: 
  

	 	(a)	so as to compete with the Company, solicit business from or canvas any Customer or Prospective Customer in respect of Restricted Products or Restricted Services; 

 

	 	(b)	so as to compete with the Company, accept orders from, act for or have any business dealings with, any Customer or Prospective Customer in respect of Restricted Products or Restricted Services; 

 

	 	(c)	 within the Restricted Area, be employed or engaged or at all interested (except as a Minority Holder) in that part of a business or person which is
involved in the business 

  
 18 

	 	
of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products or Restricted Services, if the business or person is or seeks to be
in competition with the Company. For the purposes of this sub-Clause, acts done by the Executive outside the Restricted Area shall nonetheless be deemed to be done within the Restricted Area where their primary purpose is to distribute, sell, supply
or otherwise deal with Restricted Products or Restricted Services in the Restricted Area; 

  

	 	(d)	solicit or induce or endeavour to solicit or induce any person who was a Restricted Employee (and with whom the Executive had dealings during the Relevant Period) to cease working for or providing services to the
Company, whether or not any such person would thereby commit a breach of contract; 

  

	 	(e)	employ or otherwise engage any Restricted Employee in the business of researching into, developing, manufacturing, distributing, selling, supplying or otherwise dealing with Restricted Products or Restricted Services if
that business is, or seeks to be, in competition with the Company; or 

  

	 	(f)	solicit or induce or endeavour to solicit or induce any Supplier to cease to deal with the Company and shall not interfere in any way with any relationship between a Supplier and the Company. 

 

	19.3	Application of restrictive covenants to other Group Companies 

 Clause 19.2 shall also
apply as though references to the “Company” in Clauses 19.1 and 19.2 include references to each Group Company in relation to which the Executive has in the course of the Employment or by reason of rendering services to or holding
office in such Group Company: 
  

	 	(a)	acquired knowledge of its products, services, trade secrets or Confidential Information; or 

  

	 	(b)	had personal dealings with its Customers or Prospective Customers; or 

  

	 	(c)	supervised directly or indirectly employees having personal dealings with its Customers or Prospective Customers; 

but so that references to the “Company” shall for this purpose be deemed to be references to the relevant Group Company. The
obligations undertaken by the Executive pursuant to this Clause 19.3 shall, with respect to each Group Company, constitute a separate and distinct covenant in favour of and for the benefit of each Group Company and which shall be enforceable either
by the particular Group Company or by the Company on behalf of the Group Company and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenants in favour of any other Group Company. 

 

	19.4	Effect of suspension on Restricted Period 

 If the Company exercises its right to suspend
the Executive’s duties and powers under Clause 5.3 after notice of termination of the Employment has been given, the aggregate of the period of the suspension and the Restricted Period shall not exceed twelve months and if the aggregate of the
two periods would exceed twelve months, the Restricted Period shall be reduced accordingly. 
  

	19.5	Further undertakings 

 The Executive hereby undertakes to the Company that he will not at
any time: 
  

	 	(a)	during the Employment or after the Termination Date engage in any trade or business or be associated with any person engaged in any trade or business using any trading names used by the Company or any Group Company
including the name(s) or incorporating the word(s) “LivaNova”, “Cyberonics” or “Sorin”; 

  
 19 

	 	(b)	after the Termination Date make any public statement in relation to the Company or any Group Company or any of their officers or employees; or 

 

	 	(c)	after the Termination Date represent or otherwise indicate any association or connection with the Company or any Group Company or for the purpose of carrying on or retaining any business represent or otherwise indicate
any past association with the Company or any Group Company. 

  

	19.6	Severance 

 The restrictions in this Clause 19 (on which the Executive has had the
opportunity to take independent advice, as the Executive hereby acknowledges) are separate and severable restrictions and are considered by the parties to be reasonable in all the circumstances. It is agreed that if any such restrictions, by
themselves, or taken together, shall be adjudged to go beyond what is reasonable in all the circumstances for the protection of the legitimate interests of the Company or a Group Company but would be adjudged reasonable if some part of it were
deleted, the relevant restriction or restrictions shall apply with such deletion(s) as may be necessary to make it or them valid and enforceable. 
  

	20.	RECONSTRUCTION AND AMALGAMATIONS 

 If the Company undergoes any process of reconstruction
or amalgamation (whether or not involving the liquidation of the Company) and the Executive is offered employment by the successor or proposed successor to the Company or any Group Companies on terms which as a whole are no less favourable than
those under this Agreement whether as to duties, responsibilities, remuneration or otherwise and the Executive does not accept the offer within one month of it being made, then the Executive shall have no claim against the Company or the successor
to the Company in respect of termination of this Agreement and the Employment. 
  

	21.	DISCIPLINARY AND GRIEVANCE PROCEDURE 

  

	21.1	Disciplinary procedures and grievance procedures 

  

	21.1.1	Any disciplinary action taken in connection with the Employment will usually be taken in accordance with the Company’s normal disciplinary procedures (which are workplace rules and not contractually binding) a copy
of which is available from Human Resources. 

