<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarter ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission file number 1-13252
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McKESSON CORPORATION
- -----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3207296
- ------------------------------ --------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
One Post Street, San Francisco, California 94104
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(415) 983-8300
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(Registrant's telephone number, including area code)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1998
- ---------------------------- ----------------------------
Common stock, $.01 par value 95,016,153 shares
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
==============================
Item Page
- ---- ----
1. Condensed Financial Statements
Consolidated Balance Sheets
June 30, 1998 and March 31, 1998 3 - 4
Statements of Consolidated Income
Three month periods ended
June 30, 1998 and 1997 5
Statements of Consolidated Cash Flows
Three month periods ended
June 30, 1998 and 1997 6 - 7
Financial Notes 8 - 10
2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Review 11 - 14
PART II. OTHER INFORMATION
===========================
4. Submission of Matters to a Vote of Security Holders 15
5. Other Information 15
6. Exhibits and Reports on Form 8-K 16
Exhibit Index 18
<PAGE>
PART I. FINANCIAL INFORMATION
==============================
McKESSON CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, March 31,
1998 1998
-------- --------
(in millions)
ASSETS
- ------
Current Assets
Cash and cash equivalents $ 169.8 $ 35.7
Marketable securities available
for sale (Note 2) 44.9 77.9
Receivables 1,732.0 1,380.4
Inventories 2,775.2 2,583.5
Prepaid expenses 33.3 28.1
------- -------
Total 4,755.2 4,105.6
------- -------
Property, Plant and Equipment
Land 37.6 35.6
Buildings, machinery and equipment 854.8 834.7
------- -------
Total 892.4 870.3
Accumulated depreciation (448.4) (440.0)
------- -------
Net 444.0 430.3
Goodwill and Other Intangibles 751.7 752.4
Other Assets 350.2 319.2
------- -------
Total Assets $6,301.1 $5,607.5
======= =======
(Continued)
- 3 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
June 30, March 31,
1998 1998
-------- --------
(in millions,
except par value)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Drafts payable $ 245.5 $ 286.2
Accounts payable - trade 2,397.3 1,859.1
Short-term borrowings 58.4 -
Current portion of long-term debt 10.3 10.0
Salaries and wages 41.0 53.9
Taxes 138.7 115.7
Interest and dividends 45.3 29.5
Other 222.4 223.4
------- -------
Total 3,158.9 2,577.8
------- -------
Postretirement Obligations and
Other Noncurrent Liabilities 238.4 233.3
------- -------
Long-Term Debt (Note 2) 1,147.6 1,194.2
------- -------
McKesson-obligated mandatorily
redeemable preferred securities
of subsidiary grantor trust whose
sole assets are junior subordinated
debentures of McKesson (Note 3) 195.4 195.4
------- -------
Stockholders' Equity
Common stock (200.0 shares authorized,
95.2 and 93.4 issued as of June 30 and
March 31, 1998, respectively;
par value of $.01) 1.0 0.9
Additional paid-in capital 564.0 440.7
Other capital (41.0) (42.2)
Retained earnings 1,204.4 1,173.2
Accumulated translation adjustment (46.6) (45.4)
ESOP notes and guarantee (115.6) (115.6)
Treasury shares, at cost (5.4) (4.8)
------- -------
Net 1,560.8 1,406.8
------- -------
Total Liabilities and
Stockholders' Equity $6,301.1 $5,607.5
======= =======
See Financial Notes.
(Concluded)
- 4 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(unaudited)
Three Months Ended
June 30
---------------------
1998 1997
-------- --------
(in millions - except
per share amounts)
REVENUES $5,870.9 $4,975.5
------- -------
COSTS AND EXPENSES
Cost of sales 5,468.6 4,610.7
Selling, distribution and administration 302.2 278.5
Interest 28.0 23.1
------- -------
Total 5,798.8 4,912.3
------- -------
INCOME BEFORE INCOME TAX EXPENSE
AND DIVIDENDS ON PREFERRED
SECURITIES OF SUBSIDIARY TRUST 72.1 63.2
INCOME TAX EXPENSE (28.4) (24.0)
DIVIDENDS ON PREFERRED
SECURITIES OF SUBSIDIARY TRUST (1.6) (1.6)
------- -------
NET INCOME $ 42.1 $ 37.6
======= =======
EARNINGS PER COMMON SHARE
Diluted $ 0.43 $ 0.39
Basic 0.45 0.41
Dividends 0.125 0.125
SHARES ON WHICH EARNINGS
PER COMMON SHARE WERE BASED
Diluted 103.5 100.2
Primary 92.9 91.0
See Financial Notes.
- 5 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(unaudited)
Three Months Ended
June 30
---------------------
1998 1997
-------- --------
(in millions)
Operating Activities
Net Income $ 42.1 $ 37.6
Adjustments to reconcile to net cash
provided (used) by operating activities
Depreciation 18.1 17.7
Amortization 5.0 3.6
Provision for bad debts 3.4 2.8
Deferred taxes on income (1.0) 2.7
Other non-cash items 4.0 (2.9)
------- -------
Total 71.6 61.5
------- -------
Effects of changes in
Receivables (361.9) (25.5)
Inventories (198.0) 133.3
Accounts and drafts payable 504.6 (165.7)
Taxes 34.7 15.7
Other (3.1) (46.9)
------- -------
Total (23.7) (89.1)
------- -------
Net cash provided (used) by
operating activities 47.9 (27.6)
------- -------
Investing Activities
Purchases of marketable securities (6.8) (1.2)
Maturities of marketable securities 40.7 11.4
Property acquisitions (34.8) (23.1)
Properties sold 6.2 1.7
Acquisitions of businesses, less cash
and short-term investments acquired (3.9) (3.2)
Other (25.8) (11.7)
------- -------
Net cash used by
investing activities (24.4) (26.1)
------- -------
(Continued)
- 6 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(unaudited)
Three Months Ended
June 30
---------------------
1998 1997
-------- --------
(in millions)
Financing Activities
Proceeds from issuance of debt $ 62.8 $ 35.1
Repayment of debt (48.9) (19.0)
Dividends paid on preferred
securities of subsidiary trust (2.5) (2.8)
Capital stock transactions
Issuances 111.1 2.0
ESOP notes and guarantee - 1.9
Dividends paid (11.7) (11.5)
Other (.2) -
------- -------
Net cash provided by
financing activities 110.6 5.7
------- -------
Net Increase (Decrease) in Cash
and Cash Equivalents 134.1 (48.0)
Cash and Cash Equivalents
at beginning of period 35.7 124.8
------- -------
Cash and Cash Equivalents
at end of period $ 169.8 $ 76.8
======= =======
See Financial Notes.
(Concluded)
- 7 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL NOTES
1. Interim Financial Statements
----------------------------
In the opinion of the Company, these unaudited condensed
consolidated financial statements include all adjustments
necessary for a fair presentation of its financial position as of
June 30, 1998 and the results of its operations and its cash
flows for the three months ended June 30, 1998 and 1997.
The results of operations for the three months ended June
30, 1998 and 1997 are not necessarily indicative of the results
for the full years.
It is suggested that these interim financial statements be
read in conjunction with the annual audited financial statements,
accounting policies and financial notes thereto included in the
Company's 1998 Annual Report to Stockholders which have
previously been filed with the Securities and Exchange
Commission.
2. Marketable Securities
---------------------
The June 30, 1998 marketable securities balance includes
$41.3 million held in trust as exchange property for the
Company's $67.7 million principal amount of 4.5% exchangeable
subordinated debentures which remain outstanding.
3. Convertible Preferred Securities
--------------------------------
In February 1997, a wholly owned subsidiary trust of the
Company issued 4 million shares of preferred securities to the
public and 123,720 common securities to the Company, which are
convertible at the holder's option into McKesson common stock.
The proceeds of such issuances were invested by the trust in
$206,186,000 aggregate principal amount of the Company's 5%
Convertible Junior Subordinated Debentures due 2027 (the
"Debentures"). The Debentures represent the sole assets of the
trust. The Debentures mature on June 1, 2027, bear interest at
the rate of 5%, payable quarterly, and are redeemable by the
Company beginning in March 2000 at 103.5% of the principal amount
thereof.
Holders of the securities are entitled to cumulative cash
distributions at an annual rate of 5% of the liquidation amount
of $50 per security. Each preferred security is convertible at
the rate of 1.3418 shares of McKesson common stock, subject to
adjustment in certain circumstances. The preferred securities
will be redeemed upon repayment of the Debentures, and are
callable by the Company at 103.5% of the liquidation amount
beginning in March 2000.
