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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 1996
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 Number 94-3207296
McKesson Plaza, One Post Street, San Francisco, CA 94104
Telephone - Area Code (415) 983-8300
Securities registered pursuant to Section 12(b) of the Act:
(Name Of Each Exchange
(Title Of Each Class) On Which Registered)
Common Stock, $.01 par value New York Stock Exchange
Pacific Stock Exchange
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 X No ___
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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. [ ]
Aggregate market value of voting stock held by nonaffiliates of the Registrant
at June 3, 1996 $1,453,307,348
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Number of shares of common stock outstanding at June 3, 1996: 42,939,511
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Appendix to the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on July 31, 1996 are incorporated by
reference into Parts I and II of this report. Portions of the Registrant's
Proxy Statement for said meeting are incorporated by reference into Part III of
this report.
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TABLE OF CONTENTS
Item Page
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PART I
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1. Business............................................. 1
2. Properties........................................... 7
3. Legal Proceedings.................................... 7
4. Submission of Matters to a Vote of Security Holders.. 9
Executive Officers of the Registrant................. 10
PART II
5. Market for the Registrant's Common Stock and
Related Stockholder Matters.......................... 13
6. Selected Financial Data.............................. 13
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 13
8. Financial Statements and Supplementary Data.......... 13
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................. 13
PART III
10. Directors and Executive Officers of the Registrant... 14
11. Executive Compensation............................... 14
12. Security Ownership of Certain Beneficial Owners and
Management........................................... 14
13. Certain Relationships and Related Transactions....... 14
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K......................................... 15
Signatures........................................... 16
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PART I
ITEM 1. BUSINESS
(a) General Development of Business
New McKesson (the "Company") was organized in the state of Delaware on July
7, 1994 as a wholly-owned subsidiary of McKesson Corporation, a Delaware
corporation ("McKesson"), for the purpose of owning and operating the businesses
of McKesson following the acquisition of McKesson's pharmaceutical benefits
management business ("PCS") by a subsidiary of Eli Lilly and Company, for
approximately $4 billion (the "PCS Transaction").
For financial statement purposes, the Company is the continuing entity and
has retained the name McKesson Corporation. PCS is reflected as a discontinued
operation in the Company's consolidated financial statements.
During fiscal 1996, the Company made several key acquisitions and
investments reflecting its increased focus on health care.
In December 1995, the Company acquired Ogden BioServices Corporation,
renamed McKesson Bioservices Corporation, which provides support services to
commercial, non-profit and governmental organizations engaged in drug
development and biomedical research. Also during fiscal 1996, the Company
acquired interests in two companies engaged in the development of new
technology-based initiatives to enhance the Health Care Services segment's
competitive position.
In addition, during fiscal 1996 the Company made significant internal
investments in technology-based initiatives to improve its competitiveness in
the retail and institutional market segments. The CareMax(SM) and OmniLink(SM)
programs provide value-added programs and services designed to improve the
profitability and competitiveness of community pharmacies. The BidLink(SM) and
SupplyNET(SM) programs are designed to assist institutional consumers in
enhancing logistics, contract compliance and utilization management.
In April 1996, the Company acquired Automated Healthcare, Inc. which
provides automated pharmaceutical dispensing equipment for use by health care
institutions.
In May 1995, the Company announced its intention to repurchase from time to
time up to 3.5 million shares of its common stock in open market or private
transactions. During fiscal 1996, the Company repurchased 1.35 million shares
for $63 million. On May 31, 1996, the Company announced the authorization for
the repurchase of an additional 3.5 million common shares and that substantially
all of the shares in the initial authorization had been repurchased.
Developments which could be considered significant to individual segments
of the business are described under (c)(1) "Narrative Description of Business"
on pages 2 through 6 of this report.
(b) Financial Information About Industry Segments
Financial information for the three years ended March 31, 1996 appears in
Financial Note 15, "Segments of Business", on pages 37 and 38 of the Appendix to
the Company's 1996 Proxy Statement, which note is incorporated herein by
reference.
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(c) Narrative Description of Business
(1) Description of Segments of Business
The principal segments of the Company's business are:
Health Care Services
Service Merchandising
Water Products
Armor All
Health Care Services
Products & Markets
Wholesale Distribution of Pharmaceutical & Health Care Products -- Within
the United States and Canada, the Company is the largest wholesale distributor
of ethical and proprietary drugs and health and beauty care products. Its
products are distributed to chain and independent drug stores, hospitals,
alternate care sites, food stores and mass merchandisers. This business
requires large inventories, significant amounts of which are financed by related
payables. In addition, the Company owns a 22.7% equity interest in Nadro, S.A.
de C.V. the leading pharmaceutical wholesaler in Mexico.
Using the names "Economost" and "Econolink" and a number of related service
marks, the Company has promoted electronic order entry systems and a wide range
of computerized merchandising and asset management services for drug retailers
and hospitals. The Company is also a supplier of computer systems and software
for pharmacy management.
Voluntary Marketing Program -- Under the Valu-Rite(R) pharmacy program, the
Company provides its independent U.S. retail drug store customers with a common
marketing identity, group advertising, purchasing programs, promotional
merchandise and access to a pharmacy provider network. At March 31, 1996,
approximately 5,050 stores were participating in the Valu-Rite program. Similar
programs are available to independent drug stores through other drug
wholesalers. The Company provides similar services to retail drug stores in
Canada. Independent pharmacists will have access to OmniLink through CareMax, a
new pharmacy network. This will enable CareMax members to take advantage of new
profit opportunities through improved access to managed care networks and
programs designed to enhance patient care.
OmniLink is a centralized pharmacy computer application offered to all the
Company's retail customers. OmniLink enables pharmacists to streamline pharmacy
transactions, increase transaction accuracy, and participate in patient care
programs. Using OmniLink, retailers can better manage and serve customers,
pharmacy benefit managers, pharmaceutical manufacturers and managed care
organizations.
In the institutional market segment, BidLink enables hospitals, alternate
care sites and long-term health care providers to manage price and product mix.
SupplyNET provides tools to the Company's institutional customers for contract
compliance and utilization management.
In the United States, the Company does business under the McKesson Drug
Company and McKesson Health Systems trade-names. In Canada, the Company does
business under the name Medis Health and Pharmaceutical Services Inc.
Pharmaceutical Services Group -- McKesson's Pharmaceutical Services Group
is comprised of Healthcare Delivery Systems, Inc. ("HDS") and McKesson
Bioservices Corporation ("Bioservices"). HDS
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provides services designed to meet the needs of pharmaceutical and other
healthcare manufacturers in commercializing a product and enhancing its market
position. The core activity currently is the development of integrated systems
for specialized delivery of biotech and other high-cost pharmaceutical
therapies. These systems manage manufacturer cost and information requirements
through a variety of services including financial assistance programs for
patients, reimbursement support and patient advocacy programs and product hot-
line, physician and patient information programs. These services are also
provided to manufacturers on a stand alone basis outside of integrated service
systems. Bioservices provides support services to commercial, non-profit and
governmental organizations engaged in drug development and biomedical research
including biological repository management, clinical trials support and
regulatory process management services.
Other -- Through its Sunmark operations, the Company supplies durable
medical equipment to the home health care industry. Through Zee Medical, Inc.,
the Company distributes first-aid products and supplies to industrial and
commercial customers. Through Automated Healthcare Inc., acquired in April
1996, the Company provides automated pharmaceutical dispensing equipment for use
by health care institutions.
Competition
In every area of operations, the distribution businesses (excluding the
Pharmaceutical Services Group) face strong competition both in price and service
from national, regional and local full-line, short-line and specialty
wholesalers, service merchandisers, and from manufacturers engaged in direct
distribution. The particular areas in which the Pharmaceutical Services Group
provides services are in a rapid state of development and therefore there are no
clearly defined markets in which the Pharmaceutical Services Group competes. It
nonetheless faces competition from various other service providers and from
pharmaceutical and other healthcare manufacturers (as well as other potential
customers of the Pharmaceutical Services Group) which may from time to time
decide to develop, for their own internal needs, those services which are
provided by the Pharmaceutical Services Group and other competing service
providers. Price, quality of service, and, in some cases, convenience to the
customer are generally the principal competitive elements in the Health Care
Services segment.
Intellectual Property
The principal trademarks and service marks of the Health Care Services
segment are: ECONOMOST(R), ECONOLINK(R), VALU-RITE(R), BidLink, SupplyNET,
CareMax, OmniLink and RxOBOT(TM). The Health Care Services segment also owns
other registered and unregistered trademarks and service marks and similar
rights. All of the principal marks are registered in the United States and
registration has been obtained or applied for in Canada with respect to such
marks. The United States federal registrations of these trademarks and service
marks have ten or twenty year terms, depending on date of registration; the
Canadian registrations have fifteen year terms. All are subject to unlimited
renewals. The Company believes this business has taken all necessary steps to
preserve the registration and duration of its trademarks and service marks,
although no assurance can be given that it will be able to successfully enforce
or protect its rights thereunder in the event that they are subject to third-
party infringement. The Company does not consider any particular patents,
licenses, franchises or concessions to be material to the business of the Health
Care Services segment.
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Service Merchandising
Products & Markets
Millbrook Distribution Services Inc. ("Millbrook") -- Millbrook distributes
health and beauty care products, general merchandise and specialty foods to
supermarkets, convenience stores, discount department stores and drugstores.
The primary market area for product distribution is the U.S., east of the
Rockies. In addition to the core procurement and distribution businesses,
Millbrook provides services such as product recommendations, planogramming,
retail shelf management and temporary field labor.
Competition
In all areas of operation, Millbrook faces strong competition both as to
price and service from national and regional grocery wholesalers, regional
specialty distributors, service merchandisers and self-warehousing by retailers
and buying organizations. Economies of scale, as well as price, product
variety, value-add services and marketing and technological support are
generally the principal competitive elements.
Intellectual Property
The principal trademarks and service marks of the Service Merchandising
segment are: VALU-STAR(R), BRIGHT IDEAS(R), and CARRIAGE TRADE(R). Millbrook
also owns other registered and unregistered trademarks and service marks and
similar rights. All of the principal marks are registered in the United States.
The United States federal registrations of these trademarks and service marks
have ten or twenty year terms, depending on date of registration; and are
subject to unlimited renewals. The Company believes this business has taken all
necessary steps to preserve the registration and duration of its trademarks and
service marks, although no assurance can be given that it will be able to
successfully enforce or protect its rights thereunder in the event that they are
subject to third-party infringement. The Company does not consider any
particular patents, licenses, franchises or concessions to be material to the
business of the Service Merchandising segment.
Water Products
Products & Markets
McKesson Water Products Company is primarily engaged in the processing and
sale of bottled drinking water delivered to homes and businesses under its
Sparkletts, Alhambra, and Crystal brands in California, Arizona, Nevada and
Texas. It also sells and leases bottled water dispensers and coolers in the
foregoing states, and sells packaged water through retail stores in
approximately 40 states. In addition, under the Aqua-Vend trademark, it sells
processed water through vending machines in California, Arizona, Nevada, Texas,
Louisiana and Florida. Due to the nature of this business, it does not
generally (a) require significant amounts of inventory to meet the needs of its
customers or to meet its own internal supply requirements, (b) provide
significant extended payment terms to its customers or (c) otherwise have
significant working capital requirements.
Competition
Water Products faces significant competition in both price and service in
all aspects of its business from several large local and regional competitors.
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Intellectual Property
The principal trademarks and service marks of the Water Products segment
are: SPARKLETTS(R), ALHAMBRA(R), CRYSTAL(TM), CRYSTAL-FRESH(R) and AQUA-
VEND(R). McKesson Water Products Company also owns other registered and
unregistered trademarks and service marks used by the Water Products segment.
All of the principal trademarks and service marks are registered in the United
States, in addition to certain other jurisdictions. The United States federal
registrations of these trademarks have terms of ten or twenty years, depending
on date of registration, and are subject to unlimited renewals. The Company
believes this business has taken all necessary steps to preserve the
registration and duration of its trademarks and service marks, although no
assurance can be given that it will be able to successfully enforce or protect
its rights thereunder in the event that they are subject to third-party
infringement. The Company does not consider any particular patents, licenses,
franchises or concessions to be material to the business of the Water Products
segment.
Armor All
Products & Markets
The Company is engaged through its majority-owned Armor All Products
Corporation subsidiary ("Armor All") in developing and marketing a line of
branded appearance enhancement and protection products primarily for the do-it-
yourself automotive and home care markets. Its principal brand, Armor All(R),
has the leading position in the domestic automotive protectant market. A second
major brand, Rain Dance(R), is a strong competitor in the market for automotive
waxes, polishes and washes. Armor All's principal product, Armor All(R)
Protectant, is designed to protect and beautify natural and synthetic polymer
materials and is used primarily on certain automobile surfaces. Armor All's
products are marketed in the U.S. and Canada by its direct sales force and
through independent manufacturers' representatives and distributors.
International sales are effected through foreign sales offices, foreign
distributors and a marketing and distribution alliance with S.C. Johnson.
Primary customers include mass merchandise retailers, auto supply stores,
warehouse clubs, hardware stores and other retail outlets. Armor All in recent
years has extended its product lines by introducing Armor All(R) Tire Foam(R)
Protectant, Armor All(R) QuickSilver(TM) Wheel Cleaner, Armor All(R) Protectant
Low-Gloss Natural Finish, Armor All(R) Spot & Wash(TM) Concentrate, Armor
All(R) Leather Care Protectant, Armor All(R) Armor Plate(R) Paint Protectant
and Armor All(R) FlashBlack(TM) Tire Shine. In January 1994, Armor All entered
the home care market with the acquisition of the E-Z Deck Wash(R) and E-Z D(TM)
brands. The E-Z Deck Wash product is designed to clean and restore wood
surfaces such as patio decks, siding and fences. Subsequent to the acquisition,
Armor All expanded its home care line by introducing several products under the
Armor All brand name: Deck Protector, WaterProofing Sealer, Vinyl Siding Wash,
Painted Wood Wash and three Pressure Washing Formulas. Products which comprise
a majority of Armor All's sales volume are manufactured under full service
packaging agreements whereby contract packagers generally own the raw materials
and finished goods in their possession and transfer title to Armor All just
prior to shipment to Armor All's customers. Armor All's use of contract
packagers permits it to avoid significant investments in inventory, machinery
and other fixed assets. Armor All's relationships with its three most important
packagers have lasted for 8, 11 and 23 years, respectively. Subject to
contractual arrangements, Armor All periodically reevaluates its selection of
packagers, and believes that other acceptable packagers are readily available.
Competition
In the domestic protectant market, Armor All Protectant has two principal
competitors, STP(R) Son-of-a-Gun(R) Protectant and Turtle Wax(R) Formula
2001(R). Armor All(R) Tire Foam(TM) Protectant has four principal competitors
and Armor All(R) QuickSilver(TM) Wheel Cleaner has three principal competitors.
Armor All brand cleaner competes against many specialty automotive cleaner
products. Armor All brand wash
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products and all of the Rain Dance and Rally brand products compete with
numerous wash, wax and polish products in the automotive aftermarket. The No.7
brand products compete with many wash and specialty cleaning products.
Competition in international markets varies by country.
In the domestic home care products market, the E-Z Deck Wash brand product
has two principal competitors, Thompson's(R) Deck Wash and Olympic(R) Deck
Cleaner, and several secondary competitors. Armor All Deck Protector and
Armor All WaterProofing Sealer each compete against products marketed under the
Thompson's, Olympic and Behr brand names. Armor All Vinyl Siding Wash and Armor
All Painted Wood Wash compete against multi-surface products marketed under the
Thompson's and Olympic brand names. The Armor All Power Washing Formulas compete
against products marketed by the manufacturers of power washer machines; Coleman
and Karcher are the principal brand names.
Intellectual Property
The principal trademarks and service marks of the Armor All segment are:
ARMOR ALL(R), VIKING DESIGN(R) and related designs, RAIN DANCE(R), RALLY(R), NO.
7(R), TIRE FOAM(R), QUICKSILVER(TM), SPOT & WASH(R), ARMOR PLATE(R),
FLASHBLACK(R), EXPRESS WASH(TM), WAX PAX(TM), E-Z DECK WASH(R) and E-Z D(TM).
Armor All also owns other registered and unregistered trademarks and service
marks. All of the principal trademarks and service marks are registered in the
United States and Canada. Such marks are also registered in certain other
foreign jurisdictions. The United States federal registrations of these
trademarks and service marks have ten or twenty year terms, depending on date of
registration; the Canadian registrations have fifteen year terms. All are
subject to unlimited renewals. The Company believes it has taken all necessary
steps to preserve the registration and duration of its trademarks and service
marks, although no assurance can be given that it will be able to successfully
enforce or protect its rights thereunder in the event that they are subject to
third-party infringement.
Armor All owns a patent on ARMOR ALL Armor Plate Paint Protectant, RAIN
DANCE wax, and Armor All Spot & Wash concentrate, and has applied for patents on
ARMOR ALL QuickSilver Wheel Cleaner and ARMOR ALL Vinyl Siding Wash. In
addition, Armor All owns a patent on an E-Z DECK WASH product and has other
domestic and foreign E-Z DECK WASH patents pending. Armor All has the exclusive
right to use a supplier's patented formula to produce ARMOR ALL Deck Protector.
