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EXHIBIT 10
TRUST UNDER THE
KING PHARMACEUTICALS EXECUTIVE
DEFERRED COMPENSATION PLAN
THIS AGREEMENT is made this 27th day of July, 2005 by and
between King Pharmaceuticals, Inc. as a Corporation organized
under the laws of
Tennessee (the "Company") and First Tennessee Bank National
Association,
Trust Department, a trust organization under the laws of the
United States of
America and having its principal office and place of business in
Tennessee as
trustee (the "Trustee").
RECITALS
WHEREAS, the Company has adopted the deferred compensation
plan(s)
listed in Appendix A which is/are (an) unfunded executive
benefit plan(s)
providing deferred compensation benefits to a select group of
its management or
highly compensated employees (the "Plan"); and
WHEREAS, the Plan contemplates that employees of the Company
and
Adopting Employers (listed in Appendix B, if any) and any other
affiliate
designated by the Board may become participants in the Plan (the
Company and
each Adopting Employer that has employees who participate in the
Plan are
collectively referred to as the "Employers" unless indicated
otherwise); and
WHEREAS, the Company has incurred or expects to incur liability
under
the terms of the Plan with respect to the employees who
participate in the Plan
(the "Participants"); and
WHEREAS, the Company wishes to establish a trust (the "Trust")
and to
contribute to the Trust assets that shall be held therein,
subject to the claims
of the Company's creditors in the event of the Company's
insolvency, as herein
defined, until paid to the Plan participants and their
beneficiaries in such
manner and at such times as specified in the Plan or paid to the
Company in
accordance herewith; and
WHEREAS, it is the intention of the parties that the Trust
shall
constitute an unfunded arrangement and shall not affect the
status of the Plan
as an unfunded Plan maintained for the purpose of providing
deferred
compensation for a select group of management or highly
compensated employees
according to Title I of the Employee Retirement Income Security
Act of 1974 as
amended; and
WHEREAS, it is the intention of the Company to make
contributions to
the Trust to provide a source of funds to assist it in the
meeting of its
liabilities under the Plan.
NOW, THEREFORE, the parties do hereby establish the Trust and
agree
that the Trust shall be comprised, held and disposed of as
follows:
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SECTION 1. ESTABLISHMENT OF TRUST
(a) The Company hereby deposits with Trustee in trust $100.00,
which
shall become the principal of the Trust to be held, administered
and disposed of
by the Trustee as provided in this Trust Agreement. The Company
shall have the
right to make additional deposits from time to time in its sole
discretion.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the
Company
is the grantor, within the meaning of Subpart E, part I,
subchapter J, chapter
I, subtitle A of the Internal Revenue Code of 1986, as amended
(the "Internal
Revenue Code"), and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall
be held
separate and apart from other funds of the Company and shall be
used exclusively
for the uses and purposes of Plan participants and general
creditors of the
Company as herein set forth. The Participants and their
beneficiaries shall have
no preferred claim on, or any beneficial ownership interest in,
any assets of
the Trust. Any rights created under the Plan and this Trust
Agreement shall be
mere unsecured contractual rights of the Participants and their
beneficiaries
against their Employer. Any assets held by the Trust will be
subject to the
claims of the Company's general creditors under federal and
state law in the
event of Insolvency, as defined in Section 3(a) herein.
(e) The Trustee agrees to accept additional deposits made by
the
Company pursuant to Section 1 (a) hereof, and contributions that
are paid to it
by the Company in accordance with the terms of this Trust
Agreement. Such
additional deposits and contributions shall be in cash or in
such other form
that may be acceptable to the Trustee, including but not limited
to policies of
life insurance. The Trustee shall have no duty to determine or
collect
contributions under the Plan and shall have no responsibility
for any property
until it is received and accepted by the Trustee. The Company
shall have the
sole duty and responsibility for the determination of the
accuracy and
sufficiency of the deposits and contributions to be made under
the Plan, the
transmittal of the same to the Trustee and compliance with any
statute,
regulation or rule applicable to contributions.