  

	21.1.2	If the Executive wishes to obtain redress of any grievance relating to the Employment or is dissatisfied with any reprimand, suspension or other disciplinary step taken by the Company, he should follow the procedures
set out in the Company’s grievance policy, a copy of which is available from Human Resources. 

  

	22.	GENERAL 

  

	22.1	Provisions which survive termination 

 Any provision of this Agreement which is expressed
or intended to have effect on, or to continue in force after, the termination of this Agreement shall have such effect, or, as the case may be, continue in force, after such termination. 

 

	22.2	No collective agreements 

 There are no collective agreements that directly affect the
terms and conditions of the Employment. 

  
 20 

	23.	DATA PROTECTION AND PRIVACY 

  

	23.1	Data Protection 

 The Executive acknowledges and agrees that the Company is permitted to
hold personal information (including sensitive personal data) about the Executive as part of its personnel and other business records and may use such information in the course of the Company’s or the Group’s business. The Executive agrees
that the Company may disclose such information to third parties in the event that such disclosure is in the Company’s view required for the proper conduct of the Company’s business or that of any Group Company. This Clause 23.1 applies to
information held, used or disclosed in any medium. 
  

	23.2	Privacy 

 All communications, whether by telephone, email, fax, or any other means, which
are transmitted, undertaken or received using the Company’s IT or communications systems (“Company Systems”) or on Company premises will be treated by the Company as work related. The Company Systems are provided for work use
only. The Company may intercept, record and monitor all communications made by the Executive and his use of the Company Systems, without further notice. The Executive should not regard any communications or use as being private. 

 

	24.	AMENDMENTS, WAIVERS AND REMEDIES 

  

	24.1	Amendments 

 No amendment or variation of this Agreement or any of the documents referred
to in it (other than an alteration in the Basic Salary) shall be effective unless it is in writing and signed by or on behalf of each of the parties. 
  

	24.2	Waivers and remedies cumulative 

  

	24.2.1	The rights of each party under this Agreement: 

  

	 	(a)	may be exercised as often as necessary; 

  

	 	(b)	are cumulative and not exclusive of its rights under the general law; and 

  

	 	(c)	may be waived only in writing and specifically. 

  

	24.2.2	Delay in exercising or non-exercise of any right is not a waiver of that right. 

  

	24.2.3	Any right of rescission conferred upon the Company by this Agreement shall be in addition to and without prejudice to all other rights and remedies available to it. 

 

	25.	ENTIRE AGREEMENT 

  

	25.1.1	This Agreement and the documents referred to in it constitute the entire agreement and understanding of the parties and supersede and extinguish all previous agreements, promises, assurances, warranties, representations
and understandings between the parties, whether written or oral, relating to the subject matter of this Agreement. 

  
 21 

	25.1.2	Each party acknowledges that in entering into this Agreement it does not rely on, and shall have no remedies in respect of, any statement, representation, assurance or warranty (whether made innocently or negligently)
that is not set out in this Agreement. 

  

	25.1.3	Each party agrees that it shall have no claim for innocent or negligent misrepresentation or negligent misstatement based on any statement in this Agreement. 

 

	25.1.4	Nothing in this Clause shall limit or exclude any liability for fraud. 

  

	26.	NO OUTSTANDING CLAIMS 

 The Executive hereby acknowledges that he has no outstanding
claims of any kind against the Company or any Group Company (other than in respect of remuneration and expenses due to the date of this Agreement but not yet paid). 
  

	27.	SEVERANCE 

 If any provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect: 
  

	 	(a)	the legality, validity or enforceability in that jurisdiction of any other provisions of this Agreement; or 

  

	 	(b)	the legality, validity or enforceability in any other jurisdiction of that or any other provision of this Agreement. 

  

	28.	NOTICE 

  

	28.1	Notices and deemed receipt 

 Any notice hereunder shall be given by either party to the
other either personally to the Executive or the Company Secretary (as appropriate) or sent in the case of the Company, to its registered office for the time being and, in the case of the Executive, to his address last known to the Company. Any such
notice shall be in writing and shall be given by letter delivered by hand or sent by first class prepaid recorded delivery or registered post or by facsimile transmission. Any such notice shall be deemed to have been received: 

 

	 	(a)	if delivered personally, at the time of delivery; 

  

	 	(b)	in the case of pre-paid recorded delivery or registered post, 48 hours from the date of posting; 

  

	 	(c)	in the case of registered airmail, five days from the date of posting; and 

  

	 	(d)	in the case of fax or email, at the time of transmission; 

 provided that if deemed receipt
occurs before 9am on a business day the notice shall be deemed to have been received at 9am on that day and if deemed receipt occurs after 5pm on a business day, or on a day which is not a business day, the notice shall be deemed to have been
received at 9am on the next business day. For the purpose of this Clause, “business day” means any day which is not a Saturday, a Sunday or a public holiday in the place at or to which the notice is left or sent. 

