TRANSITION AND SUCCESSION
AGREEMENT
THIS TRANSITION
AND SUCCESSION AGREEMENT (this “Agreement”) is entered
into as of this 8 th day of January, 2007 (this
“Agreement”), by and between Mylan Laboratories Inc., a
Pennsylvania corporation (the “Company”), and Prasad
Nimmagadda (the “Executive”).
WHEREAS, the Board
of Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined herein), to
ensure the Executive’s full attention and dedication to the
Company in the event of any threatened or actual Change of Control
and to provide the Executive with compensation and benefits
arrangements upon a Change of Control.
NOW, THEREFORE, IT
IS HEREBY AGREED AS FOLLOWS:
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(a)
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“Effective Date” means
the first date during the Change of Control Period (as defined
herein) on which a Change of Control occurs. Notwithstanding
anything in this Agreement to the contrary, if a Change of Control
occurs and if the Executive’s employment with the Company is
terminated prior to the date on which the Change of Control occurs,
and if it is reasonably demonstrated by the Executive that such
termination of employment (1) was at the request of a third
party that has taken steps reasonably calculated to effect a Change
of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then “Effective
Date” means the date immediately prior to the date of such
termination of employment. For the sake of clarity, it is
understood that if the Executive’s employment terminates
prior to the Effective Date other than as described in the
preceding sentence, this Agreement shall thereupon be null and void
and of no further force and effect.
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(b)
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“Change of Control
Period” means the period commencing on the date hereof and
ending on the third anniversary of the date hereof; provided,
however, that, commencing on the date one year after the date
hereof, and on each annual anniversary of such date (such date and
each annual anniversary thereof, the “Renewal Date”),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such
Renewal Date, unless, at least 60 days prior to a Renewal Date
no less than three years from the date hereof, the Company shall
give notice to the Executive that the Change of Control Period
shall not be so extended.
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(c)
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“Affiliated Company”
means any company controlled by, controlling or under common
control with the Company.
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(d)
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“Change of Control”
means:
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(1)
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The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then-outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”)
or (B) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this
Section 1(d), the following acquisitions shall not constitute
a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Affiliated Company or
(iv) any acquisition by any corporation pursuant to a
transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and
1(d)(3)(C);
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(2)
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Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least two-thirds of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
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(3)
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Consummation of a reorganization,
merger, statutory share exchange or consolidation or similar
corporate transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its subsidiaries
(each, a “Business Combination”), in each case unless,
following such Business Combination, (A) all or substantially
all of the individuals and entities that were the beneficial owners
of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock and the combined voting
power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such
transaction, owns the Company or all or substantially all of the
Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions
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as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to the Business Combination, and (C) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination;
or
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(4)
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Approval by the shareholders of the
Company of a complete liquidation or dissolution of the
Company.
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(e)
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“Employment Agreement”
means the Executive Employment Agreement dated as of January 8,
2007, by and between the Company and the Executive, and any
extension or modification thereof or any successor agreement
thereto.
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2.
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Employment Period; Employment
Agreement .
The Company hereby agrees to continue the Executive in its employ,
subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the second
anniversary of the Effective Date (the “Employment
Period”), provided the Employment Period shall terminate
sooner upon the Executive’s termination of employment for any
reason. Upon the Effective Date, the Employment Agreement, with the
exception of Section 10 thereof, which shall survive in all
respects, shall be null and void and of no further force or effect,
provided the Executive shall be paid all amounts earned and due to
the Executive thereunder within twenty-four (24) hours of the
Effective Date, subject in all respects to Section 6
below.
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3.
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Terms of Employment
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(a)
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Position and Duties
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(1)
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During the Employment Period,
(A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 180-day period immediately
preceding the Effective Date and (B) the Executive’s services
shall be performed at the office where the Executive was employed
immediately preceding the Effective Date or at any other location
less than 30 miles from such office.
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(2)
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During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment
Period, it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that, to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
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(1)
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Base Salary. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually,
beginning no more than 12 months after the Executive’s
last salary review. The Annual Base Salary shall be paid at such
intervals as the Company pays executive salaries generally. During
the Employment Period, the Annual Base Salary shall be reviewed at
least annually, beginning no more than 12 months after the
last salary increase awarded to the Executive prior to the
Effective Date. Any increase in the Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive
under this Agreement. The Annual Base Salary shall not be reduced
after any such increase and the term “Annual Base
Salary” shall refer to the Annual Base Salary as so
increased.
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(2)
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Annual Bonus. In addition to the
Annual Base Salary, the Executive shall participate in a bonus
program during the Employment Period and have a bonus which is no
less favorable than the bonus for other employees of his level at
the Company and its Affiliated Companies.
