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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-13252
McKESSON CORPORATION
A Delaware Corporation
I.R.S. Employer Identification Number
94-3207296
McKesson Plaza
One Post Street, San Francisco, CA 94104
Telephone (415) 983-8300
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is an accelerated filer. Yes No
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the
last business day of the registrant’s most recently completed second fiscal quarter, September 2004, was approximately $7.6 billion.
Number of shares of common stock outstanding on April 30, 2005: 299,979,779
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for its Annual Meeting of Stockholders to be held on July 27, 2005 are incorporated by
reference into Part III of this report.
1
(Title of Each Class)
Common Stock, $0.01 par value
(Name of Each Exchange on Which Registered)
New York Stock Exchange
Pacific Exchan
g
e, Inc.
Preferred Stock Purchase Rights New York Stock Exchange
Pacific Exchan
g
e, Inc.

Table of contents

  • Page 1
    ...Delaware Corporation I.R.S. Employer Identification Number 94-3207296 McKesson Plaza One Post Street, San Francisco, CA 94104 Telephone (415) 983-8300 Securities registered pursuant to Section 12(b) of the Act: (Title of Each Class) Common Stock, $0.01 par value Preferred Stock Purchase Rights (Name...

  • Page 2
    ... Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Results of Operations and Financial Condition Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes In and Disagreements with Accountants on...

  • Page 3
    ...-aid products and equipment, and provides logistics and other services within the United States and Canada. Our Provider Technologies segment delivers enterprise-wide patient care, clinical, financial, supply chain, managed care and strategic management software solutions, automated pharmaceutical...

  • Page 4
    ... ordering and inventory control, and Supply Management OnlineSM, an Internet-based ordering, purchasing, third-party reconciliation and account management system, help ensure that our customers have the right products at the right time for their facilities and patients. Our investment in operational...

  • Page 5
    ... facilities, including physicians' offices, clinics and surgery centers (primary care), long-term care facilities and homecare sites (extended care). Supply Management On-LineSM, an electronic ordering system, provides an advanced tool for ordering medical-surgical products over the Internet, and...

  • Page 6
    ... is designed to reduce days in accounts receivable, prevent insurance claim denials, reduce costs and improve productivity for our customers. Solutions include contract management, electronic claims processing and coding compliance checking. The segment's hospital information systems also play a key...

  • Page 7
    ... Information About the Business Customers. In recent years, a significant portion of our revenue growth has been with a limited number of large customers. During 2005, sales to our largest customer, Rite Aid Corporation, and ten largest customers accounted for approximately 10% and 50% of our total...

  • Page 8
    ... financial statements, "Significant Accounting Policies" and "Segments of Business," appearing in this Annual Report on Form 10-K. Item 2. Properties Because of the nature of our principal businesses, plant, warehousing, office and other facilities are operated in widely dispersed locations. The...

  • Page 9
    ... Sharing and Savings Plan (the "HBOC Plan") and the McKesson Profit Sharing and Investment Plan (the "McKesson Plan"), as well as participants in those plans. On May 6, 2005, a Stipulation and Agreement of Settlement was executed for that portion of the ERISA Action that involves HBOC Plan claims...

  • Page 10
    ...single post-merger accounting oversight claim against the directors of postmerger McKesson remains to be litigated in the previously-reported action captioned: Saito, et. al. v. McCall (Civil Action No. 17132). The Company filed its answer to the Fourth Amended Complaint in Saito on February 8, 2005...

  • Page 11
    ... customers seeking distribution services. The investigation is at an early stage, and the Company is in the process of responding to the FTC document request. In April 2005, we received a subpoena from the office of the Attorney General of the State of New York ("NYAG") requesting the production...

  • Page 12
    ... in England and Wales. The contract engages the Company to develop, implement and operate a human resources and payroll system at more than 600 NHS locations. As previously reported, there have been contract delays to date which have increased costs and decreased the amount of time in which we can...

  • Page 13
    ...1, 2001 and a director since July 1999. Formerly Executive Vice President, President and Chief Executive Officer of the Supply Solutions Business (January-July 1999); Group President, McKesson Health Systems (1997-1999) and Vice President of the Company since 1996. Service with the Company - 9 years...

  • Page 14
    ... Vice President, President, McKesson Provider Technologies since April 2004; McKesson Information Solutions, Chief Operating Officer (2002-2004), Group President (2001-2002), Chief Operating Officer, Channel Health (1999-2001). Service with the Company - 4 years. Executive Vice President and Chief...

  • Page 15
    ... the discussion under Item 1 of our proxy statement for the 2005 Annual Meeting of Stockholders (the "Proxy Statement") under the heading "Election of Directors." Information about compliance with Section 16(a) of the Exchange Act is incorporated by reference from the discussion under the heading...

  • Page 16
    ... to receive cash. Meeting fees and Committee Chair annual retainers may be deferred into RSUs or DCAP II or may be paid in cash. Options are granted at fair market value and have a term of ten years. If the Company's stockholders approve the new 2005 Stock Incentive Plan at the Annual Meeting on...

  • Page 17
    ... employees of 45.2 million shares in the form of nonqualified stock options, with or without SARs, restricted stock or restricted stock units. No executive officers or directors participate in this Plan. If the Company's stockholders approve the new 2005 Stock Incentive Plan at the Annual Meeting...

  • Page 18
    ... in the Financial Review section of this Annual Report on Form 10-K and Financial Note 21, "Related Party Balances and Transactions," to the consolidated financial statements. Item 14. Principal Accountant Fees and Services Information regarding principal accountant fees and services is set forth...

  • Page 19
    ... duly authorized. MCKESSON C ORPORATION Dated: May 12, 2005 By Jeffrey C. Campbell Jeffrey C. Campbell Executive Vice President and Chief Financial Officer On behalf of the Registrant and pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 20
    McKESSON CORPORATION SCHEDULE II SUPPLEMENTARY CONSOLIDATED FINANCIAL STATEMENT SCHEDULE VALUATION AND QUALIFYING ACCOUNTS For the Years Ended March 31, 2005, 2004 and 2003 (In millions) Additions Description Balance at Beginning of Year Charged to Costs and Expenses Charged to Other Accounts ...

  • Page 21
    ... settlement between Lead Plaintiff and Defendants McKesson HBOC, Inc. and HBO & Company) thereto in connection with the consolidated securities class action (Exhibit 99.1 to the Company's Current Report on Form 8-K. Date of Report January 18, 2005, File No. 1-13252). McKesson Corporation 1999 Stock...

  • Page 22
    ...and Chief Executive Officer (Exhibit 10.43 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2004, File No 1-13252). Employment Agreement, dated as of April 1, 2004, by and between the Company and its Executive Vice President and President Provider Technologies (Exhibit...

  • Page 23
    McKESSON CORPORATION Exhibit Number Description 12 21 23 24 31.1 31.2 32 Calculation of Ratio of Earnings to Fixed Charges List of Subsidiaries of the Registrant Consent of Deloitte & Touche LLP Power of Attorney Certification of Chief Executive Officer Pursuant to Rule 13a - 14(a) and Rule 15d-14...

  • Page 24
    ... Review Management's Annual Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Financial Statements: Consolidated Statements...

  • Page 25
    ... operations Net income (loss) Financial Position Working capital Days sales outstanding for: (2) Customer receivables Inventories Drafts and accounts payable Total assets Total debt, including capital lease obligations Stockholders' equity Property acquisitions Common Share Information Common shares...

  • Page 26
    ... mean the Company's fiscal year. We conduct our business through three operating segments: Pharmaceutical Solutions, Medical-Surgical Solutions and Provider Technologies. See Financial Note 1 to the accompanying consolidated financial statements, "Significant Accounting Policies," for a description...

  • Page 27
    ... rates resulting from the Company's business mix as well as favorable tax settlements and adjustments. Revenues: (In millions) 2005 Years Ended March 31, 2004 2003 Pharmaceutical Solutions U.S. Healthcare direct distribution & services U.S. Healthcare sales to customers' warehouses Subtotal Canada...

  • Page 28
    ... contracting changes in the segment's automation business both of which had the effect of delaying revenue recognition. Gross Profit: (Dollars in millions) 2005 Years Ended March 31, 2004 2003 Gross Profit Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Total Gross Profit...

  • Page 29
    ... in cost of sales that more closely reflects replacement cost than do other accounting methods, thereby mitigating the effects of inflation and deflation on operating profit. The practice in the Pharmaceutical Solutions distribution businesses is to pass on to customers published price changes from...

  • Page 30
    ... for the expected contract losses. Operating Expenses: (Dollars in millions) 2005 Years Ended March 31, 2004 2003 Operating Expenses Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Corporate Subtotal Securities Litigation charge Total Operating Expenses as a Percentage...

  • Page 31
    ... employees for the purchase of McKesson common stock primarily in February 1999, which were included in Corporate expenses, increases in pension expense of $13.9 million primarily for our U.S. defined benefit pension plans. In 2004 and 2003, we reduced the assumed long-term rate of asset return...

  • Page 32
    McKESSON CORPORATION FINANCIAL REVIEW (Continued) Segment Operating Profit and Corporate Expenses: (Dollars in millions) 2005 Years Ended March 31, 2004 2003 Segment Operating Profit Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Subtotal Corporate Expenses, net ...

  • Page 33
    ... in the reported tax rate are primarily due to changes within state and foreign tax rates resulting from the Company's business mix, including varying proportions of income attributable to foreign countries that have lower income tax rates. In 2005, we recorded an income tax benefit of $390...

  • Page 34
    ... tax settlements and adjustments with the U.S. Internal Revenue Service and with various taxing authorities. A large portion of this benefit, which was not previously recognized by the Company, resulted from the filing of amended tax returns by our subsidiary, McKesson Information Solutions LLC...

  • Page 35
    ...: Severance Exit-related costs Asset impairments Subtotal Customer settlement reserve reversals Total By Segment: Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Corporate Total Number of employees terminated (primarily in distribution, delivery and associated back-office...

  • Page 36
    ... date. - In 2003, we acquired the outstanding stock of A.L.I. Technologies Inc. ("A.L.I.") for an aggregate cash purchase price of $347.0 million. A.L.I. provides digital medical imaging solutions, which are designed to streamline access to diagnostic information, automate clinical workflow...

  • Page 37
    ... 31, 2005, we had $44.9 million of notes receivable from certain of our current and former officers and senior managers related to purchases of common stock under our various employee stock purchase plans. These notes were issued for amounts equal to the market value of the stock on the date of the...

  • Page 38
    ... from all share-based payments, including grants of employee stock options, in the financial statements based on the grant-date fair values. We intend to adopt this standard using the modified prospective method of transition, whereby compensation cost will be recognized for new awards granted and...

  • Page 39
    ... annual dividend payments and the expected future stock price. An increase in the expected term of the option, stock price volatility and/or riskfree interest rate will increase compensation expense. An increase in the dividend yield will decrease compensation expense. Had we accounted for employee...

  • Page 40
    ...-income investments. A lower discount rate increases the present value of benefit obligations and increases pension expense. Long-term return on plan assets is determined based on the historical experience of our portfolio and the review of projected returns by asset class on broad, publicly traded...

  • Page 41
    ... pharmaceutical distribution business. Notably, purchases from certain of our suppliers are better aligned with customer demand and as a result, net financial inventory (inventory net of accounts payable) has decreased. In addition, working capital levels benefited from favorable receivable terms...

  • Page 42
    McKESSON CORPORATION FINANCIAL REVIEW (Continued) investment inventory and the number and timing of new fee-based arrangements with pharmaceutical manufacturers. Consolidated working capital has increased over the past two years primarily as a result of our higher sales volume. Our ratio of net debt...

  • Page 43
    ... the value of our stock and changes in interest rates for debt securities with similar terms. We derive revenues from Canada, the United Kingdom, Ireland, France, the Netherlands, Australia, New Zealand and Puerto Rico. In addition, as discussed in Part I, "Business" of this Annual Report on Form 10...

  • Page 44
    ...the Class, and final approval by the Court after a hearing. Other than the Consolidated Action, none of the previously reported Securities Litigation has been resolved by the settlement described above. As a result, during the third quarter of 2005, we recorded a pre-tax charge totaling $1.2 billion...

  • Page 45
    ... purchase or the price they are willing to pay for our products and services. Changes in pharmaceutical and medical-surgical manufacturers' pricing, selling, inventory, distribution or supply policies or practices, or changes in our customer mix could also significantly reduce our revenues and net...

  • Page 46
    ... the purchase and distribution of thousands of inventory items from numerous distribution centers; receive, process and ship orders on a timely basis; manage the accurate billing and collections for thousands of customers and process payments to suppliers. Our business and results of operations may...

  • Page 47
    McKESSON CORPORATION FINANCIAL REVIEW (Continued) The loss of third party licenses utilized by our Provider Technologies segment may adversely impact our operating results. We license the rights to use certain technologies from third-party vendors to incorporate in or complement our Provider ...

  • Page 48
    ... condition. Evolving HIPAA-related laws or regulations could restrict the ability of our customers to obtain, use or disseminate patient information. This could adversely affect demand for our products if they are not re-designed in a timely manner in order to meet the requirements of any new...

  • Page 49
    ... potential loss. In order to provide prompt and complete service to our major Pharmaceutical Solutions customers, we maintain significant product inventory at certain of our distribution centers. While we seek to maintain property insurance coverage in amounts sufficient for our business, there can...

  • Page 50
    ... registered public accounting firm, has issued an audit report on our management's assessment of our internal control over financial reporting. This audit report appears on page 51 of this annual report on Form 10-K. May 12, 2005 John H. Hammergren John H. Hammergren Chairman, President, and Chief...

  • Page 51
    ...become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of March 31, 2005, is fairly stated, in all...

  • Page 52
    ... PUBLIC ACCOUNTING FIRM The Stockholders and Board of Directors of McKesson Corporation: We have audited the accompanying consolidated balance sheets of McKesson Corporation and subsidiaries (the "Company") as of March 31, 2005 and 2004, and the related consolidated statements of operations...

  • Page 53
    McKESSON CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share amounts) 2005 Years Ended March 31, 2004 2003 Revenues Cost of Sales Gross Profit Operating Expenses Selling Distribution Research and development Administrative Securities Litigation charge Total Operating ...

  • Page 54
    ... Plant and Equipment, Net Capitalized Software Held for Sale Notes Receivable Goodwill Intangibles Other Assets Total Assets LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Drafts payable Accounts payable Deferred revenue Current portion of long-term debt Salaries and wages Taxes Securities...

  • Page 55
    McKESSON CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Years Ended March 31, 2005, 2004 and 2003 (Shares in thousands, dollars in millions) Common Stock Shares Amount Additional Paid-in Capital Accumulated Other ESOP Notes Comprehensive and Income (Loss) Guarantees Treasury Common ...

  • Page 56
    ... of shares under employee plans 8,996 ESOP note collections Note collections Note reserves Translation adjustment Additional minimum pension liability, net of tax of $(2.8) Net loss Unrealized loss on investments, net of tax of $(0.1) Other Cash dividends declared, $0.24 per common share Balances...

  • Page 57
    ... bad debts Securities Litigation charge Notes receivable reserve Customer settlement reserve reversal International contract loss accruals Deferred taxes Other non-cash items Total Effects of changes in: Receivables Inventories Drafts and accounts payable Deferred revenue Taxes Proceeds from sale of...

  • Page 58
    ...-aid products and equipment, and provides logistics and other services within the United States and Canada. Our Provider Technologies segment delivers enterprise-wide patient care, clinical, financial, supply chain, managed care and strategic management software solutions, automated pharmaceutical...

  • Page 59
    ... and Equipment is stated at cost and depreciated on the straight-line method at rates designed to distribute the cost of properties over estimated service lives ranging from one to 30 years. Capitalized Software Held for Sale consists of development costs for software held for sale primarily for...

  • Page 60
    ...recorded net of sales returns, allowances and rebates. Sales returns are recorded when goods are returned to us and are generally not accepted unless the inventory can be returned to the manufacturer for credit. Commencing in 2005, the Company changed its accounting policy for customer sales returns...

  • Page 61
    ... and Certain Production-Type Contracts," based on the terms and conditions in the contract. Contracts accounted for under the percentage-of-completion method are generally measured based on the ratio of labor costs incurred to date to total estimated labor costs to be incurred. Changes in estimates...

  • Page 62
    ... the consolidated statements of operations. Employee Stock Options. We account for our employee stock-based compensation plans using the intrinsic value method under Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." We apply the disclosure provisions of...

  • Page 63
    ... provided by the SEC in April 2005, SFAS No. 123(R) will become effective for us no later than 2007. The Company intends to adopt this standard using the modified prospective method of transition. This transition method requires that compensation cost be recognized for new awards granted and awards...

  • Page 64
    ... date. • In 2003, we acquired the outstanding stock of A.L.I. Technologies Inc. ("A.L.I.") for an aggregate cash purchase price of $347.0 million. A.L.I. provides digital medical imaging solutions, which are designed to streamline access to diagnostic information, automate clinical workflow...

  • Page 65
    .... Purchase prices have been allocated based on estimated fair values at the date of acquisition and may be subject to change. Pro forma results of operations for our business acquisitions have not been presented because the effects were not material to the consolidated financial statements on...

  • Page 66
    ...: Severance Exit-related costs Asset impairments Subtotal Customer settlement reserve reversals Total By Segment: Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Corporate Total Number of employees terminated (primarily in distribution, delivery and associated back-office...

  • Page 67
    ... employee severance costs. The balances at March 31, 2004 for Corporate included approximately $7 million of retirement costs, which were paid in April 2004. In addition to the above restructuring activities, we are still managing a 2001/2000 restructuring plan associated with customer settlements...

  • Page 68
    ...value using a variety of pricing techniques including discounted cash flow analyses and market transactions. 7. Other Income, Net (In millions) 2005 Years Ended March 31, 2004 2003 Interest income Equity in earnings, net Gain on sale of notes receivable Other, net Total 8. Earnings (Loss) Per Share...

  • Page 69
    ...were excluded from the computations of diluted net earnings per share in 2004 and 2003 as their exercise price was higher than the Company's average stock price. 9. Receivables, net March 31, (In millions) 2005 2004 Customer accounts Other Total Allowances Net $5,281.6 609.2 5,890.8 (159.3) $5,731...

  • Page 70
    ...: (In millions) Pharmaceutical Solutions Medical-Surgical Solutions Provider Technologies Total Balance, March 31, 2003 Goodwill acquired Translation adjustments Balance, March 31, 2004 Goodwill acquired Sale of business Translation adjustments Balance, March 31, 2005 Information regarding other...

  • Page 71
    ... under the receivables sale facility. In 2005, 2004 and 2003, we sold customer lease portfolio receivables for cash proceeds of $50.7 million, $45.4 million and $117.9 million. The employee stock ownership program ("ESOP") debt bears interest at rates ranging from 8.6% fixed rate to approximately...

  • Page 72
    ... value of our long-term debt was determined based on quoted market prices and may not be representative of actual values that could have been realized or that will be realized in the future. In the normal course of business, we are exposed to interest rate changes and foreign currency fluctuations...

  • Page 73
    ...employed by the Company prior to December 31, 1996 are covered under the Company-sponsored defined benefit retirement plan. In 1997, we amended this plan to freeze all plan benefits based on each employee's plan compensation and creditable service accrued to that date. The Company has made no annual...

  • Page 74
    ..."Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," $11.8 million in settlement charges associated with these payments were expensed in the first quarter of 2005. A reconciliation of the pension plans' funded status to the net asset...

  • Page 75
    ... equity securities Fixed income Other Total 46% 16% 31% 7% 100% 46% 17% 29% 8% 100% 46% 17% 28% 9% 100% We develop our expected long-term rate of return assumption based on the historical experience of our portfolio and the review of projected returns by asset class on broad, publicly traded...

  • Page 76
    ...us. The ESOP's outstanding borrowings are reported as long-term debt of the Company and the related receivables from the ESOP are shown as a reduction of stockholders' equity. The loans are repaid by the ESOP from interest earnings on cash balances and common dividends on shares not yet allocated to...

  • Page 77
    McKESSON CORPORATION FINANCIAL NOTES (Continued) Information regarding the changes in benefit obligations for our other postretirement plans is as follows: (In millions) Years Ended March 31, 2005 2004 Change in benefit obligations Benefit obligation at beginning of year Service cost Interest cost ...

  • Page 78
    ... tax settlements with the U.S. Internal Revenue Service and with various other taxing authorities. A large portion of this benefit, which was not previously recognized by the Company, resulted from the filing of amended tax returns by our subsidiary, McKesson Information Solutions LLC (formerly...

  • Page 79
    ... signed into law. The AJCA provides a one-time 85% dividends received deduction for certain foreign earnings that are repatriated under a plan for reinvestment in the United States, provided certain criteria are met. FSP No. 109-2 allows companies additional time to evaluate the effects of the law...

  • Page 80
    McKESSON CORPORATION FINANCIAL NOTES (Continued) Deferred tax balances consisted of the following: March 31, (In millions) 2005 2004 Assets Receivable allowances Deferred revenue Compensation and benefit-related accruals Deferred compensation Intangibles Investment valuation Securities Litigation ...

  • Page 81
    ... project costs, which are reflected in our estimates used for the percentage-of-completion method of accounting for software installation services within these contracts. In addition, most of our customers who purchase our software and automation products also purchase annual maintenance agreements...

  • Page 82
    ... Sharing and Savings Plan (the "HBOC Plan") and the McKesson Profit Sharing and Investment Plan (the "McKesson Plan"), as well as participants in those plans. On May 6, 2005, a Stipulation and Agreement of Settlement was executed for that portion of the ERISA Action that involves HBOC Plan claims...