 

	29.	GOVERNING LAW AND JURISDICTION 

  

	29.1	Governing law 

 This Agreement is governed by and to be construed in accordance with
English law. 

  
 22 

	29.2	Jurisdiction 

 Each party hereby submits to the exclusive jurisdiction of the English
courts as regards any claim, dispute or matter arising out of or in connection with this Agreement and its implementation and effect. 

  
 23 

 IN WITNESS of which this Agreement has been executed and delivered as a deed on the first date written
above. 
  

					
	EXECUTED as a Deed	  	 /s/ Brian Sheridan
	  	
	by LIVANOVA PLC	  	Brian Sheridan, Director	  	
	acting by Brian Sheridan,	  		  	
	Director, and a Witness	  		  	
		  	 /s/ Megan M. Menagh
	  	
		  	Witness	  	
			
	Full Name:	  	 Megan Marie Menagh
	  	
			
	Address:	  	 Via Benigno Craspi, 17
	  	
			
		  	 Milan, Italy 20159
	  	
			
		  	  
	  	
			
	EXECUTED as a Deed	  		  	
	By VIVID SEHGAL	  	 /s/ Vivid Sehgal
	  	
	in the presence of:	  		  	
			
	Witness’s	  		  	
			
	Signature:	  	 /s/ Bhara T. Rana
	  	
			
	Full Name:	  	 Bhara T. Rana
	  	
			
	Address:	  	 92 Ruislip Road
	  	
			
		  	 Greenford UB6 9QH
	  	
			
		  	  
	  	

  
 24Exhibit 10.1

TAX MATTERS AGREEMENT

This Tax Matters Agreement (the “Agreement”), dated as of September 8, 2015, is by and among Capital Southwest Corporation, a Delaware corporation (“Capital Southwest”), and CSW Industrials, Inc., a Delaware corporation (“CSWI”).  Each of Capital Southwest and CSWI is sometimes referred to as a “Party,” and, collectively, as the “Parties.”

WHEREAS, CSWI and one or more of its Subsidiaries are members of the Affiliated Group of which Capital Southwest is the common parent corporation;

WHEREAS, following the Share Distribution, Capital Southwest will not own, directly or indirectly, any Capital Stock in CSWI or any of its Subsidiaries;

WHEREAS, following the Share Distribution, CSWI and one or more of its Subsidiaries will be members of the Affiliated Group of which CSWI is the common parent corporation; and

WHEREAS, Capital Southwest and CSWI desire to set forth certain covenants and indemnities relating to the preservation of the tax-free status of the Share Distribution.

NOW, THEREFORE, in consideration of the mutual obligations and undertakings contained herein, the parties agree as follows:

ARTICLE I

DEFINITIONS

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

“Acting Party” has the meaning set forth in Section 3.03(a) of this Agreement.

“Affiliate” means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person.

“Affiliated Group” means an affiliated group of corporations within the meaning of Section 1504 of the Code.

“Business Day” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by applicable law to be closed in New York, New York.

“Capital Southwest Active Business” means the Sensory Device Manufacturing Business, as defined in the Tax Opinion.

 “Capital Stock” means all classes or series of capital stock of a Party, including (i) common stock, (ii) preferred stock, (iii) all options, warrants and other rights to acquire such capital stock, and (iv) all instruments properly treated as stock in a Party for U.S. federal income tax purposes.

 

“Code” means the Internal Revenue Code of 1986, as amended.

“Contribution” has the meaning given to such term in the Distribution Agreement.

“CSWI Active Business” means the Diversified Industrial Growth Business, as defined in the Tax Opinion.

 “Distribution Agreement” means the Distribution Agreement by and between Capital Southwest and CSWI, dated as of September 8, 2015.

“Distribution Date” has the meaning given to such term in the Distribution Agreement.

“Fifty-Percent or Greater Interest” has the meaning that is given to such term for purposes of Section 355(e) of the Code.

“Filing Date” has the meaning set forth in Section 3.04(d) of this Agreement

“Final Determination” means the final resolution of liability for any Tax with respect to a taxable period (i) as specified on an effective IRS Form 870 or 870-AD (or any successor forms), or as specified on an effective comparable form of another Taxing Authority, except that an IRS Form 870 or 870-AD or comparable form that reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for a refund or the right of the Taxing Authority to assert a further deficiency shall not constitute a Final Determination; (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and may not be appealed; (iii) by a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws of any other jurisdiction; or (iv) by any other final disposition, including by reason of the expiration of the applicable statute of limitations.

 “IRS” means the Internal Revenue Service.

 “Member” has the meaning given to such term in Treasury Regulation Section l.1502-1(b).