The Company believes that Armor All's trademarks are more important assets than
its patents, and that the termination or invalidity of its patents would not
have a material adverse effect on Armor All.
Ownership
At March 31, 1996, the Company owned 55% of the outstanding common shares
of Armor All. In fiscal 1994, the Company sold $180 million of subordinated
debentures that are exchangeable, at the option of the holders, into 6.9 million
additional shares of Armor All common stock owned by the Company, subject to the
Company's right to pay cash equal to the market price of the stock in lieu of
making the exchange. If all of the debentures were exchanged, the Company's'
ownership interest in Armor All would be reduced to approximately 22%. In such
event, the Company may not be able to exercise continued control over the
business operations of Armor All and may not be able to obtain the financial
benefits it would otherwise have received if it had maintained its controlling
interest in Armor All.
(2) Other Information About the Business
Customers -- Sales to the Company's largest customer, Wal-Mart Stores,
Inc., accounted for 11% of consolidated revenues in fiscal 1996 and 10% in
fiscal 1995; however, no material part of the business is dependent upon a
single or a very few customers, the loss of any one of which could have a
material adverse effect on the Company or any of its business segments.
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Environmental Legislation -- The Company sold its chemical distribution
operations in fiscal 1987. In connection with the disposition of those
operations, the Company retained responsibility for certain environmental
obligations and has entered into agreements with the EPA and certain states
pursuant to which it is or may be required to conduct environmental assessments
and cleanups at several closed sites. These matters are described further in
Item 3 "Legal Proceedings" below. Other than any capital expenditures which may
be required in connection with those matters, the Company does not anticipate
making substantial capital expenditures for environmental control facilities or
to comply with environmental laws and regulations in the future. The amount of
capital expenditures expended by the Company for environmental compliance was
not material in fiscal 1996 and is not expected to be material in the next
fiscal year.
Employees -- At March 31, 1996, the Company employed approximately 11,300
persons.
Backlog Orders -- Each of the Company's segments seeks to promptly fill or
otherwise satisfy the orders of each such segment's customers. Accordingly,
none of the Company's segments has a significant backlog of customer orders.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
Information as to foreign operations is included in Financial Note 15,
"Segments of Business" on pages 37 and 38 of the Appendix to the Company's 1996
Proxy Statement (the "Appendix"), which notes are incorporated herein by
reference.
ITEM 2. PROPERTIES
Because of the nature of the Company's principal businesses, plant,
warehousing, office and other facilities are operated in widely dispersed
locations. The warehouses are typically owned or leased on a long-term basis.
The Company considers its operating properties to be in satisfactory condition
and adequate to meet its needs for the next several years. Information as to
material lease commitments is included in Financial Note 10, "Lease Obligations"
on pages 29 and 30 of the Appendix, which note is incorporated herein by
reference. Due to the numerous warehousing, office and other facilities
utilized by the Company in its business operations, the Company does not believe
that any one of its facilities is materially important to the Company.
ITEM 3. LEGAL PROCEEDINGS
In addition to commitments and obligations in the ordinary course of
business, the Company is subject to various claims, other pending and possible
legal actions for product liability and other damages, investigations relating
to governmental laws and regulations, and other matters arising out of the
normal conduct of the Company's business.
The Company currently is a defendant in six civil actions filed since late
1993 by retail pharmacies. The first proceeding, Feitelberg v. Abbott
Laboratories, is pending in the Superior Court for the State of California
(County of San Francisco) and is now referred to as Coordinated Proceeding
Special Title, Pharmaceutical Cases I, II and III. The second proceeding, HJB,
Inc. v. Abbott Laboratories (now known as MDL 997), is pending in the United
States District Court for the Northern District of Illinois. The third
proceeding, K-S Pharmacies, Inc. v. Abbott Laboratories, is pending in the
Circuit Court of Wisconsin for Dane County. A fourth action, Adams v. Abbott
Laboratories, was filed in the U.S. District Court for the Eastern District of
Arkansas. A fifth action, Salk Drug Co. v. Abbott Laboratories, was filed in
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the District Court of Minnesota, Fourth Judicial District. Finally, an action
was filed this past year in California Superior Court for San Francisco County,
Horton v. Abbott Laboratories, et. al.. These actions were brought as purported
class actions on behalf of all other similarly-situated retail pharmacies. A
class has been certified in Feitelberg and in MDL 997. There are numerous other
defendants in these actions including pharmaceutical manufacturers, a
pharmaceutical mail order firm, and several other wholesale distributors. These
cases allege, in essence, that the defendants have unlawfully conspired together
and agreed to fix the prices of brand name pharmaceuticals sold to plaintiffs at
artificially high, discriminatory, and non-competitive levels, all in violation
of various state and federal antitrust laws. Some of the plaintiffs specifically
contend that the wholesaler and manufacturer defendants are engaged in a
conspiracy to fix prices charged to plaintiffs and members of the purported
classes (independent and chain retail drug stores) above the price levels
charged to mail order pharmacies, HMOs and other institutional buyers. The
California cases allege, among other things, violation of California antitrust
law. In MDL 997, plaintiffs allege that defendants' actions constitute price
fixing in violation of the Sherman Act. In the K-S Pharmacies, Inc. and Salk
Drug complaints, plaintiffs allege violation of Wisconsin and Minnesota
antitrust laws, respectively. In each of the complaints, except Adams,
plaintiffs seek certification as a class and remedies in the form of injunctive
relief, unquantified monetary damages (trebled as provided by law), and
attorneys fees and costs. In addition, the California cases seek restitution. In
MDL 997, the court recently granted the motion for summary judgment filed by the
Company and other wholesaler defendants. In K-S Pharmacies, the court dismissed
the Company and other wholesaler defendants without prejudice and is considering
whether the dismissal will be with prejudice. The Company believes it has
meritorious defenses to the allegations made against it and intends to
vigorously defend itself in the remaining cases. In addition, the Company has
entered into a judgment sharing agreement with certain pharmaceutical
manufacturer defendants, which provides generally that the Company (together
with the other wholesale distributor defendants) will be held harmless by such
pharmaceutical manufacturer defendants and will be indemnified against the costs
of adverse judgments, if any, against the wholesaler and manufacturers in these
or similar actions, in excess of $1 million in the aggregate per wholesale
distributor defendant.
Primarily as a result of the operation of its former chemical businesses,
which were divested in fiscal 1987, the Company is involved in various matters
pursuant to environmental laws and regulations:
The Company has received claims and demands from governmental agencies relating
to investigative and remedial actions purportedly required to address
environmental conditions alleged to exist at five sites where the Company (or
entities acquired by the Company) formerly conducted operations; and the
Company, by administrative order or otherwise, has agreed to take certain
actions at those sites, including soil and groundwater remediation.
The current estimate (determined by the Company's environmental staff, in
consultation with outside environmental specialists and counsel) of the upper
limit of the Company's range of reasonably possible remediation costs for these
five sites is approximately $24 million, net of amounts which third parties have
agreed to pay in settlement or which the Company expects, based either on
agreements or nonrefundable contributions which are ongoing, to be contributed
by third parties. The $24 million is expected to be paid out between April 1996
and March 2028 and is included in the Company's recorded environmental reserves
at March 31, 1996.
In addition, the Company has been been designated as a potentially
responsible party ("PRP") by the U.S. Environmental Protection Agency under the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended (the "Superfund" law), for environmental assessment and cleanup costs as
the result of the Company's alleged disposal of hazardous substances at 27
Superfund sites. With respect to each of these Superfund sites, numerous other
PRPs have similarly been designated and, while the current state of the law
potentially imposes joint and several liability upon PRPs, as a practical matter
costs of these sites are typically shared with other PRPs. The Company's
estimated liability at these 27 Superfund sites is approximately $3 million, net
of amounts which third parties are expected or have agreed to contribute where
the Company believes it is probable that the third parties will fulfill their
agreements to pay. Settlements and costs paid by the Company in Superfund
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matters to date have not been significant. The $3 million is included in the
Company's recorded environmental reserves at March 31, 1996, along with an
additional $1 million for miscellaneous other matters.
The potential costs to the Company related to environmental matters is
uncertain due to such factors as: the unknown magnitude of possible pollution
and cleanup costs; the complexity and evolving nature of governmental laws and
regulations and their interpretations; the timing, varying costs and
effectiveness of alternative cleanup technologies; the determination of the
Company's liability in proportion to other PRPs; and the extent, if any, to
which such costs are recoverable from insurance or other parties.
Management believes, based on current knowledge and the advise of the
Company's counsel, that the outcome of the litigation and governmental
proceeding discussed in this Item 3 will not have a material adverse effect on
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the three months ended March 31,
1996.
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Executive Officers of the Registrant
The following table sets forth information concerning the executive
officers of the Registrant as of June 3, 1996. The number of years of service
with the Company includes service with predecessor and acquired companies,
including McKesson.
There are no family relationships between any of the executive officers or
directors of the Registrant. The executive officers are chosen annually to
serve until the first meeting of the Board of Directors following the next
annual meeting of stockholders and until their successors are elected and have
qualified, or until death, resignation or removal, whichever is sooner.
Name Age Position with Registrant and Business Experience
- ------------------- --- ------------------------------------------------
Alan Seelenfreund 59 Chairman of the Board and Chief Executive Officer
since July 1994 and a Director since November 1994.
Formerly Chairman of the Board and Chief Executive
Officer (November 1989-November 1994), a Director
(July 1988-November 1994) and Chief Financial Officer
(April 1984-April 1990) of McKesson. Service with
the Company - 21 years.
Mark A. Pulido 43 President and Chief Operating Officer and a Director
since May 20, 1996. Chief Executive Officer, Sandoz
Pharmaceuticals Corporation (January-April 1996) and
Chief Operating Officer (December 1994-December
1995). Other positions in the last six years, all
with Red Line Healthcare Corporation, a Sandoz
affiliate: Chairman of the Board (December 1994-
January 1996), Chairman, President and Chief
Executive Officer (March 1992-November 1994),
President and Chief Executive Officer (January 1992-
March 1992), and President and Chief Operating
Officer (February 1990-December 1991). Service with
the Company - 1 month.
William A. Armstrong 55 Vice President Human Resources and Administration
since September 1994. Formerly Vice President Human
Resources and Administration (April 1993-November
1994), Vice President Administration (July 1991-April
1993) and Executive Assistant to the Office of the
Chief Executive (1990- April 1992) of McKesson.
Service with the Company - 24 years.
Jon W. d'Alessio 49 Staff Vice President and Treasurer since September
1994. Formerly Staff Vice President and Treasurer
(January 1992-November 1994), Staff Vice President
Corporate Treasury (November 1991-January 1992) and
Staff Vice President and Chief Information Officer
(1990-November 1991) of McKesson. Service with the
Company - 18 years.
10
<PAGE>
Name Age Position with Registrant and Business Experience
- ------------------- --- ------------------------------------------------
Michael T. Dalby 50 Vice President Strategic Planning since September
1994. Principal at McKinsey & Company, Inc., an
international management consulting firm (1988-1994).
Service with the Company - 1 year 9 months.
Kevin B. Ferrell 48 Vice President and Chief Financial Officer since
October 1994. Executive Vice President of Global
Investment Management at Bank of America (1993-March
1994). Other positions in the last 18 years, all
associated with Bank of America: President and
Director of SeaFirst Bank, Senior Vice President and
Head of Corporate Banking in San Francisco and Senior
Vice President of Finance and Treasury. Service with
the Company - 1 year 7 months.
John H. Hammergren 37 Vice President and President of McKesson Health
Systems since January 1996. President, Medical/
Surgical Division, Kendall Healthcare Products
Company (1993-1996) and Vice President and General
Manager (1991-1993). Service with the Company - 5
months.
Richard H. Hawkins 46 Vice President and Controller since September 1994.
Formerly Vice President (April 1993-November 1994)
and Controller (April 1990-November 1994) of
McKesson, Chief Financial Officer (September 1993-
November 1994) of McKesson's Drug Company division
and Vice President Finance (February 1991-April 1993)
of McKesson's Distribution Group. Service with the
Company - 12 years.
David L. Mahoney 41 Vice President since September 1994 and President,
Pharmaceutical Services Group since February 1996.
Formerly President of Healthcare Delivery Systems,
Inc., a wholly-owned subsidiary of the Company,
(September 1994-December 1995) and Vice President
Strategic Planning (July 1990-September 1994) of
McKesson. Service with the Company - 6 years.
Ivan D. Meyerson 51 Vice President and General Counsel since July 1994.
Formerly Vice President and General Counsel (January
1987-November 1994) of McKesson. Service with the
Company - 18 years.
Nancy A. Miller 52 Vice President and Corporate Secretary since July
1994. Formerly Vice President and Corporate Secretary
(December 1989-November 1994) of McKesson. Service
with the Company - 18 years.
11
<PAGE>
Name Age Position with Registrant and Business Experience
- ------------------- --- ------------------------------------------------
Charles A. Norris 50 Vice President and President of McKesson Water
Products Company, a wholly-owned subsidiary of the
Company, since September 1994. Formerly Vice
President (April 1993-November 1994) and President
(May 1990-November 1994) of McKesson Water Products
Company, a wholly-owned subsidiary of McKesson.
Service with the Company - 6 years.
Robert A. Sigel 42 Vice President since November 1995 and President of
Millbrook Distribution Services Inc., a wholly-owned
subsidiary of the Company, since November 1994.
Formerly President (1990-November 1994) of Millbrook
Distribution Services Inc., a wholly-owned subsidiary
of McKesson, and its predecessor companies. Service
with the Company - 10 years.
12
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
(a) Market Information
The principal market on which the Company's common stock is traded is the
New York Stock Exchange. High and low prices for the common stock by quarter
appear in Financial Note 17, "Quarterly Financial Information" on pages 41 and
42 of the Appendix which note is incorporated herein by reference.
(b) Holders
The number of record holders of the Company's common stock as of March 31,
1996 was 15,143.
(c) Dividends
Dividend information is included in Financial Note 17, "Quarterly Financial
Information" on pages 41 and 42 of the Appendix, which note is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Selected financial data is shown on pages 2 to 6 of the Appendix and is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's discussion and analysis of the Company's financial condition
and results of operations appears in the Financial Review on pages 7 through 15
of the Appendix and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements and Supplementary Data appear on pages 18 through 42
of the Appendix and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
13
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of the Company is incorporated by
reference from the Company's 1996 Proxy Statement (the "Proxy Statement").
Certain information relating to Executive Officers of the Company appears from
pages 10 through 12 of this Form 10-K Annual Report. The information with
respect to this item required by Item 405 of Regulation S-K is incorporated
herein by reference from the Company's 1996 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to this item is incorporated herein by reference
from the Company's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain transactions with management is
incorporated by reference from the Company's Proxy Statement.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) Exhibits and Financial Statement Schedule
The following consolidated financial statements of the Company and the
Independent Auditors' Report are included on pages 17 through 42 of the Appendix
and are incorporated by reference in Item 8:
Independent Auditors' Report
Consolidated Financial Statements
Statements of Consolidated Income for the years ended
March 31, 1996, 1995 and 1994
Consolidated Balance Sheets, March 31, 1996, 1995 and 1994
Statements of Consolidated Stockholders' Equity for the years
ended March 31, 1996, 1995 and 1994
Statements of Consolidated Cash Flows for the years ended
March 31, 1996, 1995 and 1994
Financial Notes
The following are included herein: Page
----
Independent Auditors' Report on Supplementary
Financial Schedule 17
Supplementary Financial Schedule: 18
II Consolidated Valuation and Qualifying Accounts
Financial statements and schedules not included or incorporated by
reference herein have been omitted because of the absence of conditions under
which they are required or because the required information, where material, is
shown in the financial statements, financial notes or supplementary financial
information.
Exhibits submitted with this Form 10-K as filed with the SEC and those
incorporated by reference to other filings are listed on the Exhibit Index on
pages 19 through 22.
