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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