The Company has guaranteed, on a subordinated basis,
distributions and other payments due to the preferred securities
(the "Guarantee"). The Guarantee, when taken together with the
Company's obligations under the Debentures and in the indenture
pursuant to which the Debentures were issued and the Company's
obligations under the Amended and Restated Declaration of Trust
governing the subsidiary trust, provides a full and unconditional
guarantee of amounts due on the preferred securities.
The Debentures and related trust investment in the
Debentures have been eliminated in consolidation and the
preferred securities are reflected as outstanding in the
accompanying consolidated financial statements.
- 8 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL NOTES
4. Comprehensive Income
--------------------
The Company has adopted Statement of Financial Accounting
Standards ("SFAS") No. 130 "Reporting Comprehensive Income," in
the first quarter of fiscal 1999. Comprehensive income is
defined as all changes in stockholders' equity from nonowner
sources. As such, it includes net income and amounts arising
from foreign currency translations, unrecognized pension costs
and unrealized gains or losses on marketable securities
classified as available for sale which are recorded directly to
stockholders' equity. Total comprehensive income for the three
months ended June 30, 1998 and 1997 is as follows:
Three Months Ended
June 30
------------------
1998 1997
---- ----
Net income $42.1 $37.6
Foreign currency translation adjustments (1.2) -
---- ----
$40.9 $37.6
==== ====
5. New Accounting Pronouncements
-----------------------------
In fiscal 1998, the Financial Accounting Standards Board
issued SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information," which establishes annual and interim
reporting standards for an enterprise's operating segments and
related disclosures about its products, services, geographic
areas, and major customers; and SFAS No. 132 "Employers'
Disclosures about Pension and Other Postretirement Benefits,"
which standardizes the disclosure requirements for pensions and
other postretirement benefits and expands disclosures on changes
in benefit obligations and fair values of plan assets. The
Company will implement these statements in fiscal 1999. Adoption
of these statements will not impact the Company's consolidated
financial position, results of operations or cash flows, and any
effect will be limited to the form and content of its
disclosures.
In fiscal 1999, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," which standardizes the accounting for
derivatives, requiring recognition as either assets or
liabilities on the balance sheet and measurement at fair value.
The Company plans to adopt this statement in fiscal 2001. The
Company has not yet determined the effect adoption of this
statement will have on the Company's consolidated financial
position, results of operations or cash flows.
- 9 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL NOTES
6. Proposed Acquisition
--------------------
On September 23, 1997, the Company and AmeriSource Health
Corporation ("AmeriSource"), a leading U. S. wholesale
distributor of pharmaceutical and related health care products
and services, jointly announced the execution of a definitive
Merger Agreement providing for the Company to acquire
AmeriSource. On March 3, 1998, the Federal Trade Commission
("FTC") voted to block the proposed merger. On March 9, 1998,
the FTC filed a complaint with the United States District Court
for the District of Columbia seeking a preliminary injunction to
halt the merger. On March 18, 1998, the Company and AmeriSource
each announced that they would oppose the FTC's motion for
preliminary injunction. The hearing commenced on June 9, 1998
and concluded on July 24, 1998. On July 31, 1998 the court
issued its opinion granting the FTC's motion for the preliminary
injunction to halt the merger until a full administrative hearing
can be held before the FTC. The Company and AmeriSource
announced on that date that they would discuss the impact of the
court's decision on the merger agreement, but that it was highly
unlikely that the merger would continue to be pursued. On August
7, 1998, the Company and AmeriSource announced that their merger
agreement had been terminated.
- 10 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
Segment Results
- ---------------
Three Months Ended
June 30
------------------------
1998 1997 %Chg
------ ------ ----
(in millions)
REVENUES
Health Care Services
Pharmaceutical Distribution
& Services
U. S. Health Care (1) $4,797.6 $4,073.9 17.8
International 518.9 377.8 37.3
------- -------
Total Pharmaceutical
Distribution & Services 5,316.5 4,451.7 19.4
Medical/Surgical Distribution
& Services 475.8 446.9 6.5
------- -------
Total Health Care Services 5,792.3 4,898.6 18.2
------- -------
Water Products 74.7 72.3 3.3
Corporate 3.9 4.6 (15.2)
------- -------
Total $5,870.9 $4,975.5 18.0
======= =======
OPERATING PROFIT
Pharmaceutical Distribution
& Services $ 82.7 (2) $ 68.3 21.1
Medical/Surgical Distribution
& Services 17.1 14.5 17.9
------- -------
Total Health Care Services 99.8 82.8 20.5
Water Products 11.5 11.1 3.6
------- -------
Total 111.3 93.9 18.5
Interest - net (3) (26.5) (21.8)
Corporate and other (12.7) (8.9)
------- -------
Income before income taxes $ 72.1 $ 63.2 14.1
======= =======
(1) Includes sales to customers' warehouses of $927.9 million
and $632.8 million in the quarters ended June 30, 1998 and
1997, respectively.
(2) Includes $4.9 million in charges related to the terminated
transaction with AmeriSource and $2.8 million in costs
incurred in connection with the integration and
rationalization of recent acquisitions.
(3) Interest expense is shown net of corporate interest income.
- 11 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
Overview of Results
- -------------------
Net income for the first quarter increased to $42.1 million,
$0.43 per diluted share, from $37.6 million, $0.39 per share, in
the prior year. Included in the current year first quarter
results were $4.9 million in pre-tax and after-tax charges
associated with the Company's terminated merger transaction with
AmeriSource Health Corporation ("AmeriSource") and $2.8 million
in pre-tax costs incurred in connection with the integration and
rationalization of recent acquisitions. In the second quarter,
the Company anticipates recording additional costs associated
with the terminated AmeriSource transaction that were incurred
subsequent to June 30, 1998 and related tax benefits on costs
incurred to date. See Financial Note 6.
The effective income tax rate applicable to continuing
operations for the quarter ended June 30, 1998 differed from the
effective income tax rate for the comparable year period
primarily due to the write-off of costs associated with the
terminated AmeriSource transaction, net of the positive effect of
a refinancing of Canadian debt in a more tax-efficient manner in
the third quarter of fiscal 1998.
PHARMACEUTICAL DISTRIBUTION & SERVICES
The Pharmaceutical Distribution & Services segment includes
the operations of the Company's U.S. pharmaceutical and health
care products distribution business and its international health
care distribution businesses in Canada and Mexico. This segment
accounted for approximately 91% of total revenues in the first
quarter.
Segment revenues increased by 19% for the quarter compared
with the prior year, reflecting internal growth of 18% (12.5%
excluding sales to customers' warehouses) in the U.S.
pharmaceutical distribution business, and a 37% increase in
international revenues. U.S. pharmaceutical distribution
revenues increased due to sales growth in the existing customer
base and the addition of several major new customers during the
quarter in the retail and institutional sectors. The increase in
international revenues reflects the transition of additional
customers of Drug Trading Company, Limited, to Medis, the
Company's Canadian health care distribution business.
Operating profit for the quarter, excluding the effect of
the $7.7 million in charges noted above, increased by 32% to
$90.4 million from the prior year, and as a percentage of
revenues (excluding sales to customers' warehouses), increased 27
basis points to 2.06% from 1.79%. The improvement reflects
growth in procurement profits and operating efficiencies, the
latter resulting from facility consolidations and continuing
emphasis on technologies and logistics systems.
MEDICAL/SURGICAL DISTRIBUTION & SERVICES
The Medical/Surgical Distribution & Services segment
includes the operations of the Company's medical/surgical
supplies distribution business. This segment accounted for
approximately 8% of total revenues in the first quarter.
Revenues increased 6.5% to $475.8 million, due to gains in
the acute care and primary care segments offset, in part, by a
decline in long-term care revenues. Operating profit for the
quarter increased by 18% to $17.1 million reflecting a 35 basis
point increase in its operating margin resulting from ongoing
productivity initiatives.
- 12 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
WATER PRODUCTS
Revenues at Water Products increased by 3% for the quarter
compared with the prior year and operating profit increased 4% in
the quarter to $11.5 million from $11.1 million in the prior
year. Both revenues and operating profit were affected adversely
by reduced demand resulting from unusually cold and rainy weather
in California, which accounts for more than 70% of Water
Products' business.
INTEREST, NET
Interest expense, net of interest income, increased to $26.5
million in the quarter from $21.8 million for the prior year
period, reflecting an increase in working capital earlier in the
quarter associated, in part, with an inventory build-up for the
commencement of business with several large new customers.