  • Page 83
    ...single post-merger accounting oversight claim against the directors of postmerger McKesson remains to be litigated in the previously-reported action captioned: Saito, et. al. v. McCall (Civil Action No. 17132.) The Company filed its answer to the Fourth Amended Complaint in Saito on February 8, 2005...

  • Page 84
    ... customers seeking distribution services. The investigation is at an early stage, and the Company is in the process of responding to the FTC document request. In April 2005, we received a subpoena from the office of the Attorney General of the State of New York ("NYAG") requesting the production...

  • Page 85
    ... in England and Wales. The contract engages the Company to develop, implement and operate a human resources and payroll system at more than 600 NHS locations. As previously reported, there have been contract delays to date which have increased costs and decreased the amount of time in which we can...

  • Page 86
    ...repurchased shares will be used to support the Company's stock-based employee compensation plans and for other general corporate purposes. In 2005, the Board renewed the common stock rights plan. Under the renewal of the plan, effective October 22, 2004, the Board declared a dividend distribution of...

  • Page 87
    ...and 2003 we purchased $3.0 million of services per year from an equity-held investment. 22. Segments of Business Our segments include Pharmaceutical Solutions, Medical-Surgical Solutions and Provider Technologies. We evaluate the performance of our operating segments based on operating profit before...

  • Page 88
    ... to the distribution of pharmaceutical and healthcare products, our Pharmaceutical Solutions segment includes the manufacture and sale of automated pharmaceutical dispensing systems for retail pharmacies, disease management and patient and other services for payors, and software, and consulting and...

  • Page 89
    ... and healthcare products distribution business and our investment in Nadro for our Pharmaceutical Solutions segment. Our Provider Technologies business has operations in the United Kingdom, Canada and Europe. We also have a software manufacturing and a printing facility in Ireland. Net revenues were...

  • Page 90
    ... Vice President, Group President Paul E. Kirincic Executive Vice President, Human Resources Nicholas A. Loiacono Vice President and Treasurer Ivan D. Meyerson Executive Vice President, General Counsel and Secretary Marc E. Owen Executive Vice President, Corporate Strategy and Business Development...

  • Page 91
    ...Company. For information about McKesson Corporation stock or to request replacement of lost dividend checks, stock certificates, 1099-DIV's, or to have your dividend check deposited directly into your checking or savings account, stockholders may call The Bank of New York's telephone response center...

  • Page 92
    Exhibit 10.6 McKESSON CORPORATION DEFERRED COMPENSATION ADMINISTRATION PLAN ("DCAP" or "DCAP I") (Amended and Restated as of October 28, 2004)

  • Page 93
    TABLE OF CONTENTS Page A. PURPOSE B. ERISA PLAN C. PARTICIPATION AND DEFERRALS D. AMOUNTS OF DEFERRAL E. PAYMENT OF DEFERRED COMPENSATION F. SOURCE OF PAYMENT G. MISCELLANEOUS H. ADMINISTRATION OF THE PLAN I. AMENDMENT OR TERMINATION OF THE PLAN J. CLAIMS AND APPEALS K. DEFINITIONS L. SUCCESSORS M....

  • Page 94
    ... provide a select group of executives employed by the Company an opportunity to defer for later payment amounts earned as compensation. Since its original effective date, the Plan has been amended and restated on various occasions. This amendment and restatement has been approved by the Board as of...

  • Page 95
    ... of the deferred compensation using the closing price of Common Stock on the New York Stock Exchange on the day coinciding with each date on which his or her deferred compensation is credited to his or her Stock Account. If the date of credit is not a business day, then the closing price referred to...

  • Page 96
    ... may change a previous election as to form and time of payment of benefits by completing in writing and filing with the Administrator a new election of form and time of payment of benefits under this Plan from the following: a. Form. i. Payment of the amount credited to the Participant's Account in...

  • Page 97
    ... or any fiduciary holding securities under an employee benefit plan of the McKesson or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly or indirectly, by stockholders of McKesson in substantially the...

  • Page 98
    ... other fiduciary holding securities under an employee benefit plan of McKesson, at least 50% of the combined voting power of the voting securities of McKesson or such surviving entity outstanding immediately after such merger or consolidation, or (II) a merger or consolidation effected to implement...

  • Page 99
    ... of the Plan shall be the Executive Vice President, Human Resources, of McKesson. If the Executive Vice President, Human Resources, is a Participant, any discretionary action taken as Administrator which directly affects him or her as a Participant shall be specifically approved by the Compensation...

  • Page 100
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources or his...

  • Page 101
    ...Executive Vice President's review shall take into account all comments, documents, records and other information submitted by the appellant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Executive Vice President...

  • Page 102
    ... McKesson Corporation Deferred Compensation Administration Plan I ("DCAP" or "DCAP I"). 15. "Retirement" shall mean termination of employment after (a) the date on which the Participant's number of points under the Retirement Share Plan portion of the McKesson Corporation Profit-Sharing Investment...

  • Page 103
    M. EXECUTION To record the amendment and restatement of the Plan by the Board of Directors of McKesson Corporation at a meeting held on October 28, 2004. McKESSON CORPORATION By: Paul E. Kirincic Executive Vice President, Human Resources 10

  • Page 104
    Exhibit 10.7 McKESSON CORPORATION DEFERRED COMPENSATION ADMINISTRATION PLAN II ("DCAP II") (Amended and Restated as of October 28, 2004)

  • Page 105
    ... E. PAYMENT OF DEFERRED COMPENSATION F. SOURCE OF PAYMENT 1 1 1 2 3 7 7 8 8 8 10 11 11 A-1 i G. MISCELLANEOUS H. ADMINISTRATION OF THE PLAN I. J. AMENDMENT OR TERMINATION OF THE PLAN CLAIMS AND APPEALS K. DEFINITIONS L. SUCCESSORS M. EXECUTION APPENDIX A DEFERRAL OF RESTRICTED STOCK PROCEEDS

  • Page 106
    McKESSON CORPORATION DEFERRED COMPENSATION ADMINISTRATION PLAN II (Amended and Restated as of October 28, 2004) A. PURPOSE This Plan was established to enhance the Company's ability to attract and retain executive personnel and members of the Board who are not otherwise employees of the Company. The...

  • Page 107
    ... pursuant to an election executed and filed with the Administrator before the amounts so deferred are earned. 3. Notification of Participants. The Administrator shall annually notify each Eligible Executive and each Eligible Director that he or she may participate in the Plan for the next Year. Such...

  • Page 108
    ... following factors: McKesson's cost of funds, corporate tax brackets, expected amount and duration of deferrals, number and age of eligible Participants, expected time and manner of payment of deferred amounts, and expected performance of available fixed-rate insurance contracts covering the lives...

  • Page 109
    ... defer compensation, a form and time of payment of benefits under this Plan from the following: a. Form. i. Payment of the amount credited to the Participant's Account in a single sum. ii. Payment of amounts credited to the Participant's Account in any specified number of approximately equal annual...

  • Page 110
    ...death. A Participant may change the Beneficiary, from time to time, by filing a new written designation with the Administrator. Effective January 1, 2003, if the Participant fails to effectively designate a Beneficiary in accordance with the Administrator's procedures or the person designated by the...

  • Page 111
    ...Exchange Act), excluding McKesson or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of McKesson or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly...

  • Page 112
    ... any federal, state or local income tax withholding requirements and Social Security or other employment tax requirements applicable to the payment of benefits under this Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may...

  • Page 113
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources or his...

  • Page 114
    ... of denial. The appeal must be addressed to: Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, for good cause shown, may extend the period during which the appeal may be filed for another 60 days. The...

  • Page 115
    ...the Social Security Administration has determined renders the Participant eligible to receive Social Security benefits on account of disability. 9. "Eligible Director" shall mean a member of the Board described by Section C.1.b. 10. "Eligible Executive" shall mean an employee of the Company selected...

  • Page 116
    ... Account. 14. "Plan" shall mean the McKesson Corporation Deferred Compensation Administration Plan II ("DCAP II"). 15. "PSIP" shall mean the McKesson Corporation Profit-Sharing Investment Plan. 16. "Retirement" shall mean termination of employment after (a) the date on which the Participant's number...

  • Page 117
    ...") upon the tender of certain shares of restricted stock (the "Transaction Proceeds"), which had been granted to executives under the Company's 1988 Restricted Stock Plan, at the completion of the transaction involving the acquisition of PCS Health Systems, Inc. ("PCS") by Lilly (the "Transaction...

  • Page 118
    Exhibit 10.8 McKESSON CORPORATION OPTION GAIN DEFERRAL PLAN ("OGDP") (Amended and Restated as of October 28, 2004)

  • Page 119
    TABLE OF CONTENTS Page A. PURPOSE B. ERISA PLAN C. PARTICIPATION D. AMOUNTS OF DEFERRAL E. PAYMENT OF DEFERRED COMPENSATION F. SOURCE OF PAYMENT G. MISCELLANEOUS H. ADMINISTRATION OF THE PLAN I. J. AMENDMENT OR TERMINATION OF THE PLAN CLAIMS AND APPEALS 1 1 1 2 2 6 6 7 7 7 9 10 10 K. DEFINITIONS ...

  • Page 120
    ... Board who are not employed by the Company who hold exercisable stock options granted under the McKesson Corporation 1978 Stock Option Plan (the "1978 Plan") to defer the cash portion of the gain (the "Cash Gain") such individual realizes from his or her exercisable stock options in connection with...

  • Page 121
    ... such Participant (the "Account"). From the initial effective date of the Plan (January 27, 1994) through the end of Year 1994, interest was credited to each Account at an annual rate of 7.5%. Thereafter, the interest rate is set each year to the Moody's Corporate Bond Yield Average for December of...

  • Page 122
    ... defer compensation, a form and time of payment of benefits under this Plan from the following: a. Form. i. Payment of the amount credited to the Participant's Account in a single sum. ii. Payment of amounts credited to the Participant's Account in any specified number of approximately equal annual...

  • Page 123
    ...'s death. A Participant may change the Beneficiary designation from time to time by filing a new written designation with the Administrator. Effective January 1, 2003, if the Participant fails to effectively designate a Beneficiary in accordance with the Administrator's procedures or the person...

  • Page 124
    ...Exchange Act), excluding McKesson or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of McKesson or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly...

  • Page 125
    ... the satisfaction of any federal, state or local income tax withholding requirements and Social Security or other employment tax requirements applicable to deferrals under this Plan or the payment of amounts deferred under this Plan. If no other arrangements are made, the Company may provide, at its...

  • Page 126
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources or his...

  • Page 127
    ... of denial. The appeal must be addressed to: Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, for good cause shown, may extend the period during which the appeal may be filed for another 60 days. The...

