Exhibit 10.26

PHARMERICA CORPORATION

PharMerica Corporation 2007 Omnibus Incentive Plan

Performance Share Award Agreement

This PERFORMANCE SHARE AWARD AGREEMENT (the “Agreement”), granted under the
PharMerica Corporation 2007 Omnibus Incentive Plan (the “Plan”) is effective as
of              200   (the “Date of Grant”) and is made between PharMerica
Corporation, a Delaware corporation (the “Company”) and                     
(the “Recipient”).

Preliminary Statements

WHEREAS, the Company has determined that it is desirable and in its best
interests to grant to the Recipient shares of the Company’s common stock (the
“Stock”) subject to performance conditions, in order to provide the Recipient
with a significant interest in the Company’s growth so that the Recipient will
have a greater incentive to perform at the highest level and further the
interests of the Company and the shareholders of the Company (the “Award”); and

WHEREAS, any capitalized term not herein defined shall have the meaning as set
forth in the Plan.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein:

1. Grant of Performance Shares. On the terms and conditions of this Agreement
and the Plan, the Committee grants to the Recipient a performance share award
based on the criteria established by the Compensation Committee that are
described in Section 2 below (the “Performance Shares”). The target number of
Performance Shares to be issued pursuant to the Award is                  shares
(the “Target Shares”) and the maximum number of Performance Shares that may be
issued pursuant to the Award is                  shares. The extent to which the
Award shall become vested and non-forfeitable shall be determined in accordance
with the provisions of Section below. The date of grant of the Award is
            , 20     (the “Grant Date”).

The Recipient’s right, if any, to continue to be employed by the Company will
not be enlarged or otherwise affected by the receipt of this Award, and the
receipt of this Award will not in any way restrict the right of the Company to
terminate the Recipient’s employment at any time.

2. Vesting of the Performance Shares. Except as provided in Section 3 below, the
Recipient shall vest in the Award in accordance with the following provisions:

(a) Performance Cycle. The Performance Cycle for the Award shall commence on the
Grant Date and shall end on the final day of the Company’s 20     fiscal year
(December 31, 20    ).

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(b) Percentage of Target Shares Earned. Subject to Section 4 below, the extent
to which the Award shall become earned at the end of the Performance Cycle shall
be based upon the cumulative annual growth in EBITDA (“EBITDA CAGR”) through the
Performance Cycle (the “Performance Criteria”), which shall be determined by
taking the Company’s EBITDA for the Company’s 2007 fiscal year and measuring it
against the Company’s EBITDA for the Company’s 2009 fiscal year. The Recipient
shall be entitled to 100% of the Target Shares if the Company has achieved
EBITDA CAGR of 20% at the end of the Performance Cycle (equal to a 44% increase
in EBITDA by the completion of the Performance Cycle). Generally, the percentage
of Target Shares earned at the end of the Performance Cycle based on the
Performance Criteria shall be determined according to the following schedule,
however the actual Awards of Performance Shares will be interpolated between the
percentages set forth in the chart based on actual results, as provided in
Exhibit A hereto:

 

Performance Criteria

 

Payout Level

  Target Performance Achievement   (percentage of Target Shares earned) < 90%  
0% 90%   50% 100%   100% 110%   120% 120%   150% > 120%   150%

(c) Board Certification. Promptly after the Audit Committee of the Board
approves the Company’s financial statements for the fiscal year in which the end
of the Performance Cycle occurs, the Committee must determine and certify
whether, and to what extent, the Performance Criteria have been achieved. If the
minimum Performance Criteria of EBITDA CAGR has not been achieved during the
Performance Cycle, no Performance Shares will be issued and this Agreement will
be of no force or effect.

(d) Vesting. The Recipient shall vest in the Award on the last day of the
Performance Cycle (the “Vesting Date”); provided, however, that, unless
otherwise provided in Section 3 below, the Recipient remains in the continuous
employment of the Company through the Vesting Date. All vesting in the Award, if
applicable, shall occur only on the Vesting Date; there shall be no
proportionate vesting in the Award prior to the Vesting Date.