SECTION 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
(a) From time to time, the Company may deliver to the Trustee
a
schedule (the "Payment Schedule") that indicates the amounts
payable in respect
of each Participant (and his or her beneficiaries), that
provides a formula or
other instructions for determining the amounts payable, the form
in which such
amounts are to be paid (as
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provided for or available under the Plan), and the time of
commencement for
payment of such amounts. Except as otherwise provided herein,
the Trustee shall
make payments to the Participants and their beneficiaries in
accordance with
such Payment Schedule. The Trustee shall make provision for the
reporting and
withholding of any federal, state or local taxes that may be
required to be
withheld with respect to the payment of benefits pursuant to the
terms of the
Payment Schedule and shall pay amounts withheld to the
appropriate taxing
authorities or determine that such amount have been reported,
withheld and paid
by the Company. If the principal of the Trust, and any earnings
thereon, are not
sufficient to make payments of benefits in accordance with the
terms of the
Payment Schedule, the Company shall make the balance of each
such payment as it
falls due. The Trustee shall notify the Company where principal
and earnings are
not sufficient.
(b) Upon the receipt by the Trustee of (i) a written notice from
the
Company, indicating that the Plan has been completely terminated
and (ii) a
Payment Schedule, indicating how payments shall be made as a
result of the
termination of the Plan, the Trustee shall pay to each
Participant his or her
account balance under the Plan in accordance with the terms of
such Payment
Schedule. Notwithstanding the foregoing, upon the termination of
the Plan the
Company shall be entitled to make payment of benefits directly
to the
Participant or their beneficiaries in accordance with subsection
(f) below.
(c) The Company hereby agrees that the Authorized Party (as
defined
below) shall have the exclusive responsibility, and the Trustee
shall not have
any responsibility or duty under this Trust Agreement for
determining that the
Payment Schedule is in accordance with the terms of the Plan and
applicable law,
including without limitation, the amount, timing or method of
payment and the
identity of each person to whom such payments shall be made. The
Trustee shall
have no responsibility or duty to determine the tax effect of
any payment or to
see to the application of any payment.
(d) The entitlement of a Participant or his or her beneficiaries
to the
benefits under the Plan shall be determined by the Company or
such party as it
shall designate under the Plan, and any claim for such benefits
shall be
considered and reviewed under the procedures set out in the
Plan.
(e) The Company may make payment of benefits directly to the
Participants or their beneficiaries as they become due under the
terms of the
Plan. The Company shall notify the Trustee of its decision to
make payment of
benefits directly to Participants or their beneficiaries. If the
Company makes
payments according to this subsection the Company shall make
provision for the
reporting and withholding of any federal, state or local taxes
that may be
required to be withheld with respect to the payment of benefits
pursuant to the
terms of the Plan and shall pay amounts withheld to the
appropriate taxing
authorities.
(f) Company shall furnish the Trustee with a written list of the
names,
signatures and extent of authority of all persons authorized to
direct Trustee
and otherwise act on behalf of the Company and the Participants
under the terms
of this Trust
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Agreement ("Authorized Party"). The Trustee shall be entitled to
rely on and
shall be fully protected in acting upon direction from an
Authorized Party until
notified in writing by the Company, as appropriate, of a change
of the identity
of an Authorized Party.
(g) In accordance with the procedures mutually acceptable to
the
Company and Trustee, all directions and instructions to the
Trustee from an
Authorized Party, including but not limited to the Payment
Schedule, shall be in
writing, transmitted by mail or by facsimile or shall be an
electronic
transmission, provided the Trustee may, in its discretion,
accept oral
directions and instructions and may require confirmation in
writing ("Authorized
Instructions").
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENT TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT
(a) The Trustee shall cease payment of benefits to the
Participants who
are current or former employees of the Company and their
beneficiaries if it
receives notice that the Company is Insolvent. The Company shall
be considered
"Insolvent" for purposes of this Trust Agreement if (i) the
Company is unable to
pay its debts as they become due, or (ii) the Company is subject
to a pending
proceeding as a debtor under the United States Bankruptcy
Code.