  • Page 128
    ... condition which the Social Security Administration has determined renders the Participant eligible to receive Social Security benefits on account of disability. 10. "Eligible Director" shall mean a director described by Section C.1.b. 11. "Eligible Executive" shall mean an employee of the Company...

  • Page 129
    ... (a) the date on which the Participant's number of points under the Retirement Share Plan portion of the McKesson Corporation Profit-Sharing Investment Plan equals 65, (b) attaining eligibility for a Retirement Allowance under the terms of the McKesson Corporation Retirement Plan or (c) receiving an...

  • Page 130
    Exhibit 10.9 McKESSON CORPORATION MANAGEMENT DEFERRED COMPENSATION PLAN ("MDCP") (Amended and Restated as of October 28, 2004)

  • Page 131
    TABLE OF CONTENTS Page A. B. C. D. E. F. G. H. I. J. K. L. PURPOSE ERISA PLAN PARTICIPATION AMOUNTS OF DEFERRAL PAYMENT OF DEFERRED COMPENSATION SOURCE OF PAYMENT MISCELLANEOUS ADMINISTRATION OF THE PLAN AMENDMENT OR TERMINATION OF THE PLAN CLAIMS AND APPEALS DEFINITIONS SUCCESSORS 1 1 1 1 1 5 5 ...

  • Page 132
    ... and shall be effective as of such date except as otherwise set forth below. B. ERISA PLAN This Plan is an unfunded deferred compensation program for a select group of management employees of the Company and members of the Board who are not employed by the Company. The Plan, therefore, is covered...

  • Page 133
    ...'s annual meeting of stockholders next following the Eligible Director's 72nd birthday. An Eligible Executive or Eligible Director may alter the period of deferral, provided that: a. such alteration is made at least one year prior to the earliest date the Participant could have received distribution...

  • Page 134
    ... time of any election to defer compensation under the Plan of the time and form in which any amount remaining in the Participant's Account at the time of the Participant's death shall be paid to his or her Beneficiary. Such election shall be made in writing and filed with the Administrator. Benefits...

  • Page 135
    ...Exchange Act), excluding McKesson or any of its subsidiaries, a trustee or any fiduciary holding securities under an employee benefit plan of McKesson or any of its subsidiaries, an underwriter temporarily holding securities pursuant to an offering of such securities or a corporation owned, directly...

  • Page 136
    ... any federal, state or local income tax withholding requirements and Social Security or other employment tax requirements applicable to the payment of benefits under this Plan. If no other arrangements are made, the Company may provide, at its discretion, for such withholding and tax payments as may...

  • Page 137
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources or his...

  • Page 138
    ... of denial. The appeal must be addressed to: Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, for good cause shown, may extend the period during which the appeal may be filed for another 60 days. The...

  • Page 139
    ...mean the McKesson Corporation Management Deferred Compensation Plan ("MDCP"). 15. "Retirement" shall mean termination of employment after (a) the date on which the Participant's number of points under the Retirement Share Plan portion of the McKesson Corporation Profit-Sharing Investment Plan equals...

  • Page 140
    ... on the Company and any successors or assigns thereto. M. EXECUTION To record the amendment and restatement of the Plan by the Board of Directors of McKesson Corporation at a meeting held on October 28, 2004. McKESSON CORPORATION By: Paul E. Kirincic Executive Vice President, Human Resources 9

  • Page 141
    Exhibit 10.10 McKESSON CORPORATION EXECUTIVE BENEFIT RETIREMENT PLAN (Amended and Restated as of October 28, 2004)

  • Page 142
    McKESSON CORPORATION EXECUTIVE BENEFIT RETIREMENT PLAN TABLE OF CONTENTS A. PURPOSE B. ERISA PLAN C. PARTICIPATION D. BENEFITS ON APPROVED RETIREMENT E. DEATH BENEFITS F. TERMINATION BEFORE APPROVED RETIREMENT G. SPECIAL FORFEITURE AND REPAYMENT RULES H. METHOD OF PAYMENT I. SOURCE OF PAYMENT J. ...

  • Page 143
    ...receive benefits under any other Company-paid plan, program or agreement that provides Company Executives, or the individual Executive, with retirement benefits that supplement or are in addition to the benefits under the Retirement Plan, Profit-Sharing Investment Plan or Supplemental Profit-Sharing...

  • Page 144
    ... by (2) the Executive's Basic Retirement Benefits. The percentage stated in clause (1) may be specified by the Compensation Committee or may be specified in the Executive's written employment contract with the Company. Unless otherwise determined by the Compensation Committee, the percentage of...

  • Page 145
    ..., however, that the benefits payable under this Plan and any other plan be paid in the same form or at the same time. 2. Time of Payment. The benefits provided on Approved Retirement shall commence on the first day of the month following the date the Executive's Service terminates. 3. Reduction for...

  • Page 146
    ...An Executive may change his or her beneficiary, from time to time, by filing a new written designation with the Administrator. If the Executive is married, any beneficiary designation which does not designate the Executive's spouse to receive at least one-half of the benefit payable on the Executive...

  • Page 147
    ...other applicable provisions in this Plan, an Executive who terminates employment with the Company other than on Approved Retirement or death shall be entitled to receive, beginning at age 65, monthly payments equal to his Termination Benefits. An Executive's Termination Benefits are equal to (1) the...

  • Page 148
    ... or the aggregate number of the Executive's Years of Service before the Break in Service. b. Basic Retirement Benefits. For purposes of this Section F, an Executive's Basic Retirement Benefits shall be determined at the time that the Executive terminates employment with the Company, calculating all...

  • Page 149
    ... to the Company and obtained by the Executive during the term of the Executive's employment, whether or not they are the Executive's work product. Examples of such confidential information or trade secrets include (but are not limited to) customer lists, supplier lists, pricing and cost data...

  • Page 150
    ... information, research and development plans, processes, equipment, product information and all other types and categories of information as to which the Executive knows or has reason to know that the Company intends or expects secrecy to be maintained. c. Fails to promptly return all documents...

  • Page 151
    ...'s spouse to be effective. Such election shall become effective when filed with the Administrator and must be filed before the Executive's termination of employment with the Company. 3. Lump Sum Distribution. An Executive whose employment terminates by reason of an Approved Retirement on or after...

  • Page 152
    ... settlement agreement that provides for any additional rights and privileges already not already provided under the Plan, including without limitation with respect to form and time of payment. 3. Fiduciary Insurance. The Company may purchase insurance for its directors, officers, employees and...

  • Page 153
    ... Vice President, Human Resources of McKesson under the direction of the Compensation Committee. If the Executive Vice President, Human Resources, is an Executive participating in the Plan, then any discretionary action taken as Administrator which directly affects the Executive Vice President, Human...

  • Page 154
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources, or his...

  • Page 155
    ...Executive Vice President's review shall take into account all comments, documents, records and other information submitted by the appellant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The Executive Vice President...

  • Page 156
    ... employment with the Company, divided by the number of whole and partial years of service. 4. "Basic Retirement Benefits" shall mean the monthly annuity benefit payable under the Retirement Plan and a hypothetical monthly annuity benefit payable to the Executive under the Profit-Sharing Investment...

  • Page 157
    ... the Board. 10. "Deferred Compensation Administration Plan II" or "DCAP II" shall mean the McKesson Corporation Deferred Compensation Administration Plan II. 11. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. 12. "Executive" shall mean an employee of the Company...

  • Page 158
    ... 31, 2016. 21. "Supplemental Profit-Sharing Investment Plan" or "Supplemental PSIP" shall mean the McKesson Corporation Supplemental ProfitSharing Investment Plan. 22. "Termination Benefits" shall mean those benefits specified in Section F.l.a. 23. "Year of Service" shall mean a period of 365...

  • Page 159
    P. EXECUTION To record the amendment and restatement of the Plan by the Board of Directors of McKesson Corporation at a meeting held on October 28, 2004. McKESSON CORPORATION By: Paul E. Kirincic Executive Vice President, Human Resources 17

  • Page 160
    McKESSON CORPORATION EXECUTIVE BENEFIT RETIREMENT PLAN APPENDIX A SAMPLE CALCULATION EARLY RETIREMENT Executive retires at age 59, three years early, with 25 Years of Service Final Average Compensation: Percentage of Final Average Compensation specified under the Plan: 60% (20% + 1.77% for each of ...

  • Page 161
    ... Adjusted Objective LESS: Retirement Plan Spouse Allowance and annuitized value of PSIP Retirement Share Plan Account Annual EBRP Survivor Benefit NOTE: As intended, the Plan Survivor Benefit provides a supplement to the Retirement Plan and the PSIP so that the total of these sources of Company...

  • Page 162
    McKESSON CORPORATION EXECUTIVE BENEFIT RETIREMENT PLAN APPENDIX C SAMPLE CALCULATION TERMINATION BEFORE APPROVED RETIREMENT Executive is hired at age 40 and terminated at age 50. Final Average Compensation: Percentage of Final Average Compensation specified under the Plan: Pro Rata Percentage ...

  • Page 163
    Exhibit 10.11 McKESSON CORPORATION EXECUTIVE SURVIVOR BENEFITS PLAN (Amended and Restated as of October 28, 2004)

  • Page 164
    ...C. PARTICIPATION D. SURVIVOR BENEFITS E. TERMINATION OF EMPLOYMENT OTHER THAN ON APPROVED RETIREMENT OR DEATH F. SPECIAL FORFEITURE RULES G. SOURCE OF PAYMENT H. MISCELLANEOUS I. ADMINISTRATION OF THE PLAN 1 1 1 2 3 4 6 6 7 7 7 9 10 10 i J. AMENDMENT OR TERMINATION OF THE PLAN K. CLAIMS AND APPEALS...

  • Page 165
    ... approved by the Board as of October 28, 2004 and shall be effective as of such date except as otherwise set forth below. B. ERISA PLAN This Plan is a welfare benefit program intended primarily for a select group of management or highly compensated employees of the Company. The Plan, therefore, is...

  • Page 166
    ...any Company retirement plan, compensation plan, deferred compensation plan, excess benefit plan, any group life insurance or survivor benefit plan made generally available by the Company to all employees. This provision shall not preclude the payment of survivor benefits which are earned and payable...

  • Page 167
    ...her final Annual Base Salary. c. Any amount determined under Section E.1.a or Section E.1.b shall be reduced by any death or survivor benefit (other than a retirement benefit paid under a tax qualified retirement plan) payable on account of service rendered by the Executive to another employer after...

  • Page 168
    ... Plan and the McKesson Corporation 1984 Management Benefit Plan; an Executive who would have completed five or more years (i) if his or her employment was not terminated by the Company in violation of his or her Employment Agreement or (ii) if his or her employment was not terminated for "good...

  • Page 169
    ... to the Company and obtained by the Executive during the term of the Executive's employment, whether or not they are the Executive's work product. Examples of such confidential information or trade secrets include (but are not limited to) customer lists, supplier lists, pricing and cost data...