3. Acceleration of Vesting of the Award. Upon the occurrence of any of the
following events, the Recipient shall become fully vested in a pro-rata portion
of the Award (as determined under Section 3(c) below:

(a) the termination of the Recipient’s employment with the Company by reason of
the Recipient’s death or disability (within the meaning of Section 409A of the
Code), or the Recipient’s “Retirement” (as defined in Section 3(d) below) from
the Company at or after age 62; or

 

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(b) within one (1) year following a Change in Control, (A) the Recipient’s
employment is terminated by the Company without “Cause” (as defined in
Section 3(d) below) or (B) the Recipient terminates employment for “Good Reason”
(as defined in Section 3(d) below) and provided that the Recipient executes a
non-revocable written release in the form provided by the Company or its
successors.

(c) Calculation of Pro-Rata Accelerated Shares. The actual number of Performance
Shares that shall be paid upon the occurrence of an event specified in this
Section 3 is the amount of Performance Shares as determined and certified under
Sections 2(b) and 2(c), respectively, as if the Recipient were still employed on
the Vesting Date, multiplied by a fraction; the numerator of which is the total
number of complete months worked by the Recipient during the Performance Cycle,
and the denominator of which is             , the total number of months in the
Performance Cycle.

(d) Definitions. For purposes hereof, the following definitions shall apply:

(i) “Retirement” shall mean a termination of the Optionee’s employment at or
after age 62 for any reason except by the Company for Cause; provided, that the
Recipient has been employed by the Company for at least five years.

(ii) “Good Reason” shall mean either:

(A) a reduction of the Recipient’s salary other than (i) a reduction based on
the Company’s financial performance, or (ii) a reduction made to the salaries
provided to all or most of the other management or executive employees of the
Company with similar responsibilities, positions, compensation or other criteria
as determined by the Committee in good faith;

(B) a significant change in the Recipient’s responsibilities and/or duties which
constitutes, when compared to the Recipient’s responsibilities and/or duties
before the Change of Control, a demotion; or a material loss of title or office;
or

(C) the relocation of the offices at which the Recipient is principally employed
as of the Change of Control to a location more than fifty (50) miles from such
offices, which relocation is not approved by the Recipient.

(iii) “Cause” means:

(A) any willful, material violation of any law or regulation applicable to the
business of the Company;

(B) conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, or any willful perpetration of a common law fraud;

 

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(C) commission of any act of personal dishonesty which involves personal profit
in connection with the Company;

(D) intentional wrongful disclosure of confidential information of the Company;

(E) intentional wrongful engagement in any competitive activity,

(F) the willful and continued failure or refusal to perform the material duties
required of the Recipient as an employee, officer, director or consultant of the
Company (other than as a result of disability);

(G) disregard of the policies of the Company so as to cause material loss,
damage or injury to the property, reputation or employees of the Company;

(H) ongoing alcohol/drug addiction and a failure by the Recipient to
successfully complete a recovery program, or

(I) any other misconduct by the Recipient which is materially injurious to the
financial condition or business reputation of, or is otherwise materially
injurious to, the Company.

4. Forfeiture of the Award. Any portion of the Award that is unvested shall
automatically be forfeited on the date that the Recipient ceases to be employed
by the Company.

5. Payment of Award. The Recipient shall be entered as the stockholder of record
for the number of Performance Shares covered by the Award which the Committee
determines, in writing, have been vested and earned by the Recipient pursuant to
Sections 2(b) and 2(c) as soon as administratively practicable after the Vesting
Date, but no later than March 15th of the year following the year in which the
Vesting Date occurs.