Liquidity and Capital Resources
- -------------------------------
Cash and marketable securities available for sale were
$214.7 million at June 30, 1998 and $113.6 million at March 31,
1998. The June 30, 1998 marketable securities balance included
$41.3 million that is currently restricted and held in trust as
exchange property in connection with the Company's outstanding
exchangeable debentures. The increase in cash and marketable
securities is due in large part to the purchase by the McKesson
Employee Stock Ownership Plan (ESOP) of approximately 1.3 million
shares of newly issued common stock from the Company at $78.125
per share on May 29, 1998.
The increase in receivables at June 30, 1998 compared to
March 31, 1998 reflects quarter on quarter sales growth and the
addition of a large new customer at the end of May 1998. The
increase in accounts and drafts payable at June 30, 1998 compared
to March 31, 1998 is due to the growth in sales and extended
payment terms with certain vendors.
Stockholders' equity was $1,560.8 million at June 30, 1998,
and the net debt-to-capital ratio was 36%, down from 41% at March
31, 1998. The net debt-to-capital ratio for both periods was
computed by reducing the outstanding debt amount by the cash and
marketable securities balances at the end of the period.
Average diluted shares increased to 103.5 million from 100.2
million in the prior year due primarily to shares issued under
employee benefits plans and the sale of shares to the ESOP noted
above.
- 13 -
<PAGE>
McKESSON CORPORATION and SUBSIDIARIES
FINANCIAL REVIEW
Other
- -----
The Company relies heavily on computer technologies to
operate its business. As a result, the Company continuously
seeks to upgrade and improve its computer systems in order to
provide better service to its customers and to support the
Company's growth. The Company has conducted an assessment of its
computer systems and has begun to make the changes necessary to
make these systems Year 2000 compliant. The Company believes
that with modifications to or replacements of its existing
computer-based systems, it will be Year 2000 compliant by June
30, 1999, although the Company cannot provide any assurance in
this regard. The Company's systems rely in part on the
computer-based systems of its trading partners. As part of the
Company's assessment, an overview of certain of its trading
partners' Year 2000 compliance strategies is being performed and
the Company plans to conduct extensive systems testing with such
trading partners during calendar year 1999. Nevertheless, if any
trading partner or other entity upon which they rely failed to
become Year 2000 compliant, the Company could be adversely
affected. The Company incurred approximately $7 million in
fiscal 1998 and expects to incur between $10 and $15 million in
each of fiscal 1999 and 2000 in costs associated with
modifications to the Company's existing systems to make them Year
2000 compliant and related testing, including planned testing
with trading partners. Such costs are being expensed as
incurred. Year 2000 project costs are difficult to estimate
accurately and the projected cost could change due to
unanticipated technological difficulties, project vendor delays
and project vendor cost overruns.
- 14 -
<PAGE>
PART II. OTHER INFORMATION
===========================
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company's Annual Meeting of Stockholders was held on
July 29, 1998. The following matters were voted upon at the
meeting and the stockholder votes on each such matter are briefly
described below:
The Board of Directors' nominees for directors as
listed in the proxy statement were each elected to
serve for a three-year term expiring at the Annual
Meeting in 2001. The vote was as follows:
Votes For Votes Withheld
---------- --------------
Mary G. F. Bitterman 85,814,897 907,077
Mark A. Pulido 85,832,897 889,077
Robert H. Waterman, Jr. 85,827,207 894,767
The terms of the following named directors continued
after the meeting:
Tully M. Friedman Carl E. Reichardt
John M. Pietruski Alan Seelenfreund
David S. Pottruck Jane E. Shaw
The proposal to amend the Company's Restated
Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 200,000,000 to
400,000,000 was approved by the following vote:
Votes For Votes Against Votes Withheld
---------- ------------- --------------
79,616,499 6,894,463 211,012
Item 5. Other Information
- --------------------------
The ratios of earnings to fixed charges and of earnings to
combined fixed charges and preferred stock dividends amounted to
2.93x and 3.02x for the three months ended June 30, 1998 and
1997, respectively. There were no preferred stock dividends in
the three months ended June 30, 1998 and 1997, respectively.
The ratio of earnings to fixed charges was computed by
dividing fixed charges (interest expense, the portion of rental
expense under operating leases deemed by the Company to be
representative of the interest factor and dividends on preferred
securities of a subsidiary grantor trust) into earnings available
for fixed charges (net income plus income tax expense and fixed
charges).
- 15 -
<PAGE>
PART II. OTHER INFORMATION
===========================
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
3.1 Certificate of Amendment of Restated Certificate
of Incorporation of the Company, as filed with the
Office of the Delaware Secretary of State on July
29, 1998
3.2 Restated Certificate of Incorporation of the
Company, as filed with the Office of the Delaware
Secretary of State on July 30, 1998
10.1 Amendment No. 1 to Consulting Agreement entered
into as of March 25, 1998 by and between the
Company and its Chairman and former Chief
Executive Officer
10.2 McKesson Corporation Management Deferred
Compensation Plan, amended as of May 29, 1998
10.3 McKesson Corporation Deferred Compensation
Administration Plan, amended as of May 29, 1998
10.4 McKesson Corporation 1985 Executives Elective
Deferred Compensation Plan, amended as of May 29,
1998
12.1 Computation of Ratio of Earnings to Fixed charges
and Earnings to Combined Fixed Charges and
Preferred Stock Dividends
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
three months ended June 30, 1998.
- 16 -
<PAGE>
SIGNATURE
=========
Pursuant to the requirements 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
(Registrant)
Dated: August 7, 1998 By /s/ Richard H. Hawkins
-----------------------------
Richard H. Hawkins
Vice President and
Chief Financial Officer
By /s/ Heidi E. Yodowitz
-----------------------------
Heidi E. Yodowitz
Controller
- 17 -
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -------------------------------------------------------
3.1 Certificate of Amendment of Restated Certificate of
Incorporation of the Company, as filed with the Office
of the Delaware Secretary of State on July 29, 1998
3.2 Restated Certificate of Incorporation of the Company,
as filed with the Office of the Delaware Secretary of
State on July 30, 1998
10.1 Amendment No. 1 to Consulting Agreement entered into as
of March 25, 1998 by and between the Company and its
Chairman and former Chief Executive Officer
10.2 McKesson Corporation Management Deferred Compensation
Plan, amended as of May 29, 1998
10.3 McKesson Corporation Deferred Compensation
Administration Plan, amended as of May 29, 1998
10.4 McKesson Corporation 1985 Executives Elective Deferred
Compensation Plan, amended as of May 29, 1998
12.1 Computation of Ratio of Earnings to Fixed charges and
Earnings to Combined Fixed Charges and Preferred Stock
Dividends
27 Financial Data Schedule
- 18 -
Exhibit 3.1
CERTIFICATE OF AMENDMENT
of
RESTATED CERTIFICATE OF INCORPORATION
of
McKESSON CORPORATION
Pursuant to Section 242 of the General Corporation Law
of the State of Delaware
------------------------
McKesson Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST. At a meeting of the Board of Directors of the
Corporation duly called and held on May 29, 1998, resolutions
were duly adopted setting forth a proposed amendment to the
Restated Certificate of Incorporation of the Corporation,
declaring such amendment to be advisable and directing that such
amendment be submitted to the stockholders of the Corporation for
approval at its Annual Meeting of Stockholders to be held on July
29, 1998. Such resolutions recommended that the first paragraph
of Article IV of the Restated Certificate of Incorporation of the
Corporation be amended and restated in its entirety as follows:
"The total number of shares of stock of
all classes which the Corporation has
authority to issue is 500,000,000 shares,
divided into 100,000,000 shares of Series
Preferred Stock, par value $0.01 per share
(herein called the "Series Preferred
Stock"), and 400,000,000 shares of Common
Stock, par value $0.01 per share (herein
called the "Common Stock"). The aggregate
par value of all shares having par value is
$5,000,000.
SECOND. At the Annual Meeting of Stockholders of the
Corporation duly called and held on July 29, 1998, the
affirmative vote of a majority of the votes permitted to be cast
by the holders of the outstanding shares of the Corporation's
common stock, par value $0.01 per share, and the Corporation's
Series Preferred Stock par value $0.01 per share, was obtained in
favor of such amendment with respect to Article IV.
THIRD. Said amendment was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
In Witness Whereof, McKesson Corporation has caused this
Certificate of Amendment to be signed by Nancy A. Miller, its
Vice President and Corporate Secretary, and attested by Dana T.
Iapicca, its Assistant Secretary, this 29th day of July 1998.
/s/ Nancy A. Miller
---------------------------
Nancy A. Miller
Vice President
and Corporate Secretary
Attest:
/s/ Dana T. Iapicca
- ---------------------------
Dana T. Iapicca
Assistant Secretary
Exhibit 3.2
RESTATED
CERTIFICATE OF INCORPORATION
OF
McKESSON CORPORATION
(Duly Adopted in Accordance with Section 245 of
the Delaware General Corporation Law)
-----------------------------------
Originally Incorporated on July 7, 1994
Under the Name SP Ventures, Inc.