  • Page 170
    ... time, unless such benefits are payable from the proceeds of an insurance policy. Such benefits shall be exempt from the claims of creditors or other claimants and from all orders, decrees, levies, garnishments, or executions to the fullest extent allowed by law. 3. Applicable Law and Severability...

  • Page 171
    ... make a written request for review of any matter concerning his or her benefits under this Plan. The claim must be addressed to the Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, Human Resources or his...

  • Page 172
    ... of denial. The appeal must be addressed to: Executive Vice President, Human Resources, McKesson Corporation, One Post Street, San Francisco, California 94104. The Executive Vice President, for good cause shown, may extend the period during which the appeal may be filed for another 60 days. The...

  • Page 173
    ... notice shall state that the appellant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits. The notice shall describe any voluntary appeal procedures offered by the Plan and the...

  • Page 174
    ... 15. "Retirement Plan" shall mean the McKesson Corporation Retirement Plan. 16. "Tax Factor" shall mean one divided by one minus the Top Marginal Rate of Tax. 17. "Top Marginal Rate of Tax" shall be the highest combined marginal individual federal and state income tax rate, if any (giving effect to...

  • Page 175
    To record the amendment and restatement of the Plan by the Board of Directors of McKesson Corporation at a meeting held on October 28, 2004. McKESSON CORPORATION By: Paul E. Kirincic Executive Vice President, Human Resources 11

  • Page 176
    McKESSON CORPORATION EXECUTIVE SURVIVOR BENEFITS PLAN Appendix I This Appendix illustrates the calculation of benefits under Section D.1 of the Plan. A. Assumptions Executive is subject to California Income Tax. Executive's Annual Base Salary: $350,000 Top Marginal Rate of Tax: Top Federal Rate: 28...

  • Page 177
    ... below) times 1-1/2 times the Executive's final Annual Base Salary at the date of his or her termination of employment (or $1 million, if smaller) multiplied by the Tax Factor, and reduced by any death or survivor benefit payable to a beneficiary of the Executive on account of service rendered to...

  • Page 178
    ... Under Section D Under Section J, benefits are determined under Section D by treating the date the Plan is terminated as the date the Executive terminated employment, as follows: Pro Rata Percentage: 66-2/3% Greater of (a) whole months of service divided by total whole months from hire to age...

  • Page 179
    Exhibit 10.12 McKESSON CORPORATION EXECUTIVE MEDICAL PLAN (As Amended and Restated Effective January 1, 2004)

  • Page 180
    ... OF DEPENDENTS ENROLLMENT PERIODS CESSATION OF PARTICIPATION MEDICAL, DENTAL, VISION AND DRUG BENEFITS GENERAL PLAN EXCLUSIONS COBRA CONTINUATION COVERAGE CLAIMS AND APPEALS COORDINATION OF BENEFITS PAYMENT OF BENEFITS SOURCE OF CONTRIBUTIONS ADMINISTRATION OF THE PLAN DURATION AND AMENDMENT OF THE...

  • Page 181
    ... time the claim was incurred. B. ERISA PLAN This Plan is a welfare benefit plan intended primarily for a select group of management or highly compensated employees of the Company. The Plan therefore is covered by Title I of ERISA except that it is exempt from the reporting and disclosure provisions...

  • Page 182
    ...in the Plan by the Compensation Committee, he or she shall be treated, solely for purposes of this Plan, as if he or she had terminated his or her employment with the Company for reasons other than Approved Retirement. Prior to January 1, 2004, the Board had reserved to itself the power to designate...

  • Page 183
    ... or participant in the other medical plan to pay premiums on a timely basis, or (ii) misconduct such as making a fraudulent claim or intentionally misrepresenting a material fact in connection with the prior plan. Coverage pursuant to this section will become effective on the date of the election. 4

  • Page 184
    ... Service on that date. If the Executive is not in Active Service on that date, coverage will become effective on the date he returns to Active Service. 4. Procedures with Respect to Medical Child Support Orders. In the event that a Medical Child Support Order is received by the Plan, the Company...

  • Page 185
    ... determined by the Company; or b. The date that the Executive terminates employment with the Company, unless the Executive retires from the Company under an Approved Retirement and is eligible to receive benefits under the McKesson Corporation Retirement Plan; or c. The date the Executive enters the...

  • Page 186
    ... Uniformed Services Employment and Reemployment... required by the Plan or the Insurance Company; and (4) the...terms of the Plan. 5. Certificate of Group Health Plan Coverage. An Executive or a Dependent having coverage will receive a Certificate of Creditable Coverage upon losing coverage under the Plan...

  • Page 187
    ...eligible to participate under the terms of this Plan in order to obtain benefits under the insurance contract or contracts. H. GENERAL PLAN EXCLUSIONS Coverage under the Plan is not provided for any of the following charges: 1. Those for care, treatment, services, or supplies that are not prescribed...

  • Page 188
    ...same drug, device, procedure, or treatment states that it is experimental, investigational, or for research purposes. However, this exclusion will not apply with respect to services or supplies (other than drugs) received in connection with a disease; if the Insurance Company determines that: i. the...

  • Page 189
    ...is health coverage. 9. Those that a covered person is not legally obliged to pay. 10. Those, as determined by the Insurance Company, to be for custodial care. 11. To the extent allowed by the law of the jurisdiction where the group contract is delivered, those for services and supplies: a. Furnished...

  • Page 190
    ...any drug provided on an outpatient basis in any health care facility to the extent benefits are paid for it under any other part of this Plan or under any other medical or prescription drug expense benefit plan carried or sponsored by the Company. 26. Those for immunization agents. 27. Those for any...

  • Page 191
    ...mail order pharmacy. 32. Any other item excluded in the Certificate of Coverage provided by the Insurance Company. 33. Any exclusion above will not apply to the extent that coverage of the charges is required under any law... date the Executive notifies the Company that he will not return to employment...

  • Page 192
    ... of Group Health Plan Coverage upon losing COBRA Continuation Coverage for any reason. This Certificate offers proof that the individual had been covered under the McKesson Corporation Executive Medical Plan, and it may allow the individual to receive credit toward a new health plan's waiting...

  • Page 193
    ... any preexisting condition of that individual; or iii. The date after the election of COBRA Continuation Coverage when the individual first becomes covered by and entitled to Medicare; or iv. The date when the employer ceases to provide any group health plan to any employee; or v. The date specified...

  • Page 194
    ending date, if a Covered Executive or Dependent is determined by the Social Security Administration to be disabled under Title II or XVI of the Social Security Act at any time during the first 60 days of COBRA Continuation Coverage and notifies the Company of such determination within 18 months ...

  • Page 195
    ... for notifying the Company or employing subsidiary of a later final determination by the Social Security Administration that such individual is no longer disabled within 30 days following such determination. d. Notice to the Insurance Company. As often as the Company or a party to whom such...

  • Page 196
    ... section 4980B(f) of the Code, or (ii) the actual cost to the Plan for the preceding year for such similarly situated beneficiaries, adjusted by the percentage increase or decrease in the implicit price deflator of the gross national product (calculated by the Department of Commerce and published in...

  • Page 197
    ... the claim form. The Insurance Company may request that the Participant give the Insurance Company written authorization to obtain information from the Participant's Physician pertaining to the diagnosis and related matters. Except as otherwise stated below, claims for benefits under this Plan must...

  • Page 198
    ... the claimant's Concurrent Care Claim is also an Urgent Care Claim to extend a previously approved on-going course of treatment provided over a period of time or number of treatments, the Insurance Company will make a determination as soon as possible, taking into account the medical exigencies, and...

  • Page 199
    ... time or number of treatments, and the claimant requests to extend treatment in a non-urgent circumstance, the claimant's request will be considered a new claim and decided according to the PostService Claim or Pre-Service Claim time limits, whichever applies. If the claimant's Concurrent Care Claim...

  • Page 200
    ... claim and any other information or evidence which the claimant intends the Insurance Company to consider in order to render a decision on review. A claimant requesting an appeal of a denied Urgent Care Claim may initiate an expedited appeal by calling the Insurance Company at the toll-free number...

  • Page 201
    ... in making the benefit determination. d. Decision on First Review. The Insurance Company shall act upon each request for a first review within the time frames indicated in the chart below. Urgent Care Claim Pre-Service Claim Post-Service Claim Not later than 36 hours after receiving the appeal Not...

  • Page 202
    ... the second appeal. iii. For Post-Service Claims, not later than 30 days after receiving the second appeal. In the event that the Insurance Company determines on second review that benefits are payable under the Plan, the Insurance Company will process payment of the claim in accordance with the...

  • Page 203
    ...which a claim is made. No action at law or in equity shall be brought to recover a benefit unless and until the claimant has: a. Submitted a written claim for benefits; and b. Been notified by the Insurance Company that the claim is denied; and c. Timely filed a written request for a first review of...

  • Page 204
    ... room is medically necessary, either in terms of generally accepted medical practice or as specifically defined in the Plan and the Insurance Contract. d. Other Plans. As used in this Section K., the term "other plans" means any other plan of health expense coverage under group insurance or any...

  • Page 205
    ...iv do not establish an order of payment, the plan under which the person has been covered for the longest will be deemed to pay its benefits first; except that the benefits of a plan which covers the person on whose expenses a claim is based as a laid off or retired employee or the dependent of such...

  • Page 206
    ... reduced by any Medicare benefits available for those expenses. This reduction will be done before the health benefits of the Plan are figured. ii. Charges used to satisfy a persons Medicare Part B deductible will be applied under the Plan in the order received by the Insurance Company. Two or more...

  • Page 207
    ..., health care service plans or any organizations. L. PAYMENT OF BENEFITS 1. Payment of Claims. The Insurance Company will process a claim in accordance with this Section L promptly after it receives complete proof of the claim. If the Insurance Company finds that the claim is payable under the Plan...

  • Page 208
    ... Company otherwise at the time the claim is filed. Notwithstanding the foregoing, if the Plan has received a Qualified Medical Child Support Order, payment will be made to the Alternate Recipient's custodial parent or legal guardian, unless payment directly to the provider of services or supplies...

  • Page 209
    ... of such proceeds and c. To provide the Plan with a lien and order directing reimbursement of medical payments against any damages collected against a third party or under no fault automobile insurance, whether in a legal judgment, settlement or otherwise provided, however, that such reimbursement...

  • Page 210
    ... upon the Compensation Committee, the Company or its Officers, members of its Board of Directors or shareholders. N. ADMINISTRATION OF THE PLAN 1. In General. The Plan shall be administered by the Senior Vice President, Human Resources of McKesson. If the Senior Vice President, Human Resources is an...

  • Page 211
    ... the Plan at any time. The Company, acting through the Board of Directors, may delegate the power and authority to amend the Plan to other designated Company employees. The Company has delegated the power and authority to amend the Plan to the Vice President of Human Resources and Administration as...