6. Dividend Equivalent Rights. If any Performance Shares are awarded to the
Recipient pursuant to this Agreement, then the Recipient shall also be entitled
to receive a number of shares of Stock equal to (A) (i) the number of
Performance Shares awarded to the Recipient under Section 2 multiplied by
(ii) the cumulative amount of cash dividends paid by the Company that the
Recipient would have received had he owned the awarded Performance Shares on
each dividend record date during the Performance Cycle, divided by (B) the
closing price of the Stock on the Vesting Date; provided, however, that cash
will be paid in lieu of any fractional shares the Recipient would be entitled to
receive under this Section 6.

7. Tax Payment Upon Vesting.

(a) At such time as the Recipient is entered as the stockholder of record with
respect to the Performance Shares earned pursuant to this Agreement, the
Recipient (or his/her personal representative) shall deliver to the Company,
within ten (10) days after the occurrence of such registration specified above
(or in the event of death, within ten (10) days of the appointment of the
personal representative) (a “Payment Date”), either a check payable to the

 

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Company in the amount of all withholding tax obligations (whether federal,
state, local or foreign income or social insurance tax), imposed on the
Recipient and the Company by reason of the awarding of the Performance Shares,
or a withholding election form to be provided by the Company upon request by the
Recipient (or personal representative).

(b) In the event the Recipient or his personal representative elects to satisfy
the withholding obligation by executing the withholding election form, the
Recipient’s actual number of vested shares of Performance Shares shall be
reduced by the smallest number of whole shares of Stock which, when multiplied
by the Fair Market Value of the Stock on the Payment Date, is sufficient to
satisfy the amount of the withholding tax obligations imposed on the Company by
reason of the Recipient being recorded as the stockholder of record of the
earned Performance Shares. In the event that the Recipient fails to tender
either the required certified check or withholding election, the Recipient shall
be deemed to have elected and executed the withholding election form.

8. Effect of Changes in Capitalization or Change in Control.

(a) Changes in Stock. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the date the Award is granted, then, in the Board’s
discretion, a proportionate and appropriate adjustment may be made by the Board
in the number and kind of shares subject to the Award, so that the proportionate
interest of the Recipient immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. In the event of any
distribution to the Company’s stockholders of securities of any other entity or
other assets (other than dividends payable in cash or stock of the Company)
without receipt of consideration by the Company, the Board shall, in such manner
as it deems appropriate, adjust the number and kind of shares subject to the
Award to reflect such distribution.

(b) Reorganization in Which the Company Is the Surviving Company. Subject to
8(c) below, if the Company shall be the surviving Company in any reorganization,
merger, or consolidation of the Company with one or more other companies or
other entities, the Award shall pertain to and apply to the securities to which
a holder of the number of shares of Stock subject to the Award would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Award, as may be applicable
so that the aggregate value of the Award thereafter shall be the same as the
aggregate value of the Award immediately before such reorganization, merger, or
consolidation.

(c) Change in Control. In the event of a Change in Control, the Board may
(i) make provisions in connection with such transaction for the continuation of
the Award; (ii) reach an agreement with the acquiring or surviving entity that
the acquiring or surviving entity will assume the obligation of the Company
under the Award; (iii) reach an agreement with the acquiring or surviving entity
that the acquiring or surviving entity will convert the Award into an award of
at least equal value, determined as of the date of the transaction, to purchase

 

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stock of the acquiring or surviving entity; or (iv) terminate the Award
effective upon the date of the applicable transaction and either make, within
sixty (60) days after the date of the applicable transaction, a cash payment to
the Recipient equal to product of the number of shares of Stock subject to the
Award and the Fair Market Value, as of the date of the applicable transaction,
of the shares of Stock subject to the Award; provided, however, that the Board
determines that any such modification does not have a substantial adverse
economic impact on the Recipient as determined at the time of such modification.

