Document:

exv10w3

Exhibit 10.3

KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

LONG-TERM PERFORMANCE UNIT AWARD CERTIFICATE

(ONE-YEAR PERFORMANCE CYCLE)

     This Certificate, when executed by a duly authorized officer of King Pharmaceuticals, Inc.
(the “Company”), evidences the grant by the Company to the Participant named
below of a Long-Term Performance Unit Award.

	 	 	 	 	 
	1.

	 	Name of Participant:
	 	[Participant Name]
	 
	 	 	 	 
	2.

	 	Social Security Number of Participant:
	 	[Social Security Number]
	 
	 	 	 	 
	3.

	 	Date of Grant:
	 	[Grant Date]
	 
	 	 	 	 
	4.

	 	Type of Grant:
	 	[Grant Type]
	 
	 	 	 	 
	5.

	 	Target Number of
Long-Term Performance Units:
	 	[Number of Shares Granted]
	 
	 	 	 	 
	6.

	 	Performance Cycle:
	 	The Performance Cycle shall begin on
January 1, 2010 and end on December
31, 2010.
	 
	 	 	 	 
	7.

	 	Vesting Period:
	 	The Vesting Period shall begin on
January 1, 2011 and end on December
31, 2012, except as otherwise set
forth in the Long-Term Performance
Unit Award Agreement.
	 
	 	 	 	 
	8.

	 	Date of Payment:
	 	Between January 1 and March 15,
2013, except as otherwise set forth
in the Long-Term Performance Unit
Award Agreement.
	 
	 	 	 	 
	9.

	 	Performance Goals:	 	 

     The number of Long-Term Performance Units earned by the Participant shall be determined in
accordance with the following grid. If the actual performance results fall between two of the
categories listed below, straight-line interpolation will be used to determine the amount earned.
Notwithstanding any other provision of this Certificate or the Long-Term Performance Unit Award
Agreement, upon the completion of the Performance Cycle, the Committee may, in its sole discretion,
reduce the number of Long-Term Performance Units that are actually earned by the Participant,
irrespective of whether adherence to the following schedule would have resulted in a greater number
of Long-Term Performance Units having been earned. For the avoidance of doubt, the Committee may
not use this discretion following a Change of Control in accordance with Article 11 of the Plan.
The Financial Objectives shall be listed and shall be calculated in the manner set forth in Exhibit
1 hereto.

FORM PSU1-3-2010

 

 

	 	 	 
	King Pharmaceuticals, Inc. Annual Performance v. stated	 	Payout—Percent of Target
	Financial Objective	 	Long-Term Performance
	During the Performance Cycle	 	Units Granted
	 	 	 
	Above Stretch
	 	200%
	Stretch
	 	200%
	Target
	 	100%
	Threshold
	 	50%
	Below Threshold
	 	0% (no payout)

     This Long-Term Performance Unit Award is subject to and governed by the terms of this
Long-Term Performance Unit Award Certificate, the Long-Term Performance Unit Award Agreement
attached hereto and incorporated by reference herein and the Company’s Incentive Plan.

	 	 	 	 	 
	 	KING PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Brian A. Markison 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

FORM PSU1-3-2010

2

 

LONG-TERM PERFORMANCE UNIT AWARD AGREEMENT

(ONE YEAR PERFORMANCE CYCLE)

PURSUANT TO THE KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

     This Long-Term Performance Unit Award Agreement (the “Agreement”) is made as of the date set
forth on the Long-Term Performance Unit Award Certificate attached hereto (the “Grant Date”) by
King Pharmaceuticals, Inc. (the “Company”) and the individual identified on the Long-Term
Performance Unit Award Certificate (the “Participant”) to grant a Long-Term Performance Unit Award
by the Company to the Participant on the terms and conditions set forth below:

     1. LONG-TERM PERFORMANCE UNIT AWARD. 

     As of the Grant Date, subject to the terms, conditions and restrictions set forth herein, the
Company grants and issues to the Participant a Long-Term Performance Unit Award for such number of
Long-Term Performance Units as indicated on the Long-Term Performance Unit Award Certificate (the
“Long-Term Performance Units”) which may be earned during the Performance Cycle as indicated on the
Long-Term Performance Unit Award Certificate if the Performance Goals set forth on the Long-Term
Performance Unit Award Certificate are met.

     2. GOVERNING PLAN.

     The Long-Term Performance Unit Award shall be granted pursuant to and (except as specifically
set forth herein) subject in all respects to the applicable provisions of the King Pharmaceuticals,
Inc. Incentive Plan (“Plan”), which are incorporated herein by reference. Terms not otherwise
defined in this Agreement have the meanings ascribed to them in the Plan.