  • Page 212
    ... the [McKesson Corporation Retirement Plan] with the approval of the Compensation Committee). 4. "Board" shall mean the Board of Directors of McKesson. 5. "Company" shall mean McKesson Corporation and any member of its controlled group as defined by Sections 414(b) and 414(c) of the Internal Revenue...

  • Page 213
    ... provide benefits under the Plan. 13. "Insurance Contract" shall mean the group health insurance contract or contracts issued to the Company by the Insurance Company pursuant to the Plan. 14. "McKesson" shall mean McKesson Corporation, a Delaware corporation. 15. "Medical Child Support Order" shall...

  • Page 214
    ... Alternate Recipient the right to, receive benefits for which a Member or beneficiary is eligible under the Plan, and satisfies the requirements stated in a. and b. below: a. A Qualified Medical Child Support Order must clearly specify: i. The name and last known mailing address of the Member and of...

  • Page 215
    ... This Plan Document has been restated and adopted by McKesson Corporation and such adoption is certified to by the undersigned Officer of the Company to be effective January 1, 2004, except as otherwise stated herein. McKesson Corporation By Paul E. Kirinic Senior Vice President, Human Resources 36

  • Page 216
    ... RESTATED RECEIVABLES PURCHASE AGREEMENT dated as of June 11, 2004 among CGSF FUNDING CORPORATION, as Seller, McKESSON CORPORATION, as Servicer, THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO, THE COMMITTED PURCHASERS FROM TIME TO TIME PARTY HERETO, THE MANAGING AGENTS FROM TIME TO TIME PARTY...

  • Page 217
    ...of this Agreement Section 5.2 Conditions Precedent to All Purchases and Reinvestment ARTICLE VI COVENANTS Section 6.1 Affirmative Covenants of the Seller Parties Section 6.2 Negative Covenants of the Seller Parties ARTICLE VII ADMINISTRATION AND COLLECTION Section 7.1 Designation of Servicer Section...

  • Page 218
    ....3 Additional Purchaser Groups; Joinder by Conduit Purchaser Section 11.4 Extension of Liquidity Termination Date Section 11.5 Terminating Committed Purchasers ARTICLE XII MISCELLANEOUS Section 12.1 Waivers and Amendments Section 12.2 Notices Section 12.3 Ratable Payments Section 12.4 Protection of...

  • Page 219
    ...Documents to Be Delivered to the Managing Agents on or Prior to the Effective Date iii Definitions Form of Purchase Notice Form of Reduction Notice Places of Business of the Seller Parties; Locations of Records; Federal Employer Identification Number(s) Names of Collection Banks; Collection Accounts...

  • Page 220
    ..., capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I. PRELIMINARY STATEMENTS WHEREAS, Seller, McKesson, PREFCO, Falcon, Blue Ridge, Liberty Street, Wachovia, Scotia and Bank One are parties to that certain Receivables Purchase Agreement dated as...

  • Page 221
    ...provided that only one Business Day's notice period shall be required in connection with the initial purchase hereunder. Each Purchase Notice shall be subject to Section 5.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested Purchase Price (which shall not be...

  • Page 222
    ...(Chicago time) shall be deemed to be received on the next succeeding Business Day. If such amounts are payable to a Purchaser they shall be paid to the related Managing Agent, for the account of such Purchaser, at its address listed beneath its signature on its signature page to this Agreement until...

  • Page 223
    ... be remitted to the Managing Agents' respective accounts no later than 12:00 noon (Chicago time) to the extent required to fund any Aggregate Reduction on such Settlement Date, applied ratably in accordance with the Pro Rata Share of each such Managing Agent's Purchaser Group and (ii) any balance...

  • Page 224
    ...(ii) each Managing Agent shall apply such amounts to reduce the Aggregate Capital and any other Aggregate Unpaids due and payable to the related Purchaser Group. Section 2.4 Application of Collections. If there shall be insufficient funds on deposit for the Servicer to distribute funds in payment in...

  • Page 225
    ... Liquidity Agreement, each Purchaser Interest so assigned shall each be deemed to have a new Tranche Period commencing on the date of any such assignment. Section 3.2 Yield Payments. On the Settlement Date for each Purchaser Interest, Seller shall pay to each Managing Agent (for the benefit of...

  • Page 226
    ... Committed Purchaser receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such notifying Committed Purchaser's Pro Rata Share of the Capital and Yield owing to all of the Committed Purchasers and all accrued but unpaid fees and other costs and expenses payable in...

  • Page 227
    ...Agent, the Managing Agents and the Purchasers, as to itself, that: (a) Corporate Existence and Power. Such Seller Party is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and is duly qualified to do business and is in good standing as...

  • Page 228
    ... the Purchasers) ownership interest in the Receivables, the Related Security and the Collections. (k) Places of Business. The principal places of business and chief executive office of such Seller Party and the offices where it keeps all of its Records are located at the addresses listed on Exhibit...

  • Page 229
    ... performed. The names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts of Seller at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit IV. (m) Material Adverse Effect. (i) The initial Servicer represents and...

  • Page 230
    ... each Receivables Sale Agreement was an Eligible Receivable on such purchase date. (v) Net Receivables Balance. Each Seller Party has determined that, immediately after giving effect to each purchase hereunder, the Net Receivables Balance is at least equal to the sum of (i) the Aggregate Capital...

  • Page 231
    ... or articles of incorporation, formation or association or by-laws or limited liability company agreement, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order...

  • Page 232
    ...paid on the Effective Date pursuant to the terms of that certain letter agreement of even date herewith among the Seller, McKesson, STCM, BTM and Rabobank; and (f) Each of the Collateral Agent and each Managing Agent and each Purchaser shall have received such other approvals and documents as it has...

  • Page 233
    ..., from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Seller Party as the Collateral Agent or any Managing Agent may from time to time reasonably request in order to protect the interests...

  • Page 234
    ... to the Collateral Agent and the Managing Agents on the date that such report, statement or other material is posted on the EDGAR system of the Securities and Exchange Commission or the website of the Originator at www.mckesson.com. (b) Notices. Such Seller Party will notify the Collateral Agent and...

  • Page 235
    ...and the related Contract, except, in each case, where the failure to so comply would not result in a Material Adverse Effect. Seller will pay when due any taxes payable in connection with the Receivables, exclusive of taxes on or measured by income or gross receipts of the Purchasers, the Collateral...

  • Page 236
    ...to the Receivables, the Related Security and the Collections purchased under the Tier Two Receivables Sale Agreement irrevocably in Seller, free and clear of any Adverse Claims other than Adverse Claims in favor of the Collateral Agent and the Purchasers (including, without limitation, the filing of...

  • Page 237
    ... thereof that include Seller and that are filed with the Securities and Exchange Commission or any other governmental agency have notes stating to the effect that Seller is a separate corporate entity and that its assets will be available to satisfy the claims of the creditors of Seller and of...

  • Page 238
    ... of Incorporation or By-Laws in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 6.1(i) of this Agreement; (N) maintain the effectiveness of, and continue to perform under the Receivables Sale...

  • Page 239
    ... or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Collateral Agent as contemplated by this Agreement. (k) Taxes. Such Seller Party shall file all tax returns and reports required by law to be filed by it and shall promptly pay all taxes and...

  • Page 240
    ... in Section 7.2(d), the Servicer will not, and will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. (d) Sales, Liens. Seller shall not sell, assign (by operation of law or otherwise) or...

  • Page 241
    ... Date arising pursuant to Section 5.1(d) of either Receivables Sale Agreement. ARTICLE VII ADMINISTRATION AND COLLECTION Section 7.1 Designation of Servicer. (a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the "Servicer") so designated from time...

  • Page 242
    ... all Obligors to pay all Collections directly to a Lock-Box or Collection Account. The Servicer shall cause a Collection Account Agreement to be in effect at all times with respect to each Collection Account. In the case of any remittances received in any Lock-Box or Collection Account that shall...

  • Page 243
    ...long as McKesson shall continue to perform as Servicer hereunder, the Seller shall pay over to McKesson on each Monthly Settlement Date, in accordance with the priority of payments set forth in Article II, a fee (the "Servicing Fee") equal to (i) one percent (1%) of the average daily Net Receivables...

  • Page 244
    ... Collection Period, times (ii) 1/12, as compensation for its servicing activities. Section 7.7 Financial Covenant. McKesson agrees that it will, as of the end of each calendar month, maintain a ratio of Total Debt to Total Capitalization of not greater than 0.565 to 1.00. ARTICLE VIII AMORTIZATION...

  • Page 245
    any corporate action to authorize any of the actions set forth in clause (i) above in this subsection (d). (e) The aggregate Purchaser Interests shall exceed 100% and shall continue as such until the earlier of (i) one Business Day following the date any Seller Party has actual knowledge thereof and...

  • Page 246
    ... Agent, the Managing Agents and each Purchaser and their respective assigns, officers, directors, agents and employees (each an "Indemnified Party") from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable...

  • Page 247
    ... Seller or the Servicer) relating to or resulting from: (i) any representation or warranty made by any Seller Party, CGSF or the Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by...

  • Page 248
    ... statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivable, the Related Security and Collections with respect thereto, and the proceeds of any thereof, whether at the time of any Incremental Purchase...

  • Page 249
    ...this Agreement or such documents, or the administration of this Agreement following an Amortization Event. Section 9.4 Withholding Tax Exemption. (a) At least five (5) Business Days prior to the first date on which any amount is payable hereunder for the account of any Purchaser, each Purchaser that...

  • Page 250
    ... as may be reasonably requested by Seller or the related Managing Agent, in each case certifying that such Purchaser is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless any change in any treaty, law or regulation has...

  • Page 251
    ...any of the Purchasers for any recitals, statements, representations or warranties made by any Seller Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this...

  • Page 252
    ... Agent, in connection with the administration and enforcement of this Agreement and the other Transaction Documents. The Committed Purchasers in each Purchaser Group agree to reimburse and indemnify the related Managing Agent and its respective officers, directors, employees, representatives and...

  • Page 253
    ... Transaction Documents and Seller and the Servicer (as applicable) shall make all payments in respect of the Aggregate Unpaids directly to the applicable Purchasers and for all purposes shall deal directly with the Purchasers. After the effectiveness of any retiring Collateral Agent's or Managing...

  • Page 254
    ... Committed Purchaser receives payment in full, pursuant to an Assignment Agreement, of an amount equal to such Committed Purchaser's Pro Rata Share of the Aggregate Capital and Yield owing to the Committed Purchasers and all accrued but unpaid fees and other costs and expenses payable in respect...

  • Page 255
    ... Purchasers party to such Joinder Agreement. On or prior to the effective date of such Joinder Agreement, the Seller, each new Purchaser and the new Managing Agent shall enter into a Fee Letter for purposes of setting forth the fees payable to the members of such Purchaser Group in connection...

  • Page 256
    ... such Purchaser Group (and each Conduit Purchaser in such Purchaser Group that has any Capital outstanding at such time) may, upon written notice to the Servicer, the Seller and the Collateral Agent, elect to become, and shall become, Terminating Committed Purchasers effective on the date specified...

  • Page 257
    ... or the Servicer, (B) reduce the rate or extend the time of payment of Yield (or any component thereof), (C) reduce any fee payable to the Collateral Agent or the Managing Agents for the benefit of the Purchasers, (D) except pursuant to Article XI hereof, change the amount of the Capital of any...

  • Page 258
    ... given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 12.2. Seller hereby authorizes the Collateral Agent to effect purchases and...

  • Page 259
    ... that such Seller Party and such Purchaser and its officers and employees may disclose such information to such Seller Party's and such Purchaser's external accountants and attorneys and as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or...

  • Page 260
    ... are solely the corporate obligations of such Conduit Purchaser. No recourse shall be had for any obligation or claim arising out of or based upon any Transaction Document against any stockholder, employee, officer, director or incorporator of such Conduit Purchaser. The agreements in this section...

  • Page 261
    ... MANAGING AGENT OR ANY PURCHASER OR ANY AFFILIATE OF ANY SUCH PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH SELLER PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW...

  • Page 262
    ...iv) to provide credit or liquidity enhancement for the timely payment for one or more Conduit Purchaser's Commercial Paper and (v) to provide other services from time to time for some or all of the Purchasers (collectively, the "Bank One Roles"). Without limiting the generality of this Section 12.13...

  • Page 263
    ...person arising in connection with the Receivables, the Related Security, or the related Contracts, or any other obligations of Seller, CGSF or the Originator. (b) The Seller hereby grants to the Collateral Agent for the ratable benefit of the Purchasers a valid and perfected security interest in all...

  • Page 264
    ... Fax: (415) 983-9369 McKESSON CORPORATION, as the Servicer By: /s/ Nicholas A. Loiacono Name: Nicholas A. Loiacono Title: Vice President and Treasurer Address: One Post Street San Francisco, California 94104 Fax: (415) 983-9369 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 265
    ...By: /s/ George S. Wilkins Name: George S. Wilkins Title: Director, Capital Markets Address: Bank One, NA (Main Office Chicago) Asset Backed Finance Suite 0596, 1-21 1 Bank One Plaza Chicago, Illinois 60670-0596 Fax: (312) 732-4487 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 266
    ... ASSET FUNDING CORPORATION, as a Conduit Purchaser By: Wachovia Capital Markets, LLC, as Attorney-In-Fact By: /s/ Douglas R. Wilson Name: DOUGLAS R. WILSON, SR. Title: VICE PRESIDENT Address: 301 South College Street Charlotte, NC 28288 Fax: (704) 383-9579 WACHOVIA BANK, NATIONAL ASSOCIATION., as...

  • Page 267
    ... WACHOVIA BANK, NATIONAL ASSOCIATION., as a Committee Purchaser and a Managing Agent By: /s/ Gary G. Fleming Name: Gary G. Fleming Jr. Title: Director Address: 191 Peachtree Street, NE Atlanta, Georgia 30303 Fax: (404) 332-5152 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 268
    ...: Vice President Address: c/o Global Securitization Services, LLC 445 Broadhollow Road, Suite 239 Melville, New York 11747 Attention: Andrew L. Stidd Fax: (212) 302-8767 THE BANK OF NOVA SCOTIA, as a Committed Purchaser and as Managing Agent By: Name: Title: Address: One Liberty Plaza New York, New...

  • Page 269
    ...-8767 THE BANK OF NOVA SCOTIA, as a Committed Purchaser and as Managing Agent /s/ Michael Eden By: Name: MICHAEL EDEN Title: DIRECTOR Address: One Liberty Plaza New York, New York 10006 Attention: Michael Eden Fax: (212) 225-5090 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 270
    ...: (704) 365-1362 SUNTRUST CAPITAL MARKETS, INC., as Managing Agent By: Name: Title: Address: 303 Peachtree Street, NE 24 th Floor, MC 3950 Atlanta, Georgia 30308 Attention: Securitization Asset Management Group Fax: (404) 813-5000 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 271
    ... Agent By: /s/ James R. Bennison Name : James R. Bennison Title: Managing Director Address: 303 Peachtree Street, NE 24 th Floor, MC 3950 Atlanta, Georgia 30308 Attention: Securitization Asset Management Group Fax: (404) 813-5000 Signature Page to Amended and Restated Receivables Purchase Agreement

  • Page 272
    ... Management Corporation One International Plaza Boston, MA 02110 Attention: Nancy D. Smith Fax: (617) 951-7050 Tel: (617) 951-7690 THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as a Managing Agent and a Committed Purchaser By: Name: Title: Address: 1251 Avenue of the Americas New York, New...

  • Page 273
    ... CORPORATION, as a Conduit Purchaser By: Name: Title: Address: c/o J.H. Management Corporation One International Plaza Boston, MA 02110 Attention: Nancy D. Smith Fax: (617) 951-7050 Tel: (617) 951-7690 THE BANK OF TOKYO-MITSUBISHI, LTD., NEW YORK BRANCH, as a Managing Agent and a Committed Purchaser...

  • Page 274
    NIEUW AMSTERDAM RECEIVABLES CORPORATION, as a Conduit Purchaser By: /s/ Tony Wong Name: Tony Wong Title : Vice President Address: c/o Global Securitization Services, LLC 445 Broadhollow Road, Suite 239 Melville, New York 11747 Attention: Tony Wong Fax: (212) 302-8767 COOPERATIEVE CENTRALE ...

  • Page 275
    ... Name: James Han Title: Vice President By: /s/ Brett Delfino Name: Brett Delfino Title: Executive Director Address: Rabobank International, New York Branch 245 Park Avenue New York, New York 100167 Attention: Neetu Mohan Fax: (212) 309-5120 Signature Page to Amended and Restated Receivables Purchase...

  • Page 276
    ... direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise. "Collateral Agent" has the meaning set forth in the preamble to this Agreement. "Aggregate Capital" means, at any time, the sum of all Capital of all Purchaser Interests...

  • Page 277
    ...has the meaning specified in Article VIII. "Applicable Margin" means, on any date and with respect to each funding made at the LIBO Rate, the number of basis points per annum set forth under the heading "Eurodollar Rate +" which corresponds to the "Debt Rating" of McKesson on such date, under and as...

  • Page 278
    ... International, New York Branch as its "base rate" and (ii) 0.50% per annum above the Rabobank Federal Funds Rate. "Blue Ridge" means Blue Ridge Funding Corporation, in its individual capacity, and its successors. "Broken Funding Costs" means for any Purchaser Interest which: (i) has its Capital...

  • Page 279
    ... or other payments so received and applied if at any time the distribution of such Collections or payments are rescinded, returned or refunded for any reason. "CGSF" means California Golden State Finance Company, a California corporation. "Change of Control" means, (i) with respect to McKesson, the...

  • Page 280
    ..., or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of...

  • Page 281
    ... to Pooled Commercial Paper maturing on dates other than those on which corresponding funds are received by Liberty Street, other borrowings by Liberty Street (other than under any commercial paper program support agreement) and any other costs associated with the issuance of Pooled Commercial...

  • Page 282
    of any receivable purchase facilities funded substantially with Pooled Commercial Paper, as calculated by its Managing Agent on the tenth (10th) Business Day immediately preceding each Settlement Date based on the aggregate amount of such costs for the applicable CP Tranche Period and the number of ...

  • Page 283
    "Credit and Collection Policy" means Seller's credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit VIII hereto, as modified from time to time in accordance with this Agreement. "Deemed Collections" means the ...

  • Page 284
    ... Reserve Ratio then in effect times (y) the aggregate Outstanding Balance of Eligible Receivables (net of Earned Discounts and quarterly volume rebates) as of the close of business on the immediately preceding Business Day. "Dilution Reserve Ratio" means, as of any date, an amount calculated as...

  • Page 285
    ... Press Release which have been publicly disclosed by McKesson in its filings with the Securities and Exchange Commission prior to the Effective Date. "Discount and Servicing Fee Reserve" means, on any date, the sum of (i) one and one-half of one percent (1.5%) times the lower of the Net Receivables...

  • Page 286
    ... Credit and Collection Policy, (xii) which was generated in the ordinary course of Originator's business pursuant to duly authorized Contracts, (xiii) which arises solely from the sale of goods or the provision of services, within the meaning of Section 3(c)(5) of the Investment Company Act of 1940...

  • Page 287
    ... Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:30 a.m. (Chicago time) for such day on such transactions received by Wachovia...

  • Page 288
    ... the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person's business payable on terms customary in the trade), (iii) obligations, whether or not assumed, secured by liens or payable out of the proceeds or production from...

  • Page 289
    ...(rounded upwards, if necessary, to the next higher 1/100th of 1% of rates quoted by not less than two major banks in New York City, selected by the Managing Agents, at approximately 10:00 a.m. (New York City time), two LIBO Business Days prior to the first day of such Tranche Period, for deposits in...

  • Page 290
    ...a locked postal box maintained by McKesson, in its capacity as Servicer with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Exhibit IV. I-15

  • Page 291
    ..." means, on any date, an amount equal to (x) the greater of (i) 21.5% and (ii) the Loss Reserve Ratio then in effect times (y) the aggregate Outstanding Balance of Eligible Receivables (net of Earned Discounts and quarterly volume rebates) as of the close of business on the immediately preceding...

  • Page 292
    ... and quarterly volume rebates). "Net Worth" means the sum of a capital stock and additional paid in capital plus retained earnings (or minus accumulated deficits) of the Originator and its Subsidiaries determined on a consolidated basis in conformity with generally accepted accounting principles...

  • Page 293
    ...per annum publicly announced from time to time by Wachovia as its "prime rate." (The "prime rate" is a rate set by Wachovia based upon various factors including Wachovia's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans...

  • Page 294
    ...Group at such time. "Purchaser Interest" means, at any time, an undivided percentage ownership interest (computed as set forth below) associated with a designated amount of Capital, Discount Rate and Tranche Period selected pursuant to the terms and conditions hereof in (i) each and every Receivable...

  • Page 295
    ... Seller has a security interest or other interest, whether constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale of pharmaceutical and other products and related services by the Originator to retail, chain and hospital pharmacies or drugstores...

  • Page 296
    ...guaranties, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise, (iv) all service contracts and other contracts and agreements associated with...

  • Page 297
    ... by the aggregate Outstanding Balance of Eligible Receivables (net of all Earned Discounts and quarterly volume rebates) at such time and (ii) the maximum dollar amounts set forth below, in each case corresponding to the Moody's and S&P short-term debt ratings for such Special Obligor at such...

  • Page 298
    ... of (i) 6.67% multiplied by the aggregate Outstanding Balance of Eligible Receivables (net of all Earned Discounts and quarterly volume rebates) at such time and (ii) $200,000,000; and (d) for so long as the short-term debt rating of Albertson's, Inc. from Moody's is "P-2" or higher and "A-2" or...