-----------------------------------
(Restates and Integrates 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 500,000,000 shares, divided
into 100,000,000 shares of Series Preferred Stock, par value
$0.01 per share (herein called the "Series Preferred Stock"), and
400,000,000 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 $5,000,000.
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 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.
(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.
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:
(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 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) 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.
(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
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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
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 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 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 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 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 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.
(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.
(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 30th day of July, 1998.
McKESSON CORPORATION
By: /s/ Nancy A. Miller
-------------------------
Nancy A. Miller
Vice President
and Corporate Secretary
Attest:
/s/ Dana T. Iapicca
- -------------------------
Dana T. Iapicca
Assistant Secretary
Exhibit 10.1
AMENDMENT No. 1
TO
CONSULTING AGREEMENT
This Amendment No. 1 to Consulting Agreement is entered into
as of the 25th day of March 1998 by and between McKesson
Corporation, a Delaware corporation ("McKesson"), and Alan
Seelenfreund ("Seelenfreund").
R E C I T A L S
- - - - - - - -
A. Seelenfreund is currently the Chairman of the Board of
Directors of McKesson having retired as an executive officer and
employee of McKesson effective July 31, 1997.
B. McKesson and Seelenfreund previously entered into a
Consulting Agreement (the "Agreement") dated as of March 28,
1997 and they now wish to amend the Agreement to extend its term
for an additional period of one year.
NOW, THEREFORE, in consideration of the foregoing and the
covenants and agreements herein contained, the parties agree as
follows:
1. Section 2(a) of the Agreement is hereby deleted and the
following Section 2(a) is substituted therein:
"2(a). The period of Seelenfreund's engagement
pursuant to this Agreement shall commence on July 31, 1998
and continue until July 31, 1999 (the "Term").
2. Section 3(a) is hereby amended in the following
respects:
(a) The second sentence thereof is amended by deleting
"March 30, 1998" and substituting in its place and stead
"March 31, 1999."
(b) The following sentence shall be added at the end
of said Section, effective as ofMarch 28, 1997:
"Seelenfreund shall be entitled to make elections regarding
annual bonus deferral and bonus stock options in a manner
similar to the elections available to the executive
employees of the Company."
3. As modified hereabove, the Agreement shall continue in
full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 1 to Consulting Agreement as of the day and year first
written above.
McKesson Corporation,
a Delaware Corporation
s/g By William A. Armstrong
--------------------
Vice President
s/g By Alan Seelenfreund
-----------------
Alan Seelenfreund
Attest:
s/g By N.A. Miller
-----------
Secretary
By the Authority of the Compensation Committee of the
Board of Directors of
McKesson Corporation
on March 25, 1998.
Exhibit 10.2
McKESSON CORPORATION
MANAGEMENT DEFERRED COMPENSATION PLAN
Amended as of May 29, 1998
A. PURPOSE
-------
This Plan is established to further enhance the Company's
ability to attract and retain executive personnel and Directors.
B. ERISA PLAN
----------
This Plan is an unfunded deferred compensation program for
a select group of management employees and Directors of the
Company. The Plan therefore is covered by Title I of ERISA
except that it is exempt from Parts 2, 3 and 4 of Title I of
ERISA.
C. PARTICIPATION
-------------
1. Eligibility to Participate
a. Eligible Executives. The Compensation Committee
may, at its discretion, and at any time, and from time to time,
select Company executives who may elect to participate in this
Plan ("Eligible Executives"). Selection of Eligible Executives
may be evidenced by the terms of the executive's employment
contract with the Company, or by inclusion among the persons
specified by the Compensation Committee.
The Compensation Committee may, at its discretion, and
at any time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Compensation Committee
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such
determination are paid out under the terms of the Plan (or until
death, if earlier).
b. Eligible Directors. Each Director who is not a
Company employee may participate in this Plan ("Eligible
Directors").
2. Election to Participate. An Eligible Executive or an
Eligible Director may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Participant shall be deemed to
accept all of the terms and conditions of this Plan.
All elections to defer amounts under this Plan shall be
made pursuant to an election executed and filed with the
Administrator before the amounts so deferred are earned. All
elections to defer compensation for any Year shall be executed
and filed with the Administrator no later than (i) November 30 of
the immediately preceding Year for Eligible Executives whose
salaries are paid monthly and (ii) December 15 of the immediately
preceding Year for all other Eligible Executives and Eligible
Directors.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive and each Eligible
Director that he or she may participate in the Plan for the next
Year. Such notice shall also set forth the Declared Rate for the
next Year.
4. Relation to Other Plans. An Eligible Executive or a
Director may participate in this Plan and may also participate in
any other benefit plan of the Company in effect from time to time
for which he or she is eligible, unless the other plan may
otherwise exclude participation on the basis of eligibility for,
or participation in, this Plan. No amounts may be deferred under
this Plan which have been deferred under any other plan of the
Company. Deferrals under this Plan may result in a reduction of
benefits payable under the Social Security Act, the Company's
Retirement Plan and the Company's Profit-Sharing Investment Plan.
D. AMOUNTS OF DEFERRAL
-------------------
1. Minimum Deferral. The minimum amount that an Eligible
Executive may defer under this Plan for any Year is $5,000 of
base salary, or any annual bonuses and/or any Long-Term Incentive
Plan award. The minimum amount of compensation that an Eligible
Director may defer for any Year is $5,000.
2. Maximum Deferral for Eligible Executives. The maximum
amount of compensation which an Eligible Executive may defer
under this Plan for any Year is (i) fifty percent (50%) of the
amount of such Eligible Executive's base salary for such Year,
and (ii) the entire amount of any annual bonus award and/or any
Long-Term Incentive Plan Award determined and payable to him or
her in such Year.
3. Maximum Deferral for Eligible Directors. The maximum
amount of compensation which an Eligible Director may defer under
this Plan for any Year is the amount of any annual retainer and
other fees from the Company earned by him or her in any such
Year.
4. No New Deferrals After January 1, 1994.
Notwithstanding paragraphs 1, 2 and 3 of this Section D., no new
deferrals under this Plan shall be made after January 1, 1994.
E. PAYMENT OF DEFERRED COMPENSATION
--------------------------------
1. Book Account and Interest Credit. Compensation
deferred by a Participant under the Plan shall be credited to a
separate bookkeeping account for such Participant (the
"Account"). (Sub-Accounts may be established for each Year for
which the Participant elects to defer compensation.) Interest
shall be credited to each Account (including Sub-Accounts
established thereunder) for each Year at a rate equal to a rate
declared by the Compensation Committee acting in its sole
discretion after taking into account, among other things, the
following factors: the Company's cost of funds, corporate tax
brackets, expected amount and duration of deferrals, number and
age of eligible Participants, expected time and manner of payment
of deferred amounts, and expected performance of available
fixed-rate insurance contracts covering the lives of Participants
(the "Declared Rate"). Each Account balance shall be compounded
monthly at the twelfth root of the annual Declared Rate of
interest provided for under this Plan. In the case of
installment payments as provided in Section E.3 below, interest
shall be credited on all amounts remaining in a Participant's
Account until all amounts are paid out.
2. Length of Deferral. An Eligible Executive or Eligible
Director shall elect in writing, and file with the Administrator,
at the same time as such Eligible Executive or Eligible Director
makes any election to defer compensation, the period of deferral
with respect to such election, subject to the minimum required
period of deferral, which is five years after the end of the Year
for which compensation is deferred, except as otherwise provided
in this Section E. Payment must commence no later than the end
of the maximum period of deferral, which is the January following
the year in which the Eligible Executive reaches age 72, or, in
the case of an Eligible Director, the January after the Company's
annual meeting of stockholders next following the Eligible
Director's 72nd birthday. Once such an election has been made,
the Eligible Executive or Eligible Director may alter the period
of deferral, provided that:
a. such alteration is made at least one year prior to
the earliest date the Participant could have received
distribution of the amounts credited to his or her Account under
the earlier election, and
b. such alteration does not provide for the receipt
of such amounts earlier than one year from the date of the
alteration, subject to the five-year minimum deferral rule stated
above.
3. Election of Methods of Payment. A Participant shall
elect in writing, and file with the Administrator, at the same
time as any election to defer compensation, a method of payment
of benefits under this Plan from the following methods:
a. Payment of amounts credited to the Participant's
Account in any specified number of approximately equal annual
installments (not in excess of 10), the first installment to be
paid in the Year designated by the Participant.
b. Payment of the amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of ten), the first
installment to be paid at a designated interval following the
earlier of Participant's Retirement or one continuous year of
disability.
c. Payment of the amount credited to the
Participant's Account in a single sum.
