EXHIBIT 10.2
McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN III (“DCAP III”)
Effective January 1, 2009
(Amended and Restated October 24, 2008)

 

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TABLE OF CONTENTS

             
A.
  PURPOSE     1    
B.
  ERISA PLAN     1    
C.
  PARTICIPATION     1    
D.
  AMOUNTS OF DEFERRAL     3    
E.
  PAYMENT OF DEFERRED COMPENSATION     4    
F.
  SOURCE OF PAYMENT     7    
G.
  MISCELLANEOUS     7    
H.
  ADMINISTRATION OF THE PLAN     8    
I.
  AMENDMENT OR TERMINATION OF THE PLAN     8    
J.
  CLAIMS AND APPEALS     9    
K.
  DEFINITIONS     10    
L.
  SUCCESSORS     13    
M.
  EXECUTION     13  

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McKESSON CORPORATION
DEFERRED COMPENSATION ADMINISTRATION PLAN III
Effective January 1, 2009
(Amended and Restated October 24, 2008)
A. PURPOSE
     1. This Plan was established to enhance McKesson’s ability to attract and
retain executive personnel and members of the Board who are not otherwise
employees of McKesson.
     2. This Plan is the successor plan to the Deferred Compensation
Administration Plan II, as amended through October 28, 2004 (the “Prior Plan”).
Effective December 31, 2004, the Prior Plan was frozen and no new allocations or
deferrals are to be made to it; provided, however, that any vested allocations
and deferrals made under the Prior Plan before January 1, 2005 shall continue to
be governed by the terms and conditions of the Prior Plan as in effect on
December 31, 2004.
     3. Any allocations and deferrals made under the Prior Plan after
December 31, 2004 and any allocations that were unvested on December 31, 2004
shall be deemed to have been made under this Plan and all such contributions,
accruals and deferrals shall be governed by the terms and conditions of this
Plan as it may be amended from time to time.
     4. This Plan is intended to comply with the requirements of Section 409A of
the Code.
     5. Capitalized terms used in this Plan shall have the meaning set forth in
Section K hereof.
B. ERISA PLAN
     This Plan is an unfunded deferred compensation program intended primarily
for a select group of management or highly compensated employees of the Company
and members of the Board who are not 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.
          a. Eligible Executives. The Administrator may, at his or her
discretion, and at any time, and from time to time, select executives of the
Company 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 or classes of persons specified by the Administrator.

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          The Administrator may, at his or her 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
Administrator 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 individual who is a member of the Board of
McKesson and 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
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.
          a. Annual Election. Subject to the provisions of Sections 2(b) and
2(c) below, an election to defer compensation must be made and become
irrevocable at the time that the Administrator prescribes, but in no event later
than the last day of the Year preceding the Year in which the compensation being
deferred is earned. A Participant’s election to defer compensation shall be
suspended during the Year only if such Participant is faced with an
Unforeseeable Emergency. Such suspension shall continue through the end of the
Year in which the Participant is faced with an Unforeseeable Emergency and the
Participant must submit a new election to defer compensation, effective the Year
after the Year in which the Unforeseeable Emergency occurs, to resume
participation in the Plan.
          b. Initial Election. A newly Eligible Executive or a newly Eligible
Director may be permitted by the Administrator to elect to participate in the
Plan by submitting an election to defer compensation in a form and by a time as
McKesson prescribes; provided that such election is made and becomes irrevocable
not later than thirty days following the date such newly Eligible Employee or
Eligible Director first becomes eligible to participate in the Plan and provided
further that such election to defer compensation applies only to compensation
earned after the date the deferral election becomes irrevocable or at such later
time that the Administrator prescribes. In compliance with this Section 2(b),
only a prorated portion of an Eligible Executive’s bonus (other than a bonus
that is performance-based compensation as defined in Section 2(c) below) may be
deferred if the Eligible Executive’s initial deferral election is made after the
performance period applicable to the bonus has begun.
          c. Election to Defer Performance-Based Compensation. To the extent
that compensation paid under the Management Incentive Plan, the Long-Term
Incentive Plan or any other Company-sponsored incentive plan is
“performance-based compensation” as defined in Treasury Regulation section
1.409A-1(e), an election to defer payments made pursuant to the Management
Incentive Plan, Long-Term Incentive Plan or other Company-sponsored bonus plan
may be made not later than six months prior to the end of the applicable
performance period or

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such earlier time as the Administrator may prescribe; provided, however, that
such election shall be made prior to the date that compensation paid under the
Management Incentive Plan compensation, Long-Term Incentive Plan or other
Company-sponsored incentive plan, whichever is applicable, is substantially
certain to be paid or readily ascertainable.
          d. Election to Defer Other Compensation. The Administrator, in its
sole discretion, may permit other types of compensation to be deferred under the
Plan; provided, however, the Administrator terms and conditions of such
deferrals shall be included in the applicable deferral election form and in
accordance with Code Section 409A and the regulations promulgated and guidance
issued thereunder.
     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.
          a. Participation in Other Plans. An Eligible Executive or an Eligible
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 and
the Administrator may modify or render invalid a Participant’s election prior to
such election becoming irrevocable to accommodate deferrals made under other
plan(s). Deferrals under this Plan may result in a reduction of benefits payable
under the Social Security Act, the Retirement Plan and the PSIP.
          b. Automatic Deferral. An Eligible Executive’s base salary deferrals
and annual bonus award deferrals (but not DCAP housing deferrals, sign-on and
retention bonus deferrals and Long-Term Incentive Plan award deferrals) shall be
credited, in a separate Account under the Plan with an amount calculated to be
the Matching Employer Contribution percentage that would have been credited to
the Eligible Executive’s PSIP account if five percent (5%) of such deferrals
under DCAP III had been made under the PSIP. For these purposes, Matching
Employer Contribution shall have the meaning defined in the PSIP.
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 $5,000 of any
annual bonus award(s) and $5,000 of 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) 75% of the amount of such Eligible Executive’s base salary for such Year,
and (ii) 90% of any annual bonus award and/or any Long-Term Incentive Plan award
determined and payable to him or her in such Year. Additionally, the
Administrator may change the maximum amount (expressed as a percentage limit) of
base salary that Eligible Executives as a group may defer under the Plan for any
Year. Notwithstanding these limits, deferrals may be reduced by the Company as
permitted under Treasury Regulation section 1.409A-3(j)(4).