  • Page 299
    ... Receivables Sale Agreement, dated as of the date hereof, between CGSF and the Seller, (as amended, restated, supplemented or otherwise modified and in effect from time to time). "Total Capitalization" means, on any date, the sum of (a) Total Debt and (b) the Net Worth on such date. "Total Debt...

  • Page 300
    ...each Purchase Notice, the Receivables Sale Agreements, each Collection Account Agreement, the Fee Letter, each Liquidity Agreement and all other instruments, documents and agreements executed and delivered in connection herewith. "UCC" means the Uniform Commercial Code as from time to time in effect...

  • Page 301
    ... Restated Receivables Purchase Agreement, dated as of June 11, 2004 (the "Receivables Purchase Agreement," the terms defined therein being used herein as therein defined), among the undersigned, as Seller and McKesson Corporation, as initial Servicer, the "Conduit Purchasers" from time to time party...

  • Page 302
    ... the following statements are true on the date hereof, and will be true on the date of the Proposed Purchase (before and after giving effect to the Proposed Purchase): (i) the representations and warranties of the undersigned set forth in Section 5.1 of the Receivables Purchase Agreement are true...

  • Page 303
    ... servicer, the Conduit Purchasers from time to time party thereto, the Committed Purchasers from time to time party thereto, the Managing Agents from time to time party thereto and Bank One, NA (Main Office Chicago), as Collateral Agent (the "Receivables Purchase Agreement"). Capitalized terms used...

  • Page 304
    ... Bank ABA#53000219 Account#2000010384921 Account Name: CP Liability Account Ref: CGSF Funding Corporation/McKesson Corp. Liberty Street Funding Corp. The Bank of Nova Scotia - New York Agency ABA# 026-002532 Account: Liberty Street Funding Corp. Acct# 2158-13 Three Pillars Funding LLC SunTrust Bank...

  • Page 305
    After giving effect to such Aggregate Reduction made on the Proposed Reduction Date, the Aggregate Capital is $[•]. Very truly yours, CGSF FUNDING CORPORATION By: Name: Title: II-A-3

  • Page 306
    ... SELLER PARTIES; LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBER(S) CGSF Funding Corporation McKesson Corporation Principal Place of Business Location of Records One Post Street San Francisco CA 94104 One Post Street San Francisco, CA 94104 Customer and Financial Services 1220 Senlac...

  • Page 307
    ...ACCOUNTS Bank Name Account # Type Lock-Box # Address Bank of America Bank of America Bank of America Bank of America Bank of America... ACH P.O. Box 848442, Dallas, TX 75284 12748 Collections Center Drive Chicago, IL 60693 File 57256, Los Angeles, CA 90074 P.O. Box 409521, Atlanta, GA 30384 ACH ACH ...

  • Page 308
    ..., as Managing Agents This Compliance Certificate is furnished pursuant to that certain Amended and Restated Receivables Purchase Agreement dated as of June 11, 2004 among CGSF Funding Corporation (the "Seller"), McKesson Corporation (the "Servicer"), the "Conduit Purchasers" from time to time party...

  • Page 309
    The foregoing certifications, together with the computations set forth in Schedule I hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ___ day of Name: Title: V-2

  • Page 310
    SCHEDULE I TO COMPLIANCE CERTIFICATE A. Schedule of Compliance as of with Section ___ of the Agreement. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement. This schedule relates to the month ended: _____ V-3

  • Page 311
    ... for the purpose of receiving mail and processing payments therefrom pursuant to that certain [name of lock-box agreement] between you and McKesson Corporation (the "Company") dated _____ (the "Agreement "). You hereby confirm your agreement to perform the services described therein. Among the...

  • Page 312
    ...will redirect the funds as the Collateral Agent may otherwise request, (iii) you will transfer monies on deposit in the Lock-Box Account, at any time, as directed by the Collateral Agent, (iv) all services to be performed by you under the Agreement will be performed on behalf of the Collateral Agent...

  • Page 313
    ...a wholly-owned subsidiary of Bank One Corporation. THIS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This letter agreement may be executed in any number of counterparts...

  • Page 314
    ...the terms of this letter agreement by signing in the space provided below. This letter agreement will become effective immediately upon execution of a counterpart of this letter agreement by all parties hereto. Very truly yours, McKESSON CORPORATION By: Name: Title: CGSF FUNDING CORPORATION By: Name...

  • Page 315
    ...to perform all other services you are performing under that certain agreement dated [___] between you and McKesson Corporation on our behalf. We appreciate your cooperation in this matter. Very truly yours, BANK ONE, NA (MAIN OFFICE CHICAGO) (for itself and as Collateral Agent) By: Name: Title: VI-5

  • Page 316
    ... Receivables Purchase Agreement dated as of June 11, 2004 by and among CGSF Funding Corporation, as Seller, McKesson Corporation, as Servicer, the "Conduit Purchasers" from time to time party thereto, the "Committed Purchasers" from time to time party thereto, the "Managing Agents" from time to time...

  • Page 317
    3. If the Seller has any outstanding Capital under the Purchase Agreement, at or before 12:00 noon, local time of the Seller, on the Effective Date the Purchaser shall pay to the Seller, in immediately available funds, an amount equal to the sum of (i) the Transferred Percentage of the outstanding ...

  • Page 318
    ...Commitment of the Purchaser, as well as administrative information with respect to the Purchaser. 9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 10. The Purchaser hereby covenants and agrees that, prior to the date which is one...

  • Page 319
    IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers of the date hereof. [SELLER] By: Name: Title: [PURCHASER] By: Name: Title: VII-4

  • Page 320
    ...ASSIGNMENT AGREEMENT LIST OF LENDING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS Date: Transferred Percentage: , % A-1 Commitment [existing] A-2 Commitment [revised] B-1 Outstanding Capital (if any) B-2 Ratable Share Seller Purchaser A-1 Commitment [initial] B-1 Outstanding Capital (if...

  • Page 321
    ... Receivables Purchase Agreement dated as of June 11, 2004 by and among CGSF Funding Corporation, as Seller, McKesson Corporation, as Servicer, the "Conduit Purchasers" from time to time party thereto, the "Committed Purchasers" from time to time party thereto, the "Managing Agents" from time to time...

  • Page 322
    ...such Assignment Agreement, the Purchaser is required to pay $ of the Seller) on the Effective Date in immediately available funds.] Very truly yours, to the Seller at or before 12:00 noon (local time BANK ONE, NA (Main Office Chicago), individually and as Collateral Agent [and a Managing Agent] By...

  • Page 323
    EXHIBIT VIII CREDIT AND COLLECTION POLICY Attached. VIII-1

  • Page 324
    EXHIBIT IX FORM OF CONTRACT(S) Attached. IX-1

  • Page 325
    EXHIBIT X FORM OF MONTHLY REPORT Attached. X-1

  • Page 326
    ... to time party thereto and Bank One, NA (Main Office Chicago), as collateral agent (the "Collateral Agent"). To the extent not defined herein, capitalized terms used herein have the meanings assigned to such terms in the Agreement. (the "New Managing Agent"), (the "New Conduit Purchaser"), (the "New...

  • Page 327
    ...governed by, and construed in accordance with, the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Joinder Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written, such execution being made on Schedule...

  • Page 328
    Schedule I to Joinder Agreement Dated Section 1. The "CP Rate" for any Tranche Period for any Purchaser Interest owned by the New Conduit Purchaser is [ The "LIBO Rate" for any Tranche Period for any Purchaser Interest funded by any member of the New Purchaser Group is ]. The "Base Rate" for any ...

  • Page 329
    Consented to this day of , 20 by: CGSF FUNDING CORPORATION as Seller By: Name: Title: MCKESSON CORPORATION as Servicer By: Name: Title: BANK ONE, NA (MAIN OFFICE CHICAGO), as Collateral Agent By: Name: Title: [SIGNATURE BLOCK FOR EACH MANAGING AGENT] as a Managing Agent By: Name: Title: XI-4

  • Page 330
    ... Group SunTrust Purchaser Group BTM Purchaser Group Blue Ridge Funding Corporation Liberty Street Funding Corp. Three Pillars Funding LLC Gotham Funding Corporation Wachovia Bank, National Association The Bank of Nova Scotia Three Pillars Funding LLC The Bank of Tokyo-Mitsubishi Ltd., New York...

  • Page 331
    ... DATE Document Responsible Party Amended and Restated Receivables Sale Agreement between McKesson, as seller and California Golden State Finance Company, as buyer Exhibit I Exhibit II Exhibit III Exhibit IV Exhibit V Definitions Principal Place of Business; Location(s) of Records; Federal Employer...

  • Page 332
    ... of the board of directors of CGSF (attached thereto) authorizing the execution, delivery and performance of the Tier One Receivables Sale Agreement, the Tier Two Receivables Sale Agreement and any other documents to be delivered by it in connection with such agreements, and (iv) the names and...

  • Page 333
    Document Responsible Party Opinion of Bingham McCutchen LLP, counsel to McKesson, relating to true sale and nonconsolidation issues. Fourth Amended and Restated Fee Letter among Seller, McKesson, the Managing Agents and the Collateral Agent Upfront Fee Letter among Seller, McKesson, SunTrust, BTM ...

  • Page 334
    EXHIBIT 12 McKESSON CORPORATION CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES (In millions) 2005 2004 Years Ended March 31, 2003 2002 2001 Earnings: Income (loss) from continuing operations before income taxes Adjustments: Equity in net income of and dividends from equity investees Fixed ...

  • Page 335
    ... they are listed. JURISDICTION OF ORGANIZATION McKesson Capital Funding Corporation McKesson Information Solutions Holdings Limited McKesson Information Solutions LLC McKesson Services LLC McKesson Medical-Surgical Inc. McKesson Medical-Surgical Minnesota Inc. McKesson Trading Company Delaware...

  • Page 336
    ... financial statement schedule of McKesson Corporation, and management's report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of McKesson Corporation for the fiscal year ended March 31, 2005. Deloitte & Touche LLP San Francisco...

  • Page 337
    ... such Director and/or Officer, under the Securities Act of 1934, as amended, an Annual Report on Form 10-K for the fiscal year ended March 31, 2005, and thereafter to execute and file any and all amendments to such Form, whether filed prior or subsequent to the time such Form becomes effective. The...

  • Page 338
    ... financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 12, 2005 /s/ John H. Hammergren John H. Hammergren Chairman and Chief Executive Officer...

  • Page 339
    ... b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: May 12, 2005 /s/ Jeffrey C. Campbell Jeffrey C. Campbell Executive Vice President and Chief Financial Officer 3. 4.

  • Page 340
    ... of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ John H. Hammergren John H. Hammergren Chairman and Chief Executive Officer May 12, 2005 /s/ Jeffrey...