(b) Reports on Form 8-K
None.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
McKESSON CORPORATION
Date: May 31, 1996 By: /s/Kevin B. Ferrell
------------------------------------
Kevin B. Ferrell, Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on May 31, 1996 by the following persons on behalf
of the Registrant and in the capacities indicated:
/s/Alan Seelenfreund /s/Mark A. Pulido
- ----------------------------------------- --------------------------------
Alan Seelenfreund, Chairman and Mark A. Pulido, President and
Chief Executive Officer and Director Chief Operating Officer and
Director
/s/Kevin B. Ferrell /s/Richard H. Hawkins
- ----------------------------------------- --------------------------------
Kevin B. Ferrell, Vice President Richard H. Hawkins, Vice President
and Chief Financial Officer and Controller
/s/Mary G.F. Bitterman /s/Tully M. Friedman
- ----------------------------------------- --------------------------------
Mary G.F. Bitterman, Director Tully M. Friedman, Director
/s/George M. Keller
- ----------------------------------------- --------------------------------
James R. Harvey, Director George M. Keller, Director
/s/John M. Pietruski
- ----------------------------------------- --------------------------------
John M. Pietruski, Director Carl E. Reichardt, Director
/s/Jane E. Shaw /s/Robert H. Waterman
- ----------------------------------------- --------------------------------
Jane E. Shaw, Director Robert H. Waterman, Jr., Director
16
<PAGE>
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY FINANCIAL SCHEDULE
The Stockholders and Board of Directors of McKesson Corporation:
We have audited the consolidated financial statements of McKesson Corporation
and subsidiaries as of March 31, 1996, 1995 and 1994, and for the years then
ended and have issued our report thereon dated May 13, 1996 which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
Corporation's change in its method of accounting for postemployment benefits;
such consolidated financial statements and report are included in the Appendix
to your Proxy Statement for the 1996 annual meeting of stockholders of the
Corporation and are incorporated herein by reference. Our audits also included
the consolidated supplementary financial schedule of McKesson Corporation,
listed in Item 14(a). This consolidated supplementary financial schedule is the
responsibility of the Corporation's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such consolidated
supplementary financial schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
San Francisco, California
May 13, 1996
17
<PAGE>
Schedule II
McKESSON CORPORATION - CONSOLIDATED
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED MARCH 31, 1996, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------------------------- --------- ---------------------- ---------------- -------------------
Additions
-----------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at
Description of Period Expenses Accounts Deductions /(1)/ End of Period /(2)/
- -------------------------- --------- --------- ---------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
AMOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY:
Year Ended March 31, 1996
- ---------------------------
Allowances for doubtful
accounts receivable $43,584 $13,947 $ - $30,111 $27,420
Other reserves 16,044 13,749 - 13,271 16,522
------- ------- ------- ------- -------
$59,628 $27,696 $ - $43,382 $43,942
======= ======= ======= ======= =======
Year Ended March 31, 1995
- --------------------------
Allowances for doubtful
accounts receivable $18,637 $49,452 $ - $24,505 $43,584
Other reserves 15,599 6,066 - 5,621 16,044
------- ------- ------- ------- -------
$34,236 $55,518 $ - $30,126 $59,628
======= ======= ======= ======= =======
Year Ended March 31, 1994
- --------------------------
Allowances for doubtful
accounts receivable $26,346 $ 9,994 $ 1 $17,704 $18,637
Other reserves 14,886 5,144 - 4,431 15,599
------- ------- ------- ------- -------
$41,232 $15,138 $ 1 $22,135 $34,236
======= ======= ======= ======= =======
</TABLE>
- ---------------------
NOTES: 1996 1995 1994
---- ---- ----
(1) Deductions:
Written off $30,696 $27,491 $17,704
Credited to other accounts 12,686 2,635 4,431
------- ------- -------
Total $43,382 $30,126 $22,135
======= ======= =======
(2) Amounts shown as deductions from:
Current receivables $43,047 $56,023 $30,826
Other assets 895 3,605 3,410
------- ------- -------
Total $43,942 $59,628 $34,236
======= ======= =======
18
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -------------------------------------------------------------------
2.1 Restructuring and Distribution Agreement dated as of July 10, 1994,
by and among McKesson Corporation, a Delaware corporation ("Old
McKesson"), McKesson Corporation, a Maryland corporation
("Maryland"), Clinical Pharmaceuticals, Inc. ("CPI"), PCS Health
Systems, Inc. ("PCS") and the Company (Exhibit 2.1 (1)).
2.2 Amendment, dated as of October 10,1994, by and among Old McKesson,
Maryland, CPI, PCS and the Company, which amends the Distribution
Agreement (Exhibit 2.2 (3)).
2.3 Second Amendment, dated as of November 3, 1994, by and among Old
McKesson, Maryland, CPI, PCS and the Company, which amends the
Distribution Agreement (Exhibit 2.5 (5)).
2.4 Agreement and Plan of Merger, dated as of July 10, 1994, by and among
Old McKesson, Eli Lilly and Company ("Parent") and ECO Acquisition
Corporation (the "Purchaser") (Exhibit 2.3 (4)).
2.5 Amendment, dated as of August 8, 1994, by and among Old McKesson,
Parent and Purchaser, which amends the Merger Agreement (Exhibit 2.4
(5))
3.1 Restated Certificate of Incorporation of the Company, as filed with
the Office of the Delaware Secretary of State on January 31, 1996.
3.2 Restated By-Laws of the Company, as amended through June 10, 1996.
4 Rights Agreement dated as of September 14, 1994 between the Company
and First Chicago Trust Company of New York, as Rights Agent (Exhibit
4.1 (4)).
4.1 Registrant agrees to furnish to the Commission upon request a copy of
each instrument with respect to issues of long-term debt of the
Registrant, the authorized principal amount of which does not exceed
10% of the total assets of the Registrant.
10.1 Tax Sharing Agreement, dated as of July 10, 1994, among the Company,
Old McKesson, Parent and the Purchaser (Exhibit 10.1 (1)).
10.2 HDS Services Agreement, dated as of July 10, 1994, among Parent, PCS
and Healthcare Delivery Systems, Inc. (Exhibit 10.2 (1)).
10.3 McKesson Services Agreement, dated as of July 10, 1994, between PCS
and the Company (Exhibit 10.3 (1)).
10.4 Memorandum of Understanding, dated as of July 10, 1994, between
Parent and the Company (Exhibit 10.4 (1)).
10.5 Non-Competition Agreement, dated as of July 10, 1994, between the
Company, Old McKesson, the Purchaser and Parent (Exhibit 10.5 (1)).
10.6 McKesson Corporation 1994 Stock Option and Restricted Stock Plan
(Amended Effective April 26, 1995) (Exhibit A (6)).
19
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -------------------------------------------------------------------
10.7 McKesson Corporation Supplemental PSIP (Exhibit 10.7 (2)).
10.8 McKesson Corporation Deferred Compensation Administration Plan
(Exhibit 10.8 (2)).
10.9 McKesson Corporation Deferred Compensation Administration Plan II
(Exhibit 10.9 (2)).
10.10 McKesson Corporation Directors' Deferred Compensation Plan (Exhibit
10.10 (2)).
10.11 McKesson Corporation 1994 Option Gain Deferral Plan (Exhibit 10.12
(3)).
10.12 McKesson Corporation 1985 Executives' Elective Deferred Compensation
Plan (Exhibit 10.13 (2)).
10.13 McKesson Corporation Management Deferred Compensation Plan (Exhibit
10.14 (2)).
10.14 McKesson Corporation 1984 Executive Benefit Retirement Plan (Exhibit
10.15 (2)).
10.15 McKesson Corporation 1988 Executive Survivor Benefits Plan (Exhibit
10.16 (2)).
10.16 McKesson Corporation Executive Medical Plan Summary (Exhibit 10.17
(3)).
10.17 McKesson Corporation 1988 Management Survivor Benefits Plan (Exhibit
10.18 (2)).
10.18 McKesson Corporation Severance Policy for Executive Employees
(Exhibit 10.19 (2)).
10.19 McKesson Corporation 1989 Management Incentive Plan (Amended and
Restated Effective April 26, 1995) (Exhibit B (6)).
10.20 McKesson Corporation 1981 Long-Term Incentive Plan (Exhibit 10.21
(2)).
10.21 McKesson Corporation 1973 Stock Purchase Plan (Exhibit 10.22 (2)).
10.22 Form of Termination Agreement by and between the Company and certain
designated Executive Officers (Exhibit 10.23 (8)).
10.23 Description of McKesson Corporation Retirement Program for
Nonemployee Directors (Exhibit 10.24 (8)).
10.24 Separation and Mutual General Release Agreement entered into as of
February 12, 1996 by and between the Company and a former Executive
Officer.
20
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- ---------------------------------------------------------------------
10.25 Credit Agreement entered into as of March 31, 1995, among the
Company, Medis Health and Pharmaceutical Services, Inc., an indirect
wholly-owned subsidiary of the Company, the several financial
institutions from time to time party to the agreement (collectively
the "Banks"), Bank of America National Trust and Savings Association,
as Agent for the Banks, Chemical Bank, as Co-Agent for the Banks and
Bank of America Canada, as Canadian Administrative Agent. (Exhibit
10.25(8))
10.26 Custodial Agreement Acknowledgment entered into as of March 31, 1995,
among the Company and Bank of America National Trust and Savings
Association (the "Custodian") in its capacity as Custodian under the
Custodial Agreement and as Agent for the Banks from time to time
party to the Credit Agreement. (Exhibit 10.26(8))
10.27 Pledge Agreement entered into as of March 31, 1995 among the Company
(the "Pledgor") and Bank of America National Trust and Savings
Association, as Agent for the Banks from time to time party to the
Credit Agreement. (Exhibit 10.27 (8)).
10.28 Guaranty entered into as of March 31, 1995 by the Company (the
"Guarantor"), in favor of and for the benefit of Bank of America
National Trust and Savings Association, as Agent for and
representative of the Banks party to the Credit Agreement.
(Exhibit 10.28 (8)).
11 Computation of Earnings Per Common Share for the Five Years Ended
March 31, 1996.
13 1996 Annual Report to Security Holders Pursuant to Rule 14a-3(b). (7)
21 List of Subsidiaries of the Company.
23 Independent Auditors' Consent.
27 Financial Data Schedule.
Footnotes to Exhibit Index:
(1) Incorporated by reference to designated exhibit to the Company's
Registration Statement on Form 10 filed with the Commission on July 27,
1994, File No. 1-13252.
(2) Incorporated by reference to designated exhibit to Amendment No. 1 to the
Company's Registration Statement on Form 10 filed with the Commission on
August 26, 1994, File No. 1-13252.
(3) Incorporated by reference to designated exhibit to Amendment No. 2 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 11, 1994, File No. 1-13252.
(4) Incorporated by reference to designated exhibit to Amendment No. 3 to the
Company's Registration Statement on Form 10 filed with the Commission on
October 27, 1994, File No. 1-13252.
(5) Incorporated by reference to designated exhibit to Amendment No. 4 to the
Company's Registration Statement on Form 10 filed with the Commission on
November 7, 1994, File No. 1-13252.
(6) Incorporated by reference to designated exhibit attached to the Company's
definitive Proxy Statement dated June 9, 1995 for the Annual Meeting of
Stockholders to be held on July 26, 1995.
(7) Filed as an Appendix to the Company's definitive Proxy Statement dated June
17, 1996 for the Annual Meeting of Stockholders to be held on July 31, 1996,
and incorporated by reference herein.
(8) Incorporated by reference to designated exhibit to the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
21
<PAGE>
Executive Compensation Plans and Arrangements
1. McKesson Corporation 1994 Stock Option and Restricted Stock Plan (Amended
Effective April 26, 1995) .
2. McKesson Corporation Supplemental PSIP.
3. McKesson Corporation Deferred Compensation Administration Plan.
4. McKesson Corporation Deferred Compensation Administration Plan II.
5. McKesson Corporation Directors' Deferred Compensation Plan.
6. McKesson Corporation 1994 Option Gain Deferral Plan.
7. McKesson Corporation 1985 Executives' Elective Deferred Compensation Plan.
8. McKesson Corporation Management Deferred Compensation Plan.
9. McKesson Corporation 1984 Executive Benefit Retirement Plan.
10. McKesson Corporation 1988 Executive Survivor Benefits Plan.
11. McKesson Corporation Executive Medical Plan Summary.
12. McKesson Corporation 1988 Management Survivor Benefits Plan.
13. McKesson Corporation Severance Policy for Executive Employees.
14. McKesson Corporation 1989 Management Incentive Plan (Amended and Restated
Effective April 26, 1995).
15. McKesson Corporation 1981 Long-Term Incentive Plan.
16. McKesson Corporation 1973 Stock Purchase Plan.
17. Form of Termination Agreement by and between the Company and certain
designated Executive Officers.
18. Description of McKesson Corporation Retirement Program for Nonemployee
Directors.
19. Separation and Mutual General Release Agreement dated as of February 12,
1996 by and between the Company and a former Executive Officer.
22
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
MCKESSON CORPORATION
ORIGINALLY INCORPORATED ON JULY 7, 1994
UNDER THE NAME OF SP VENTURES, INC.
(RESTATES ONLY)
ARTICLE I.
The name of the Corporation is McKesson Corporation.
ARTICLE II.
The address of the registered office of the Corporation within the State of
Delaware is 1013 Centre Road, City of Wilmington 19805-1297, County of New
Castle. The name of the registered agent of the Corporation at such address is
The Prentice-Hall Corporation System, Inc.
ARTICLE III.
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
ARTICLE IV.
The total number of shares of stock of all classes which the Corporation has
authority to issue is 300,000,000 shares, divided into 100,000,000 shares of
Series Preferred Stock, par value $0.01 per share (herein called the "Series
Preferred Stock"), and 200,000,000 shares of Common Stock, par value $.01 per
share (herein called the "Common Stock"). The aggregate par value of all shares
having par value is $3,000,000.
The Board of Directors of the Corporation is expressly authorized, as shall be
stated and expressed in the resolution or resolutions it adopts, subject to
limitations prescribed by law and the provisions of this Article IV, to provide
for the issuance of the shares of Series Preferred Stock in one or more class or
series, in addition to the shares thereof specifically provided for in this
Article IV, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix for each such class or series such
voting powers, full or limited, or no voting powers, and such distinctive
designations, powers, preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof,
including without limitation, the authority to provide that any such class or
series may be (i) subject to redemption at such time or times and at such price
or prices; (ii) entitled to receive dividends (which may be cumulative or non-
cumulative) at such rates, on such conditions, and at such times, and payable in
preference to, or in relation to, the dividends payable on any other class or
classes or any other series; (iii) entitled to such rights
<PAGE>
upon the dissolution of, or upon any distribution of the assets of, the
Corporation; (iv) convertible into, or exchangeable for, shares of any other
class or classes of stock, or of any other series of the same or any other class
or classes of stock, of the Corporation at such price or prices or at such rates
of exchange and with such adjustments; or (v) subject to the terms and amounts
of any sinking fund provided for the purchase or redemption of the shares of
such series; all as may be stated in such resolution or resolutions.
The number of authorized shares of Series Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Series Preferred Stock, as the case may be, or of any
series thereof, unless a vote of any such holders is required pursuant to the
provisions of this Article IV or the certificate or certificates establishing
any additional series of such stock.
A description of each class of the Corporation's stock, with the powers,
designations, preferences and relative, participating, optional and other
rights, if any, and the qualifications, limitations and restrictions thereof, is
as follows:
I. SERIES PREFERRED STOCK
A. GENERAL PROVISIONS RELATING TO ALL SERIES
1. The Board of Directors shall have authority to classify and reclassify any
unissued shares of the Series Preferred Stock from time to time by setting or
changing in any one or more respects the powers, designations, preferences and
relative, participating, optional and other rights, if any, and the
qualifications, limitations and restrictions of the Series Preferred Stock.
Subject to the foregoing, the power of the Board of Directors to classify and
reclassify any of the shares of Series Preferred Stock shall include, without
limitation, subject to the provisions of this Certificate of Incorporation,
authority to classify or reclassify any unissued shares of such stock into one
or more series of Series Preferred Stock, and to divide and classify shares of
any series into one or more series of Series Preferred Stock by determining,
fixing or altering one or more of the following:
(a) The distinctive designation of such series and the number of shares to
constitute such series; provided that, unless otherwise prohibited by the
terms of such or any other series, the number of shares of any series may be
decreased by the Board of Directors in connection with any classification or
reclassification of unissued shares and the number of shares of such series
may be increased by the Board of Directors in connection with any such
classification or reclassification, and any shares of any series which have
been redeemed, purchased, otherwise acquired or converted into shares of
Common Stock or any other series shall remain part of the authorized Series
Preferred Stock and be subject to classification and reclassification as
provided in this Section.
(b) Whether or not and, if so, the rates, amounts and times at which, and the
conditions under which, dividends shall be payable on shares of such series,
whether any such dividends shall rank senior or junior to or on a parity with
the dividends payable on any other series of Series Preferred Stock, and the
status of any such dividends as cumulative, cumulative to a limited extent or
non-cumulative and as participating or non-participating.
(c) Whether or not shares of such series shall have voting rights, in
addition to any voting rights provided by law and, if so, the terms of such
voting rights.
(d) Whether or not shares of such series shall have conversion or exchange
privileges and, if so, the terms and conditions thereof, including provision
for adjustment of the conversion or exchange rate in such events or at such
times as the Board of Directors shall determine.
<PAGE>
(e) Whether or not shares of such series shall be subject to redemption and,
if so, the terms and conditions of such redemption, including the date or
dates upon or after which they shall be redeemable and the amount per share
payable in case of redemption, which amount may vary under different
conditions and at different redemption dates; and whether or not there shall
be any sinking fund or purchase account in respect thereof, and if so, the
terms thereof.
(f) The rights of the holders of shares of such series upon the liquidation,
dissolution or winding up of the affairs of, or upon any distribution of the
assets of, the Corporation, which rights may vary depending upon whether such
liquidation, dissolution or winding up is voluntary or involuntary and, if
voluntary, may vary at different dates, and whether such rights shall rank
senior or junior to or on a parity with such rights of any other series of
Series Preferred Stock.
(g) Whether or not there shall be any limitations applicable, while shares of
such series are outstanding, upon the payment of dividends or making of
distributions on, or the acquisition of, or the use of moneys for purchase or
redemption of, any stock of the Corporation, or upon any other action of the
Corporation, including action under this Section, and, if so, the terms and
conditions thereof.