“Non-Acting Party” has the meaning set forth in Section 3.03(a) of this Agreement.

“Notified Action” has the meaning set forth in Section 3.03(a) of this Agreement.

“Party” has the meaning set forth in the preamble.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof, without regard to whether any entity is treated as disregarded for U.S. federal income tax purposes.

 

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“Proposed Acquisition Transaction” means a transaction or series of related transactions (or any agreement, understanding, arrangement, or substantial negotiations within the meaning of Section 355(e) of the Code and Treasury Regulations section 1.355-7, to enter into a transaction or series of related transactions), whether such transaction is supported by the Party’s officers, directors, management or shareholders, is a hostile acquisition, or otherwise, as a result of which such Party would merge or consolidate with any other Person or as a result of which any Person or any group of related Persons would, directly or indirectly, acquire, or have the right to acquire, from such Party and/or one or more holders of outstanding shares of such Party’s Capital Stock, a number of shares of such Party’s Capital Stock that would, when combined with any other changes in ownership of such Party’s Capital Stock relevant for purposes of Section 355(e) of the Code, comprise 40% or more of (A) the value of all outstanding shares of all classes of stock of such Party as of the date of such transaction, or, in the case of a series of related transactions, the date of the last transaction of such series, or (B) the total combined voting power of all outstanding shares of all classes of voting stock of such Party as of the date of such transaction, or, in the case of a series of related transactions, the date of the last transaction of such series. Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (A) the adoption by a Party of a shareholder rights plan or (B) issuances by a Party that satisfy Safe Harbor VIII (relating to acquisitions in connection with a person’s performance of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether a transaction constitutes an indirect acquisition, any recapitalization resulting in a shift of voting power or any redemption of shares of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code and shall be interpreted accordingly. Any clarification of, or change in, Section 355(e) of the Code or the regulations thereunder shall be incorporated in this definition and its interpretation.

“Protective Section 336(e) Election” has the meaning set forth in Section 4.11 of this Agreement.

“Representation Letters” means the officers’ certificates setting forth representations delivered or deliverable by Capital Southwest and/or CSWI to the Tax Advisor in connection with the rendering of the Tax Opinion.

“Ruling” means a written determination furnished by the National Office of the IRS in response to a request by Capital Southwest or CSWI.

“Share Distribution” has the meaning given to such term in the Distribution Agreement.

“Subsidiary” of any Person means another Person (a) in which the first Person owns, directly or indirectly, an amount of the voting interests sufficient to elect at least a majority of its board of directors or other governing body (or, if there are no voting interests, a majority of the equity interests in such other Person), or (b) with respect to whom the first Person otherwise has the power to direct its management and policies.  A Subsidiary may be owned directly or indirectly by such first Person or by another Subsidiary of such first Person.

“Tax” or “Taxes” means any and all taxes, charges, fees, duties and other governmental charges imposed by a Taxing Authority, including, without limitation, all net income, alternative or add-on minimum, estimated, gross income, sales, use, ad valorem, gross receipts, value added, franchise, profits, license, transfer, recording, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit, custom duty or other taxes of any kind whatsoever, together with any related interest, penalties and other additions to tax.

 

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“Tax Advisor” means a United States tax counsel or accountant of recognized national standing.

“Tax Controversy” means any audit (including any pending or threatened audit), examination, dispute, suit, action, proposed assessment or other proceeding relating to Taxes.

“Tax-Free Status” means the qualification of the Contribution and Share Distribution, taken together, (a) as a reorganization described in Sections 368(a)(1)(D) and 355 of the Code, (b) as a transaction in which the CSWI stock that is distributed by Capital Southwest is “qualified property” for purposes of Sections 355(d), 355(e), and 361(c) of the Code, and (c) as a transaction in which the shareholders of Capital Southwest recognize no income or gain for U.S. federal income tax purposes pursuant to Section 355 of the Code (except for cash received in lieu of fractional shares, if any).

“Tax Materials” has the meaning set forth in Section 3.01(a)(i) of this Agreement.

“Tax Opinion” means the opinion of the Tax Advisor deliverable to Capital Southwest in connection with the Contribution and Share Distribution.

“Tax-Related Losses” means (i) all Taxes imposed pursuant to any Final Determination and resulting from the failure of the Contribution and the Share Distribution, taken together, to qualify for Tax-Free Status, and (ii) all reasonable accounting, legal and other professional fees, and court costs incurred in connection with such failure.

“Tax Return” means any return, filing, questionnaire or other document, including requests for extensions of time, filings made with estimated Tax payments, claims for refund and amended returns, that may be filed for any taxable period with any Taxing Authority in connection with any Tax (whether or not a payment is required to be made with respect to such filing) or any information reporting requirement (including any related supporting information or schedule attached thereto).

“Taxing Authority” means a federal, national, foreign, municipal, state, or other governmental authority responsible for the administration of any Tax.

