Exhibit 10.1


    


    Director
      Compensation Policy

    for
      Non-Employee Directors of King Pharmaceuticals, Inc.

    


    As
      Approved by the Board of Directors on February 13, 2004

    and
      amended on July 22, 2005, February 22, 2006 and August 2,
      2006

    


    


    
      	 	 
	
              Retainer
                *

               

            	
              $38,000
                annually

            
	
              Board
                Meeting Fees

               

            	
              $2,000
                per meeting

            
	
              Committee
                Meeting Fees

               

            	
              $1,200
                per meeting

            
	
              Non-Executive
                Chairman of the Board Retainer

               

            	
              $120,000
                annually

            
	
              Audit
                Chair Retainer *

               

            	
              $10,000
                annually

            
	
              Other
                Chair Retainer *

               

            	
              $7,500
                annually

            
	
              Continuing
                Education Expenses

               

               

            	
              Reasonable
                and customary expenses

              (up
                to 3 days per year)

            
	
              Personal
                use of corporate aircraft

               

               

            	
              10
                hours of flight time

              per
                calendar year **

            
	
              Annual
                Grant of Restricted Stock Units

            	
              $120,000
                market value,

              restricted
                stock units ***

            


    

    


    


    Compensation
      to be received by each director pursuant to this policy may be deferred in
      accordance with the King Pharmaceuticals, Inc. Non-Employee Directors’ Deferred
      Compensation Plan. 

    


    
      	
              *

            	
              Fees
                are to be paid at the end of each quarter for service
                during that quarter. Fees for service during part of a quarter will
                be pro
                rated.

            


    

     

    
      	
              **

            	
              (1)
                10 hours are available to each director each calendar year. Unused
                hours
                do not accumulate from one year to the
                next.

            


    

     

    
      	 	
              (2)
                Each use pursuant to this provision shall require the prior authorization
                of the Chairman of the Board.

            


    

    
       

      
        	 	
                (3)
                  Use is limited to flights for which the primary purpose is King’s
                  business. The aircraft flight shall not be for purely personal
                  purposes.

              


      

      
         

        
          	 	
                  (4)
                    Flight time will accrue only while the director is on
                    board.

                


        

        
           

          
            	 	
                    (5)
                      Usage will be treated as compensation to the director as may
                      be required
                      by the Internal Revenue Code.

                  


          

           

        

      

    

    
      	 	
              (6)
                Reports of aircraft usage by non-employee directors will be provided
                not
                less than annually to the Compensation and Human Resources
                Committee.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    ***
      Automatically awarded once annually through the King Pharmaceuticals, Inc.
      Incentive Plan.

    


    By
      resolution of the Board on February 13, 2004, as amended on February 22, 2006
      and August 2, 2006, restricted stock units related to King’s common stock,
      having a value of $120,000 at the time of grant (based upon the closing price
      of
      the common stock as of that date) are automatically granted to each non-employee
      director on April 30 of each year, or, if April 30 falls on a weekend or
      holiday, on the first business day immediately preceding April 30.

    


    Upon
      becoming a director (other than through re-election), the non-employee director
      shall automatically be granted, upon the first day of service as a director,
      such number of restricted stock units as have a value equal to the portion
      of
      $120,000 which is equivalent to the fraction of a year between the first date
      of
      service and the first April 30 thereafter.

    


    Restricted
      stock units granted pursuant to this provision have a restricted period which
      shall end on the date of the first to occur of the following events, and
      otherwise according to the terms of the Incentive Plan: (1) one year following
      the date of grant; (2) the director, standing for reelection, is not reelected;
      (3) the director completes his or her term of office after declining to stand
      for reelection; (4) the director completes his or her term of office after
      not being nominated to stand for reelection; (5) the director completes his
      or
      her term of office, having been ineligible to stand for reelection under term
      limit provisions then in effect.

    


    Notes
      to Schedule of Compensation for Non-Management Directors:

    


    The
      Board
      of Directors determined, on March 11, 2004, that the only compensation to be
      paid for participation in executive sessions of the non-management directors
      shall be a fee of $1,200 for attending an executive session of the
      non-management directors which is held on a day on which a Board meeting is
      not
      held. Retainers shall not otherwise be paid to the coordinating director or
      other participants for these activities.