9. General Restrictions. The Company shall not be required to sell or issue any
shares of Stock under the Award if the sale or issuance of such shares would
constitute a violation by the Recipient or by the Company of any provision of
any law or regulation of any governmental authority, including without
limitation any federal or state securities laws or regulations. If at any time
the Company shall determine, in its discretion, that the listing, registration,
or qualification of any shares subject to the Award upon any securities exchange
or under any state or federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in connection
with, the issuance or purchase of shares, the Award may not be exercised in
whole or in part unless such listing, registration, qualification, consent, or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company, and any delay caused thereby shall in no way affect
the date of termination of the Award. Specifically in connection with the
Securities Act of 1933 (as now in effect or as hereafter amended), unless a
registration statement under such Act is in effect with respect to the shares of
Stock covered by the Award, the Company shall not be required to sell or issue
such shares unless the Company has received evidence satisfactory to it that the
holder of the Award may acquire such shares pursuant to an exemption from
registration under such Act. Any determination in this connection by the Company
shall be final, binding, and conclusive. The Company may, but shall in no event
be obligated to, register any securities covered hereby pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended). The Company
shall not be obligated to take any affirmative action in order to cause the
issuance of shares pursuant to the Award to comply with any law or regulation of
any governmental authority. As to any jurisdiction that expressly imposes the
requirement that the Award shall not be exercisable unless and until the shares
of Stock covered by the Award are registered or are subject to an available
exemption from registration, the exercise of the Award (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.

10. Restrictions On Transfer. Other than by will or under the laws of descent
and distribution, the Recipient shall not have the right to make or permit to
occur any transfer, pledge or hypothecation of all or any portion of any
unvested portion of the Award, whether outright or as security, with or without
consideration, voluntary or involuntary. Any such transfer, pledge or
hypothecation not made in accordance with this Agreement shall be deemed null
and void.

11. Interpretation of this Agreement. All decisions and interpretations made by
the Committee or the Board with regard to any question arising under this
Agreement shall be final, binding and conclusive on the Company and the
Recipient and any other person entitled to receive the benefits of the Award as
provided for herein.

 

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12. Governing Law. The validity, interpretation and enforcement of this
Agreement are governed in all respects by the laws of the State of Delaware,
without giving effect to its conflict of laws principles, and by the laws of the
United States of America.

13. Binding Effect. Subject to all restrictions provided for in this Agreement
and by applicable law relating to assignment and transfer of this Agreement and
the Award provided for herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors, and assigns.

14. Notice. Any notice hereunder by the Recipient to the Company shall be in
writing and shall be deemed duly given if mailed or delivered to the Company at
its principal office, addressed to the attention of the Board, or if so mailed
or delivered to such other address as the Company may hereafter designate by
notice to the Recipient. Any notice hereunder by the Company to the Recipient
shall be in writing and shall be deemed duly given if mailed or delivered to the
Recipient at the address specified below by the Recipient for such purpose, or
if so mailed or delivered to such other address as the Recipient may hereafter
designate by written notice given to the Company.

15. Severability. In the event that any one or more of the provisions or portion
thereof contained in this Agreement shall for any reason be held to be invalid,
illegal or unenforceable in any respect, the same shall not invalidate or
otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.

16. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior understandings and agreements written or oral, of the
parties hereto with respect to the subject matter hereof. There is no
representation or statement made by any party on which another party has relied
which is not included in this Agreement. Neither this Agreement nor any term
hereof may be amended, waived, discharged, or terminated except by a written
instrument signed by the Company and the Recipient; provided, however, that the
Company unilaterally may waive any provision hereof in writing to the extent
that such waiver does not adversely affect the interests of the Recipient
hereunder, but no such waiver shall operate as or be construed to be a
subsequent waiver of the same provision or a waiver of any other provision
hereof.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement, or caused this Agreement to be duly executed and delivered on his or
its behalf, as of the day and year first above written.

 

PHARMERICA CORPORATION   BY:  

 

  DATE:  

 

  RECIPIENT  

 

  DATE:  

 

  RECIPIENT’S ADDRESS:  

 

 

 

 

 

 

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EXHIBIT A