4. Date Payments Begin. Single sum payments to be made
following Retirement shall be made as soon as practicable
following such Retirement. In the case of a Participant's death,
single sum or installment payments may begin as soon as
practicable after such death. All other payments shall begin
(or, in the case of payments to be made in a single sum, shall be
made) in January following the deferral period under Section E.2,
but, in any event, must begin no later than the January following
the year in which the Eligible Executive reaches age 72, or, in
the case of an Eligible Director, the January after the Company's
annual meeting of stockholders next following the Eligible
Director's 72nd birthday.
5. Payments on Termination. If for any reason other than
Retirement or Death, an Eligible Executive terminates employment
with the Company or an Eligible Director ceases to be a Director,
the entire undistributed amount of his or her deferred
compensation will be paid in the form of a lump sum as soon as
practicable after such termination or cessation.
6. Payments on Death.
a. Death After Payments Have Begun. If a Participant
dies after payments from his or her Account have begun, the
remainder of the amounts credited to the Participant's Account
shall be paid to his or her Beneficiary at the same time and in
the same manner as they would have been paid had the Participant
survived.
b. Death Before Payments Have Begun. If a
Participant dies before payments from his or her Account have
begun, the amount credited to his or her Account shall be paid to
his or her Beneficiary at the time and in the manner elected by
the Participant. Such election shall be made in writing and
filed with the Administrator at the time of any election to defer
compensation. Benefits shall be paid in one of the methods
specified in paragraphs a. and c. of Section E.3. and at the time
specified in Section E.4. The Administrator, at his or her
discretion, may distribute all benefits to a Beneficiary in a
single payment if the present value of the benefits payable to a
Participant or Beneficiary is less than $5,000.
7. Payments on Hardship. The Compensation Committee may
in its sole discretion direct payment to a Participant of all or
of any portion of any amounts deferred, notwithstanding an
election under Section E.3 above at any time that it determines
that such Participant has suffered an event of undue hardship
which causes an emergency condition in his or her financial
affairs.
8. Effect of Change in Control on Minimum Deferral Period.
The five-year minimum deferral period described in Section E.2.
shall not apply in the event of a Change in Control of Company or
its operating subsidiary, McKesson Corporation, a Maryland
corporation (each of which is referred to herein as
"Corporation");
For purposes of this Plan, a Change in Control of a
Corporation shall be deemed to have occurred if any of the events
set forth in any one of the following paragraphs shall occur:
a. any "person" (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as such term is modified in Sections 13(d) and 14(d) of the
Exchange Act), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the
same proportions as their ownership of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
b. during any period of not more than two consecutive
years, individuals who at the beginning of such period constitute
the Board and any new director (other than a director designated
by a Person who has entered into an agreement with the Company to
effect a transaction described in clause a., c., or d. of this
paragraph) whose election by the Board 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
c. the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other
than (I) a merger or consolidation which would result in
thevoting 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), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
d. the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be
distributed upon a Change in Control, if the Participant has so
elected.
9. Designation of Beneficiary. A Participant may
designate any person(s) or any entity as his or her Beneficiary.
Designation shall be in writing and shall become effective only
when filed with the Administrator. Such filing must occur before
the Participant's death. A Participant may change the
Beneficiary, from time to time, by filing a new written
designation with the Administrator. If the Participant is
married, any Beneficiary designation which does not designate the
Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
F. SOURCE OF PAYMENT
-----------------
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
G. MISCELLANEOUS
-------------
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Executive shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Participant's life, and shall
authorize the Company to purchase life insurance on his or her
life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
H. ADMINISTRATION OF THE PLAN
--------------------------
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice
President, Human Resources is a Participant, any discretionary
action taken as Administrator which directly affects him or her
as a Participant shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
the authority and responsibility to interpret this Plan and shall
adopt such rules and regulations for carrying out this Plan as it
may deem necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have or
claim any interest in this Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
I. AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
The Board may at any time amend this Plan. Such action
shall be prospective only and shall not adversely affect the
rights of any Participant or Beneficiary to any benefit
previously earned under this Plan. The Board may at any time
terminate this Plan; thereupon compensation previously deferred
plus interest credited thereon shall promptly be paid, on
termination, in single lump sums to the respective Participants
or Beneficiaries entitled thereto.
J. EFFECTIVENESS
-------------
This Plan is effective as of November 1, 1989, the date on
which this Plan was approved by the Board; provided, however,
that deferrals of compensation under this Plan shall not commence
unless and until the Company has received a favorable no-action
letter regarding this Plan from the Securities and Exchange
Commission.
K. DEFINITIONS
-----------
For purposes of this Plan, the following terms shall have
the meanings indicated:
1. "Account" means the Account specified in Section E.1.
2. "Administrator" shall mean the person specified in
Section H.
3. "Beneficiary" shall mean the person or entity described
by Section E.9.
4. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
5. "Company" shall mean McKesson Corporation, a Delaware
corporation and any subsidiary in which it owns at
least 50% of the issued and outstanding stock (and any
subsidiary 50% of the issued and outstanding stock of
which is owned by such a subsidiary).
6. "Compensation Committee" shall mean the Compensation
Committee of the Board.
7. "Declared Rate" shall have the meaning described in
Section E.1.
8. "Eligible Director" shall mean a Director described by
Section C.1.b.
9. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in
this Plan under Section C.
10. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
11. "Participant" shall be any Company executive or member
of the Board for whom amounts are credited to an
Account under this Plan. Upon his or her death, his or
her Beneficiary shall be a Participant until all
amounts are paid out of his or her Account.
12. "Plan" shall mean the McKesson Corporation Management
Deferred Compensation Plan.
13. "Retirement" shall mean termination of a Participant's
employment after his or her age plus years of service
with the Company reaches 65.
14. "Year" is the calendar year.
Executed as of May 29, 1998, in the City and County of San
Francisco, State of
California.
McKESSON CORPORATION
By:
-------------------------
William A. Armstrong
Vice President, Human Resources and Administration
Exhibit 10.3
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN (DCAP)
Amended as of May 29, 1998
The purpose of this Plan is to provide a select group of
executives employed by McKesson Corporation, a Delaware
corporation ("McKesson"), and its subsidiaries (collectively, the
"Company"), and McKesson directors, an opportunity to defer for
later payment amounts earned as compensation.
1. PARTICIPATION
-------------
a. Employees. An employee of the Company is eligible to
be a Participant in this Plan for any year if (i) it is
reasonably anticipated by the Company that he or she will receive
an award under a Company incentive plan of at least $5,000, or
(ii) he or she is entitled to defer compensation from the Company
pursuant to the terms of an employment contract or incentive
plan. An eligible employee shall become a "Participant" by
making an irrevocable election in writing to participate in this
Plan or, if such employment contract or incentive plan provides
for automatic participation in this Plan, by making an
irrevocable election to defer compensation.
b. Directors. Each member of the Board of Directors of
McKesson may participate in this Plan in accordance with the
terms of the McKesson Directors' Deferred Compensation Plan
("DDCP").
2. COMPENSATION THAT MAY BE DEFERRED
---------------------------------
a. Employees.
(i) Base Salary. Each employee who participates in
this Plan may elect to defer up to fifty percent (50%) of his or
her base salary earned from the Company in any calendar year.
For calendar year 1987, the maximum amount that may be deferred
under this provision is the lesser of fifty percent (50%) of the
employee's 1987 base salary or the amount earned by the employee
from the Company on and after September 1, 1987. In any event,
the Company may limit deferrals as is necessary or appropriate to
provide sufficient current compensation to cover taxes, benefit
payments and other necessary or appropriate deductions.
(ii) Incentive Plans. The Company maintains and
administers various incentive plans for its executives and key
employees. Pursuant to the terms of some of these plans or an
employment contract with the Company, a participating employee
may make an irrevocable election to have the incentive
compensation awarded to him paid on a deferred basis.
b. Directors. A member of the Board of Directors of
McKesson entitled to compensation for service as a director may
make an irrevocable election to defer compensation in accordance
with the terms of the DDCP. To the extent that the terms of the
DDCP conflict with the terms of this Plan, the DDCP shall govern
with respect to all amounts deferred by any such Director.
3. ELECTION TO DEFER
-----------------
a. Time and Manner of Election; Election is Irrevocable.
