Document:

EX-10.4

 

KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

RESTRICTED UNIT CERTIFICATE

     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 Restricted
Units of the Company.

	 	 	 
	1. Name or Participant:
	 	 
	 

	 	 
	 
	 	 
	2. Social Security Number of Participant:
	 	 
	 

	 	 
	 
	 	 
	3. Date of Grant:
	 	 
	 

	 	 
	 
	 	 
	4. Type of Grant:
	 	 
	 

	 	 
	 
	 	 
	5. Number of Shares:
	 	 
	 

	 	 
	 
	 	 
	6. Restricted Period:

	 	The restrictions upon the Restricted Units
shall lapse upon 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
Participant, standing for reelection, is not
reelected; (3) the Participant completes his
or her term of office after declining to stand
for reelection; (4) the Participant completes
his or her term of office after not being
nominated to stand for reelection; (5) the
Participant completes his or her term of
office, having been ineligible to stand for
reelection under term limit provisions then in
effect.
	 
	 	 
	7. Date of Payment:

	 	Within 60 days after the lapse of
restrictions, except as otherwise set forth in
the Restricted Unit Grant Agreement.

This Restricted Unit grant is subject to and governed by the terms of this Restricted Unit
Certificate, the Restricted Unit Grant 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 	 

 

 

	 	 	 	 	 

RESTRICTED UNIT GRANT AGREEMENT

PURSUANT TO THE KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

     This Restricted Unit Grant Agreement (the “Agreement”) is made as of the date set forth on the
Restricted Unit Certificate attached hereto (the “Grant Date”) by King Pharmaceuticals, Inc. (the
“Company”) and the individual identified on the Restricted Unit Certificate (the “Participant”) to
effect an award of restricted units by the Company to the Participant on the terms and conditions
set forth below:

     1. AWARD OF RESTRICTED UNITS. 

     As of the Grant Date, subject to the terms, conditions and restrictions set forth herein, the
Company grants and issues to the Participant units representing a contingent entitlement of
the Participant to receive the number of shares of Common Stock indicated on the Restricted
Unit Certificate at the end of the Restricted Period, provided the Participant continues to be a
Non-Employee Director of the Company (the “Restricted Units”).

     2. GOVERNING PLAN.

     The Restricted Units 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. RESTRICTIONS ON THE RESTRICTED UNITS.

(a) No Transfer. The Restricted Units (including any additional units
received by the Participant as a result of stock dividends, stock splits or any
other similar transaction affecting the Company’s securities without receipt of
consideration) may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, alienated or encumbered during the Restricted Period.

(b) Restricted Period. At the end of the Restricted Period indicated on the
Restricted Unit Certificate, the Participant shall be entitled to receive the number
of shares of Common Stock as is set forth on the Restricted Unit Certificate,
provided that the Participant continues to be a Non-Employee Director as of such
date. Such shares of Common Stock shall thereafter be delivered by the Company to
the Participant in accordance with this Agreement and the Plan.

(c) Forfeiture. Except as otherwise set forth in this Agreement, if the
Participant ceases to be a Non-Employee Director of the Company for any reason other
than death or Permanent Disability (as defined in Section 10.3 of the Plan for
Awards subject to Section 409A of the Code) prior to the end of the Restricted
Period, then as of the date on which the Participant ceases to be a Non-

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Employee Director the Restricted Units shall immediately be forfeited and the
Participant shall have no rights to receive any payout under this Agreement.

(d) Death and Permanent Disability. Notwithstanding subsection 3(c) above,
in the event a Non-Employee Director ceases to be a director by reason of death or
Permanent Disability, the Restricted Period shall immediately lapse and the payment
shall be made within 60 days of the date of death or Permanent Disability.

(e) Change of Control. Upon a Change of Control, the Restricted Period
shall immediately lapse and the payment shall be made on the date of the Change of
Control in accordance with Article 11 of the Plan.

     4. FORM AND TIMING OF PAYMENT.

     All payments of Restricted 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 on the Date
of Payment set forth in the Restricted Unit Certificate; provided, however, if, the Participant is
a “specified employee” (as defined under Section 409A of the Code) then such payment, if required
by Section 409A of the Code, will be made six months after the date of such Separation from Service
(as defined in Section 409A of the Code).

     5. VOTING AND DIVIDEND RIGHTS. 

     The Participant shall have no rights as a shareholder, including voting and dividend rights,
with respect to the Restricted Units. The Participant will obtain full voting and other rights as a
shareholder of the Company upon a payment in shares of Common Stock as provided in Section 4 above.

     6. ADDITIONAL AGREEMENTS.

(a) Tax Matters. The Restricted 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 Restricted 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.

(b) Independent Advice; No Representations. Participant acknowledges that
(i) (s)he was free to use professional advisors of 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)

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(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 or other effects or
implications of the Restricted Units or other matters contemplated by this
Agreement.

(c) Value of Restricted Units. No representations or promises are made to
Participant regarding the value of the Restricted 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 shares equal to the Restricted Units would have been
entitled to receive in connection with such Adjustment Event.

     7. 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.
	 

	 	501 Fifth Street
	 

	 	Bristol, TN 37620
	 

	 	Attention: General Counsel

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     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 Restricted Unit 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. 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. This Agreement may be modified only by
written agreement signed by Participant and the Company.

5EX-10.5

 

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, August 2, 2006 and May 16, 2007

	 	 	 
	Retainer *

	 	$38,000 annually
	 
	 	 
	Board Meeting Fees

	 	$2,000 per meeting
	 
	 	 
	Committee Meeting Fees

	 	$1,200 per meeting
	 
	 	 
	Lead Independent Director Retainer *

	 	$25,000 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.

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