“Treasury Regulations” means the U.S. Treasury Regulations promulgated under the Code.

“Unqualified Tax Opinion” means an unqualified “will” opinion of a Tax Advisor to the effect that a transaction will not affect the qualification of the Contribution and Share Distribution for Tax-Free Status.  Any such opinion must assume that the Contribution and Share Distribution would have qualified for Tax-Free Status if the transaction in question did not occur.  An unqualified “will” opinion may describe the reasons for the conclusions and include the facts, assumptions, and supporting legal analysis.

 

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ARTICLE II

COOPERATION AND TAX CONTROVERSIES

Section 2.01.  Cooperation.

(a)                 Each Party shall use its commercially reasonable best efforts to cooperate fully with the other Party in connection with the preparation and filing of any Tax Return and the conduct of any Tax Controversy, in each case, concerning any matter that is relevant for purposes of this Agreement. Such cooperation shall include (i) the retention and provision, on commercially reasonable demand, of books, records, documentation and other information relating to any Tax Return until the later of (x) the expiration of the applicable statute of limitations (giving effect to any extension, waiver, or mitigation thereof), and (y) in the event a claim has been made under this Agreement for which such information is relevant, until a Final Determination with respect to such claim; (ii) the filing or execution of any document that may be necessary or reasonably helpful in connection with the filing of any Tax Return, or in connection with any Tax Controversy (including a power of attorney); and (iii) the use of the Parties’ commercially reasonable best efforts to obtain any documentation from a governmental authority or a third party that may be necessary or helpful in connection with any of the foregoing.  Each Party shall make its employees and facilities available on a mutually convenient, commercially reasonable basis to facilitate such cooperation.

Section 2.02.  Tax Controversies.

(a)                 Each Party shall use commercially reasonable efforts to keep the other Party informed on a timely basis as to the status of any Tax Controversy involving any issue that could give rise to any liability of the other Party under this Agreement.  Each Party shall promptly notify the other Party of any inquiries by any Taxing Authority, or any other administrative, judicial or other governmental authority, that relate to any Tax that may give rise to any liability under this Agreement.  Capital Southwest shall have sole control of any Tax Controversy relating to any of its Tax Returns, except, however, that in the case of any such Tax Controversy that may affect Taxes for which CSWI may have indemnification liability under this Agreement (such Taxes, "Section 3.04(a) Taxes"), (i) CSWI shall be entitled to participate, jointly along with Capital Southwest, in the Tax Controversy, at CSWI’s cost and expense, to the extent the Tax Controversy relates to Section 3.04(a) Taxes, (ii) Capital Southwest shall keep CSWI promptly informed and consult in good faith with CSWI with respect to any issue relating to Section 3.04(a) Taxes, (iii) Capital Southwest shall promptly provide CSWI with copies of all correspondence, notices, and other written materials received from any Taxing Authority relating to Section 3.04(a) Taxes and shall otherwise keep CSWI promptly advised of all developments related to Section 3.04(a) Taxes, (iv) CSWI may request Capital Southwest to take a position (as specified, and in the form set forth, in written materials provided by CSWI to Capital Southwest) with respect to Section 3.04(a) Taxes, and Capital Southwest shall take such position (as specified and in such form), provided, (A) there exists at least "substantial authority" for such position within the meaning of Section 6662 of the Code, (B) the adoption of such position could not reasonably be expected to increase Capital Southwest's Taxes, other than Section 3.04(a) Taxes, or CSWI agrees to indemnify and hold harmless Capital Southwest for such increases in Taxes, and (C) CSWI agrees to reimburse Capital Southwest for any reasonable third party costs that are attributable to CSWI’s request, (v) Capital Southwest shall provide CSWI with a copy of any written submission to be sent to a Taxing Authority, to the extent related to Section 3.04(a) Taxes, at least 10 days prior to the submission thereof and shall incorporate any comments or suggested revisions that CSWI may have with respect thereto, and (vi) there shall be no settlement, resolution or closing or other agreement with respect to Section 3.04(a) Taxes without the prior written consent of CSWI.

 

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ARTICLE III

TAX-FREE STATUS

Section 3.01.  Representations, Warranties and Covenants.

(a)                 CSWI represents and warrants, and covenants as to time periods after the date hereof as set forth in Section 3.01(a)(ii), that:

(i)            it has examined (A) the Tax Opinion, and (B) the Representation Letters (the foregoing (A) and (B), collectively, the “Tax Materials”);

(ii)            the facts presented and the representations made in the Tax Materials, to the extent descriptive of CSWI and its Subsidiaries (including the business purposes for the Contribution and Share Distribution, to the extent that they relate to CSWI and its Subsidiaries, and the plans, proposals, intentions, policies and covenants of CSWI and its Subsidiaries) are, and will be through and including the Distribution Date, and thereafter as relevant, true, correct, and complete in all respects; and

(iii)            neither it nor any of its Subsidiaries has any plan or intention to take any action that is inconsistent with any of the representations or covenants made by them in the Tax Materials.

(b)                 Capital Southwest hereby represents and warrants, and covenants as to time periods after the date hereof as set forth in Section 3.01(b)(ii), that:

(i)            it has examined the Tax Materials;

(ii)            it has delivered complete and accurate copies of the Tax Materials to CSWI, and the facts presented and the representations made therein, to the extent descriptive of Capital Southwest and its Subsidiaries (other than CSWI and its Subsidiaries) (including the business purposes for the Contribution and Share Distribution, to the extent that they relate to Capital Southwest and its Subsidiaries (other than CSWI and its Subsidiaries), and the plans, proposals, intentions, policies and covenants of Capital Southwest and its Subsidiaries (other than CSWI and its Subsidiaries), are, and will be through and including the Distribution Date, and thereafter as relevant, true, correct and complete in all respects; and

(iii)            neither it, nor any of its Subsidiaries (other than CSWI and its Subsidiaries) has any plan or intention to take any action that is inconsistent with any of the representations or covenants made by them in the Tax Materials.

 

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Section 3.02.  Restrictions on Capital Southwest and CSWI.  Capital Southwest and CSWI each agree that:

(a)                 it will not take or fail to take, or permit, any of its Subsidiaries (as they exist from time to time) to take or fail to take any action if such action or failure to act would be inconsistent with any representation or covenant in the Tax Materials;

(b)                 from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will (i) “actively conduct,” within the meaning of Section 355(b)(2) of the Code, its active business (the Capital Southwest Active Business and the CSWI Active Business, respectively), and (ii) not engage in any transaction that would result in it ceasing to “actively conduct” its active business; and

(c)                 from the date hereof until the first day after the two-year anniversary of the Distribution Date, it will not:

(i)            enter into any Proposed Acquisition Transaction or, to the extent it has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur,

(ii)            liquidate or partially liquidate (within the meaning of such terms as defined for purposes of Sections 331 and 302, respectively, of the Code),

(iii)            sell or transfer in a single transaction or series of transactions, other than sales or transfers of inventory in the ordinary course of business, 35% or more of the gross assets of the Capital Southwest Active Business or the CSWI Active Business or 35% or more of its and its Affiliates consolidated gross assets (such percentages to be measured based on fair market value as of the Distribution Date), or sell or transfer any portion of its and its Affiliates’ assets if such sale or transfer would result in the violation of the “continuity of business enterprise” requirement of Treasury Regulations Section 1.368-1(d) in connection with the Contribution and Share Distribution,

(iv)            redeem or otherwise repurchase, directly or through one or more of its Affiliates, any of its Capital Stock, except to the extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue Procedure 2003-48),

(v)            amend its certificate of incorporation or other organizational documents, or take any other action, whether through a stockholder vote or otherwise, affecting the voting rights of its Capital Stock (including, without limitation, through the conversion of one class of its Capital Stock into another class of its Capital Stock); or

(vi)            take any other action or actions, including any action that would be reasonably likely to be inconsistent with any representation made in the Tax Materials, which in the aggregate (and taking into account any other transactions described in this subparagraph (c)) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire, directly or indirectly, stock representing a Fifty-Percent or Greater Interest in Capital Southwest or CSWI or otherwise jeopardize qualification of the Contribution and Share Distribution for Tax-Free Status,

 

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unless prior to taking any such action (A) it shall provide the other Party with an Unqualified Tax Opinion in form and substance satisfactory to the other Party in the other Party’s discretion, which discretion shall be exercised in good faith to preserve the Tax-Free Status (and in determining whether an opinion is satisfactory, the other Party may consider, among other factors, the appropriateness of any underlying assumptions and management’s representations if used as a basis for the opinion), or (B) the other Party shall have waived in writing the requirement to obtain such Unqualified Tax Opinion.

Section 3.03.  Procedures Regarding Opinions.

(a)                 If either Party (the “Acting Party”) notifies the other Party (the “Non-Acting Party”) that it desires to take one of the actions described in clauses (i) through (vi) of Section 3.02(c) (a “Notified Action”), the parties shall cooperate and use commercially reasonable best efforts to attempt to obtain the Unqualified Tax Opinion referred to in Section 3.02(c), unless the Non-Acting Party shall have waived in writing the requirement to obtain the Unqualified Tax Opinion.  Each Party shall bear its own costs and expenses of obtaining the Unqualified Tax Opinion.

Section 3.04.  Liability for Tax-Related Losses.