Each Participant shall make an election to defer compensation
under this Plan at the time and in the manner prescribed by the
Management Incentive Plan Committee. All elections to defer
compensation under this Plan shall be irrevocable and shall be
made prior to the year in which the compensation is earned. Once
an election is made, the Participant may alter the timing of
receipt of such deferred compensation, provided that such
alteration is made at least one year prior to the earliest date
the Participant could have received distribution of the deferred
compensation under a previous election and does not provide for
the receipt of such amounts earlier than one year from the date
of the alteration. An election to defer base salary in 1987,
however, shall be made prior to September 1, 1987, which is the
first date with respect to which base salary may be deferred
under this Plan.
b. $5,000 Minimum. The minimum amount that a Participant
may defer under this Plan for any one calendar year is $5,000.
c. No New Deferrals After January 1, 1994.
Notwithstanding paragraphs a. and b., above, no new deferrals
shall be made under this Plan after January 1, 1994.
4. RETAINED ACCOUNT OR STOCK ACCOUNT
---------------------------------
a. Election of Account. Each Participant's deferred
compensation shall be credited to a separate bookkeeping account
of McKesson maintained for such Participant (the "Account"). The
Participant may elect that deferrals be credited either to the
"Retained Account" or the "Stock Account" as defined below. All
such elections shall be irrevocable.
b. Retained Account.
(i) The Retained Account shall accrue interest during
each calendar year equal to the median yield of all
non-convertible debt issues coming to market during the
twelve-month period ending one month prior to the end of the
month in which the election instructions are issued in the prior
fiscal year from companies rated A (includes A- and A+), as
reported by the Standard & Poor's Monthly Bond Guides in its
calendar of new offerings. The rate of interest so determined
shall be applied to each Participant's entire Retained Account
balance. The Retained Account balance shall be compounded at the
end of each calendar year by the annual rate of interest so
determined.
(ii) Notwithstanding paragraph (i), above, beginning
January 1, 1994, all deferrals made by a Participant into his or
her Retained Account after 1992 will earn interest at the same
rate as deferrals to the McKesson Corporation Deferred
Compensation Administration Plan II (DCAP II).
c. Stock Account.
(i) The amount of stock credited to the Stock Account
of the Participant shall be determined by the number of shares of
McKesson Common Stock which could be purchased with the amount of
the deferred compensation using the closing price of McKesson
Common Stock on the New York Stock Exchange on the day coinciding
with each date on which his or her deferred compensation is
credited to his or her Account. If the date of credit is not a
business day, then the closing price referred to in the prior
sentence shall be the closing price on the business day
immediately preceding the date of credit.
(ii) Under this bookkeeping arrangement, no shares of
McKesson Common Stock shall be issued to or held in any Account.
(iii) The total number of shares of McKesson Common
Stock which may be credited during any single year to the Account
of a Participant who is a non-employee Director shall be the
lesser of (I) the number of shares which could be purchased with
the aggregate amount of compensation eligible for deferral under
this Plan which such Participant elects to defer for such year,
or (II) the amount of one thousand (1,000) shares. The total
number of shares of McKesson Common Stock which may be credited
during any single year to the Account of a Participant who is an
employee shall be the number of shares which could be purchased
with the aggregate amount of compensation eligible for deferral
under this Plan which such Participant elects to defer for such
year, provided that such number, when combined with all other
shares of McKesson Common Stock theretofore credited to the
Participant's Account under this Plan, shall not exceed one
percent (1%) of the then outstanding shares of McKesson Common
Stock. For purposes of this subparagraph (iii), the calculation
of the number of shares which a Participant could purchase shall
be determined in accordance with subparagraph (i) above.
5. DISTRIBUTION OF AMOUNTS DEFERRED UNDER THE PLAN
-----------------------------------------------
a. Irrevocable Election Concerning Distribution. Amounts
deferred under the Plan by eligible Directors shall be
distributed as specified by the DDCP. Amounts deferred under the
Plan by other eligible Participants shall be distributed in
whichever of the following forms was irrevocably elected by the
Participant at the time that he or she made an irrevocable
election to defer compensation; provided, however, that any such
distribution must commence no later than the January following
the year in which the Participant reaches age 72.
(i) Installments Beginning Currently. Payment of the
funds in any number of approximately equal annual installments
not in excess of ten designated by the Participant, the first
installment to be paid at the time that the award is made, if
deferral is under an incentive plan or on the January 1 following
the year of deferral, if deferral is of base salary.
(ii) Installments Beginning in Designated Year.
Payment of the funds in any number of approximately equal annual
installments not in excess of ten designated by the Participant,
the first installment to be paid in the year designated by the
Participant.
(iii) Installments Beginning on Retirement, Disability
or Death. Payment of the funds in any number of approximately
equal annual installments not in excess of ten designated by the
Participant, the first installment to be paid at an interval
following the Participant's Retirement, disability or death,
whichever is the first to occur, designated by the Participant.
For purposes of this subparagraph, Retirement shall mean the
Participant's termination of employment after his or her age plus
years of service equals 65.
(iv) Lump Sum. Payment of the funds in one lump sum
in the year designated by the Participant.
b. Payment Upon Termination of Employment. If a
Participant's employment with the Company terminates before
Retirement (as defined in 5.a.(iii)), the Participant shall
receive a distribution of the entire amount credited to his or
her Account in the January following such termination of
employment.
c. Hardship Distributions. The Management Incentive Plan
Committee may in its sole discretion direct payment to a
Participant of all or of any portion of any amounts deferred,
notwithstanding an election under Subparagraphs (i), (ii), (iii)
and (iv) of Paragraph (a) above at any time that it determines
that such Participant has suffered an event of undue hardship
which causes an emergency condition in his financial affairs.
d. Payment to Beneficiary. If a Participant dies after
payments from his or her Account have begun, his or her
beneficiary or beneficiaries shall continue to receive payments
under this Plan in the same form and at the same time as they
would have been paid had the Participant survived. If a
Participant dies before payments from his or her Account have
begun, the amounts credited to the Account shall be paid to the
designated beneficiary or beneficiaries at the time and in the
manner previously irrevocably elected by the Participant.
Benefits shall be paid in one of the forms described in section
5(a)(i), (ii) or (iv) of this Plan. Benefits shall be paid at
the time elected by the Participant and as allowed by the
Management Incentive Plan Committee of McKesson (the
"Committee").
A Participant may designate any person or entity as his
or her Beneficiary. Designation shall be in writing and shall
become effective only when filed with the Committee. Such filing
must occur before the Participant's death. A Participant may
change the Beneficiary, from time to time, by filing a new
written designation with the Committee. If the Participant is
married any Beneficiary designation which does not designate the
Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
e. Time of Payment. Payments of deferred funds shall be
made in the first two weeks of January each year except as
otherwise irrevocably elected at the time of election of
deferral.
f. Method of Payment. Amounts deferred and credited to
the Retained Account shall be paid in cash. Amounts deferred and
credited to the Stock Account shall be paid in shares of McKesson
Common Stock.
g. Change in Control. For purposes of this Plan, a Change
in Control of McKesson, or its operating subsidiary McKesson
Corporation, a Maryland corporation (each of which is referred to
herein as "Corporation"), shall be deemed to have occurred if any
of the events set forth in any one of the following paragraphs
shall occur:
(i) any "person" (as defined in section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
and as such term is modified in sections 13(d) and 14(d) of the
Exchange Act), excluding the Company or any of its subsidiaries,
a trustee or any fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, an
underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the
same proportions as their ownership of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of
the Company's then outstanding securities; or
(ii) during any period of not more than two
consecutive years, individuals who at the beginning of such
period constitute the Board and any new director (other than a
director designated by a Person who has entered into an agreement
with the Company to effect a transaction described in clause (i),
(iii) or (iv) or of this paragraph) whose election by the Board
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 shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other
than (I) 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), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 50% of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
(II) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, no Change in Control
shall be deemed to have occurred if there is consummated any
transaction or series of integrated transactions immediately
following which the holders of the Company's Common Stock
immediately prior to such transaction or series of transactions
continue to have the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately prior to such transaction or series of transactions.
With respect to deferrals made prior to January 1,
1994, deferred funds will be distributed upon a Change in
Control, if the Participant has so elected.
6. COMPANY PROPERTY
----------------
All amounts credited to the Retained Account and the Stock
Account shall be the property solely of the Company. Each
Participant and beneficiary shall be solely an unsecured general
creditor of the Company with respect to amounts credited to his
or her Retained Account or Stock Account and shall have no
special or prior right to any stock or assets for payment of any
obligations hereunder.