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(3)
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Incentive, Savings and Retirement
Plans. During the Employment Period, the Executive shall be
entitled to participate in all cash incentive, equity incentive,
savings and retirement plans, practices, policies, and programs
applicable generally to other peer executives of the Company and
the Affiliated Companies (with such appropriate deviations by
virtue of country of residence, commensurate with deviations in
place prior to the Effective Date), but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured
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with respect to
both regular and special incentive opportunities, to the extent, if
any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company and the Affiliated Companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the 180-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and the Affiliated Companies.
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(4)
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Welfare Benefit Plans. During the
Employment Period, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and the
Affiliated Companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of the
Company and the Affiliated Companies (with such appropriate
deviations by virtue of country of residence, commensurate with
deviations in place prior to the Effective Date), but in no event
shall such plans, practices, policies and programs provide the
Executive with benefits that are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 180-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company
and the Affiliated Companies. If, on or prior to the
Executive’s Date of Termination (as defined herein), the
Executive has attained at least age 50 with at least 20 years
of service with the Company (including all cumulative service,
notwithstanding any breaks in service) the Executive shall be
entitled to retiree medical and life insurance benefits at least
equal to those that were provided to peer executives of the Company
and the Affiliated Companies and their dependents (taking into
account any required employee contributions, co-payments and
similar costs imposed on the executives and the executives’
dependents and the tax treatment of participation in the plans,
programs, practices and policies by the executive and the
executives’ dependents) (with such appropriate deviations by
virtue of country of residence, commensurate with deviations in
place prior to the Effective Date), in accordance with the retiree
medical plans, programs, practices and policies of the Company and
the Affiliated Companies in effect as of the Date of
Termination.
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(5)
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Expenses. During the Employment
Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive
in accordance with the most favorable policies,
practices
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and procedures
of the Company and the Affiliated Companies in effect for the
Executive at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated
Companies.
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(6)
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Fringe Benefits. During the
Employment Period, the Executive shall be entitled to fringe
benefits, including, without limitation, tax and financial planning
services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the
most favorable plans, practices, programs and policies of the
Company and the Affiliated Companies in effect for the Executive at
any time during the 180-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and the Affiliated Companies.
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(7)
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Office and Support Staff. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and the Affiliated Companies at any time
during the 180-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and the Affiliated Companies.
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(8)
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Vacation. During the Employment
Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and
practices of the Company and the Affiliated Companies as in effect
for the Executive at any time during the 180-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated
Companies.
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4.
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Termination of Employment
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(a)
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Death or Disability
. The Executive’s
employment shall terminate automatically if the Executive dies
during the Employment Period. If either the Company or the
Executive (or his legal representative) determines in good faith
that the Disability (as defined herein) of the Executive has
occurred during the Employment Period, such party may give the
other party written notice (“Disability Notice”) in
accordance with Section 12(b) of his or its intention that the
Executive’s employment be terminated. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of the Disability Notice by
the Executive or by the Company, as the case may be (the
“Disability Effective Date”), provided that, within
30 days after such receipt, the Executive
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shall not have
returned to full-time performance of the Executive’s duties.
“Disability” means the absence of the Executive from
the Executive’s duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to
mental or physical illness that is determined to be total and
permanent by a physician selected by the party providing the
Disability Notice and reasonably acceptable to the other
party.
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(b)
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Cause . The Company may terminate the
Executive’s employment during the Employment Period for
Cause. “Cause” means:
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(1)
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the
willful and continued failure of the Executive to perform
substantially the Executive’s duties (as contemplated by
Section 3(a)(1)(A)) with the Company or any Affiliated Company
(other than any such failure resulting from incapacity due to
physical or mental illness or following the Executive’s
delivery of a Notice of Termination for Good Reason (as defined
herein)), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company that specifically identifies the manner in
which the Board or the Chief Executive Officer of the Company
believes that the Executive has not substantially performed the
Executive’s duties, or
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(2)
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the
willful engaging by the Executive in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Company which, in the case of clauses (1) and (2), has not
been cured within 30 days after a written demand for
substantial performance is delivered to the Executive by the
Company that specifically identifies the manner in which the
Company believes that the Executive has grossly neglected his
duties or has engaged in gross misconduct.
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For purposes of
this Section 4(b), no act, or failure to act, on the part of
the Executive shall be considered “willful” unless it
is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief
Executive Officer of the Company or a senior officer of the Company
or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company.
The cessation of employment of the Executive shall not be deemed to
be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board (excluding the Executive, if the Executive
is a member of the Board) at a meeting of the Board called and held
for such purpose (afte
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