(h) Any other powers, designations, preferences and relative, participating,
optional and other rights, if any, and any other qualifications, limitations
and restrictions, on the shares of such series, not inconsistent with law and
this Certificate of Incorporation.
2. For the purposes hereof and of any certificate providing for the
classification or reclassification of any shares of Series Preferred Stock or of
any other charter document of the Corporation (unless otherwise provided in any
such certificate or document), any class or series of stock of the Corporation
shall be deemed to rank:
(a) Prior to a particular class or series of stock if the holders of such
class or classes or series shall be entitled to the receipt of dividends or
of amounts distributable in the event of any liquidation, dissolution or
winding up, as the case may be, in preference to or with priority over the
holders of such particular class or series of stock;
(b) On a parity with a particular class or series of stock, whether or not
the dividend rates, dividend payment dates, voting rights or redemption or
liquidation prices per share thereof, be different from those of such
particular class or series of stock, if the rights of holders of such class
or classes or series to the receipt of dividends or of amounts distributable
in event of any liquidation, dissolution or winding up, as the case may be,
shall be neither (i) in preference to, or with priority over, nor (ii)
subject or subordinate to, the rights of holders of such particular class or
series of stock in respect of the receipt of dividends or of amounts
distributable in the event of any liquidation, dissolution or winding up of
the Corporation, as the case may be; and
(c) Junior to a particular class or series of stock if the rights of the
holders of such class or classes or series shall be subject or subordinate to
the rights of the holders of such particular class or series of stock in
respect of the receipt of dividends or of amounts distributable in the event
of any liquidation, dissolution or winding up, as the case may be.
B. SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. DESIGNATION AND AMOUNT. The shares of this series shall be designated as
"Series A Junior Participating Preferred Stock" and the number of shares
constituting such series shall initially be 10,000,000, par value $0.01 per
share, such number of shares to be subject to increase or decrease by action of
the Board of Directors as evidenced by a certificate or certificates evidencing
such change.
<PAGE>
2. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of Series A Junior Participating Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first business day of January, April, July and October
in each year (each such date being referred to herein as a "Series A
Quarterly Dividend Payment Date"), commencing on the first Series A Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (i) $10.00 or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Series A Quarterly Dividend Payment Date, or, with
respect to the first Series A Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after November 1, 1994 (the "Rights Declaration Date") (A) declare any
dividend on Common Stock payable in shares of Common Stock, (B) subdivide the
outstanding Common Stock, or (C) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders
of shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (ii) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series A
Junior Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Series A Quarterly Dividend Payment Date
and the next subsequent Series A Quarterly Dividend Payment Date, a dividend
of $10.00 per share on the Series A Junior Participating Preferred Stock
shall nevertheless be payable on such subsequent Series A Quarterly Dividend
Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Junior Participating Preferred Stock from the Series A Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Series A Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Series A Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Series A Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Series A
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Junior Participating Preferred Stock entitled to receive payment
of a dividend or distribution declared thereon, which record date shall be no
more than 30 days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of shares of Series A Junior Participating
Preferred Stock shall have the following voting rights:
<PAGE>
(a) Subject to the provision for adjustment hereinafter set forth, each share
of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders
of the Corporation. In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(b) Except as otherwise provided herein or by law, the holders of shares of
Series A Junior Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(c) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall
mark the beginning of a period (herein called a "default period") which
shall extend until such time when all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly
dividend period on all shares of Series A Junior Participating Preferred
Stock then outstanding shall have been declared and paid or set apart for
payment. During each default period, all holders of Series Preferred
Stock, (including holders of the Series A Junior Participating Preferred
Stock) with dividends in arrears in an amount equal to six (6) quarterly
dividends thereon, voting as a class, irrespective of series, shall have
the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of Series
A Junior Participating Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(c)
or at any annual meeting of stockholders, and thereafter at annual
meetings of stockholders, provided that neither such voting right nor the
right of the holders of any other series of Series Preferred Stock, if
any, to increase, in certain cases, the authorized number of Directors
shall be exercised unless the holders of ten percent (10%) in number of
shares of Series Preferred Stock outstanding shall be present in person or
by proxy. The absence of a quorum of the holders of Common Stock shall not
affect the exercise by the holders of Series Preferred Stock of such
voting right. At any meeting at which the holders of Series Preferred
Stock shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect
Directors to fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) Directors or, if such right is exercised at an
annual meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required number, the
holders of the Series Preferred Stock shall have the right to make such
increase in the number of Directors as shall be necessary to permit the
election by them of the required number. After the holders of the Series
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the
holders of Series Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the
---- -----
Series A Junior Participating Preferred Stock.
(iii) Unless the holders of Series Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of
the total number of shares of Series Preferred Stock outstanding,
irrespective of series, may request, the calling of a special meeting of
the holders of Series Preferred Stock, which meeting shall thereupon be
called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which
holders of Series
<PAGE>
Preferred Stock are entitled to vote pursuant to this paragraph (c)(iii)
shall be given to each holder of record of Series Preferred Stock by
mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not less
than ten percent (10%) of the total number of shares of Series Preferred
Stock outstanding. Notwithstanding the provisions of this paragraph
(c)(iii), no such special meeting shall be called during the period within
60 days immediately preceding the date fixed for the next annual meeting
of the stockholders.
(iv) In any default period, the holders of Common Stock, and other classes
of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of Directors until the holders of Series
Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (A) the
Directors so elected by the holders of Series Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (B) any vacancy
in the Board of Directors may (except as provided in paragraph (c)(ii) of
this Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall have become vacant. References in this
paragraph (c) to Directors elected by the holders of a particular class of
stock shall include Directors elected by such Directors to fill vacancies
as provided in clause (B) of the preceding sentence.
(v) Immediately upon the expiration of a default period, (A) the right of
the holders of Series Preferred Stock as a class to elect Directors shall
cease, (B) the term of any Directors elected by the holders of Series
Preferred Stock as a class shall terminate, and (C) the number of
Directors shall be such number as may be provided for in this Certificate
of Incorporation or the By-laws of the Corporation irrespective of any
increase made pursuant to the provisions of paragraph (c)(ii) of this
Section 3 (such number being subject, however, to change thereafter in any
manner provided by law or in this Certificate of Incorporation or the By-
laws of the Corporation). Any vacancies in the Board of Directors effected
by the provisions of clauses (B) and (C) in the preceding sentence may be
filled by a majority of the remaining Directors.
(d) Except as set forth herein or as otherwise required by applicable law,
holders of Series A Junior Participating Preferred Stock shall have no
special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
4. CERTAIN RESTRICTIONS.
(a) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Junior Participating Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up)
<PAGE>
with the Series A Junior Participating Preferred Stock, except dividends
paid ratably on the Series A Junior Participating Preferred Stock and all
such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Junior Participating
Preferred Stock, provided that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such parity stock in exchange
for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Junior Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of Series
A Junior Participating Preferred Stock, or any shares of stock ranking on
a parity with the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences
of the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
5. REACQUIRED SHARES. Any shares of Series A Junior Participating Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Series Preferred Stock and may be reissued as part of a new
series of Series Preferred Stock to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) Upon any liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Junior Participating Preferred Stock unless,
prior thereto, the holders of shares of Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 100 (as
appropriately adjusted as set forth in subparagraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii), the "Adjustment Number").
Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
<PAGE>
(b) In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
(c) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares
of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series A Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(a) declare any dividend on Common Stock payable in shares of Common Stock, (b)
subdivide the outstanding Common Stock, or (c) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Series A Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8. NO REDEMPTION. The shares of Series A Junior Participating Preferred Stock
shall not be redeemable.
9. RANKING. The Series A Junior Participating Preferred Stock shall rank junior
to all other series of the Corporation's Series Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
10. AMENDMENT. This Certificate of Incorporation shall not be further amended
in any manner which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of two-thirds
or more of the outstanding shares of Series A Junior Participating Preferred
Stock, voting separately as a class.
11. FRACTIONAL SHARES. Series A Junior Participating Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred Stock.
II. COMMON STOCK
A. DIVIDENDS. Subject to all of the rights of the Series Preferred Stock,
dividends may be paid upon the Common Stock as and when declared by the Board of
Directors out of funds legally
<PAGE>
available for the payment of dividends.
B. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, and after the
holders of the Series Preferred Stock shall have been paid in full amounts to
which they respectively shall be entitled, or an amount sufficient to pay the
aggregate amount to which such holders shall be entitled shall have been
deposited in trust with a bank or trust company having its principal office in
the Borough of Manhattan, City, County and State of New York, having a capital,
undivided profits and surplus aggregating at least $5,000,000, for the benefit
of the holders of the Series Preferred Stock, the remaining net assets of the
Corporation shall be distributed pro rata to the holders of the Common Stock.
C. VOTING RIGHTS. Except as otherwise expressly provided with respect to the
Series Preferred Stock and except as otherwise may be required by law, the
Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes and each holder of Common Stock shall be
entitled to one vote for each share held.
ARTICLE V.
A. BOARD OF DIRECTORS OF THE CORPORATION.
1. GENERAL PROVISIONS. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. The exact number of
directors shall be fixed from time to time by, or in the manner provided in, the
By-Laws of the Corporation and may be increased or decreased as therein
provided. Directors of the Corporation need not be elected by ballot unless
required by the By-laws.
2. CLASSIFICATION OF BOARD OF DIRECTORS. The directors shall be divided into
three classes. Each such class shall consist, as nearly as may be possible, of
one-third of the total number of directors, and any remaining directors shall be
included within such group or groups as the Board of Directors shall designate.
At the annual meeting of stockholders in 1994, a class of directors shall be
elected for a one-year term, a class of directors for a two-year term and a
class of directors for a three-year term. At each succeeding annual meeting of
stockholders, beginning in 1995, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, but in no case shall a decrease in the number of
directors shorten the term of any incumbent director. A director may be removed
from office for cause only and, subject to such removal, death, resignation,
retirement or disqualification, shall hold office until the annual meeting for
the year in which his term expires and until his successor shall be elected and
qualify. No alteration, amendment or repeal of this Article V or the By-Laws of
the Corporation shall be effective to shorten the term of any director holding
office at the time of such alteration, amendment or repeal, to permit any such
director to be removed without cause, or to increase the number of directors in
any class or in the aggregate from that existing at the time of such alteration,
amendment or repeal until the expiration of the terms of office of all directors
then holding office, unless (i) in the case of this Article V, such alteration,
amendment or repeal has been approved by the holders of all shares of stock
entitled to vote thereon, or (ii) in the case of the By-Laws, such alteration,
amendment or repeal has been approved by either the holders of all shares
entitled to vote thereon or by a vote of a majority of the entire Board of
Directors.
3. DIRECTORS APPOINTED BY A SPECIFIC CLASS OF STOCKHOLDERS. To the extent that
any holders of any class or series of stock other than Common Stock issued by
the Corporation shall have the separate right, voting as a class or series, to
elect directors, the directors elected by such class or series shall be deemed
to constitute an additional class of directors and shall have a term of office
<PAGE>
for one year or such other period as may be designated by the provisions of such
class or series providing such separate voting right to the holders of such
class or series of stock, and any such class of directors shall be in addition
to the classes designated above.
ARTICLE VI.
A. GENERAL PROVISIONS. The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the Corporation and
of its directors and stockholders:
1. AMENDMENTS TO THE CERTIFICATE OF INCORPORATION. Subject to the provisions
of applicable law, the Corporation reserves the right from time to time to make
any amendment to its Certificate of Incorporation, now or hereafter authorized
by law, including any amendment which alters the contract rights as expressly
set forth therein, of any outstanding stock.
2. AMENDMENTS TO THE BY-LAWS. The Board of Directors is expressly authorized
to adopt, alter and repeal the By-Laws of the Corporation in whole or in part at
any regular or special meeting of the Board of Directors, by vote of a majority
of the entire Board of Directors. Except where this Certificate of Incorporation
otherwise requires a higher vote, the By-Laws may also be adopted, altered or
repealed in whole or in part at any annual or special meeting of the
stockholders by the affirmative vote of three-fourths of the shares of the
Corporation outstanding and entitled to vote thereon.
3. NO PREEMPTIVE RIGHTS. No holder of any class of stock of the Corporation,
whether now or hereafter authorized or outstanding, shall have any preemptive,
preferential or other right to subscribe for or purchase any class of the
Corporation's stock, whether now or hereafter authorized or outstanding, which
it may at any time issue or sell, or to subscribe for or purchase any notes,
debentures, bonds or other securities which it may at any time issue or sell,
whether or not the same be convertible into or exchangeable for or carry options
or warrants to purchase shares of any class of the Corporation's stock or other
securities, or to receive or purchase any warrants or options which may be
issued or granted evidencing the right to purchase any such stock or other
securities, it being intended by this Section 3 that all preemptive rights of
any kind applicable to securities of the Corporation are eliminated.
4. VOTE REQUIRED TO TAKE ACTION; ACTION BY WRITTEN CONSENT. Except as
otherwise provided in this Certificate of Incorporation and except as otherwise
provided by applicable law, the Corporation may take or authorize any action
upon the affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
thereof. Action shall be taken by stockholders of the Corporation only at annual
or special meetings of stockholders, and stockholders may act in lieu of a
meeting only by unanimous written consent.
5. COMPENSATION OF DIRECTORS. The Board of Directors may determine from time
to time the amount and type of compensation which shall be paid to its members
for service on the Board of Directors. The Board of Directors shall also have
the power, in its discretion, to provide for and to pay to directors rendering
services to the Corporation not ordinarily rendered by directors, as such,
special compensation appropriate to the value of such services, as determined by
the Board from time to time.
6. INTERESTED TRANSACTIONS. Any director or officer individually, or any
partnership of which any director or officer may be a member, or any corporation
or association of which any director or officer may be an officer, director,
trustee, employee or stockholder, may be a party to, or may be pecuniarily or
otherwise interested in, any contract or transaction of the Corporation, and in
the absence of fraud no contract or other transaction shall be thereby affected
or invalidated. Any director of the Corporation who is so interested, or who is
also a director, officer, trustee, employee or stockholder of such other
corporation or association or a member of such partnership which is so
<PAGE>
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of the Corporation which shall authorize any
such contract or transaction, and may vote thereat to authorize any such
contract or transaction, with like force and effect as if he were not such
director, officer, trustee, employee or stockholder of such other corporation or
association or not so interested or a member of a partnership so interested;
provided that in case a director, or a partnership, corporation or association
- --------
of which a director is a member, officer, director, trustee or employee is so
interested, such fact shall be disclosed or shall have been known to the Board
of Directors or a majority thereof. This paragraph shall not be construed to
invalidate any such contract or transaction which would otherwise be valid under
the common and statutory law applicable thereto.
7. INDEMNIFICATION. The Corporation shall indemnify (a) its directors to the
fullest extent permitted by the laws of the State of Delaware now or hereafter
in force, including the advancement of expenses under the procedures provided by
such laws, (b) all of its officers to the same extent as it shall indemnify its
directors, and (c) its officers who are not directors to such further extent as
shall be authorized by the Board of Directors and be consistent with law.
Subject only to any limitations prescribed by the laws of the State of Delaware
now or hereafter in force, the foregoing shall not limit the authority of the
Corporation to indemnify the directors, officers and other employees and agents
of this Corporation consistent with law and shall not be deemed to be exclusive
of any rights to which those indemnified may be entitled as a matter of law or
under any resolution, By-Law provision, or agreement.
8. COURT-ORDERED MEETINGS OF CREDITORS AND/OR STOCKHOLDERS. Whenever a
compromise or arrangement is proposed between this Corporation and its creditors
or any class of them and/or between this Corporation and its stockholders or any
class of them, any court of equitable jurisdiction within the State of Delaware
may, on the application in a summary way of this Corporation or of any creditor
or stockholder thereof, or on the application of any receiver or receivers
appointed for this Corporation under the provisions of Section 291 of Title 8 of
the Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as such court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which such application has
been made, be binding on all the creditors or class of creditors, and/or on all
the stockholders or class of stockholders, of this Corporation, as the case may
be, and also on this Corporation.
9. LIABILITY OF DIRECTORS. To the fullest extent permitted by Delaware
statutory or decisional law, as amended or interpreted, no director of this
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director. This Section 9
does not affect the availability of equitable remedies for breach of fiduciary
duties.
ARTICLE VII.
A. VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS
1. VOTING REQUIREMENTS. In addition to any vote otherwise required by law or
this Certificate of
<PAGE>
Incorporation, a Business Combination (such term, and certain other capitalized
terms referred to in this Article VII, as defined in Section 3 of this Article
VII) shall be recommended by the Board of Directors and approved by the
affirmative vote of at least:
(a) 80 percent of the votes entitled to be cast by outstanding shares of
voting stock of the Corporation, voting together as a single voting group;
and
(b) Two-thirds of the votes entitled to be cast by holders of voting stock
other than voting stock held by an Interested Stockholder who is (or whose
Affiliate is) a party to the Business Combination or an Affiliate or
Associate of the Interested Stockholder, voting together as a single voting
group.