7. NON-ASSIGNABLE
--------------
A Participant's rights in the Account shall be
non-assignable by him or her, except that payments may be made to
his or her estate or beneficiaries designated in accordance with
the terms of this Plan, his or her employment contract, the
applicable incentive plan or the DDCP.
8. ADMINISTRATION
--------------
This Plan shall be administered by the Committee. The
Committee shall have full power and authority to interpret the
provisions and supervise the administration of this Plan and to
take all action in connection therewith as it deems necessary or
advisable. All decisions and interpretations of the Committee
made hereunder shall be final.
9. AMENDMENT AND TERMINATION
-------------------------
While McKesson hopes to continue this Plan indefinitely, the
Plan may be amended, suspended or terminated at any time by the
Board of Directors of McKesson, provided that no such amendment,
suspension or termination shall adversely affect the
administration of amounts already credited to an Account under
the Plan, with respect to which amounts the Plan shall be
continued until all deferred compensation credited to an Account
under the Plan has been paid.
10. SUCCESSORS
----------
This Plan shall be binding on the Company and any successors
or assigns thereto.
McKESSON CORPORATION
By _________________________
William A. Armstrong
Vice President, Human Resources and Administration
Exhibit 10.4
McKESSON CORPORATION
1985 EXECUTIVES ELECTIVE DEFERRED COMPENSATION PLAN
Amended as of May 29, 1998
A. PURPOSE
-------
This Plan is established to further enhance the Company's
ability to attract and retain executive personnel.
B. ERISA PLAN
----------
This Plan is an unfunded deferred compensation program for
a select group of management employees of the Company. The Plan
therefore is covered by Title I of ERISA except that it is exempt
from Parts 2, 3, and 4 of Title I of ERISA.
C. PARTICIPATION
-------------
1. Eligibility to Participate. The Compensation Committee
may, at its discretion, and at any time, and from time to time,
select Company executives who may elect to participate in this
Plan ("Eligible Executives"). Selection of Eligible Executives
may be evidenced by the terms of the executive's employment
contract with the Company, or by inclusion among the persons
specified by the Compensation Committee.
The Compensation Committee may, at its discretion, and at
any time, and from time to time, designate additional Eligible
Executives and/or provide that executives previously designated
are no longer Eligible Executives. If the Compensation Committee
determines that an executive is no longer an Eligible Executive,
he or she shall remain a Participant in the Plan until all
amounts credited to his or her Account prior to such
determination are paid out under the terms of the Plan (or until
death, if earlier).
2. Election to Participate by Eligible Executives. Each
Eligible Executive may become a Participant in the Plan by
electing to defer compensation in accordance with the terms of
this Plan. An election to defer shall be in writing, shall be
irrevocable and shall be made at the time and in the form
specified by the Administrator. On electing to defer
compensation under this Plan, the Eligible Executive shall be
deemed to accept all of the terms and conditions of this Plan.
All elections to defer amounts under this Plan shall be
made pursuant to an election executed and filed with the
Administrator before the amounts so deferred are earned. All
elections to defer 1985 compensation shall be executed and filed
with the Administrator no later than September 15, 1985, or on
any later date in 1985 (no later than September 22, 1985) if the
election is to defer 1985 compensation earned after such later
date.
3. Notification of Participants. The Administrator shall
annually notify each Eligible Executive that he or she may
participate in the Plan for the next Year.
4. Relation to Other Plans.
a. DCAP. An Eligible Executive may participate in
this Plan and may also participate in the McKesson Corporation
Deferred Compensation Administration Plan. No amounts may be
deferred under this Plan which have been deferred under the
McKesson Corporation Deferred Compensation Administration Plan or
any other plan of the Company.
b. Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible
Executive under this Plan shall, to the extent relevant, be
treated in the same manner as amounts deferred under the McKesson
Corporation Deferred Compensation Administration Plan.
D. AMOUNTS OF DEFERRAL
-------------------
1. Minimum Deferral. The minimum amount of compensation
that may be deferred by an Eligible Executive under this Plan for
1985 is one month's salary. The minimum amount that an Eligible
Executive may defer for 1986 and later Years is $10,000.
2. Maximum Deferral.
a. 1985. The maximum amount of compensation which an
Eligible Executive
may defer under this Plan for 1985 shall be his or her salary
earned from September 16, 1985
through December 15, 1985.
b. Years After 1985. The maximum amount of
compensation which an
Eligible Executive may defer under this Plan for any Year after
1985 is (i) twenty-five percent
(25%) of the amount of such Eligible Executive's base salary for
such Year, calculated at the
annual base salary rate in effect on January 1 of such Year, and
(ii) the amount of any annual
bonus award and/or any Long-Term Incentive Plan Award determined
and payable to him or her
in such Years.
3. As Deferrals After 1986. Eligible Executives may not
defer compensation under
this Plan for any Year after 1986.
E. PAYMENT OF DEFERRED COMPENSATION
1. Book Account and Interest Credit. Compensation
deferred by an Eligible Executive under the Plan shall be
credited to a separate bookkeeping account for such Eligible
Executive (the "Account"). (Separate Accounts or Sub-Accounts
may be established for each Year for which the Eligible Executive
elects to defer compensation.) Interest shall be credited to
each Account for each Year at a rate equal to 6% plus the Moody's
Corporate Bond Yield Average--Monthly Average Corporates as
published by Moody's Investors Service, Inc. (or any successor
thereto) for December of each Year prior to the Year in which
such interest rate is credited. Each Account balance shall be
compounded monthly, in a consistent manner as determined by the
Administrator, at the appropriate rate of interest provided for
under the Plan.
2. Reduced Interest Rate for Participants Who Leave Before
Approved Retirement. If a Participant's employment with the
Company is terminated for any reason whatsoever prior to the date
of his or her Approved Retirement (except on death or
disability), the interest rate which shall be credited to his or
her Account shall be the rate specified in Section E.1, above,
for the period up to and including the date his or her employment
terminates and thereafter shall be the rate specified in Section
E.1, above, less 6 percentage points per annum. Notwithstanding
the foregoing, the Compensation Committee may, in its discretion,
credit the Account of any Participant whose employment is
terminated at an interest rate up to the plan maximum for years
and portions thereof, following the date on which the
Participant's employment terminates. This reduced rate shall not
apply to any amounts which have been distributed under paragraph
b of Section E.3 (relating to interim distributions) prior to
such termination.
3. Length of Deferral.
a. Basic Deferral Period. An Eligible Executive
shall elect in writing, and file with the Administrator, at the
same time as such Eligible Executive makes any election to defer
compensation, the period of deferral with respect to such
election. Once such an election is made, an Eligible Executive
may alter the timing of receipt of benefits under the election,
provided that such alteration is made at least one year prior to
the earliest date the Participant could have received payment of
benefits under the Plan under the previous election and does not
provide for the receipt of such amounts earlier than one year
from the date of the alteration. Payment of amounts deferred and
interest credited thereon must begin no later than the January
following the year in which the Eligible Executive reaches age
72, subject to the minimum required period of deferral, which is
5 years.
b. Interim Distributions. An Eligible Executive may
elect to have up to 100% of the amount of compensation deferred
in any Year, plus credited interest, paid to him or her prior to
age 65. No election made pursuant to this paragraph may provide
for payments of deferred compensation and interest credited
thereon until at least 5 years from the date of the deferral
which is the subject of the election.
Any election under this paragraph shall be made in
writing and filed with the Administrator at the same time as any
election to defer compensation.
c. Benefits Payable on Death. See Section F for the
payment of benefits on death of a Participant.
4. Method of Payment.
a. Election. An Eligible Executive shall elect in
writing, and file with the Administrator, at the same time as any
election to defer compensation, a method of payment of benefits
under the Plan.
b. Alternative Methods Available--Basic Deferral
Period. The following methods of benefit payment may be elected
by an Eligible Executive for amounts payable after deferral under
paragraph a. of Section E.3 relating to the basic deferral
period:
(i) Payment of amounts credited to the
Participant's Account in any specified number of approximately
equal annual installments (not in excess of 10). In the case of
installment payments, interest at the appropriate rate shall be
credited on all amounts remaining in a Participant's Accounts.
(ii) Payment of the amount credited to the
Participant's Account in a single sum.
c. Alternative Methods Available--Interim
Distributions. The following methods of benefit payment may be
elected by an Eligible Executive for interim distributions under
paragraph b of Section E.3:
(i) Payment in any specified number of
approximately equal annual installments (not in excess of 10).
In the case of installment payments, interest at the appropriate
rate shall be credited on all amounts remaining in a
Participant's Accounts.
(ii) Payment in a single sum.