(b) At all times during the continuance of this Trust, as
provided in
Section 1(d) hereof, the principal and income of the Trust shall
be subject to
claims of general creditors of the Company under federal and
state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of
the
Company shall have the duty to inform the Trustee in writing of
the Company's
Insolvency. If a person claiming to be a creditor of the Company
alleges in
writing to the Trustee that the Company has become Insolvent,
the Trustee shall
determine whether the Company is Insolvent and, pending such
determination, the
Trustee may discontinue payment of benefits to the Participants
or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person
claiming to be a
creditor alleging that the Company is Insolvent, the Trustee
shall have no duty
to inquire whether the Company is Insolvent. The Trustee may in
all events rely
on such evidence concerning the Company's solvency as may be
furnished to the
Trustee and that provides the Trustee with a reasonable basis
for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company
is
Insolvent, the Trustee shall discontinue payments of benefits to
the
Participants and their beneficiaries and shall hold the assets
of the Trust for
the benefit of the Company's general creditors. Nothing in this
Trust Agreement
shall in any way diminish any rights of the Participants or
their beneficiaries
to pursue their rights as general creditors of the Company with
respect to
benefits due under the Plan or otherwise.
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(4) The Trustee shall resume the payment of benefits to the
Participants or their beneficiaries in accordance with Section 2
of this Trust
Agreement only after the Trustee has determined that the Company
is not
Insolvent (or is no longer Insolvent). The Trustee may rely on
evidence
concerning Insolvency as may be furnished to the Trustee and
that provides the
Trustee with a reasonable basis for making a determination
concerning
Insolvency. If there is a dispute about Insolvency, the Trustee
shall have the
right to require the Company to employ and pay for the services
of an
independent expert to render a written opinion to the Trustee
addressing the
question of Insolvency.
(c) Provided that there are sufficient assets, if the
Trustee
discontinues the payment of benefits from the Trust pursuant to
Section 3(a) and
(b) hereof and subsequently resumes such payments, the first
payment following
such discontinuance shall include the aggregate amount of all
payments due to
the Participants or their beneficiaries according to the terms
of the Plan for
the period of such discontinuance, less the aggregate amount of
any payments
made to Participants or their beneficiaries by the Company in
lieu of the
payments provided for hereunder during any such period of
discontinuance. The
Trustee may require a new Payment Schedule from the Company in
such event.
SECTION 4. PAYMENTS TO COMPANY
(a) Except as provided in Sections 3 and in this Section 4(b),
because
the Trust is irrevocable, in accordance with Section 1(b)
hereof, the Company
shall not have the right or the power to direct the Trustee to
return to the
Company or to divert to others any of the Trust assets before
all payment of
benefits have been made to Participants or their beneficiaries
pursuant to the
terms of the Plan.
(b) In the event the Company makes payment of benefits
directly
pursuant to Section 1(e) hereof, the Company may file proof of
such payment
with the Trustee and request to be reimbursed for said payment.
The Trustee
shall reimburse the Company for amounts not exceeding the
Company's costs of
making Plan payments. The Trustee shall not be obligated to
verify the amount of
payment beyond receipt of reasonable proof (e.g. cancelled
check).
SECTION 5. INVESTMENT AUTHORITY
(a) The Trustee shall invest and reinvest the principal and
income of
the Trust as directed by Company or its properly designated
agent which
directions may be changed from time to time. To the maximum
extent permitted by
law, the Trustee shall have no duty or responsibility (i) to
advise with respect
to, or inquire as to the propriety of, any such investment
direction or (ii) for
any investment decisions made with respect to the Trust by the
Company. In the
absence of investment direction, the Trustee shall have no
obligation to invest
Trust assets, but may invest Trust assets in any manner
permitted under Section
5(d).
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(b) The Trustee may invest in securities (including stock or
rights to
acquire stock) or obligations issued by the Company. All rights
associated with
assets of the Trust shall be exercised by the Trustee and shall
in no event be
exercised by or rest with Plan participants, except that voting
rights with
respect to Trust assets will be exercised by the Company, unless
an investment
adviser has been appointed pursuant to Section 5(a) and voting
authority has
been delegated to such investment adviser.
(c) The Company shall have the right at any time, and from time
to time
in its sole discretion, to substitute assets of equal fair
market value, for any
asset held by the Trust. This right is exercisable by
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