2. WHEN VOTING REQUIREMENTS NOT APPLICABLE.
(a) The vote required by Section 1 of this Article VII does not apply to a
Business Combination if each of the following conditions is met:
(i) The aggregate amount of the cash and the Market Value as of the
Valuation Date of consideration other than cash to be received per share
by holders of common stock in such Business Combination is at least equal
to the highest of the following:
(A) The highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of common stock of the same class or series
acquired by it: (x) within the 2 year period immediately prior to the
Announcement Date of the proposal of the Business Combination; or (y)
in the transaction in which it became an Interested Stockholder,
whichever is higher; or
(B) The Market Value per share of common stock of the same class or
series on the Announcement Date or on the Determination Date,
whichever is higher; or
(C) The price per share equal to the Market Value per share of common
stock of the same class or series determined pursuant to subparagraph
(i)(B) of this paragraph (a), multiplied by the fraction of: (x) the
highest per share price (including any brokerage commissions, transfer
taxes and soliciting dealers' fees) paid by the Interested Stockholder
for any shares of common stock of the same class or series acquired by
it within the 2 year period immediately prior to the Announcement
Date, over (y) the Market Value per share of common stock of the same
class or series on the first day in such 2 year period on which the
Interested Stockholder acquired any shares of common stock.
(ii) The aggregate amount of the cash and the Market Value as of the
Valuation Date of consideration other than cash to be received per share
by holders of shares of any class or series of outstanding stock other
than Common Stock is at least equal to the highest of the following
(whether or not the Interested Stockholder has previously acquired any
shares of a particular class or series of stock):
(A) The highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Stockholder for any shares of such class of stock acquired by it: (x)
within the 2 year period immediately prior to the Announcement Date of
the proposal of the Business Combination; or (y) in the transaction in
which it became an Interested Stockholder, whichever is higher; or
(B) The highest preferential amount per share to which the holders of
shares of such
<PAGE>
class of stock are entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
or
(C) The Market Value per share of such class of stock on the
Announcement Date or on the Determination Date, whichever is higher;
or
(D) The price per share equal to the Market Value per share of such
class of stock determined pursuant to subparagraph (ii)(B) of this
paragraph (a), multiplied by the fraction of: (x) the highest per
share price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Stockholder for any
shares of any class of Voting Stock acquired by it within the 2 year
period immediately prior to the Announcement Date, over (y) the Market
Value per share of the same class of voting stock on the first day in
such 2 year period on which the Interested Stockholder acquired any
shares of the same class of Voting Stock.
(iii) The consideration to be received by holders of any class or series
of outstanding stock is to be in cash or in the same form as the
Interested Stockholder has previously paid for shares of the same class or
series of stock. If the Interested Stockholder has paid for shares of any
class of stock with varying forms of consideration, the form of
consideration for such class of stock shall be either cash or the form
used to acquire the largest number of shares of such class or series of
stock previously acquired by it.
(iv) After the Interested Stockholder has become an Interested Stockholder
and prior to the consummation of such Business Combination:
(A) There shall have been: (x) no reduction in the annual rate of
dividends paid on any class or series of stock of the Corporation that
is not preferred stock (except as necessary to reflect any subdivision
of the stock); (y) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
the stock; and (z) the Interested Stockholder did not become the
beneficial owner of any additional shares of stock of the Corporation
except as part of the transaction which resulted in such Interested
Stockholder becoming an Interested Stockholder or by virtue of
proportionate stock splits or stock dividends.
(B) The provisions of subparagraphs (x) and (y) of subparagraph
(iv)(A) do not apply if no Interested Stockholder or an Affiliate or
Associate of the Interested Stockholder voted as a director of the
Corporation in a manner inconsistent with such sub-subparagraphs and
the Interested Stockholder, within 10 days after any act or failure to
act inconsistent with such sub-subparagraphs, notifies the Board of
Directors of the Corporation in writing that the Interested
Stockholder disapproves thereof and requests in good faith that the
Board of Directors rectify such act or failure to act.
(v) After the Interested Stockholder has become an Interested Stockholder,
the Interested Stockholder may not have received the benefit, directly or
indirectly (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by the Corporation or any of its
Subsidiaries, whether in anticipation of or in connection with such
Business Combination or otherwise.
(b) The requirements of Section 1 of this Article VII do not apply to
Business Combinations that, as to specifically identified Interested
Stockholders or their Affiliates, have been approved or exempted therefrom by
resolution of the Board of Directors of the Corporation at any time prior to
the time that the Interested Stockholder first became an Interested
Stockholder. If the Board of Directors so provides, the resolution shall be
subject to approval of the stockholders in the
<PAGE>
manner and by the vote specified in the resolution.
3. DEFINITIONS. In this Article VII, the following words have the meanings
indicated:
(a) "Affiliate," including the term "affiliated person," means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, a specified person.
(b) "Announcement Date" means the first general public announcement of the
proposal or intention to make a proposal of the Business Combination or its
first communication generally to stockholders of the Corporation, whichever
is earlier;
(c) "Associate," when used to indicate a relationship with any person, means:
(i) Any corporation or organization (other than the Corporation or a
Subsidiary of the Corporation) of which such person is an officer,
director, or partner or is, directly or indirectly, the beneficial owner
of 10 percent or more of any class of Equity Securities;
(ii) Any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and
(iii) Any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the Corporation or any of its Affiliates.
(d) "Beneficial Owner," when used with respect to any Voting Stock, means a
person:
(i) That, individually or with any of its Affiliates or Associates,
beneficially owns Voting Stock, directly or indirectly; or
(ii) That, individually or with any of its Affiliates or Associates, has:
(A) The right to acquire Voting Stock (whether such right is
exercisable immediately or only after the passage of time), pursuant
to any agreement, arrangement, or understanding or upon the exercise
of conversion rights, exchange rights, warrants or options, or
otherwise; or
(B) The right to vote Voting Stock pursuant to any agreement,
arrangement, or understanding; or
(iii) That has any agreement, arrangement, or understanding for the
purpose of acquiring, holding, voting or disposing of Voting Stock with
any other person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, such shares of Voting Stock.
(e) "Business Combination" means:
(i) Unless the merger, consolidation, or share exchange does not alter the
contract rights of the stock as expressly set forth in this Certificate of
Incorporation or change or convert in whole or in part the outstanding
shares of stock of the Corporation, any merger or consolidation of the
Corporation or any Subsidiary with (A) any Interested Stockholder or (B)
any other corporation (whether or not itself an Interested Stockholder)
which is, or after the merger or consolidation, would be, an Affiliate of
an Interested Stockholder that was an Interested Stockholder prior to the
transaction.
<PAGE>
(ii) Any sale, lease, transfer or other disposition, other than in the
ordinary course of business, in one transaction or a series of
transactions in any 12-month period, to any Interested Stockholder or any
Affiliate of any Interested Stockholder (other than the Corporation or any
of its Subsidiaries) of any assets of the Corporation or any Subsidiary
having, measured at the time the transaction or transactions are approved
by the Board of Directors of the Corporation, an aggregate book value as
of the end of the Corporation's most recently ended fiscal quarter of 10
percent or more of the total Market Value of the outstanding stock of the
Corporation or of its net worth as of the end of its most recently ended
fiscal quarter;
(iii) The issuance or transfer by the Corporation, or any Subsidiary, in
one transaction or a series of transactions, of any Equity Securities of
the Corporation or any Subsidiary which have an aggregate Market Value of
5 percent or more of the total Market Value of the outstanding stock of
the Corporation to any Interested Stockholder or any Affiliate of any
Interested Stockholder (other than the Corporation or any of its
Subsidiaries) except pursuant to the exercise of warrants or rights to
purchase securities offered pro rata to all holders of the Corporation's
voting stock or any other method affording substantially proportionate
treatment to the holders of Voting Stock;
(iv) The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation in which anything other than cash will be
received by an Interested Stockholder or any Affiliate of any Interested
Stockholder; or
(v) Any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation, of the Corporation with any of its Subsidiaries which has
the effect, directly or indirectly, in one transaction or a series of
transactions, of increasing by 5 percent or more of the total number of
outstanding shares, the proportionate amount of the outstanding shares of
any class of Equity Securities of the Corporation or any Subsidiary which
is directly or indirectly owned by any Interested Stockholder or any
Affiliate of any Interested Stockholder.
(f) "Common Stock" means any stock other than preferred or preference stock.
(g) "Control," including the terms "controlling," "controlled by" and "under
common control with," means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract, or
otherwise, and the beneficial ownership of 10 percent or more of the votes
entitled to be cast by a corporation's voting stock creates a presumption of
control.
(h) "Determination Date" means the date on which an Interested Stockholder
first became an Interested Stockholder;
(i) "Equity Security" means:
(i) Any stock or similar security, certificate of interest, or
participation in any profit sharing agreement, voting trust certificate,
or certificate of deposit for an equity security;
(ii) Any security convertible, with or without consideration, into an
equity security, or any warrant or other security carrying any right to
subscribe to or purchase an equity security; or
(iii) Any put, call, straddle, or other option or privilege of buying an
equity security from or selling an equity security to another without
being bound to do so.
<PAGE>
(j) "Interested Stockholder" means any person (other than the Corporation or
any Subsidiary) that:
(i)(A) Is the beneficial owner, directly or indirectly, of 10 percent or
more of the voting power of the outstanding voting stock of the
Corporation; or
(B) Is an Affiliate of the Corporation and at any time within the 2 year
period immediately prior to the date in question was the beneficial owner,
directly or indirectly, of 10 percent or more of the Voting Power of the
then outstanding voting stock of the Corporation.
(ii) For the purpose of determining whether a person is an Interested
Stockholder, the number of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned by the person through application of
subsection (d) of this section but may not include any other shares of
Voting Stock which may be issuable pursuant to any agreement, arrangement,
or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
(k) "Market Value" means:
(i) In the case of stock, the highest closing sale price during the 30 day
period immediately preceding the date in question of a share of such stock
on the composite tape for New York Stock Exchange listed stocks, or, if
such stock is not quoted on the composite tape, on the New York Stock
Exchange, or if such stock is not listed on such exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30 day period
preceding the date in question on the National Association of Securities
Dealers, Inc. automated quotations system or any system then in use, or if
no such quotations are available, the fair market value on the date in
question of a share of such stock as determined by the Board of Directors
of the Corporation in good faith; and
(ii) In the case of property other than cash or stock, the fair market
value of such property on the date in question as determined by the Board
of Directors of the Corporation in good faith.
(l) "Subsidiary" means any corporation of which voting stock having a
majority of the votes entitled to be cast is owned, directly or indirectly,
by the Corporation.
(m) "Valuation Date" means: (i) for a Business Combination voted upon by
stockholders, the later of the day prior to the date of the stockholders'
vote or the day 20 days prior to the consummation of the Business
Combination; and (ii) for a Business Combination not voted upon by
stockholders, the date of the consummation of the Business Combination.
(n) "Voting Stock" means shares of capital stock of the Corporation entitled
to vote generally in the election of directors.
IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation to be executed and attested to by its duly
authorized officers this 31st day of January, 1996.
McKESSON CORPORATION
By: /s/ Nancy A. Miller
-------------------------------------
<PAGE>
Nancy A. Miller
Vice President and Corporate Secretary
Attest:
/s/ Lorraine E. Peetz
- -------------------------------------------
Lorraine E. Peetz
Assistant Secretary
<PAGE>
EXHIBIT 3.2
RESTATED
BY-LAWS
OF
McKESSON CORPORATION
A DELAWARE CORPORATION
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The address of the registered office of McKesson
Corporation (the "Corporation") within the State of Delaware is 1013 Centre
Road, City of Wilmington 19805-1297, County of New Castle. The name of the
registered agent of the Corporation at such address is The Prentice-Hall
Corporation System, Inc.
SECTION 2. OTHER OFFICES. The Corporation shall also have and maintain an
office or principal place of business at One Post Street, San Francisco,
California and may also have offices at such other places, both within and
without the State of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders of the Corporation
shall be held at such place, either within or without the State of Delaware, as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at the office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof.
SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders of the
Corporation for the purpose of election of directors and for such other business
as may lawfully come before it, shall be held on such date and at such time as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at 10:00 a.m. on the last Wednesday in July in each year if not
a legal holiday, and, if a legal holiday, at the same hour and place on the next
succeeding day not a holiday.
SECTION 3. SPECIAL MEETINGS. Special Meetings of the stockholders of the
Corporation may be called, for any purpose or purposes, by the Chairman of the
Board or the President or the Board of Directors at any time. Stockholders may
not call Special Meetings of the stockholders of the Corporation.
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<PAGE>
SECTION 4. NOTICE OF MEETINGS.
(A) Except as otherwise provided by law or the Certificate of Incorporation,
written notice of each meeting of stockholders, specifying the place, date and
hour and purpose or purposes of the meeting, shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder entitled to
vote thereat, directed to his address as it appears upon the books of the
Corporation; except that where the matter to be acted on is a merger or
consolidation of the Corporation or a sale, lease or exchange of all or
substantially all of its assets, such notice shall be given not less than 20 nor
more than 60 days prior to such meeting.
(B) If at any meeting action is proposed to be taken which, if taken, would
entitle stockholders fulfilling the requirements of Section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.
(C) When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken unless the adjournment is for more
than thirty days, or unless after the adjournment a new record date is fixed for
the adjourned meeting, in which event a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
(D) Notice of the time, place and purpose of any meeting of stockholders may be
waived in writing, either before or after such meeting, and to the extent
permitted by law, will be waived by any stockholder by his attendance thereat,
in person or by proxy. Any stockholder so waiving notice of such meeting shall
be bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
(E) Unless and until voted, every proxy shall be revocable at the pleasure of
the person who executed it or of his legal representatives or assigns, except in
those cases where an irrevocable proxy permitted by statute has been given.
SECTION 5. QUORUM. At all meetings of stockholders, except where otherwise
provided by law, the Certificate of Incorporation, or these By-Laws, the
presence, in person or by proxy duly authorized, of the holders of a majority of
the outstanding shares of stock entitled to vote shall constitute a quorum for
the transaction of business. Shares, the voting of which at said meeting has
been enjoined, or which for any reason cannot be lawfully voted at such meeting,
shall not be counted to determine a quorum at said meeting.
In the absence of a quorum any meeting of stockholders may be adjourned, from
time to time, by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. At such
adjourned meeting at which a quorum is present or represented any business may
be transacted which might have been transacted at the original meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
all action taken by the holders of a majority of the voting power represented at
any meeting at which a quorum is present shall be valid and binding upon the
Corporation.
In the event that at any meeting at which the holders of more than one class or
series of the Corporation's capital stock are entitled to vote as a class, a
quorum of any such class or series is lacking, the holders of any class or
series represented by a quorum may proceed with the
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<PAGE>
transaction of the business to be transacted by that class or series, and if
such business is the election of directors, the director whose successors shall
not have been elected shall continue in office until their successors shall have
been duly elected and shall have qualified.
SECTION 6. VOTING RIGHTS.
(A) Except as otherwise provided by law, only persons in whose names shares
entitled to vote stand on the stock records of the Corporation on the record
date for determining the stockholders entitled to vote at said meeting shall be
entitled to vote at such meeting. Shares standing in the names of two or more
persons shall be voted or represented in accordance with the determination of
the majority of such persons, or, if only one of such persons is present in
person or represented by proxy, such person shall have the right to vote such
shares and such shares shall be deemed to be represented for the purpose of
determining a quorum.
(B) Every person entitled to vote or execute consents shall have the right to
do so either in person or by an agent or agents authorized by a written proxy
executed by such person or his duly authorized agent, which proxy shall be filed
with the Secretary of the Corporation at or before the meeting at which it is to
be used. Said proxy so appointed need not be a stockholder. No proxy shall be
voted on after three years from its date unless the proxy provides for a longer
period.
(C) Without limiting the manner in which a stockholder may authorize another
person or persons to act for him as proxy pursuant to subsection (b) of this
Section, the following shall constitute a valid means by which a stockholder may
grant such authority:
(1) A stockholder may execute a writing authorizing another person or
persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing
such writing or causing his or her signature to be affixed to such writing
by any reasonable means including, but not limited to, by facsimile
signature.
(2) A stockholder may authorize another person or persons to act for him as
proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will
be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will
be the holder of the proxy to receive such transmission, provided that any
such telegram, cablegram or other means of electronic transmission must
either set forth or be submitted with information from which it can be
determined that the telegram, cablegram or other electronic transmission
was authorized by the stockholder. If it is determined that such telegrams,
cablegrams or other electronic transmissions are valid, the inspectors or,
if there are no inspectors, such other persons making that determination
shall specify the information upon which they relied.
(D) Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission created pursuant to subsection (c) of this Section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.
SECTION 7. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.
(A) The Corporation shall, in advance of any meeting of stockholders, appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Corporation may designate
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<PAGE>
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
stockholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
(B) The inspectors shall (i) ascertain the number of shares outstanding and the
voting power of each, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
(C) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.
(D) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the Corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this Section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.
(E) The provisions of this Section 7 shall not apply to any annual meeting of
stockholders held prior to the annual meeting of stockholders to be held in
1995.