     3. CALCULATION OF EARNED LONG-TERM PERFORMANCE UNITS. 

      The Committee, in its sole discretion, will determine the number of Long-Term
Performance Units earned by the Participant at the end of the Performance Cycle based on the
attainment of the Performance Goals as set forth on the Long-Term Performance Unit Award
Certificate. The number of shares of Common Stock ultimately earned and paid, if any, for such
Long-Term Performance Units will be determined based on the number of Long-Term Performance Units
actually earned and vested as set forth in Section 4 below, with one share of Common Stock granted
to the Participant for every earned and vested Long-Term Performance Unit. Notwithstanding any
other provision of this Long-Term Performance Unit Award Agreement, upon the completion of the
Performance Cycle, the Committee may, in its sole discretion, reduce the number of Long-Term
Performance Units that are actually earned by the Participant, irrespective of whether adherence to
the Performance Goals schedule provided in the Long-Term Performance Unit Award Certificate would
have resulted in a greater number of Long-Term Performance Units having been earned. For the
avoidance of doubt, the Committee may not use this discretion following a Change of Control in
accordance with Article 11 of the Plan.

FORM PSU1-3-2010

 

 

     4. VESTING OF LONG-TERM PERFORMANCE UNITS. 

     Long-Term Performance Units earned will vest as set forth below:

          (a) Provided the Participant has continued employment through the end of the Vesting Period
set forth in the Long-Term Performance Unit Award Certificate, one hundred percent (100%) of the
earned Long-Term Performance Units shall vest on the last day of such Vesting Period.

          (b) In the event of a Participant’s Separation from Service during the Performance Cycle, the
vesting, forfeiture and payment of Long-Term Performance Units shall be determined as follows:

     (i) Death, Disability, Cause or resignation. In the event of a
Participant’s Separation from Service by reason of death, Disability, Cause
or resignation during the Performance Cycle, the vesting, forfeiture and
payment of Long-Term Performance Units shall be determined according to
Section 9.2 and Section 13.5 of the Plan, which requires that all payments
comply with Section 409A of the Code. The portion of any Long-Term
Performance Units which vest upon one of the events discussed in this
Section 4(b)(i) pursuant to Section 9.2 of the Plan shall be paid to the
Participant as soon as reasonably practicable following the Participant’s
Separation from Service, with the payment date determined by the Company in
its sole discretion.

     (ii) Approved Retirement. In the event of a Participant’s
Separation from Service by reason of Approved Retirement during the
Performance Cycle:

     (A) If the Participant is an “Executive Officer,” as such term
is defined in Rule 3b-7 promulgated under the Securities Exchange Act
of 1934 (an “Executive Officer”)(or becomes an Executive Officer
during the Performance Cycle), the Participant shall receive a
prorata portion of the Long-Term Performance Units calculated by
using (i) the Participant’s actual time in service during the
Performance Cycle and (ii) the final results of the Performance Goals
(as applied to the Achievement Level of the Financial Objective
provided under Exhibit 1) upon the completion of the Performance
Cycle. The prorata portion of any Long-Term Performance Units which
vest pursuant to this Section 4(b)(ii)(A) shall be paid to the
Participant as soon as reasonably practicable following the
completion of the Performance Cycle during which the Participant’s
Separation from Service by reason of Approved Retirement occurs, but
in no event later than March 15 of the year following the completion
of the Performance Cycle.

2

 

     (B) If the Participant is not an Executive Officer, the
vesting, forfeiture and payment of Long-Term Performance Units shall
be determined according to Section 9.2 and Section 13.5 of the Plan,
which requires that all payments comply with Section 409A of the
Code. The portion of any Long-Term Performance Units which vest under
to this Section 4(b)(ii)(B) pursuant to Section 9.2 of the Plan shall
be paid to the Participant as soon as reasonably practicable
following the Participant’s Separation from Service, with the payment
date determined by the Company in its sole discretion. For purposes
of this Section 4(b)(ii)(B), the payment due to the Participant under
Section 9.2(c)(iii) of the Plan with regard to the Participant’s
Separation from Service by reason of Approved Retirement shall be
calculated as if the target performance for each Long-Term
Performance Unit had, in fact, been achieved.

     (iii) Qualifying Separation. In the event of a Participant’s
Separation from Service by reason of a “Qualifying Separation” (as such term
is defined in the King Pharmaceutical’s, Inc. Severance Pay Plan then
applicable to the Participant (the “Severance Plan”) during the Performance
Cycle:

     (A) If the Participant is an Executive Officer (or becomes an
Executive Officer during the Performance Cycle), the Participant
shall receive one hundred percent (100%) of the earned Long-Term
Performance Units calculated by using the final results of the
Performance Goals (as applied to the Achievement Level of the
Financial Objective provided under Exhibit 1) upon the completion of
the Performance Cycle. The amount of any Long-Term Performance Units
which vest pursuant to this Section 4(b)(iii)(A) shall be paid to the
Participant as soon as reasonably practicable following the
completion of the Performance Cycle during which the Participant’s
Qualifying Separation occurs, but in no event later than March 15 of
the year following the completion of the Performance Cycle.