5. Date Payments Begin.
a. After Basic Deferral Period. Payments shall begin
(or, in the case of payments to be made in a single sum, shall
generally be made) on the first day of the month after the basic
deferral period ends under paragraph a. of Section E.3, but, in
any event, must begin no later than the January following the
year in which the Eligible Executive reaches age 72.
b. Interim Distributions. Payments shall begin (or,
in the case of payments to be made in a single sum, shall be
made) on the date previously elected by the Participant for
interim distributions.
c. Upon Termination of Employment. Notwithstanding
paragraphs 5.a. and b., above, if an Eligible Executive's
employment with the Company terminates before Retirement, the
Participant shall receive a single, lump sum payment of the
entire amount credited to the Participant's Account in the
January following such termination of employment.
F. BENEFITS ON DEATH
-----------------
1. Death After Payments Have Begun.
a. Basic Deferral. If a Participant dies after
payments from his or her Account have begun (not taking into
account interim distributions under paragraph b of Section E.3),
and if installment payments are being made, the remainder of the
amounts credited to the Participant's Account shall be paid to
his or her Beneficiary at the same time and in the same manner as
they would have been paid had the Participant survived until all
amounts were paid out. If installment payments have not been
elected, amounts shall be paid as provided for under any other
form of benefit payment elected.
b. Interim Distributions. If a Participant dies
after interim distributions
under paragraph b of Section E.3 have begun, the interim
distributions shall be paid to the
Participant's Beneficiary at the same time and in the same manner
as they would have been paid
had the Participant survived.
2. Death Before Payments Have Begun. If a Participant
dies before payments (except interim distributions) have begun,
the amount credited to his or her Account shall be paid to his or
her Beneficiary beginning at the time payments would have been
made under paragraph a. of Section E.3. (relating to basic
deferrals) or at such earlier time as the Participant elected.
Elections shall be made in writing and filed with the
Administrator at the time of any election to defer compensation.
Benefits shall be paid in one of the methods specified in
paragraph b. of Section E.4. If the Participant's employment
with the Company is terminated for any reason whatsoever prior to
the date of Approved Retirement (except on death or disability),
the rate of interest which shall be credited to his or her
Account for the period after such termination shall, of course,
be the lower rate specified in Section E.2., unless the
Compensation Committee otherwise determines as provided in that
Section E.2. The Administrator, at his or her discretion, may
distribute all benefits to a Beneficiary in a single payment if
the present value of the benefits payable to a Participant or
Beneficiary is less than $5,000.
3. Designation of Beneficiary. A Participant may
designate any person or entity as his or her Beneficiary, but may
not designate more than one person or any person that is not a
natural person without the approval of the Administrator.
Designation shall be in writing and shall become effective only
when filed with (and, if appropriate, approved by) the
Administrator. Such filing must occur before the Participant's
death. A Participant may change the Beneficiary, from time to
time, by filing a new written designation with (and, if
appropriate, approved by) the Administrator. If the Participant
is married any Beneficiary designation which does not designate
the Participant's spouse to receive at least one-half of the
Participant's Account shall only become effective when approved
in writing by the Participant's spouse.
G. SOURCE OF PAYMENT
-----------------
Amounts paid under this Plan shall be paid from the general
funds of the Company, and each Participant and his or her
Beneficiaries shall be no more than unsecured general creditors
of the Company with no special or prior right to any assets of
the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Participant or Beneficiary, or create
any fiduciary relationship between the Company and any
Participant or Beneficiary with respect to any assets of the
Company.
H. MISCELLANEOUS
-------------
1. Withholding. Each Participant and Beneficiary shall
make appropriate arrangements with the Company for the
satisfaction of any federal, state, or local income tax
withholding requirements and Social Security or other employment
tax requirements applicable to the payment of benefits under this
Plan. If no other arrangements are made, the Company may
provide, at its discretion, for such withholding and tax payments
as may be required.
2. No Assignment. The benefits provided under this Plan
may not be alienated, assigned, transferred, pledged, or
hypothecated by any person, at any time. These benefits shall be
exempt from the claims of creditors or other claimants and from
all orders, decrees, levies, garnishments or executions.
3. Insurance Examinations. As a condition of
participation in this Plan, each Eligible Executive shall, if
requested by the Company, undergo such examination and provide
such information as may be required by the Company with respect
to an insurance contract on the Eligible Executive's life, and
shall authorize the Company to purchase life insurance on his or
her life.
4. Applicable Law; Severability. The Plan hereby created
shall be construed, administered, and governed in all respects in
accordance with ERISA and the laws of the State of California to
the extent that the latter are not preempted by ERISA. If any
provision of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.
I. ADMINISTRATION OF THE PLAN
--------------------------
1. In General. The Plan Administrator shall be the Vice
President, Human Resources of the Company. If the Vice
President, Human Resources is a Participant, any discretionary
action taken as Administrator which directly affects him or her
as a Participant shall be specifically approved by the
Compensation Committee. The Compensation Committee shall have
the authority and responsibility to interpret the Plan and shall
adopt such rules and regulations for carrying out the Plan as it
may deem necessary or appropriate. Decisions of the Compensation
Committee shall be final and binding on all parties who have or
claim any interest in the Plan.
2. Elections and Notices. All elections and notices made
under this Plan shall be in writing and filed with the
Administrator at the time and in the manner specified by him or
her. All elections to defer under this Plan shall be
irrevocable.
J. AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
The Board may at any time amend the Plan. Such action shall
be prospective only and shall not adversely affect the rights of
any Participant or Beneficiary to any benefit previously earned
under the Plan. The Board may increase or decrease the interest
rate credited to compensation previously deferred but the rate
shall not be reduced for periods prior to such action and shall
not be reduced below the interest rate specified in Section E.l
less 6 percentage points per annum. The Board may at any time
terminate the Plan; thereupon compensation previously deferred
plus interest credited thereon shall promptly be paid, on
termination, in single sums to the respective Participants or
Beneficiaries entitled thereto.
K. DEFINITIONS
-----------
For purposes of the Plan, the following terms shall have the
meanings indicated:
1. "Account" means the Account specified in Section E.l.
2. "Administrator" shall mean the person specified in
Section I.
3. "Approved Retirement" shall mean any termination of
employment with the Company at or after attainment of Retirement
or any retirement before age 65 with the approval of the Board.
4. "Beneficiary" shall mean the person or entity described
by Section F.3.
5. "Board" shall mean the Board of Directors of McKesson
Corporation, a Delaware corporation.
6. "Company" shall mean McKesson Corporation, a Delaware
corporation, and any subsidiary in which it owns at least 50% of
the issued and outstanding stock (and any subsidiary 50% of the
issued and outstanding stock of which is owned by such a
subsidiary).
7. "Compensation Committee" shall mean the Compensation
Committee of the Board.
8. "Effective Date" shall be September 4, 1985.
9. "Eligible Executive" shall mean an employee of the
Company selected as being eligible to participate in this Plan
under Section C.
10. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
11. "Participant" shall be any company executive for whom
amounts are credited to an Account under this Plan. Upon his or
her death, his or her Beneficiary shall be a Participant until
all amounts are paid out of his or her Account.
12. "Plan" shall mean the McKesson Corporation 1985
Executives Elective Deferred Compensation Plan.
13. "Retirement" shall mean termination of a Participant's
employment after his or her age plus years of service with the
Company reaches 65.
14. "Year" is the calendar year.
Executed as of May 29, 1998, in the City and County of San
Francisco, State of California.
McKESSON CORPORATION
By ____________________________
William A. Armstrong
Vice President, Human Resources and Administration
Exhibit 12.1
COMPUTATION OF RATIO OF EARNINGS
TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(dollars in millions)
Three Months Ended
June 30
---------------
1998 1997
------ ------
Net Income $ 42.1 $ 37.6
Income Tax Expense and Tax Benefit of
Dividends on Preferred Securities of
Subsidiary Grantor Trust of $1.0 for
the three months ended June 30 27.4 23.0
Fixed Charges (1) 36.1 30.0
----- -----
Earnings Available for Fixed Charges $105.6 $ 90.6
===== =====
Fixed Charges (1) $ 36.1 $ 30.0
Preferred Stock Dividends - -
----- -----
Combined Fixed Charges and Preferred
Stock Dividends $ 36.1 $ 30.0
===== =====
Ratio of Earnings to Fixed Charges 2.93x 3.02x
===== =====
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends 2.93x 3.02x
===== =====
(1) Fixed charges consist of interest expense incurred, the
portion of rental expense under operating leases deemed by
the Company to be representative of the interest factor and
dividends on preferred securities of a subsidiary grantor
trust.
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<CIK> 0000927653
<NAME> MCKESSON
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<S> <C>
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<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
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0
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<COMMON> 1,000
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