SECTION 8. LIST OF STOCKHOLDERS. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least 10 days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
said meeting, arranged in alphabetical order, showing the address of and the
number of shares registered in the name of each stockholder. Such list shall be
open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least 10 days prior
to the meeting, either at a place within the city where the meeting is to be
held and which place shall be specified in the notice of the meeting, or, if not
specified, at the place where said meeting is to be held, and the list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 9. STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS. At an annual meeting of
the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors,
4
<PAGE>
otherwise properly brought before the meeting by or at the direction of the
Board of Directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting, (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class or series
and number of shares of capital stock of the Corporation which are owned
beneficially or of record by the stockholder, (iv) a description of all
arrangements or understandings between the stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by the stockholder and any material interest of the stockholder in such
business, and (v) a representation that the stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 9, provided, however, that nothing in this Section 9 shall
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 9, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
SECTION 10. NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS. In
addition to any other applicable requirements, only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors, by any nominating committee or person appointed by the
Board of Directors or by any stockholder of the Corporation entitled to vote for
the election of directors at the meeting who complies with the notice procedures
set forth in this Section 10. Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely notice
in writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of the Corporation which are beneficially owned by the person and (iv)
any other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Section 14 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder; and (b) as to the
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stockholder giving the notice, (i) the name and record address of the
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by the stockholder,
(iii) a description of all arrangements or understandings between the
stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by the
stockholder, (iv) a representation that such stockholder intends to appear in
person or by proxy at the meeting to nominate the persons named in such notice
and (v) any other information relating to the stockholder that would be required
to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for the election of directors pursuant
to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee being named as a nominee and to serve as a director if elected.
The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein. These provisions
shall not apply to nomination of any persons entitled to be separately elected
by holders of preferred stock.
The Chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS. The property, affairs and business of the
Corporation shall be managed under the direction of its Board of Directors,
which may exercise all of the powers of the Corporation, except such as are by
law or by the Certificate of Incorporation or by these By-Laws expressly
conferred upon or reserved to the stockholders.
SECTION 2. NUMBER AND TERM OF OFFICE; REMOVAL. The number of directors of the
Corporation shall be fixed from time to time by these By-Laws but in no event
shall be less than three (3). Until these By-Laws are further amended, the
number of directors shall be nine. The directors shall be divided into three
classes. Each such class shall consist, as nearly as may be possible, of one-
third of the total number of directors, and any remaining directors shall be
included within such group or groups as the Board of Directors shall designate.
At the initial annual meeting of stockholders in 1994, a class of directors
shall be elected for a one-year term, a class of directors for a two-year term
and a class of directors for a three-year term. At each succeeding annual
meeting of stockholders, beginning in 1995, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, but in no case shall a decrease in the number
of directors shorten the term of any incumbent director. A director may be
removed from office for cause only and, subject to such removal, death,
resignation, retirement or disqualification, shall hold office until the annual
meeting for the year in which his term expires and until his successor shall be
elected and qualify. No alteration, amendment or repeal of these By-Laws shall
be effective to shorten the term of any director holding office at the time of
such alteration, amendment or repeal, to permit any such director to be removed
without cause, or to increase the number of directors in any class or in the
aggregate from that existing at the time of such alteration, amendment or repeal
until the expiration of the terms of office of all directors then holding
office, unless such alteration,
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amendment or repeal has been approved by either the holders of all shares of
stock entitled to vote thereon or by a vote of a majority of the entire Board of
Directors. The provisions of this Section 2 shall not apply to directors
governed by Section 15 of this ARTICLE III.
SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for the
election of directors, the directors to be elected at such meeting shall be
elected by a plurality of votes given at such election.
SECTION 4. VACANCIES. Any vacancy occurring in the Board of Directors for any
cause other than by reason of an increase in the number of directors may be
filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum, or by the stockholders. Any
vacancy occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire Board of Directors or by the
stockholders. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the expiration of the term for which he
was elected and until his successor shall have been elected and shall have
qualified. A director elected by the stockholders to fill a vacancy shall be
elected to hold office until the expiration of the term for which he was elected
and until his successor shall have been elected and shall have qualified. The
provisions of this Section 4 shall not apply to directors governed by Section 15
of this ARTICLE III.
SECTION 5. RESIGNATIONS. A director may resign at any time by giving written
notice to the Board of Directors or to the Secretary. Such resignation shall
take effect at the time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
SECTION 6. ANNUAL MEETINGS. The Board of Directors, as constituted following
the vote of stockholders at any meeting of the stockholders for the election of
directors, may hold its first meeting for the purpose of organization and the
transaction of business, if a quorum be present, immediately after such meeting
and at the same place, and notice of such meeting need not be given. Such first
meeting may be held at any other time and place specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or in a
consent and waiver of notice thereof signed by all the directors.
SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors may
be held without notice at such places and times as may be fixed from time to
time by resolution of the Board.
SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors may be called at any time by the Chairman of the Board or the
President and shall be called by the Secretary upon the written request of any
three directors and each special meeting shall be held at such place and time as
shall be specified in the notice thereof. At least twenty-four (24) hours'
notice of each such special meeting shall be given to each director personally
or sent to him addressed to his residence or usual place of business by
telephone, telegram or facsimile transmission, or at least 120 hours' notice of
each such special meeting shall be given to each director by letter sent to him
addressed as aforesaid or on such shorter notice and by such means as the person
or persons calling such meeting may deem reasonably necessary or appropriate in
light of the circumstances. Any notice by letter or telegram shall be deemed to
be given when deposited in the United States mail so addressed or when duly
deposited at an appropriate office for transmission by telegram, as the case may
be. Such notice need not state the business to be transacted at or the purpose
or purposes of
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such special meeting. No notice of any such special meeting of the Board of
Directors need be given to any director who attends in person or who, in writing
executed and filed with the records of the meeting, either before or after the
holding thereof, waives such notice. No notice need be given of an adjourned
meeting of the Board of Directors.
SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of
directors, but in no event less than two directors, shall constitute a quorum
for the transaction of business at any annual, regular or special meeting of the
Board of Directors. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, the act of a majority of the directors
present at any meeting, at which a quorum is present, shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum be had.
SECTION 10. CONSENT IN WRITING. Any action required or permitted to be taken
at any meeting of the Board of Directors or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or such committee.
SECTION 11. COMMITTEES.
(A) Executive Committee. The Board of Directors may, by resolution passed by a
majority of the whole Board, appoint an Executive Committee of not less than
three members, each of whom shall be a director. The Executive Committee, to the
extent permitted by law, shall have and may exercise when the Board of Directors
is not in session all powers of the Board in the management of the business and
affairs of the Corporation, including, without limitation, the power and
authority to declare a dividend or to authorize the issuance of stock, except
such Committee shall not have the power or authority to amend the Certificate of
Incorporation, to adopt an agreement of merger or consolidation, to recommend to
the stockholders the sale, lease or exchange of all or substantially all of the
Corporation's property and assets, to recommend to the stockholders of the
Corporation a dissolution of the Corporation or a revocation of a dissolution,
or to amend these By-Laws.
(B) Other Committees. The Board of Directors may, by resolution passed by a
majority of the whole Board, from time to time appoint such other committees as
may be permitted by law. Such other committees appointed by the Board of
Directors shall have such powers and perform such duties as may be prescribed by
the resolution or resolutions creating such committee, but in no event shall any
such committee have the powers denied to the Executive Committee in these By-
Laws.
(C) Term. The members of all committees of the Board of Directors shall serve a
term coexistent with that of the Board of Directors which shall have appointed
such committee. The Board, subject to the provisions of subsections (a) or (b)
of this Section 11, may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee; provided, that no
committee shall consist of less than one member. The membership of a committee
member shall terminate on the date of his death or voluntary resignation, but
the Board may at any time for any reason remove any individual committee member
and the Board may fill any committee vacancy created by death, resignation,
removal or increase in the number of members of the committee. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they
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constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
(D) Meetings. Unless the Board of Directors shall otherwise provide, regular
meetings of the Executive Committee or any other committee appointed pursuant to
this Section 11 shall be held at such times and places as are determined by the
Board of Directors, or by any such committee, and when notice thereof has been
given to each member of such committee, no further notice of such regular
meetings need be given thereafter; special meetings of any such committee may be
held at the principal office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof; or at any place which has been
designated from time to time by resolution of such committee or by written
consent of all members thereof, and may be called by any director who is a
member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time after the meeting
and will be waived by any director by attendance thereat. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.
SECTION 12. TELEPHONE MEETINGS. The Board of Directors or any committee
thereof may participate in a meeting by means of a conference telephone or
similar communications equipment if all members of the Board or of such
committee, as the case may be, participating in the meeting can hear each other
at the same time. Participation in a meeting by these means shall constitute
presence in person at the meeting.
SECTION 13. COMPENSATION. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors and/or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or committee, and the Board of Directors or
committee in good faith authorizes the contract or trans action by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.
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SECTION 15. DIRECTORS ELECTED BY SPECIAL CLASS OR SERIES. To the extent that
any holders of any class or series of stock other than Common Stock issued by
the Corporation shall have the separate right, voting as a class or series, to
elect directors, the directors elected by such class or series shall be deemed
to constitute an additional class of directors and shall have a term of office
for one year or such other period as may be designated by the provisions of such
class or series providing such separate voting right to the holders of such
class or series of stock, and any such class of directors shall be in addition
to the classes referred to in Section 2 of this ARTICLE III. Any directors so
elected shall be subject to removal in such manner as may be provided by law or
by the Certificate of Incorporation of this Corporation. The provisions of
Sections 2 and 4 of this ARTICLE III do not apply to directors governed by this
Section 15.
ARTICLE IV
OFFICERS
SECTION 1. DESIGNATION OF OFFICERS. The officers of the Corporation, who
shall be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Treasurer, a Secretary and a Controller. The Board of
Directors from time to time may choose such other officers as it shall deem
appropriate. Any one person may hold any number of offices of the Corporation
at any one time unless specifically prohibited therefrom by law. The Chairman
of the Board and the President shall be chosen from among the directors; the
other officers need not be directors.
SECTION 2. TERM OF OFFICE; RESIGNATION; REMOVAL. The term of office of each
officer shall be until the first meeting of the Board of Directors following the
next annual meeting of stockholders and until his successor is elected and shall
have qualified, or until his death, resignation or removal, whichever is sooner.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Secretary. Such resignation shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. Any officer may
be removed at any time either with or without cause by the Board of Directors.
SECTION 3. VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause, may be filled for the unexpired
portion of the term by the Board of Directors.
SECTION 4. AUTHORITY OF OFFICERS. Subject to the power of the Board of
Directors in its discretion to change and redefine the duties of the officers of
the Corporation by resolution in such manner as it may from time to time
determine, the duties of the officers of the Corporation shall be as follows:
(A) Chairman of the Board. The Chairman of the Board shall be the Chief
Executive Officer of the Corporation, and shall execute all the powers and
perform all the duties usual to such office. Subject to the direction of the
Board of Directors, he shall have the responsibility for the general management
of the Corporation. The Chairman shall preside at meetings of the stockholders
and the Board of Directors. He shall recommend to the Board, for its approval,
the membership of Board committees. Subject to the direction of the Board of
Directors, he shall generally manage the affairs of the Board and perform such
other duties as are assigned by the Board.
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(B) President. The President shall be the Chief Operating Officer of the
Corporation and shall execute all the powers and perform all the duties usual to
such office. The President shall perform such other duties as may be prescribed
or assigned to him from time to time by the Board of Directors, the Executive
Committee or the Chief Executive Officer.
(C) Other Officers. The other officers of the Corporation shall have such
powers and shall perform such duties as generally pertain to their respective
offices, as well as such powers and duties as the Board of Directors, the
Executive Committee or the Chief Executive Officer may prescribe.
SECTION 5. DIVISIONAL TITLES. Any one of the Chief Executive Officer,
President, or Vice President Human Resources and Administration (each one an
"Appointing Person"), may from time to time confer upon any employee of a
division of the Corporation the title of President, Vice President, Treasurer or
Secretary of such division or any other divisional title or titles deemed
appropriate. Any such titles so conferred may be discontinued and withdrawn at
any time by any one Appointing Person. Any employee of a division designated by
such a divisional title shall have the powers and duties with respect to such
division as shall be prescribed by the Appointing Person. The conferring,
withdrawal or discontinuance of divisional titles shall be in writing and shall
be filed with the Secretary of the Corporation.
SECTION 6. SALARIES. The salaries and other compensation of the principal
officers of the Corporation shall be fixed from time to time by the Board of
Directors.
ARTICLE V
EXECUTION OF CORPORATE INSTRUMENTS
AND VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 1. EXECUTION OF INSTRUMENTS. The Board of Directors may in its
discretion determine the method and designate the signatory officer or officers
or other person or persons, to execute any corporate instrument or document, or
to sign the corporate name without limitation, except where otherwise provided
by law, and such execution or signature shall be binding upon the Corporation.
All checks and drafts drawn on banks or other depositories on funds to the
credit of the Corporation or in special accounts of the Corporation, shall be
signed by such person or persons as the Treasurer or such other person
designated by the Board of Directors for that purpose shall authorize so to do.
SECTION 2. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and other
securities of other corporations and business entities owned or held by the
Corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person authorized
to do so by resolution of the Board of Directors.
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ARTICLE VI
SHARES OF STOCK AND OTHER SECURITIES
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. Certificates for the shares of
stock of the Corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairman of the Board (if there be such an officer
appointed), or by the President or any Vice President and by the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to indemnify the Corporation in such manner as it shall require
and/or to give the Corporation a surety bond in such form and amount as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost or destroyed.
SECTION 3. TRANSFERS. Transfers of record of shares of stock of the
Corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a certificate or
certificates for a like number of shares, properly endorsed.
SECTION 4. FIXING RECORD DATES. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60
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nor less than 10 days before the date of such meeting, nor more than 60 days
prior to any other action. If no record date is fixed: (1) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; (2) the record date
for determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed; (3)
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
SECTION 6. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the stock and other securities of the
Corporation, and may appoint transfer agents and registrars of any class of
stock or other securities of the Corporation.
SECTION 7. OTHER SECURITIES OF THE CORPORATION. All bonds, debentures and
other corporate securities of the Corporation, other than stock certificates,
may be signed by the Chairman of the Board (if there be such an officer
appointed), or the President or any Vice President or such other person as may
be authorized by the Board of Directors and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer; provided, however, that where any such bond, debenture or other
corporate security shall be authenticated by the manual signature of a trustee
under an indenture pursuant to which such bond, debenture or other corporate
security shall be issued, the signature of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the Corporation, or such other person as may be
authorized by the Board of Directors, or bear imprinted thereon the facsimile
signature of such person. In case any officer who shall have signed or attested
any bond, debenture or other corporate security or whose facsimile signature
shall appear thereon shall have ceased to be such officer before the bond,
debenture or other corporate security so signed or attested shall have been
delivered, such bond, debenture or other corporate security nevertheless may be
adopted by the Corporation and issued and delivered as though the person who
signed the same or whose facsimile signature shall have been used thereon had
not ceased to be such officer of the Corporation.
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ARTICLE VII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the name of the
Corporation and the state and date of its incorporation. Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director or officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
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presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The right to
indemnification conferred in this ARTICLE VIII shall be a contract right.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this
ARTICLE VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case
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upon a determination that indemnification of the director or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Section 1 or Section 2 of this ARTICLE VIII, as the case may be. Such
determination shall be made (i) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (iii) by the stockholders. To the extent, however, that a
director or officer of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this ARTICLE VIII, a person shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise of which such person is or was serving at the request
of the Corporation as a director, officer, employee or agent. The provisions of
this Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Sections 1 or 2 of this ARTICLE VIII, as the
case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this ARTICLE VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under Sections
1 and 2 of this ARTICLE VIII. The basis of such indemnification by a court shall
be a determination by such court that indemnification of the director or officer
is proper in the circumstances because he has met the applicable standards of
conduct set forth in Sections 1 or 2 of this ARTICLE VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
ARTICLE VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or
officer in defending or investigating a threatened or pending action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this ARTICLE VIII.
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SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this ARTICLE VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Sections 1 and 2 of
this ARTICLE VIII shall be made to the fullest extent permitted by law. The
provisions of this ARTICLE VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
ARTICLE VIII but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power or the obligation to indemnify him against such liability
under the provisions of this ARTICLE VIII.
SECTION 9. CERTAIN DEFINITIONS. For purposes of this ARTICLE VIII, references
to "the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors or
officers, so that any person who is or was a director or officer of such
constituent corporation, or is or was a director or officer of such constituent
corporation serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, shall stand in the
same position under the provisions of this ARTICLE VIII with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued. For purposes of
this ARTICLE VIII, references to "fines" shall include any excise taxes assessed
on a person with respect to an employee benefit plan; and references to "serving
at the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to an employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this ARTICLE VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this ARTICLE VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything contained
in this ARTICLE VIII to the contrary, except for proceedings to enforce rights
to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
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such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to
the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this ARTICLE VIII to
directors and officers of the Corporation.
SECTION 13. EFFECT OF AMENDMENT. Any amendment, repeal or modification of this
ARTICLE VIII shall not (a) adversely affect any right or protection of any
director or officer existing at the time of such amendment, repeal or
modification, or (b) apply to the indemnification of any such person for
liability, expense, or loss stemming from actions or omissions occurring prior
to such amendment, repeal, or modification.
