Exhibit 10.5



 






Exhibit 10.5




AMENDMENT NO. 1 TO TRANSITION AND SUCCESSION AGREEMENT




     THIS AMENDMENT NO. 1 TO TRANSITION AND SUCCESSION AGREEMENT (this “Amendment”) by and between
Mylan Laboratories Inc., a Pennsylvania corporation (the “Company”), and John P. O’Donnell (the
“Executive”), is made as of December 2, 2004.



     WHEREAS, the Company and the Executive are parties to that certain Transition and Succession
Agreement dated as of December 15, 2003 (the “Agreement”); and



     WHEREAS, the Company and the Executive wish to amend the Agreement, as set forth below;



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




	1.  	Section 8 of the Agreement is hereby amended and restated in its entirety to read as follows:






Section 8. Certain Additional Payments by the Company.




(a) Whether or not the Executive becomes entitled to any payments hereunder, if any of
the payments or benefits received or to be received by the Executive (including any
payment or benefits received in connection with a Change of Control or the Executive’s
termination of employment, whether pursuant to the terms of this Agreement or any other
plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up
Payment, being hereinafter referred to as the “Total Payments”) will be subject to the
excise tax (“the Excise Tax”) imposed under Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), the Company shall pay to the Executive an additional
amount (the “Gross-Up Payment”) such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total Payments and any federal, state and
local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after
taking into account the phase out of itemized deductions and personal exemptions
attributable to the Gross-Up Payment, shall be equal to the Total Payments.




(b) For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall
be treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the
Code) unless, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to
the Executive and selected by the accounting firm which was, immediately prior to the
Change of Control, the Company’s independent auditor (the “Auditor”), such payments or
benefits (in
whole or in part) do not constitute parachute payments, including by reason of Section
280G(b)(4)(A) of the Code, (ii) all “excess parachute payments”



 









 






within the meaning of
Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the Base Amount (as defined in Section
280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of
the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive’s residence on the Date of
Termination (or if there is no Date of Termination, then the date on which the Gross-Up
Payment is calculated for purposes of this Section 3(b)), net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state and local
taxes.




(c) In the event that the Excise Tax is finally determined to be less than the amount
taken into account hereunder in calculating the Gross-Up Payment, the Executive shall
repay to the Company, within five (5) business days following the time that the amount
of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income and employment taxes
imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
the Executive’s taxable income and wages for purposes of federal, state and local
income and employment taxes, plus interest on the amount of such repayment at 120% of
the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder in calculating the
Gross-Up Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall make an
additional Gross-Up Payment in respect of such excess (plus any interest, penalties or
additions payable by the Executive with respect to such excess) within five (5)
business days following the time that the amount of such excess is finally determined.
The Executive and the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings concerning the existence or
amount of liability for Excise Tax with respect to the Total Payments.




	2.  	This Amendment shall be governed by, interpreted under and construed in accordance with the
laws of the Commonwealth of Pennsylvania.




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	3.  	This Amendment may be executed in counterparts, each of which shall be an original and all of
which shall constitute the same document.






	4.  	Except as modified by this Amendment, the Agreement is hereby confirmed in all respects.





     IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as of the day and year
first above written.



	 	 	 	 	 	 	 
	 	 	MYLAN LABORATORIES INC.
	 
	 	 	 	 	 	 
	

	 	 	 	/s/ Robert J. Coury	 	 
	 	 	 	 	 
	 	 	By: Robert J. Coury	 	 
	 	 	Title: Vice Chairman and
	 	 
	

	 	 	 	       Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	/s/ John P. O’Donnell	 	 
	 	 	 	 	 
	 	 	John P. O’Donnell	 	 







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