3

 

     (B) If the Participant is not an Executive Officer, the
Participant shall receive the amount of the Long-Term Performance
Units which would have been paid upon the completion of the
Performance Cycle assuming the target Achievement Level of the
Financial Objective (as provided under Exhibit 1) for each Long-Term
Performance Unit had, in fact, been achieved. The Long-Term
Performance Units deemed to be earned under this Section 4(b)(iii)(B)
shall be paid to the Participant following the Participant’s
Separation from Service in accordance with Section 13.4 of the Plan
and Sections 4(c) and 5 of the Severance Plan (including the
requirement for the Participant to execute and not revoke a
“release,” as required under Section 4(c) of the Severance Plan).

          (c) In the event of the Participant’s Separation from Service by reason of death, Disability,
Approved Retirement or a Qualifying Separation following the completion of the Performance Cycle,
but prior to the end of the Vesting Period, one hundred percent (100%) of the earned Long-Term
Performance Units shall vest and be payable to the Participant as soon as reasonably practicable
following such Separation from Service (with the payment date determined by the Company in its sole
discretion), or, in the case of a Qualifying Separation, the payment and vesting of the Long-term
Performance Units shall be determined in accordance with Section 13.4 of the Plan and Sections 4(c)
and 5 of the Severance Plan (including the requirement for the Participant to execute and not
revoke a “release,” as required under Section 4(c) of the Severance Plan).

     5. FORM AND TIMING OF PAYMENT. 

      All payments of vested Long-Term Performance Units pursuant to this Agreement will
be made in the form of shares of Common Stock. Except as otherwise provided in this Agreement,
payment will be made by the Date of Payment set forth in the Long-Term Performance Unit Award
Certificate; provided, however, if, the Participant is a “specified employee” (as defined under
Section 409A of the Code) then a payment due upon his or her Separation from Service, if required
by Section 409A of the Code, will be made six (6) months after the date of such Separation from
Service.

     6. VOTING AND DIVIDEND RIGHTS.

     Except as specifically set forth in this Agreement, the Participant shall not have voting or
any other rights as a shareholder of the Company with respect to Long-Term Performance Units. The
Participant will obtain full voting and other rights as a shareholder of the Company upon the
payment of the Long-Term Performance Units in shares of Common Stock as provided in Section 5
above.

4

 

     7. ADDITIONAL AGREEMENTS.

          (a) Tax Matters. The Long-Term Performance Units granted are subject to
appropriate income tax withholding and other deductions required by applicable laws or regulations,
and Participant and his successors will be responsible for all income and other taxes payable as a
result of a payout under the Long-Term Performance Units or otherwise in connection with this
Agreement. The Company will have the power and the right to deduct or withhold, or require the
Participant or the Participant’s beneficiary to remit to the Company, the minimum necessary amount
to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to
be withheld with respect to any taxable event arising as a result of this Agreement. The Company
is not required to provide any gross-up or other tax assistance. With respect to withholding
required upon any taxable event arising as a result of the Long-Term Performance Units granted
hereunder, the Company, unless notified otherwise by the Participant in writing within thirty (30)
days prior to the taxable event, will satisfy the tax withholding requirement by withholding shares
of Common Stock having a Fair Market Value, equal to the total minimum statutory tax required to be
withheld on the transaction. The Participant agrees to pay to the Company and/or its Subsidiaries
any amount of tax that the Company, its and/or its Subsidiaries may be required to withhold as a
result of the Participant’s participation in the Plan that cannot be satisfied by the means
previously described.

          (b) Independent Advice; No Representations. Participant acknowledges that (i) (s)he
was free to use professional advisors of her/his choice in connection with this Agreement, has
received advice from her/his professional advisors in connection with this Agreement, understands
its meaning and import, and is entering into this Agreement freely and without coercion or duress;
and (ii) (s)he has not received and is not relying upon any advice, representations or assurances
made by or on behalf of the Company or any Company affiliate or any employee of or counsel to the
Company regarding any tax (including the application of Section 409A of the Code) or other effects
or implications of the Long-Term Performance Units or other matters contemplated by this Agreement.

          (c) Value of Long-Term Performance Units. No representations or promises are made to
Participant regarding the value of the Long-Term Performance Units or Company’s business prospects.
Participant acknowledges that information about investment in Company stock, including financial
information and related risks, is contained in Company’s SEC reports which have been made available
for Participant’s review at any time before Participant’s acceptance of this Agreement. Further,
Participant understands that the Company does not provide tax or investment advice and acknowledges
Company’s recommendation that Participant consult with independent specialists regarding such
matters. Sale or other transfer of the Company stock may be limited by and subject to Company
policies as well as applicable securities laws and regulations.

          (d) Adjustment in Capitalization. In the event of an Adjustment Event that is a
merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, then
the Award pursuant to Section 1 of this Agreement shall be deemed to pertain to the securities and
other property, including cash, to which a holder of the number of Long-Term Performance Units
would have been entitled to receive in connection with such Adjustment Event.

5

 

          (e) Change of Control. Upon a Change of Control, vesting, forfeiture and payment
shall occur with respect to the Long Term Performance Units in accordance with Article 11 of the
Plan.

          (f) No Right to Continued Employment. This Agreement does not confer upon Participant
any right to continue as an employee of the Company or its subsidiary or to any particular
employment tenure, nor does it limit in any way the right of Company or its subsidiary to terminate
Participant’s services to the Company or its subsidiary at any time, with or without cause.

          (g) Nontransferability. Long-Term Performance Units awarded pursuant to this
Agreement may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated (a
“Transfer”) other than by will or by the laws of descent and distribution, except as provided in
the Plan. If any Transfer, whether voluntary or involuntary, of Long-Term Performance Units is
made, or if any attachment, execution, garnishment, or lien will be issued against or placed upon
the Long-Term Performance Units, the Participant’s right to such Long-Term Performance Units will
be immediately forfeited to the Company, and this Agreement will lapse.

          (h) Approved Retirement. “Approved Retirement” means, with respect to the
interpretation of the Plan and this Agreement, with the express consent of the Company at or before
the time of such Approved Retirement, which consent may be withheld for any or no reason, any
voluntary Separation from Service by the Participant after having reached the age of fifty-five
(55) years and after having completed at least fifteen (15) years of continuous employment with the
Company.

     8. GENERAL.

           (a) Successors and Assigns. This Agreement is personal in its nature and
Participant may not assign or transfer his/her rights under this Agreement.

          (b) Notices. Any notices, demands or other communications required or desired to be
given by any party shall be in writing and shall be validly given to another party if served either
personally or if deposited in the United States mail, certified or registered, postage prepaid,
return receipt requested. If such notice, demand or other communication shall be served
personally, service shall be conclusively deemed made at the time of such personal service. If
such notice, demand or other communication is given by mail, such notice shall be conclusively
deemed given forty-eight (48) hours after the deposit thereof in the United States mail addressed
to the party to whom such notice, demand or other communication is to be given as hereinafter set
forth:

	 	 	 
	To the Company:

	 	King Pharmaceuticals, Inc.
	 

	 	400 Crossing Boulevard
	 

	 	Bridgewater, NJ 08807
	 

	 	Attention: Human Resources

     To Participant: At his/her address of record as maintained in the Company’s files.

Any party may change its address for the purpose of receiving notices, demands and other

6

 

communications by providing written notice to the other party in the manner described in this
paragraph.

          (c) Entire Agreement. Except as this Agreement may expressly provide otherwise, this
Agreement, the Long-Term Performance Unit Award Certificate and the Plan constitute the entire
agreement and understanding of the Company and Participant with respect to the subject matter
hereof and thereof, and supersede all prior written or verbal agreements and understandings between
Participant and the Company relating to such subject matter. Except as required by applicable law,
this Agreement may only be amended by written instrument signed by Participant and an authorized
officer of the Company.

          (d) Governing Law; Severability. This Agreement will be construed and interpreted
under the laws of the State of Tennessee applicable to agreements executed and to be wholly
performed within the State of Tennessee. If any provision of this Agreement as applied to any
party or to any circumstance is adjudged by a court of competent jurisdiction to be void or
unenforceable for any reason, the invalidity of that provision shall in no way affect (to the
maximum extent permissible by law) the application of such provision under circumstances different
from those adjudicated by the court, the application of any other provision of this Agreement, or
the enforceability or invalidity of this Agreement as a whole. If any provision of this Agreement
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of its coverage, then such provision shall be deemed amended to the extent
necessary to conform to applicable law so as to be valid and enforceable or, if such provision
cannot be so amended without materially altering the intention of the parties, then such provision
will be stricken and the remainder of this Agreement shall continue in full force and effect.

          (e) Remedies. All rights and remedies provided pursuant to this Agreement or by law
shall be cumulative, and no such right or remedy shall be exclusive of any other. A party may
pursue any one or more rights or remedies hereunder or may seek damages or specific performance in
the event of another party’s breach hereunder or may pursue any other remedy by law or equity,
whether or not stated in this Agreement.

          (f) Interpretation. Headings herein are for convenience of reference only, do not
constitute a part of this Agreement, and will not affect the meaning or interpretation of this
Agreement. References herein to Sections are references to the referenced Section hereof, unless
otherwise specified.

          (g) Waivers; Amendments. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any later breach of that provision.
Except as required by applicable law, this Agreement may be modified only by written agreement
signed by Participant and the Company.

[Remainder of page intentionally left blank.]

7exv10w4

Exhibit 10.4

KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

LONG-TERM PERFORMANCE UNIT AWARD CERTIFICATE

(THREE YEAR PERFORMANCE CYCLE)

     This Certificate, when executed by a duly authorized officer of King Pharmaceuticals, Inc.
(the “Company”), evidences the grant by the Company to the Participant named below of a Long-Term
Performance Unit Award.

	 	 	 	 	 
	1.

	 	Name of Participant:
	 	[Participant Name]
	 
	 	 	 	 
	2.

	 	Social Security Number of Participant:
	 	[Social Security Number]
	 
	 	 	 	 
	3.

	 	Date of Grant:
	 	[Grant Date]
	 
	 	 	 	 
	4.

	 	Type of Grant:
	 	[Grant Type]
	 
	 	 	 	 
	5.

	 	Target Number of
Long-Term Performance Units:
	 	[Number of Shares Granted]
	 
	 	 	 	 
	6.

	 	Performance Cycle:
	 	The Performance Cycle
shall begin on January 1,
2010 and end on December
31, 2012.
	 
	 	 	 	 
	7.

	 	Vesting Date:
	 	December 31, 2012, except
as otherwise set forth in
the Long-Term Performance
Unit Award Agreement.
	 
	 	 	 	 
	8.

	 	Date of Payment:
	 	Between January 1 and
March 15, 2013, except as
otherwise set forth in the
Long-Term Performance Unit
Award Agreement.
	 
	 	 	 	 
	9.

	 	Performance Goals:	 	 

     The number of Long-Term Performance Units earned by the Participant shall be
determined in accordance with the following grid. If the actual performance results fall between
two of the categories listed below, straight-line interpolation will be used to determine the
amount earned. Total Shareholder Return shall be calculated in the manner set forth in Exhibit 1
hereto and compared to the peer group identified in Exhibit 1.

	 	 	 
	King Pharmaceuticals, Inc. Percentile in	 	 
	Total Shareholder Return vs.
companies included in the Dow	 	Payout—Percent of Target
	Jones U.S. Pharmaceuticals Index	 	Long-Term Performance
	During the Performance Cycle	 	Units Granted
	 
	 	 
	 	 	 
	70th percentile +
	 	200%
	70th percentile
	 	200%
	50th percentile
	 	100%
	30th percentile
	 	50%
	<30th percentile
	 	0% (no payout)
	 
	 	 

FORM PSU3-3-2010

 

 

     This Long-Term Performance Unit Award is subject to and governed by the terms of this
Long-Term Performance Unit Award Certificate, the Long-Term Performance Unit Award Agreement
attached hereto and incorporated by reference herein and the Company’s Incentive Plan.

	 	 	 	 	 
	 	KING PHARMACEUTICALS, INC.

 	 
	 	By:  	          
 	 
	 	 	Name:  	Brian A. Markison	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

FORM PSU3-3-2010

2

 

LONG-TERM PERFORMANCE UNIT AWARD AGREEMENT

(THREE YEAR PERFORMANCE CYCLE)

PURSUANT TO THE KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

     This Long-Term Performance Unit Award Agreement (the “Agreement”) is made as of the date set
forth on the Long-Term Performance Unit Award Certificate attached hereto (the “Grant Date”) by
King Pharmaceuticals, Inc. (the “Company”) and the individual identified on the Long-Term
Performance Unit Award Certificate (the “Participant”) to grant a Long-Term Performance Unit Award
by the Company to the Participant on the terms and conditions set forth below:

     1. LONG-TERM PERFORMANCE UNIT AWARD. 

     As of the Grant Date, subject to the terms, conditions and restrictions set forth herein, the
Company grants and issues to the Participant a Long-Term Performance Unit Award for such number of
Long-Term Performance Units as indicated on the Long-Term Performance Unit Award Certificate (the
“Long-Term Performance Units”) which may be earned during the Performance Cycle as indicated on the
Long-Term Performance Unit Award Certificate if the Performance Goals set forth on the Long-Term
Performance Unit Award Certificate are met.

     2. GOVERNING PLAN.

     The Long-Term Performance Unit Award shall be granted pursuant to and (except as specifically
set forth herein) subject in all respects to the applicable provisions of the King Pharmaceuticals,
Inc. Incentive Plan (“Plan”), which are incorporated herein by reference. Terms not otherwise
defined in this Agreement have the meanings ascribed to them in the Plan.

     3. CALCULATION OF EARNED LONG-TERM PERFORMANCE UNITS. 

      The Committee, in its sole discretion, will determine the number of Long-Term
Performance Units earned by the Participant at the end of the Performance Cycle (or at such other
time as provided herein) based on the attainment of the Performance Goals as set forth on the
Long-Term Performance Unit Award Certificate. The number of shares of Common Stock ultimately
earned and paid, if any, for such Long-Term Performance Units will be determined based on the
number of Long-Term Performance Units actually earned and vested at the end of the Performance
Cycle (or at such other time as provided herein) as set forth in Section 4 below, with one share of
Common Stock granted to the Participant for every earned and vested Long-Term Performance Unit.

     4. VESTING OF LONG-TERM PERFORMANCE UNITS. 

     Long-Term Performance Units earned will vest as set forth below:

          (a) Provided the Participant has continued employment through the end of the Performance
Cycle, one hundred percent (100%) of the earned Long-Term Performance Units

1

 

 

will vest on the last day of the Performance Cycle as set forth in the Long-Term Performance Unit
Award Certificate.

          (b) In the event of a Participant’s Separation from Service during the Performance Cycle, the
vesting, forfeiture and payment of Long-Term Performance Units shall be determined as follows:

     (i) Death, Disability, Cause or resignation. In the event of a
Participant’s Separation from Service by reason of death, Disability, Cause or
resignation during the Performance Cycle, the vesting, forfeiture and payment of
Long-Term Performance Units shall be determined according to Section 9.2 and Section
13.5 of the Plan, which requires that all payments comply with Section 409A of the
Code. The portion of any Long-Term Performance Units which vest upon one of the
events discussed in this Section 4(b)(i) pursuant to Section 9.2 of the Plan shall
be paid to the Participant as soon as reasonably practicable following the
Participant’s Separation from Service, with the payment date determined by the
Company in its sole discretion.

     (ii) Approved Retirement. In the event of a Participant’s Separation
from Service by reason of Approved Retirement during the Performance Cycle:

     (A) If the Participant is an “Executive Officer,” as such term is
defined in Rule 3b-7 promulgated under the Securities Exchange Act of 1934
(an “Executive Officer”)(or becomes an Executive Officer during the
Performance Period), the Participant shall receive a prorata portion of the
Long-Term Performance Units calculated by using (i) the portion of
Participant’s actual time in service during the Performance Cycle and (ii)
the calculation of the degree of the Company’s achievement of the
Performance Goal (as applied to the factors provided in Exhibit 1), treating
the date of the Participant’s Approved Retirement as the last day of the
Performance Cycle. The prorata portion of any Long-Term Performance Units
which vest pursuant to this Section 4(b)(ii)(A) shall be paid to the
Participant as soon as reasonably practicable following the Participant’s
Separation from Service, with the payment date determined by the Company in
its sole discretion.

     (B) If the Participant is not an Executive Officer, the vesting,
forfeiture and payment of Long-Term Performance Units shall be determined
according to Section 9.2 and Section 13.5 of the Plan, which requires that
all payments comply with Section 409A of the Code. The portion of any
Long-Term Performance Units which vest under this Section 4(b)(ii)(B)
pursuant to Section 9.2 of the Plan shall be paid to the Participant as soon
as reasonably practicable following the Participant’s Separation from
Service, with the payment date determined by the Company in its sole
discretion. For purposes of this Section 4(b)(ii)(B), the payment due to
the Participant under Section 9.2(c)(iii) of the Plan with regard to the
Participant’s Separation from Service by reason of

FORM PSU3-3-2010

2

 

Approved Retirement shall be calculated as if the target performance
for each Long-Term Performance Unit had, in fact, been achieved.

     (iii) Qualifying Separation. In the event of a Participant’s
Separation from Service by reason of a “Qualifying Separation” (as such term is
defined in the King Pharmaceutical’s, Inc. Severance Pay Plan then applicable to the
Participant (the “Severance Plan”) during the Performance Cycle:

     (A) If the Participant is an Executive Officer (or becomes an
Executive Officer during the Performance Period), the Participant shall
receive one hundred percent (100%) of the earned Long-Term Performance
Units, with such earned amount being determined by calculation of the
degree of the Company’s achievement of the Performance Goal (as applied to
the factors provided in Exhibit 1), treating the date of the Participant’s
Separation from Service as the last day of the Performance Cycle. The amount
of any Long-Term Performance Units which vest pursuant to this Section
4(b)(iii)(A) shall be paid to the Participant in accordance with Section
13.4 of the Plan and Sections 4(c) and 5 of the Severance Plan (including
the requirement for the Participant to execute and not revoke a “release,”
as required under Section 4(c) of the Severance Plan).

     (B) If the Participant is not an Executive Officer, the Participant
shall receive the amount of the Long-Term Performance Units which would have
been paid upon the completion of the Performance Cycle assuming that
50th percentile performance against the Performance Goal had, in
fact, been achieved. The Long-Term Performance Units deemed to be earned
under this Section 4(b)(iii)(B) shall be paid to the Participant as soon as
reasonably practicable, subject to the requirements of Section 13.4 of the
Plan and Sections 4(c) and 5 of the Severance Plan (including the
requirement for the Participant to execute and not revoke a “release,” as
required under Section 4(c) of the Severance Plan).

     5. FORM AND TIMING OF PAYMENT. 

      All payments of vested Long-Term Performance Units pursuant to this Agreement will
be made in the form of shares of Common Stock. Except as otherwise provided in this Agreement,
payment will be made by the Date of Payment set forth in the Long-Term Performance Unit Award
Certificate; provided, however, if, the Participant is a “specified employee” (as defined under
Section 409A of the Code) then a payment due upon his or her Separation from Service, if required
by Section 409A of the Code, will be made six months after the date of such Separation from
Service.

     6. VOTING AND DIVIDEND RIGHTS.

      Except as specifically set forth in this Agreement, the Participant shall not have
voting or any other rights as a shareholder of the Company with respect to Long-Term Performance
Units.

FORM PSU3-3-2010

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The Participant will obtain full voting and other rights as a shareholder of the Company upon the
payment of the Long-Term Performance Units in shares of Common Stock as provided in Section 5
above.

     7. ADDITIONAL AGREEMENTS.

          (a) Tax Matters. The Long-Term Performance Units granted are subject to
appropriate income tax withholding and other deductions required by applicable laws or regulations,
and Participant and his successors will be responsible for all income and other taxes payable as a
result of a payout under the Long-Term Performance Units or otherwise in connection with this
Agreement. The Company will have the power and the right to deduct or withhold, or require the
Participant or the Participant’s beneficiary to remit to the Company, the minimum necessary amount
to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to
be withheld with respect to any taxable event arising as a result of this Agreement. The Company
is not required to provide any gross-up or other tax assistance. With respect to withholding
required upon any taxable event arising as a result of the Long-Term Performance Units granted
hereunder, the Company, unless notified otherwise by the Participant in writing within thirty (30)
days prior to the taxable event, will satisfy the tax withholding requirement by withholding shares
of Common Stock having a Fair Market Value, equal to the total minimum statutory tax required to be
withheld on the transaction. The Participant agrees to pay to the Company and/or its Subsidiaries
any amount of tax that the Company, its and/or its Subsidiaries may be required to withhold as a
result of the Participant’s participation in the Plan that cannot be satisfied by the means
previously described.

          (b) Independent Advice; No Representations. Participant acknowledges that (i) (s)he
was free to use professional advisors of her/his choice in connection with this Agreement, has
received advice from her/his professional advisors in connection with this Agreement, understands
its meaning and import, and is entering into this Agreement freely and without coercion or duress;
and (ii) (s)he has not received and is not relying upon any advice, representations or assurances
made by or on behalf of the Company or any Company affiliate or any employee of or counsel to the
Company regarding any tax (including the application of Section 409A of the Code) or other effects
or implications of the Long-Term Performance Units or other matters contemplated by this Agreement.

          (c) Value of Long-Term Performance Units. No representations or promises are made to
Participant regarding the value of the Long-Term Performance Units or Company’s business prospects.
Participant acknowledges that information about investment in Company stock, including financial
information and related risks, is contained in Company’s SEC reports which have been made available
for Participant’s review at any time before Participant’s acceptance of this Agreement. Further,
Participant understands that the Company does not provide tax or investment advice and acknowledges
Company’s recommendation that Participant consult with independent specialists regarding such
matters. Sale or other transfer of the Company stock may be limited by and subject to Company
policies as well as applicable securities laws and regulations.

          (d) Adjustment in Capitalization. In the event of an Adjustment Event that is a
merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, then

FORM PSU3-3-2010

4

 

the Award pursuant to Section 1 of this Agreement shall be deemed to pertain to the securities and
other property, including cash, to which a holder of the number of Long-Term Performance Units
would have been entitled to receive in connection with such Adjustment Event.

          (e) Change of Control. Upon a Change of Control, vesting, forfeiture and payment
shall occur with respect to the Long Term Performance Units in accordance with Article 11 of the
Plan.

          (f) No Right to Continued Employment. This Agreement does not confer upon Participant
any right to continue as an employee of the Company or its subsidiary or to any particular
employment tenure, nor does it limit in any way the right of Company or its subsidiary to terminate
Participant’s services to the Company or its subsidiary at any time, with or without cause.

          (g) Nontransferability. Long-Term Performance Units awarded pursuant to this
Agreement may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated (a
“Transfer”) other than by will or by the laws of descent and distribution, except as provided in
the Plan. If any Transfer, whether voluntary or involuntary, of Long-Term Performance Units is
made, or if any attachment, execution, garnishment, or lien will be issued against or placed upon
the Long-Term Performance Units, the Participant’s right to such Long-Term Performance Units will
be immediately forfeited to the Company, and this Agreement will lapse.

          (h) Approved Retirement. “Approved Retirement” means, with respect to the
interpretation of the Plan and this Agreement, with the express consent of the Company at or before
the time of such Approved Retirement, which consent may be withheld for any or no reason, any
voluntary Separation from Service by the Participant after having reached the age of fifty-five
(55) years and after having completed at least fifteen (15) years of continuous employment with the
Company.

     8. GENERAL.

           (a) Successors and Assigns. This Agreement is personal in its nature and
Participant may not assign or transfer his/her rights under this Agreement.

          (b) Notices. Any notices, demands or other communications required or desired to be
given by any party shall be in writing and shall be validly given to another party if served either
personally or if deposited in the United States mail, certified or registered, postage prepaid,
return receipt requested. If such notice, demand or other communication shall be served
personally, service shall be conclusively deemed made at the time of such personal service. If
such notice, demand or other communication is given by mail, such notice shall be conclusively
deemed given forty-eight (48) hours after the deposit thereof in the United States mail addressed
to the party to whom such notice, demand or other communication is to be given as hereinafter set
forth:

FORM PSU3-3-2010

5

 

	 	 	 
	To the Company:

	 	King Pharmaceuticals, Inc.
	 

	 	400 Crossing Boulevard
	 

	 	Bridgewater, NJ 08807
	 

	 	Attention: Human Resources

     To Participant: At his/her address of record as maintained in the Company’s files.

Any party may change its address for the purpose of receiving notices, demands and other
communications by providing written notice to the other party in the manner described in this
paragraph.

          (c) Entire Agreement. Except as this Agreement may expressly provide otherwise, this
Agreement, the Long-Term Performance Unit Award Certificate and the Plan constitute the entire
agreement and understanding of the Company and Participant with respect to the subject matter
hereof and thereof, and supersede all prior written or verbal agreements and understandings between
Participant and the Company relating to such subject matter. Except as required by applicable law,
this Agreement may only be amended by written instrument signed by Participant and an authorized
officer of the Company.

          (d) Governing Law; Severability. This Agreement will be construed and interpreted
under the laws of the State of Tennessee applicable to agreements executed and to be wholly
performed within the State of Tennessee. If any provision of this Agreement as applied to any
party or to any circumstance is adjudged by a court of competent jurisdiction to be void or
unenforceable for any reason, the invalidity of that provision shall in no way affect (to the
maximum extent permissible by law) the application of such provision under circumstances different
from those adjudicated by the court, the application of any other provision of this Agreement, or
the enforceability or invalidity of this Agreement as a whole. If any provision of this Agreement
becomes or is deemed invalid, illegal or unenforceable in any jurisdiction by reason of the scope,
extent or duration of its coverage, then such provision shall be deemed amended to the extent
necessary to conform to applicable law so as to be valid and enforceable or, if such provision
cannot be so amended without materially altering the intention of the parties, then such provision
will be stricken and the remainder of this Agreement shall continue in full force and effect.

          (e) Remedies. All rights and remedies provided pursuant to this Agreement or by law
shall be cumulative, and no such right or remedy shall be exclusive of any other. A party may
pursue any one or more rights or remedies hereunder or may seek damages or specific performance in
the event of another party’s breach hereunder or may pursue any other remedy by law or equity,
whether or not stated in this Agreement.

          (f) Interpretation. Headings herein are for convenience of reference only, do not
constitute a part of this Agreement, and will not affect the meaning or interpretation of this
Agreement. References herein to Sections are references to the referenced Section hereof, unless
otherwise specified.

          (g) Waivers; Amendments. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any later breach of

FORM PSU3-3-2010

6

 

that provision. Except as required by applicable law, this Agreement may be modified only by
written agreement signed by Participant and the Company.

[Remainder of page intentionally left blank.]

FORM PSU3-3-2010

7

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