SECTION 14. AUTHORITY TO ENTER INTO INDEMNIFICATION AGREEMENTS. The
Corporation may enter into indemnification agreements with the directors and
officers of the Corporation, including, without limitation, any indemnification
agreement in substantially the form set forth in Exhibit 1 attached to these
By-Laws.
ARTICLE IX
NOTICES
Whenever, under any provisions of these By-Laws, notice is required to be given
to any stockholder, the same shall be given in writing, timely and duly
deposited in the United States Mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the Corporation or its
transfer agent. Any notice required to be given to any director may be given by
any of the methods stated in Section 8 of ARTICLE III hereof, except that such
notice other than one which is delivered personally, shall be sent to such
address or (in the case of facsimile telecommunication) facsimile telephone
number as such director shall have disclosed in writing to the Secretary of the
Corporation, or, in the absence of such filing, to the last known post office
address of such director. If no address of a stockholder or director be known,
such notice may be sent to the office of the Corporation required to be
maintained pursuant to Section 2 of ARTICLE I hereof. An affidavit of mailing,
executed by a duly authorized and competent employee of the Corporation or its
transfer agent appointed with respect to the class of stock affected, specifying
the name and address or the names and addresses of the stockholder or
stockholders, director or directors, to whom any such notice or notices was or
were given, and the time and method of giving the same, shall be conclusive
evidence of the statements therein contained. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices given by telegram or other means of electronic transmission shall be
deemed to have been given as at the sending time recorded by the telegraph
company or other electronic transmission equipment operator transmitting the
same. It shall not be necessary that the same method of giving be employed in
respect of all directors, but one permissible method may be employed in respect
of any one or more, and any other permissible method or methods may be employed
in respect of any other or others. The period or limitation of time within which
any stockholder may exercise any option or right, or enjoy any privilege or
benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, shall not be affected or extended in any manner by the
failure of such a stockholder or such director to receive such notice. Whenever
any notice is required to be given under the provisions of this statutes or of
the Certificate of Incorporation, or of
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these By-Laws, a waiver thereof in writing signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Whenever notice is required to be given, under
any provision of law or of the Certificate of Incorporation or By-Laws of the
Corporation, to any person with whom communication is unlawful, the giving of
such notice to such person shall not be required and there shall be no duty to
apply to any governmental authority or agency for a license or permit to give
such notice to such person. Any action or meeting which shall be taken or held
without notice to any such person with whom communication is unlawful shall have
the same force and effect as if such notice had been duly given. In the event
that the action taken by the Corporation is such as to require the filing of a
certificate under any provision of the Delaware General Corporation Law, the
certificate shall state, if such is the fact and if notice is required, that
notice was given to all persons entitled to receive notice except such persons
with whom communication is unlawful.
ARTICLE X
AMENDMENTS
The Board of Directors is expressly authorized to adopt, alter and repeal the
By-Laws of the Corporation in whole or in part at any regular or special meeting
of the Board of Directors, by vote of a majority of the entire Board of
Directors. Except where ARTICLE V of the Certificate of Incorporation of the
Corporation requires a higher vote, the By-Laws may also be adopted, altered or
repealed in whole or in part at any annual or special meeting of the
stockholders by the affirmative vote of three fourths of the shares of the
Corporation outstanding and entitled to vote thereon.
CERTIFICATE OF SECRETARY
The undersigned, Vice President and Corporate Secretary of McKesson Corporation,
a Delaware corporation, hereby certifies that the foregoing is a full, true and
correct copy of the By-Laws of said Corporation, with all amendments to date of
this Certificate.
WITNESS the signature of the undersigned and the seal of the Corporation this
10th day of June, 1996.
/s/ Nancy A. Miller
-------------------------------------
Nancy A. Miller
Vice President and Corporate Secretary
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EXHIBIT 1
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of ______, 19__, between McKesson Corporation, a
Delaware corporation (the "Company"), and ______________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors and
officers the most capable persons available.
WHEREAS, Indemnitee is a director/officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors of public companies
in today's environment;
WHEREAS, the Certificate of Incorporation and the By-laws of the Company require
the Company to indemnify and advance expenses to its directors to the fullest
extent permitted by law and the Indemnitee has been serving and continues to
serve as a director or officer of the Company in part in reliance on such
Certificate of Incorporation and By-laws;
WHEREAS, in recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Company in an effective manner and Indemnitee's reliance on the aforesaid
Certificate of Incorporation and By-laws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Certificate
of Incorporation and By-laws will be available to Indemnitee (regardless of,
among other things, any amendment to or revocation of such Certificate of
Incorporation and By-laws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company), and in
order to induce Indemnitee to continue to provide services to the Company as a
director or officer thereof, the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) permitted by law and as set forth
in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.
NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing
to serve the Company directly or, at its request, with another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(A) Change in Control: shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended), other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 20% or more of the total
voting power represented by the Company's then outstanding Voting Securities, or
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company and
any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the
<PAGE>
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets.
(B) Expense: include attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending, being
a witness in or participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Proceeding relating to any Indemnifiable
Event.
(C) Indemnifiable Event: any event or occurrence that takes place either
prior to or after the execution of this Agreement, related to the fact that
Indemnitee is or was a director or an officer of the Company, or while a
director or officer is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any such capacity.
(D) Potential Change in Control: shall be deemed to have occurred if (i)
the Company enters into an agreement or arrangement, the consummation of which
would result in the occurrence of Change in Control; (ii) any person (including
the Company) publicly announces an intention to take or to consider taking
actions which if consummated would constitute Change in Control; (iii) any
person, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
who is or becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's then outstanding Voting Securities, increases his beneficial ownership
of such securities by 5% or more over the percentage so owned by such person on
the date hereof; or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.
(E) Proceeding: any threatened, pending or completed action, suit or
proceeding, or any inquiry, hearing or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.
(F) Reviewing Party: any appropriate person or body consisting of a member
or members of the Company's Board of Directors or any other person or body
appointed by the Board (including the special, independent counsel referred to
in Section 3) who is not a party to the particular Proceeding with respect to
which Indemnitee is seeking indemnification.
(G) Voting Securities: any securities of the Company which vote generally
in the election of directors.
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2. AGREEMENT TO INDEMNIFY.
(A) In the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other
participant in, a Proceeding by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law, as soon as practicable but in any event no later than
thirty days after written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Proceeding and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the creation of the
Trust). Notwithstanding anything in this Agreement to the contrary and except as
provided in Section 5, prior to a Change in Control Indemnitee shall not be
entitled to indemnification pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee against the Company or any director or
officer of the Company unless the Company has joined in or consented to the
initiation of such Proceeding. If so requested by Indemnitee, the Company shall
advance (within ten business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance").
(B) Notwithstanding the foregoing, (i) the obligations of the Company under
Section 2(a) shall be subject to the condition that the Reviewing Party shall
not have determined (in a written opinion, in any case in which the special,
independent counsel referred to in Section 3 hereof is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance pursuant to Section 2(a)
shall be subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced legal
proceedings in a court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any determination made by
the Reviewing Party that Indemnitee would not be permitted to be indemnified
under applicable law shall not be binding and Indemnitee shall not be required
to reimburse the Company for any Expense Advance until a final judicial
determination is made with respect thereto (as to which all rights of appeal
therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse
the Company for Expense Advances shall be unsecured and no interest shall be
charged thereon. If there has not been a Change in Control the Reviewing Party
shall be selected by the Board of Directors, and if there has been such a Change
in Control (other than a Change in Control which has been approved by a majority
of the Company's Board of Directors who were directors immediately prior to such
Change in Control), the Reviewing Party shall be the special, independent
counsel referred to in Section 3 hereof. If there has been no determination by
the Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence litigation in any
court in the States of California or Delaware having subject matter jurisdiction
thereof and in which venue is proper seeking an initial determination by the
court or challenging any such determination by the Reviewing Party or any aspect
thereof, and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
3. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control
of the Company (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under applicable law or
the Company's
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Certificate of Incorporation or By-Laws now or hereafter in effect relating to
indemnification for Indemnifiable Events, the Company shall seek legal advice
only from special, independent counsel selected by Indemnitee and approved by
the Company (which approval shall not be unreasonably withheld), and who has not
otherwise performed services for the Company or the Indemnitee (other than in
connection with such matters) within the last five years. Such independent
counsel shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement. Such counsel, among other things,
shall render its written opinion to the Company and Indemnitee as to whether and
to what extent the Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of the special,
independent counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or the engagement of
special, independent counsel pursuant hereto.
4. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a Trust for the
benefit of the Indemnitee and from time to time upon written request of
Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Proceeding
relating to an Indemnifiable event, and any and all judgments, fines, penalties
and settlement amounts of any and all Proceedings relating to an Indemnifiable
Event from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid. The amount or amounts to be deposited in the Trust pursuant
to the foregoing funding obligation shall be determined by the Reviewing Party,
in any case in which the special, independent counsel referred to above is
involved. The terms of the Trust shall provide that upon a Change in Control (i)
the Trust shall not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee, (ii) the Trustee shall advance, within ten
business days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which the Indemnitee would be required to reimburse the
Company under Section 2(b) of this Agreement), (iii) the Trust shall continue to
be funded by the Company in accordance with the funding obligation set forth
above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for
which the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such Trust shall revert
to the Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The Trustee shall be chosen by
the Indemnitee. Nothing in this Section 4 shall relieve the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust shall be reported as income by the Company for federal, state, local
and foreign tax purposes.
5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING THIS AGREEMENT. The
Company shall indemnify Indemnitee against any and all expenses (including
attorneys' fees), and, if requested by Indemnitee, shall (within ten business
days of such request) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any claim asserted against or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement or under applicable law or the
Company's Certificate of Incorporation or By-laws now or hereafter in effect
relating to indemnification for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery,
as the case may be.
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6. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a
Proceeding but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Proceedings relating in whole or in part to
an Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
7. DEFENSE TO INDEMNIFICATION, BURDEN OF PROOF AND PRESUMPTIONS. It shall be a
defense to any action brought by the Indemnitee against the Company to enforce
this Agreement (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the Company) that the Indemnitee has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the Company to indemnify the Indemnitee for the
amount claimed. In connection with any determination by the Reviewing Party or
otherwise as to whether the Indemnitee is entitled to be indemnified hereunder,
the burden of proving such a defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action by the Indemnitee that indemnification of the
claimant is proper under the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the Indemnitee
had not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the applicable
standard of conduct. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Company's Certificate
of Incorporation or By-laws or the Delaware General Corporation Law or
otherwise. To the extent that a change in the Delaware General Corporation Law
(whether by statute or judicial decision) permits greater indemnification by
agreement than would be afforded currently under the Company's Certificate of
Incorporation and By-laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so
afforded by such change.
9. LIABILITY INSURANCE. To the extent the Company maintains an insurance
policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any Company
director or officer.
10. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any affiliate of the
Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or
legal representatives after the expiration of two years from the date of accrual
of such cause of action, or such longer period as may be required by state law
under the circumstances, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action
5
<PAGE>
within such period; provided, however, that if any shorter period of limitations
is otherwise applicable to any such cause of action such shorter period shall
govern.
11. AMENDMENT OF THIS AGREEMENT. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
12. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.
14. SETTLEMENT OF CLAIMS. The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action
or claim effected without the Company's written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent to any
proposed settlement. The Company shall not be liable to indemnify the Indemnitee
under this Agreement with regard to any judicial award if the Company was not
given a reasonable and timely opportunity, at its expense, to participate in the
defense of such action.
15. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director or officer of
the Company or of any other enterprise at the Company's request.
16. SEVERABILITY. The provisions of this Agreement shall be severable in the
event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law. Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
6
<PAGE>
17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the _______________ day of __________________, 19___.
McKESSON CORPORATION
By: ______________________
Name:
Title:
______________________
[Indemnitee]
7
<PAGE>
EXHIBIT 10.24
SEPARATION AND MUTUAL GENERAL RELEASE AGREEMENT
This Separation and Mutual General Release Agreement (the "Agreement" or
"Separation Agreement") is entered into as of February 12, 1996 by and between
______________ ("Executive"), an individual, and McKesson Corporation, a
Delaware corporation (the "Company").
In consideration of the covenants undertaken and the releases contained in
this Agreement and for other good and valuable consideration, Executive and the
Company agree as follows:
1. Termination of Employment.
-------------------------
Executive's employment with the Company will terminate effective February
29, 1996 (the "Separation Date"). As of that date, except as expressly
provided herein, all compensation, benefit coverage and other perquisites
of employment will cease.
2. Salary Continuation Payments.
----------------------------
For a period of twelve (12) months from the date of this Agreement, but
subject to the provisions of Paragraph 10 below, Executive will continue to
receive his regular bi-weekly salary of $11,923.08, less applicable federal
and state withholding and other payroll taxes and deductions. Such Salary
Continuation Payments shall not be reduced or otherwise affected by any
earnings, commissions, fees or other compensation received by Executive
from any source subsequent to the Separation Date. Should Executive obtain
full-time employment during the period in which the Salary Continuation
Payments are to be made,
-1-
<PAGE>
Company agrees that, upon Executive's written request, it shall pay to
Executive, in one lump sum, the then present value of all remaining Salary
Continuation Payments and benefits less applicable federal and state
withholding and other payroll taxes and deductions.
3. Stock Options.
-------------
Executive presently holds options to purchase shares of McKesson
Corporation, a Delaware Corporation, under the McKesson Corporation 1978
Stock Option Plan and 1994 Stock Option and Restricted Stock Plan. A
complete and accurate summary of the options currently held by Executive is
attached hereto and designated as Attachment A. Company has determined to
defer Executive's Separation Date beyond February 1, 1996 in order to
provide Executive with the benefit of receiving those additional stock
options which have vested during calendar year 1996. Executive shall be
eligible to exercise those grants that are vested and unexercised as of the
Separation Date, subject to and in strict accordance with the Statements of
Terms and Conditions applicable to the option plans. Options that are not
vested as of such date shall be cancelled, and Executive's rights with
respect to said options shall cease and terminate.
4. Restricted Stock.
----------------
Executive presently holds 5,000 shares of McKesson Corporation common stock
granted to him under the Company's 1988 Restricted Stock Plan and/or 1994
Stock Option and Restricted Stock Plan. Executive received the restricted
stock grant on or about February 1, 1994, and the restrictions applicable
thereto remain in effect until February 1, 1998. On the Separation Date,
all of Executive's rights with respect to the restricted stock grant
-2-
<PAGE>
shall cease and terminate and said restricted shares shall be cancelled and
returned to Company.
5. MIP Award.
---------
Executive shall be eligible for consideration for an award under Company's
Management Incentive Program ("MIP") for the fiscal year ending March 31,
1996. Company agrees that the amount of such award shall be Fifty Thousand
Dollars ($50,000), payable within ten (10) business days of execution of
this Agreement by the parties.
6. Housing Loan.
------------
Executive affirms that he is indebted to Company in the principal amount of
Four Hundred Thousand Dollars ($400,000). Said indebtedness is more fully
described and evidenced by a secured promissory note, dated March 6, 1994,
a copy of which is attached hereto as Attachment B (the "Promissory Note").
Notwithstanding anything to the contrary contained in Section 1.b. of the
Promissory Note, the parties agree that so long as Executive is complying
with the terms of this Agreement, repayment shall not be required until the
first to occur of (i) sale of the property which secures said indebtedness,
or (ii) one year from Separation Date. Company further agrees that interest
shall continue to be waived by Company (and imputed as income to Executive)
until repayment of the indebtedness is due and payable pursuant to the
provisions of this Paragraph 6.
7. Benefits Coverage/Perquisites.
-----------------------------
Executive shall continue to be covered (subject to his continued monthly
payment of required premiums) under the Company's Executive Medical Plan
until the earlier of (i) one year from the Separation Date, or (ii) the
date upon which he first becomes eligible for
-3-
<PAGE>
primary coverage under another employer's medical plan. On whichever date
is applicable pursuant to the preceding sentence, Executive's coverage
under the Executive Medical Plan shall cease and Executive shall be given
an opportunity to elect continuation coverage in accordance with applicable
law. Executive shall also continue to be covered under Company's Executive
Survivor Benefit Plan until the earlier of (i) one year from the Separation
Date, or (ii) the date upon which he first becomes eligible for coverage
under another employer's life insurance or survivor benefit plan. Executive
shall also receive any earned vacation pay as of the Separation Date.
Executive shall be entitled to receive any fully vested benefits in
accordance with the terms of the Company's Profit-Sharing Investment Plan
as of the Separation Date. Executive will not be a participant in or
otherwise be entitled to coverage or benefits under the Company's
disability plans, Life Insurance Plan, Profit-Sharing Investment Plan,
Retirement Plan, MIP, or any other benefit plan or policy provision at any
time subsequent to the Separation Date, and his accrual and coverage under
all other Company plans and policies shall cease as of the Separation Date,
except as expressly set forth in this Separation Agreement.
During the period of Salary Continuation Payments specified herein,
Executive shall continue to receive from Company his existing (i) monthly
automobile allowance, and (ii) health club membership dues.
8. Amended Termination Agreement.
-----------------------------
The Amended Termination Agreement dated February 1, 1994, as further
amended, between the Company and Executive shall be terminated as of the
date of this Separation
-4-
<PAGE>
Agreement, and the Executive shall not retain any rights arising out of the
Amended Termination Agreement.
9. Litigation Cooperation.
----------------------
Executive agrees to make himself reasonably available to cooperate in any
actual or anticipated litigation or arbitration matter in which Company
reasonably requests his assistance based upon his duties with the Company
during the period for which he receives payments under paragraph 2. Once
such payments have ended, Company shall pay Executive a daily consulting
fee for such assistance in the amount of $750.00, subject to a one-half day
minimum, and shall reimburse Executive for his reasonable out-of-pocket
expenses in connection with any such assistance.
10. Termination.
-----------
Company may terminate this Agreement in the event of Executive's breach of
any of the covenants set forth in paragraphs 13, 14, 15, 17, and 18, or if
he accepts a position as an employee or an independent contractor with a
competitor of Company. For purposes of this Agreement, "competitor" shall
mean any company primarily engaged in the wholesale distribution of
pharmaceutical and health and beauty-aid products. The Chief Executive
Officer of Company shall have sole discretion to determine whether a
company is a Competitor, and such determination shall be final and binding.
Notice of termination shall be in writing and shall be effective upon
delivery. Upon termination of this Agreement in accordance with this
paragraph, all of Executive's Salary Continuation Payments and other
benefits under this Agreement shall cease, and Company shall have no
further obligation to make such payments or provide such benefits to
Executive.
-5-
<PAGE>
11. Mutual General Release.
----------------------
In consideration of the payments and other consideration set forth in this
Separation Agreement, Executive on his own behalf and on behalf of his
heirs, dependents, assigns and successors, hereby releases the Company and
each of its past and present subsidiaries, affiliates, directors, officers,
agents, employees, representatives, assigns and successors from any and all
actions, charges, suits, grievances, damages, costs, expenses or other
claims or liabilities of any kind or nature, (including, but not limited
to, claims under ERISA, the Age Discrimination in Employment Act, or the
Civil Rights Acts of 1964 and 1991) whether known or unknown, suspected or
unsuspected, which Executive has, has had, may have, or may hereafter have,
either in his own name, in a representative capacity or as a shareholder of
Company ("Claims"), arising out of, or by reason of, any cause, matter or
thing whatsoever existing as of the date of execution of this Separation
Agreement including, without limitation, any Claims arising out of or
related in any way to Executive's employment. Excepted from this release
are this Separation Agreement and any rights or obligations under it.
Company hereby releases Executive and his heirs, dependents, assigns and
successors from any and all actions, charges, suits, grievances, damages,
costs, expenses, or other claims or liabilities of any kind or nature,
whether known or unknown, suspected or unsuspected, which Company has, has
had, may have, or hereafter have ("Claims") arising out of, or by reason
of, any cause, matter or thing whatsoever existing as of the date of
execution of this Separation Agreement including, without limitation, any
Claims arising
-6-
<PAGE>
out of or related in any way to Executive's employment. Excepted from this
release are this Separation Agreement (and the Promissory Note) and any
rights or obligations under it or them.
12. Effect of Release; Complete Waiver.
----------------------------------
Company and Executive understand that except (i) in the case of Company, as
provided in the last sentence of Paragraph 11, and (ii) in the case of
Executive, as provided in the last sentence of the first paragraph of
Paragraph 11, they are waiving all claims, whether known or unknown, and
whether or not they suspect that those claims exist or might exist at this
time. Company and Executive acknowledge that they are familiar with Section
1542 of the California Civil Code, which provides that:
A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST
HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Executive and Company, being aware of this provision and its effect upon
their respective rights, expressly waive any rights each one may have under
section 1542 or under any statutes or common law principles of similar
effect.
-7-
<PAGE>
13. Confidentiality.
---------------
Executive covenants and agrees not to disclose any information relating to
the existence and terms of this Separation Agreement and shall take every
precaution to prevent disclosure of such information to third parties other
than members of his immediate family and his personal financial and legal
advisors, unless such disclosure is required by law. Executive acknowledges
that violation of this covenant would constitute a material breach of this
Separation Agreement.
14. Limited Rights Against Company.
------------------------------
Executive agrees that he will not seek, in any way, any payments or
benefits based upon his employment with the Company, his separation from
employment and/or conduct prior to the execution of this Separation
Agreement, other than as expressly set forth in this Separation Agreement.
Executive waives any and all right or entitlement to any such payments or
benefits. Executive further agrees that he has no intention to, and will
not, file any charge or action, whether based on tort, express or implied
contract, or any federal, state or local law, statute or regulation
(including, but not limited to, ERISA or the Civil Rights Acts of 1964 and
1991) relating to his employment, his eligibility for benefits, or the
termination or terms and conditions of his employment. Executive agrees
that this Agreement may be pleaded as a complete bar to any action or suit
before any court or administrative body with respect to any claim relating
to his employment with, or termination from, Company.
-8-
<PAGE>
15. Protection of "Proprietary Information".
---------------------------------------
Executive acknowledges that, in the course of his work as an employee of
the Company, he has had and may have access to Proprietary Information (as
defined below) concerning the Company, its products, customers and methods
of doing business. Executive acknowledges that the Company has developed,
compiled and otherwise obtained, often at great expense, this information,
which has great value to the Company's business. Executive agrees to hold
in strict confidence and not disclose any Proprietary Information, directly
or indirectly, to anyone outside of the Company, or use, copy, publish,
summarize, or remove from Company premises such information. Executive
agrees to deliver promptly to Company all tangible Proprietary Information
which is in his possession or under his control.
16. "Proprietary Information" Defined.
---------------------------------
For purposes of this Separation Agreement, but subject to the remaining
provisions of this Paragraph the reference to "Proprietary Information"
means all information and any idea in whatever form, tangible or
intangible, whether disclosed to or learned or developed by Executive,
pertaining to or affecting the business of the Company or its parent or
other affiliated companies or their clients, consultants, or business
associates unless: (a) the information is or becomes publicly known through
lawful means not requiring the permission or license of the Company; (b)
the information was rightfully in Executive's possession or part of his
general knowledge prior to his employment by the Company or by virtue of
his activities not related to his employment by the Company; (c) the
information is disclosed to Executive without confidential or proprietary
restriction by a
-9-
<PAGE>
third party who rightfully possesses the information (without confidential
or proprietary restriction for the benefit of the Company) and did not
learn it, directly or indirectly, from the Company on a confidential basis.
Executive and the Company further agree that the following information is
included, without limitation, in the definition of Proprietary Information
if the same is encompassed by the preceding sentence: (i) processes, trade
secrets, electronic codes, computer software, source codes, proprietary
techniques, inventions, improvements and research projects; (ii)
information about costs, budgets, profits, markets, employees, terms of
sale, sales and lists of customers or vendors; (iii) plans for future
development, strategies, potential acquisitions, and new product concepts
and marketing; and (iv) all documents, books, papers, drawings, models,
sketches, studies, consultant's reports and other data of any kind and
description, including electronic data recorded or retrieved by any means,
that have been or will be given to Executive by the Company or its parent
or other affiliated companies, as well as written or oral instructions or
comments.
The parties acknowledge and agree that Executive is not intended by this
Paragraph 16 to be restricted generally from using his experience and
knowledge (including experience and knowledge derived during his employment
by the Company) for such purposes and/or in competition with the Company.
The parties' intention is that Executive is to be prohibited only from
disclosing or using to the detriment of the Company and its affiliates
Proprietary Information of the Company and its affiliates, as distinct from
non-confidential information pertaining to industry conditions, trends and
strategies, customers and potential
-10-
<PAGE>
customers, strengths and weaknesses of industry participants and,
generally, information that could have been learned by Executive had he
been employed by one of Company's competitors (or another business not
affiliated with the Company) in a comparable position for a comparable
period.
17. Solicitation of Employees.
-------------------------
Executive agrees that he will not, directly or indirectly, solicit or
assist in the solicitation of any employees of Company from the date of
this Separation Agreement until the Separation Date or for a period of
twelve (12) months following the Separation Date.
18. No Disparagement/References.
---------------------------
Executive covenants and agrees that he will in no way disparage Company or
its products, services, employees, or business reputation, to any person or
entity whether or not said person or entity is a current or prospective
supplier, customer or employee of Company. Executive further covenants and
agrees that he will not otherwise engage in conduct which is not in good
faith and which disrupts, damages, impairs or interferes with the business,
reputation or employees of Company. Company agrees that all inquiries by
prospective employers of Executive shall be directed solely to William A.
Armstrong, Vice President Human Resources and Administration, and that the
response of Company shall be essentially as set forth on Attachment C
hereto.
19. Absence of Reliance.
-------------------
Executive acknowledges that, in agreeing to the terms of this Separation
Agreement, he has not relied in any way upon any representations or
statements of the Company
-11-
<PAGE>
regarding the subject matter hereof, or the basis or effect of this
Separation Agreement other than those representations or statements set
forth in this Separation Agreement.
20. No Representations.
------------------
This Agreement expresses the full settlement terms upon which Executive and
Company sever their employment relationship. There are no other
representations or terms relating to the employment relationship and/or its
severance that have not been identified in writing in this Agreement.
21. Entire Agreement; Amendment.
---------------------------
This instrument contains the entire agreement and understanding concerning
Executive's employment with the Company and separation of employment and
the other subject matters addressed herein between the parties, and
supersedes all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matters thereof. This
Separation Agreement may be amended or modified only by a written document
executed by all of the parties hereto.
22. Severability.
------------
If any provision of this Separation Agreement or the application thereof is
held invalid, the invalidity shall not affect other provisions or
applications of this Separation Agreement which can be given effect without
the invalid provisions or applications. To this end, the provisions of this
Separation Agreement are declared to be severable.
-12-
<PAGE>
23. Governing Law.
-------------
This Separation Agreement and all transactions hereunder shall be governed
by, interpreted and enforced in accordance with the laws of the State of
California without reference to principles of conflict of laws.
24. Forum Selection.
---------------
Any and all litigation relating to state law causes of action arising out
of this Separation Agreement shall be heard exclusively in California state
courts. To that end, the parties to this Separation Agreement consent to
jurisdiction in California state courts and waive any defense of lack of
personal jurisdiction.
Any and all litigation relating to federal law causes of action arising out
of this Separation Agreement shall be heard exclusively in California
federal courts. The parties also consent to jurisdiction in California
federal courts and waive any defense of lack of personal jurisdiction.
25. Counterparts.
------------
This Separation Agreement may be executed in counterparts with the same
force and effect as if all signatures were set forth in a single
instrument.
26. Headings.
--------
Headings of sections in this Separation Agreement have been included solely
for convenience and reference and are not part of the Agreement.
-13-
<PAGE>
27. Voluntary Agreement.
-------------------
It is understood and agreed that both the Company and Executive are
voluntarily entering into this Separation Agreement as a way of severing
the employment relationship existing between the parties. Executive
acknowledges that he has been informed by the Company that he should
consult with legal counsel concerning the contents of this Separation
Agreement. This Separation Agreement is not to be construed as an
allegation or admission on the part of either party that either has
violated any order, ruling, law, statute, regulation, contract or covenant,
express or implied.
28. Period for Review and Revocation.
--------------------------------
Executive confirms that he has had at least twenty-one (21) days to review
and consider the waiver and release provisions of this Agreement, including
but not limited to such provisions concerning claims (if any) under the Age
Discrimination in Employment Act ("ADEA"). The parties agree that Executive
shall have a period of seven (7) days following his execution of this
Agreement to revoke said ADEA waiver, and that such waiver is neither
effective nor enforceable until the expiration of such seven-day period.
-14-
<PAGE>
In the event this agreement is revoked by Executive in accordance with the
provisions of this Paragraph 28, Executive agrees to return to Company all
consideration and benefit provided by Company to which Executive would not
be entitled absent this agreement.
Date of
Execution: March 6, 1996 ______________________________________
Executive
McKESSON CORPORATION
Date of
Execution: March 6, 1996
By: ______________________________________
Vice President, Human
Resources and Administration
-15-
<PAGE>
EXHIBIT 11
McKESSON CORPORATION - CONSOLIDATED
COMPUTATION OF EARNINGS PER COMMON SHARE
FOR THE FIVE YEARS ENDED MARCH 31
(in thousands except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
-------- ---------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Income (loss) after taxes from continuing operations $135,433 $(193,174) $126,428 $ 95,070 $ 22,077
Dividend requirements - convertible preferred stocks - - - - (7,081)/(1)/
Interest charges on convertible debentures - net of tax - - 18 1,352 - /(2)/
Contribution adjustment - Series B ESOP convertible
preferred stock/(3)/ - (1,836) (3,706) (3,758) - /(2)/
-------- --------- -------- -------- ---------
135,433 (195,010) 122,740 92,664 14,996
Discontinued operations - 21,028 30,628 19,665 10,256
Discontinued operations - gain on sale of PCS - 576,656 - - -
Extraordinary item - - (4,186) - -
Cumulative effects of accounting changes - - (16,660) - (110,500)
-------- --------- -------- -------- ---------
Total $135,433 $ 402,674 $132,522 $112,329 $( 85,248)
======== ========= ======== ======== =========
Fully diluted shares
Common shares outstanding/(4)/ 46,740 43,568 40,943 40,025 38,776
Convertible securities - dilutive - 1,882 3,160 4,783 - /(2)/
-------- --------- -------- -------- ---------
Total 46,740 45,450 44,103 44,808 38,776
======== ========= ======== ======== =========
Fully diluted earnings (loss) per share
Continuing operations $ 2.90 $ (4.29) $ 2.78 $ 2.07 $ .39
Discontinued operations - .46 .70 .44 .26
Discontinued operations - gain on sale of PCS - 12.69 - - -
Extraordinary item - - (.10) - -
Cumulative effects of accounting changes - - (.38) - (2.85)
-------- --------- -------- -------- ---------
$ 2.90 $ 8.86 $ 3.00 $ 2.51 $ (2.20)
======== ========= ======== ======== =========
PRIMARY EARNINGS PER SHARE
Income (loss) after taxes from continuing operations $135,433 $(193,174) $126,428 $ 95,070 $ 22,077
Dividend requirements - convertible preferred stocks/(1)/ - (3,501) (7,052) (7,010) (7,081)
-------- --------- -------- -------- ---------
135,433 (196,675) 119,376 88,060 14,996
Discontinued operations - 21,028 30,628 19,665 10,256
Discontinued operations - gain on sale of PCS - 576,656 - - -
Extraordinary item - - (4,186) - -
Cumulative effects of accounting changes - - (16,660) - (110,500)
-------- --------- -------- -------- ---------
Total $135,433 $ 401,009 $129,158 $107,725 $ (85,248)
======== ========= ======== ======== =========
Common shares outstanding/(4)/ 46,646 43,568 40,789 40,025 38,776
======== ========= ======== ======== =========
Primary earnings per share
Continuing operations $ 2.90 $ (4.51) $ 2.93 $ 2.20 $ .39
Discontinued operations - .48 .75 .49 .26
Discontinued operations - gain on sale of PCS - 13.23 - - -
Extraordinary item - - (.10) - -
Cumulative effects of accounting changes - - (.41) - (2.85)
-------- --------- -------- -------- ---------
Total $ 2.90 $ 9.20 $ 3.17 $ 2.69 $ (2.20)
======== ========= ======== ======== =========
</TABLE>
(1) Net of certain related tax benefits.
(2) 1992 fully diluted earnings per share computation excludes the effect of
convertible securities which were anti-dilutive.
(3) Represents the assumed additional ESOP contribution expense that the Company
would have incurred if the Series B ESOP convertible preferred stock had
been converted at the beginning of the period presented.
(4) Common shares outstanding have been computed by adding the monthly average
(beginning of the month plus end of the month divided by 2), dividing the
aggregate by 12 and adjusting this total for dilutive stock options using
the treasury stock method.
23
<PAGE>
EXHIBIT 13
1996 Annual Report
to Security Holders
Pursuant to Rule 14a-3(b)
24
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
There is no parent of the Company. The following is a listing of the
significant subsidiaries of the Company.
<TABLE>
<CAPTION>
Jurisdiction of
Organization
---------------
<S> <C>
Armor All Products Corporation................................. Delaware
McKesson Water Products Company................................ California
Medis Health and Pharmaceutical Services Inc................... Canada
Millbrook Distribution Services Inc............................ Indiana
</TABLE>
25
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in McKesson Corporation
Registration Statement Nos. 33-86536, 333-611 and 333-2871 on Form S-8 of our
report dated May 13, 1996 (which expresses an unqualified opinion and includes
an explanatory paragraph relating to the Corporation's change in its method of
accounting for postemployment benefits) and of our report dated May 13, 1996,
incorporated by reference in and appearing in this Annual Report on Form 10-K of
McKesson Corporation, respectively, for the year ended March 31, 1996.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
San Francisco, California
June 17, 1996
26
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000927653
<NAME> MCKESSON CORPORATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 281,800
<SECURITIES> 195,400
<RECEIVABLES> 824,500
<ALLOWANCES> (43,100)
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0
0
<COMMON> 400
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<TOTAL-REVENUES> 13,716,400
<CGS> 12,569,400
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<OTHER-EXPENSES> 0
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<INCOME-TAX> (88,700)
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<EPS-PRIMARY> 2.90
<EPS-DILUTED> 2.90
</TABLE>