(a)                 Subject to Section 3.04(c), CSWI shall be responsible for, and shall indemnify and hold harmless Capital Southwest and its Affiliates and each of their respective officers, directors and employees from and against, any Tax-Related Losses, without duplication, that are attributable to or result from any one or more of the following: (A) the acquisition (other than pursuant to the Distribution Agreement or the Share Distribution) by any Person, other than Capital Southwest and its Affiliates, of all or a portion of CSWI’s stock and/or its or its Subsidiaries’ assets, (B) any negotiations, understandings, agreements or arrangements by CSWI (other than as set forth in the Distribution Agreement) with respect to transactions or events (including, without limitation, stock issuances (pursuant to the exercise of stock options or otherwise), option grants, capital contributions, or acquisitions, or a series of such transactions or events) that cause the Contribution and Share Distribution to be treated as part of a plan (or series of related transactions) pursuant to which one or more Persons acquire directly or indirectly stock of CSWI representing a Fifty-Percent or Greater Interest therein, (C) any action or failure to act by CSWI after the Share Distribution (including any amendment to CSWI’s certificate of incorporation or other organizational document, whether through a stockholder vote or otherwise) affecting the voting rights of CSWI stock (including through the conversion of one class of CSWI stock into another class of CSWI stock), (D) any breach by CSWI of its covenants set forth in Section 3.02 (regardless of whether the act or failure to act giving rise to the breach is covered by a Ruling or Unqualified Tax Opinion), or (E) any breach by CSWI of its representations, warranties, or covenants set forth in Section 3.01(a).

 

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(b)                Subject to Section 3.04(c), Capital Southwest shall be responsible for, and shall indemnify and hold harmless CSWI and its Affiliates and each of their respective officers, directors and employees from and against any Tax-Related Losses, without duplication, that are attributable to, or result from any one or more of the following: (A) the acquisition (other than pursuant to the Distribution Agreement, or the Share Distribution) by any Person, other than CSWI and its Affiliates, of all or a portion of Capital Southwest’s stock and/or its or its Subsidiaries’ assets, (B) any negotiations, understandings, agreements or arrangements by Capital Southwest (other than as set forth in the Distribution Agreement) with respect to transactions or events (including, without limitation, stock issuances (pursuant to the exercise of stock options or otherwise), option grants, capital contributions, or acquisitions, or a series of such transactions or events) that cause the Contribution and Share Distribution to be treated as part of a plan (or series of related transactions) pursuant to which one or more Persons acquire directly or indirectly stock of Capital Southwest representing a Fifty-Percent or Greater Interest therein, (C) any action or failure to act by Capital Southwest after the Share Distribution (including any amendment to Capital Southwest’s certificate of incorporation (or other organizational document), whether through a stockholder vote or otherwise) affecting the voting rights of Capital Southwest stock (including through the conversion of one class of Capital Southwest stock into another class of Capital Southwest stock), (D) any breach by Capital Southwest of its covenants set forth in Section 3.02 (regardless of whether such act or failure to act is covered by a Ruling or Unqualified Tax Opinion), or (E) any breach by Capital Southwest of its representations, warranties, or covenants set forth in Section 3.01(b).

(c)                Notwithstanding Sections 3.04(a) and (b), to the extent that any Tax-Related Loss of a Party can be attributed to an action or actions taken by each Party, individually, or to actions taken by both Parties (whether or not such actions are the same), responsibility for such Tax-Related Loss shall be shared by Capital Southwest and CSWI according to relative fault.

(d)                A Party shall pay to the other Party the amount of any Tax-Related Losses for which the first Party is responsible under this Section 3.04: (A) in the case of Tax-Related Losses described in clause (i) of the definition of Tax-Related Losses no later than three (3) business days prior to the date Capital Southwest files, or causes to be filed, the applicable amended Tax Return for the year of the Contribution and Share Distribution (the “Filing Date”), and (B) in the case of Tax-Related Losses described in clause (ii) of the definition of Tax-Related Losses, no later than five (5) days after the date the Other Party pays such Tax-Related Losses.

ARTICLE IV

MISCELLANEOUS

Section 4.01. Effective Date. This Agreement is effective upon the occurrence of the Share Distribution; provided, however, that the representations, warranties, and covenants set forth in Section 3.01 shall be effective as of the date of this Agreement.

Section 4.02.  Complete Agreement. This Agreement constitutes the entire agreement of the parties concerning the subject matter hereof. Any other agreements (including tax sharing agreements), whether or not written, in respect of any Tax between or among Capital Southwest and CSWI or any of CSWI’s Subsidiaries shall be terminated and have no further effect as of the Distribution Date. This Agreement may not be amended except by an agreement in writing signed by the parties hereto.

 

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Section 4.03.  Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement must be in writing and will be deemed to have been duly given (i) when delivered by hand, (ii) three (3) Business Days after it is mailed, certified or registered mail, return receipt requested, with postage prepaid, (iii) on the same Business Day when sent by facsimile or electronic mail (return receipt requested) if the transmission is completed before 5:00 p.m. recipient’s time, or one (1) Business Day after the facsimile or email is sent, if the transmission is completed on or after 5:00 p.m. recipient’s time or (iv) one (1) Business Day after it is sent by Express Mail, Federal Express or other courier service, as follows (or at such other address for a party as shall be specified in a notice given in accordance with this Section 4.03):

		If to CSWI:	CSW Industrials, Inc.