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     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 (other than the portion of the annual
retainer subject to Mandatory Deferral under and as defined in the 1997
Non-Employee Directors’ Equity Compensation and Deferral Plan) and other fees
from McKesson earned by him or her in any such Year.
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 or earnings shall
be credited to each Account for each Year at a rate equal to a rate declared or
any other measurement device (the “Declared Rate”) approved by the Compensation
Committee acting in its sole discretion after taking into account, among other
things, the following factors: McKesson’s cost of funds, corporate tax brackets,
expected amount and duration of deferrals, number and age of eligible
Participants, expected time and manner of payment of deferred amounts, and
expected performance of available fixed-rate insurance contracts covering the
lives of Participants. Notwithstanding the foregoing, if a Change in Control
occurs, the Declared Rate for the balance of the calendar year in which the
Change in Control occurs and for the two calendar years immediately following
the year in which the Change in Control occurs shall not be less than the
Declared Rate as in effect on the day before the Change in Control occurs.
Interest or earnings on each Account balance shall be compounded daily on each
business day within the Year to yield the Declared Rate for the Year. Interest
or earnings shall be credited to each Account as of the end of each business
day.
     2. 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: McKesson’s cost of funds, corporate
tax brackets, expected amount and duration of deferrals, number and age of
eligible Participants, expected time and manner of payment of deferred amounts,
and expected performance of available fixed-rate insurance contracts covering
the lives of Participants (the “Declared Rate”). Notwithstanding the foregoing,
if a Change in Control (as defined in Section K.5 below) occurs, the Declared
Rate for the balance of the calendar year in which the Change in Control occurs
and for the two calendar years immediately following the year in which the
Change in Control occurs shall not be less than the Declared Rate as in effect
on the day before the Change in Control occurs. Interest on each Account balance
shall be compounded daily on each business day within the Year to yield the
Declared Rate for the Year. In the case of installment payments as provided in
Section E.4 below, interest shall be credited on all amounts remaining in a
Participant’s Account until all amounts are paid out. Interest shall be credited
to each Account as of the end of each business day .
     3. 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

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election, subject to the minimum required period of deferral and the maximum
permissible period of deferral. The minimum required period of deferral is five
years after the end of the Year for which compensation is deferred.
Notwithstanding the foregoing, the five-year minimum deferral period shall not
apply to payments made as a result of death, Disability, Retirement, Separation
from Service, a Change in Control or Unforeseeable Emergency. 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 McKesson’s annual meeting of
stockholders next following the Eligible Director’s 72nd birthday; provided,
however, no payment shall be paid or commence which will cause an impermissible
acceleration of such payment under Treasury Regulation section 1.409A-(3)(j).
     4. Election of Form and Time of Payment. A Participant shall elect in
writing, and file with the Administrator, at the same time as any election to
defer compensation, a form and time of payment of benefits under this Plan from
the following:
          a. Form.
               i. Payment of the amount credited to the Participant’s Account in
a single sum.
               ii. Payment of amounts credited to the Participant’s Account in
any specified number of approximately equal annual installments (not in excess
of ten). For purposes of this Plan, installment payments shall be treated as a
single distribution under Section 409A of the Code.
          b. Time.
               i. The lump sum or first installment to be paid in the earlier of
the first January or June that is at least six months following the Year of
Participant’s Retirement, Disability or death.
               ii. Subject to Section E.3, the lump sum or first installment to
be paid in January of the year designated by the Participant; provided, however,
Participant shall elect a payment date, or payment commence date, which is no
later than the end of the Maximum Period of Deferral and if Participant elects a
distribution date which is subsequent to the Maximum Period of Deferral, the
election as to the time of distribution shall be deemed void immediately prior
to the time such election is irrevocable and distributions shall be made under
paragraph i. above.
               iii. Subject to Section E.3, the lump sum or first installment to
be paid in two or more Januarys designated by the Participant following the Year
of Participant’s Retirement, Disability or death.
The Participant may elect a different time and/or form of distribution for
Retirement, Disability or death.

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     5. Modification of Elections. Once such an election has been made, the
Eligible Executive or Eligible Director may modify the the time and/or form of
distributions made under the Plan, 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 five years from the originally scheduled distribution date. A
change to the time and form of a distribution may be modified or revoked until
12 months prior to the time a distribution is originally scheduled to be made,
at which time such change shall become irrevocable. The last valid election
accepted by the Administrator shall govern the payout; provided, however, if a
modification under this Section E.5 is determined immediately prior to such
modification becoming irrevocable to cause a payment date to be, or payment
commence date begin, after later than the end of the Maximum Period of Deferral
such modification shall be deemed to be revoked immediately prior to the time
such modification become irrevocable and distributions shall be made as if
Participant had not modified his or her election.
     6. