Document:

Ex-10.8

 

Exhibit 10.8

NOTE: CERTAIN MATERIAL HAS BEEN REDACTED FROM THIS DOCUMENT AND FILED SEPARATELY WITH THE SEC
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE LOCATIONS OF THESE
REDACTIONS ARE INDICATED THROUGHOUT THE DOCUMENT BY THE FOLLOWING MARKING: [***].

2007 EXECUTIVE MANAGEMENT INCENTIVE AWARDS

     As Adopted by the Compensation and Human Resources Committee of the Board of Directors on March 21, 2007

Introduction

     2007 Executive Management Incentive Awards (“EMIA”), made pursuant to Article 9 of the King
Pharmaceuticals, Inc. (the “Company”) Incentive Plan (the “Plan”), will be comprised of 1 to 2
financial objectives (“Financial Objectives”) and, for most participants, approximately 4
individual operational objectives (“Operational Objectives”). In determining the potential EMIA
payout for any participant, Financial Objectives and Operational Objectives shall be weighted as
determined either by the Committee or by the Chief Executive Officer, as further detailed below.
All capitalized terms not otherwise defined shall have the meanings assigned to them in the Plan.

Administration

     The Compensation and Human Resources Committee of the Board of Directors of the Company (the
“Committee”) shall have complete discretionary authority over the administration of the EMIAs as
set forth herein including, without limitation, the authority to adjudicate claims related to
EMIAs, interpret the terms of EMIAs, and to resolve disputes and factual questions related to
EMIAs. Determinations of the Committee shall be binding on the Company and the EMIA participants.

Eligibility to Participate

     Except as otherwise determined by the Committee, executives having the title of Vice President
or more senior titles as of March 21, 2007 shall be eligible to participate in the 2007 EMIA. The
Chief Executive Officer, President, Chief Financial Officer, Chief Commercial Officer, Chief
Technical Operational Officer, General Counsel, Corporate Compliance Officer, Chief Science Officer
are designated “Top Executives.”

     The Committee and/or the Chief Executive Officer, as further detailed below in the section
entitled “Objective Approval and Weighting,” may establish an EMIA for an executive who is hired or
promoted to fill an EMIA-eligible position after March 21, 2007; provided, however, that

	 	a.	 	an EMIA may be established for a Top Executive after 90 days have elapsed since January
1, 2007 only if 75.1% or more of the performance time period is remaining at the time the
EMIA is established, in accordance with Treas. Reg. § 1.162-27(e);
	 
	 	b.	 	any executive hired after September 30, 2007 is ineligible for an EMIA; and
	 
	 	c.	 	any employee of the Company promoted into an EMIA-eligible position and who becomes an
EMIA Participant (but who is not a Top Executive) shall participate in the EMIA and 2007
Management Incentive Plan prorata (if a participant of the Management Incentive Plan).

 

 

Objective Approval and Weighting

     The Committee shall establish and approve all Financial Objectives and any amendments thereto.
EMIAs for the Top Executives shall be based entirely upon Financial Objectives. The Committee shall
approve the specific weighting of the Financial Objectives for the Top Executives and any
amendments thereto. EMIAs for Top Executives shall be established during the first 25% of the
applicable performance period and shall be based upon prospective financial goals the
accomplishment of which is substantially uncertain at the time of the establishment of the EMIA.

     The Chief Executive Officer or his designee shall approve, for all EMIA Participants other
than Top Executives, (1) the weighting of their Financial Objectives, based upon each executive’s
ability to affect the accomplishment of those objectives, and (2) their Operational Objectives, and
any amendments to either of these items.

     The weighting of EMIA objectives shall be as follows:

	 	 	 	 	 	 	 
	Executive	 	Financial Objectives	 	Operational Objectives
	Chief Executive Officer

	 	75% EPS and 25% Revenues
	 	 	0	%
	Chief Financial Officer

	 	100% EPS
	 	 	0	%
	Chief Commercial Officer

	 	25% EPS and 75% Revenues
	 	 	0	%
	Remaining direct reports
to the CEO

	 	100% EPS
	 	 	0	%
	All other EMIA Participants

	 	50% EPS
	 	 	50	%

Award Payout Schedule

     EMIA Participants are eligible for cash awards which are a percentage of their 2007 base
salary paid, as described in the table below.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	POSITION	 	THRESHOLD	 	TARGET	 	STRETCH
	President & Chief Executive Officer
	 	 	50	%	 	 	100	%	 	 	200	%
	Chief Financial Officer
	 	 	35	%	 	 	70	%	 	 	140	%
	Chief Commercial Officer
	 	 	30	%	 	 	60	%	 	 	120	%
	Chief Technical Operations Officer
	 	 	30	%	 	 	60	%	 	 	120	%
	Chief Science Officer
	 	 	25	%	 	 	50	%	 	 	100	%
	General Counsel
	 	 	25	%	 	 	50	%	 	 	100	%
	EVP Level 1
	 	 	25	%	 	 	50	%	 	 	100	%
	EVP Level 2
	 	 	20	%	 	 	40	%	 	 	80	%
	Senior Vice President
	 	 	17.5	%	 	 	35	%	 	 	70	%
	Vice President
	 	 	15	%	 	 	30	%	 	 	60	%

Calculating an EMIA Payout

     The weight previously established for each objective (a percentage) is multiplied by the
percentage (as provided in the table above) associated with the EMIA Participant’s achievement
level in connection with that objective (none, threshold, target or stretch, or, in the case of
Financial Objectives, a prorata percentage between these levels). Once this calculation is
performed for each objective, the results of all calculations are summed and that sum is multiplied
by the 2007 base salary

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paid to the EMIA Participant. The result is the payout amount for the EMIA Participant. See
the attached example.

     The award for any person who becomes an EMIA Participant, or for an EMIA Participant who is
promoted, during the performance period will be prorated based on the portion of the year spent in
each position. The award for any EMIA Participant who retires during 2007 will be prorated based
on portion of the year spent in the applicable position.

Eligibility for EMIA Payout

     Payment of any EMIA shall be contingent upon the Committee’s determination that Financial
Objectives have been met by the Company, and at what achievement level those objectives have been
met. Also:

	 	a.	 	In the case of any of the Top Executives, payment of any EMIA shall be contingent upon
the Committee’s certification of the achievement level applicable to the executive in
connection with each Financial Objective.
	 
	 	b.	 	In the case of any EMIA Participant who holds the title of EVP Level 1 or a more senior
title, other than the Top Executives, payment of any EMIA shall be contingent upon the
Committee’s approval of the determination of the Chief Executive Officer, or his designee,
of the achievement level applicable to each of the EMIA Participant’s Operational
Objectives.
	 
	 	c.	 	In the case of any EMIA Participant who holds a title more junior than EVP Level 1,
payment of any EMIA shall be contingent upon the determination of the Chief Executive
Officer, or his designee, of the achievement level applicable to each of the EMIA
Participant’s Operational Objectives.

     Other than for reasons of Death, Disability or Approved Retirement, an EMIA Participant must
be employed by the Company on December 31, 2007 or the EMIA Participant will forfeit any EMIA which
he or she may have otherwise qualified to receive.

     In the event of an EMIA Participant’s death on or after January 1, 2008, the EMIA shall be
paid to his or her estate. In the event of an EMIA Participant’s death on or before December 31,
2007, a prorata portion of the EMIA, reflecting the EMIA Participant’s time in service during the
performance year, shall be paid to his or her estate.

     In the event of an EMIA Participant’s incapacity on the date his or her EMIA is paid by the
Company, the EMIA shall be paid to his or her legal guardian or appointed representative. In the
event of an EMIA Participant’s incapacity on or before December 31, 2007, a prorata portion of the
EMIA, reflecting the EMIA Participant’s time in service during the performance year, shall be paid
to his or her legal guardian or appointed representative.

Timing of EMIA Payout

     The payment of each EMIA will be made on or before March 15, 2008.

3

 

Tax Matters

     All EMIA payments are subject to applicable state, federal, local and other tax withholding
requirements.

     In the case of the Top Executives, all EMIAs are intended to be “qualified performance-based
compensation” in accordance with Treas. Reg. § 1.162-27(e) and shall be interpreted and
administered as such unless the Committee determines that it is in the best interests of the
Company not to adhere to the requirements of 162(m) of the Internal Revenue Code of 1986, as
amended (the “Code”), and Treas. Reg. § 1.162-27.

Other Matters

     The Committee, in its discretion, may reduce or eliminate any EMIA in the event it determines
it is in the best interests of the Company to do so for reasons including, without limitation,
financial distress of the Company, administrative difficulties or that the EMIA payment is
nondeductible by the Company under the Internal Revenue Code. The reduction of one or more EMIAs
shall not increase the EMIA of any other EMIA Participant.

     The Committee, in its discretion, may (i) accelerate an EMIA payment provided such payment is
reduced to reasonably reflect present value, or (ii) delay payment of any EMIA and adjust the
amount of the payment based on a reasonable rate of interest or an actual predetermined investment.

     The Committee may, at any time, amend or terminate this EMIA program. The Board of Directors
of the Company, in its discretion, may, at any time, withdraw the Committee’s authority over this
EMIA program.

     The grant of an EMIA shall in no way be construed or interpreted to establish or guarantee a
term of employment and does not change the “at-will” or other status of any person employed by the
Company.

     The terms and conditions of this EMIA program are, in their entirety, set forth in this
document and the EMIA documents pertaining to a specific EMIA Participant. Once established, EMIA
objectives may only be altered by valid written notice to that effect from the Committee or the
Chief Executive Officer or his designee, as applicable, as described in the section above entitled
“Objective Approval and Weighting.” Any oral representation or writing not authorized and approved
by the Committee, or the Chief Executive Officer or his designee, as applicable, shall be void and
of no effect, and shall not be binding on the Company or the Committee.

4

 

Financial Objectives

     The time period for the measurement of performance of Financial Objectives is January 1
through December 31, 2007. In the event that achievement of Financial Objectives is greater than
Threshold but less than Stretch, payout percentages applicable to Financial Objectives will be
prorated to reflect actual achievement (actual revenues or earnings per share).

Financial Objective 1: Revenues

     The portion of any EMIA payable pursuant to Financial Objective 1 will be based on achieving
the 2007 revenue targets detailed in the following table.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	 	 	Threshold1	 	Target1	 	Stretch1
	Revenues
	 	$[***] billion	 	$[***] billion	 	$[***] billion

Financial Objective 2: Earnings Per Share

     The portion of any EMIA payable pursuant to Financial Objective 2 will be based on achieving
the 2007 earnings per share targets as detailed in the following table.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ACHIEVEMENT LEVEL
	 	 	Threshold1	 	Target1	 	Stretch1
	Earnings per share1
	 	 	$[***]	 	 	 	$[***]	 	 	 	$[***]	 

Operational Objectives

     Each executive other than the Top Executives and direct reports to the CEO will own
approximately 4 Operational Objectives with the percentage weighting of each based on the
importance of that objective to the success of the business. The time period for the measurement of
performance of Operational Objectives is January 1 through December 31, 2007.

Minimum Earnings Per Share Requirement

     No payout will be made for any objective unless the company achieves 60% of Target
earnings per share.

 

			
	1	 	[***]

5

 

EMIA Calculation Example

Sample Position: EVP Level 2

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Payout	 	Objective
	Objective	 	Weight	 	Performance	 	Percentage	 	Payout
	Financial 1 – Revenues
	 	 	10	%	 	Threshold	 	 	20	%	 	 	   0.02 (2%)	 
	Financial 2 – EPS
	 	 	40	%	 	Target	 	 	40	%	 	 	  0.16 (16%)	 
	Operational Objective 1
	 	 	10	%	 	Stretch	 	 	80	%	 	 	 0.8 (8%)	 
	Operational Objective 2
	 	 	15	%	 	Target	 	 	40	%	 	 	 0.06 (6%)	 
	Operational Objective 3
	 	 	15	%	 	Target	 	 	40	%	 	 	 0.06 (6%)	 
	Operational Objective 4
	 	 	10	%	 	Threshold	 	 	20	%	 	 	 0.02 (2%)	 
	Total Objectives Weight
	 	 	100	%	 	 	 	 	 	 	 	 	 	 	 	 
	Total EMIA Payout
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 0.40 (40%)	 

The EVP receives 40% of his or her 2007 base pay paid as the EMIA.

