KV.A KV Pharmaceutical Co. CL A

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

One Corporate Woods Drive

Bridgeton, MO

The Agreement has an initial term that ends on December 31, 2011. The term will automatically extend for successive twelve month periods, unless either Mr. McHugh or the Company provides written notice to the other at least 180 days prior to the expiration of the then current term. In addition, if a change of control (as such term is defined in the Agreement) occurs during the term, the Agreement will not expire prior to the second anniversary of the date of consummation of the change of control.

Mr. McHugh will receive a base salary of $230,000 per annum, which base salary will be reviewed no less frequently than annually and may be increased at the discretion of the Board or the Committee.

During the term, Mr. McHugh will be eligible to receive an annual cash bonus based on performance objectives established by the Committee each year, provided that the Company, in its discretion, elects to put into effect an annual cash incentive plan or similar policy with respect to any applicable year.

The Company may terminate the Agreement (1) immediately for Cause upon written notice to Mr. McHugh, (2) without Cause upon 30 days’ written notice or (3) upon Mr. McHugh’s disability (as defined in the Agreement) upon 30 days’ advance written notice. Any determination that Mr. McHugh should be terminated for Cause may be made during or after the term of the Agreement and must be approved by no fewer than sixty-six and two-thirds (66-  ² / 3 ) percent of the directors then serving on the Board; provided, however, that if Mr. McHugh is a member of the Board, he will not participate in such vote, and a determination of Cause may be made by no fewer than sixty-six and two-thirds (66-  ² / 3 ) percent of the remaining directors then serving on the Board. “ Cause ” is defined as the occurrence of any of the following:

commission of a criminal act in respect of Mr. McHugh’s employment or conviction of, or plea of guilty or no contest to, a felony;

willful misconduct, significant dishonesty, gross negligence or breach of fiduciary duty in respect of Mr. McHugh’s employment; and

continuing neglect or failure of Mr. McHugh to perform the duties reasonably assigned to him by the Company and after notice from the Company of such neglect or failure, Mr. McHugh’s failure to cure such neglect or failure within 30 days of such notice, provided that Mr. McHugh will be provided only one 30 day cure period for the same neglect or failure.

Mr. McHugh’s employment will terminate automatically upon his death without any further notice or action required.

Mr. McHugh may resign from his employment with the Company for “ Relocation ,” which is defined as the relocation of Mr. McHugh’s principal place of employment to a place more than 75 miles from his principal place of employment as of the effective date of the Agreement. In order to invoke a termination for Relocation, Mr. McHugh must provide written notice to the Company within 90 days of the occurrence of an event that constitutes Relocation, the Company must have 30 days to cure the event and Mr. McHugh must terminate his employment, if at all, within 30 days of the end of the 30 day cure period if the Company has failed to implement a cure.

Other than upon Relocation, Mr. McHugh may resign his employment upon giving the Company at least 120 days’ advance written notice.

In the event that Mr. McHugh’s employment is terminated by the Company without Cause or by Mr. McHugh upon Relocation, subject to Mr. McHugh’s compliance with the provisions of the Agreement and the execution by Mr. McHugh of a general release of claims, as set forth in the Agreement, the Company will pay or provide to Mr. McHugh:

continued participation in the Company’s plans providing medical, dental, and vision insurance benefits, as applicable, for the 18 month period following the termination date; provided that, such welfare plan coverage will cease if Mr. McHugh obtains other full time employment providing for comparable welfare plan benefits prior to the expiration of such 18 month period; and

the following amount to be paid (1) over a period of 12 months in equal bi-weekly installments, less deductions as required by law, if the termination occurs prior to a change of control (as defined in the Agreement) or (2) in a lump sum, less deductions as required by law, if the termination occurs within 12 months of a change of control:

an amount equal to one times the sum of (x) Mr. McHugh’s then current base salary plus (y) Mr. McHugh’s target annual cash incentive for the then-current year of the term (provided, however, solely for purposes of determining payments following a termination by the Company without Cause or by Mr. McHugh upon Relocation, that in the event the Company has not adopted an annual cash incentive plan or similar policy with respect to any applicable year, the annual cash incentive for such year will be an amount equal to 25 percent of Mr. McHugh’s then-current base salary; and, provided further, that if such termination occurs after the initial term of the Agreement, the average of the annual cash incentive earned by Mr. McHugh for the two calendar years immediately preceding the year of termination will replace “target annual cash incentive”).

The Agreement also provides that the Company will make a tax gross-up payment to Mr. McHugh under certain circumstances in the event he is required to pay any excise tax imposed on any amounts or benefits payable in connection with a change of control pursuant to Section 4999 of the Code; provided, however, that in the event the aggregate value of the total amounts and benefits payable to Mr. McHugh in connection with a change of control exceeds his Parachute Threshold by less than 10%, one or more of the amounts or benefits payable to Mr. McHugh will be reduced so that the aggregate value of such amounts and benefits is $1.00 less than the Parachute Threshold.

For a period of 36 months immediately following termination, regardless of how, when or why Mr. McHugh’s employment ends, he may not, among other things, compete with the Company, solicit the Company’s customers or employees or interfere with any of the Company’s suppliers, all as more fully described in the Agreement.

Exhibit No.

Description

/s/ David A. Van Vliet

Exhibit No.

Description