5400 Lyndon B. Johnson Freeway

Suite 1300

Dallas, TX  75240

Attn.:  Chief Executive Officer

		If to Capital Southwest:	Capital Southwest Corporation

5400 Lyndon B. Johnson Freeway

Suite 1300

Dallas, TX  75240

Attn.:  Chief Executive Officer

Section 4.04.  Governing Law; Jurisdiction; Waiver of Jury Trial.

(a)                 Governing Law; Jurisdiction. This Agreement (and all claims, controversies or causes of action, whether in contract, tort or otherwise, that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, termination, performance or nonperformance of this Agreement (including any claim, controversy or cause of action based upon, arising out of or relating to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement)) shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each of the parties hereto irrevocably agrees that all proceedings arising out of or relating to this Agreement and the rights and obligations arising hereunder, or for recognition and enforcement of any judgment in respect of this Agreement and the rights and obligations arising hereunder brought by the other party hereto or its successors or assigns shall be brought, heard and determined exclusively in any federal or state court sitting in Delaware. Consistent with the preceding sentence, each of the parties hereto hereby (a) submits to the exclusive jurisdiction of any federal or state court sitting in Delaware for the purpose of any proceeding arising out of or relating to this Agreement or the rights and obligations arising hereunder brought by any party hereto and (b) irrevocably waives, and agrees not to assert by way of motion, defense, counterclaim, or otherwise, in any such proceeding, any claim that it or its property is not subject personally to the jurisdiction of the above-named courts, that the proceeding is brought in an inconvenient forum, that the venue of the proceeding is improper, or that this Agreement, the Share Distribution or any of the other transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts. Each party agrees that service of process upon such party in any such action or proceeding shall be effective if notice is given in accordance with Section 4.03.

 

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(b)                Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 4.04(b).

Section 4.05.  Successors and Assigns. A party’s rights and obligations under this Agreement may not be assigned without the prior written consent of the other party. All of the provisions of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. If any party to this Agreement forms or acquires one or more Subsidiaries, such party will cause any such Subsidiary to be bound by the terms of this Agreement, and this Agreement shall apply to any such Subsidiary in the same manner and to the same extent as the current party.

Section 4.06.  Intended Third Party Beneficiaries. This Agreement is solely for the benefit of the parties to this Agreement and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without this Agreement.

Section 4.07.  Legal Enforceability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or unenforceability without invalidating the remaining provisions. Any prohibition or unenforceability of any provision of this Agreement in any jurisdiction shall not invalidate or render unenforceable the provision in any other jurisdiction.

Section 4.08.  Expenses. Unless otherwise expressly provided in this Agreement, each party shall bear any and all expenses that arise from its respective obligations under this Agreement.

Section 4.09. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

 

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Section 4.10. Change in Law. If, after the date this Agreement is executed, as a result of an amendment to the Code, the promulgation of proposed, temporary or final regulations, the issuance of a ruling by a Taxing Authority, the decision of any court, or a change in any applicable state or local law, Capital Southwest believes that it is necessary or helpful to amend the provisions of this Agreement in order to preserve the rights and benefits contemplated herein, each of the parties hereto agrees to negotiate in good faith all such amendments and modifications as shall be necessary or appropriate in order to preserve as nearly as possible for the parties hereto the rights and benefits contemplated herein.

Section 4.11. Protective Section 336(e) Election.  Pursuant to Treasury Regulation sections 1.336-2(h)(2) and 1.336-2(j), Capital Southwest and CSWI agree that Capital Southwest shall make a protective election under Section 336(e) of the Code and the Treasury Regulations issued thereunder for CSWI and each CSWI Subsidiary for whom such an election may be made with respect to the Share Distribution (the “Protective Section 336(e) Election”).  It is intended that the Protective Section 336(e) Election will have no effect unless the Share Distribution is a “qualified stock disposition,” as defined in Treasury Regulations section 1.336-1(b)(6), either because (a) the Share Distribution is a transaction described in Treasury Regulations section 1.336-1(b)(5)(i)(B) or (b) Treasury Regulation section 1.336-1(b)(5)(ii) applies to the Share Distribution.

[Remainder of page intentionally left blank; signature page to follow]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the day and year first above written.

	 	
CAPITAL SOUTHWEST CORPORATION

	 	 
	 	
By:

	 /s/ Bowen S. Diehl
	 	
Name: Bowen S. Diehl

	 	
Title:   Chief Investment Officer

	 	 
	 	
CSW INDUSTRIALS, INC.

	 	 
	 	
By: 

	 /s/ Joseph B. Armes
	 	
Name: Joseph B. Armes

	 	
Title:   Chief Executive Officer

[Signature Page to Tax Matters Agreement]

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