Note: In the event that achievement of Financial Objectives is greater than
Threshold but less than Stretch, payout percentages applicable to Financial
Objectives will be prorated to reflect actual achievement (actual revenues or
earnings per share); provided, however, that no payout will be made for any
Financial Objective or Operational Objective unless the Company achieves 60%
of Target earnings per share.

6EX-10.8(D) AMENDMENT/ EMPLOYEE STOCK PURCHASE PLAN

 

EXHIBIT 10.8(d)

INDUSTRIAL DISTRIBUTION GROUP, INC.

THIRD AMENDMENT TO

AMENDED AND RESTATED

EMPLOYEE STOCK PURCHASE PLAN

     This Third Amendment to the Industrial Distribution Group, Inc. Amended and Restated Employee
Stock Purchase Plan (this “Amendment”) is made as of the 21st day of February, 2007, by
Industrial Distribution Group, Inc., a Delaware corporation (the “Company”).

W I T N E S S E T H:

     WHEREAS, the Company established the Industrial Distribution Group, Inc. Employee Stock
Purchase Plan effective September 19, 1997, which was amended and restated on December 10, 1997,
and further amended on March 23, 2001 and April 29, 2005 ( the “Plan”; capitalized terms
used herein and not otherwise defined herein shall have the meanings given such terms in the Plan);

     WHEREAS, the provisions of the Plan allow for outstanding awards under the Plan to be adjusted
to reflect any increase or decrease in the number of issued and outstanding shares of common stock,
$0.01 par value per share, of the Company resulting from a recapitalization, reclassification,
stock split-up, stock dividend, combination of shares or similar transaction, but do not require
that such awards be so modified;

     WHEREAS, Statement of Financial Accounting Standards No. 123 (revised 2004) published by the
Financial Accounting Standards Board (“FAS 123R”) requires the recognition of incremental
compensation cost in the event of a change in share-based payments under a plan, such as the Plan,
if such change is not required by the terms of such plan; and

     WHEREAS, upon the recommendation of the Compensation Committee of the Board of Directors, the
Board of Directors desires to modify the Plan to require that all outstanding awards under the Plan
be adjusted in the event of a recapitalization, reclassification, stock split-up, stock dividend,
combination of shares or similar transaction and thereby reduce the risk that FAS 123R will require
the recognition of additional compensation costs.

     NOW, THEREFORE, for and in consideration of the foregoing premises, and other good and
valuable consideration, the Plan is amended as follows:

     1. Section 5.2 of the Plan is hereby deleted and replaced in its entirety by the following:

“5.2 ANTIDILUTION PROVISIONS. The aggregate number of shares
of Stock reserved for purchase under the Plan, as hereinabove
provided, and the calculation of the Purchase Price per share
shall be appropriately adjusted to reflect any increase or
decrease in the number of issued shares of Stock resulting
from a recapitalization, reclassification, stock split-up,
stock dividend, combination of shares, or transaction having
similar effect. Any such adjustment shall be made by the
Compensation Committee acting with the consent of, and subject
to the approval of, the Board.”

     2. This Amendment shall be effective as of the date set forth above. Except as hereby
amended, the Plan shall remain in full force and effect.

     IN WITNESS WHEREOF, the undersigned does hereby execute this Amendment as of the date set
forth above.

	 	 	 	 	 
	 	INDUSTRIAL DISTRIBUTION GROUP, INC.

 	 
	 	By:  	/s/ Jack P. Healey
 	 
	 	 	Name:  	Jack P. Healey 	 
	 	 	Title:  	Executive Vice President and Chief Financial Officer

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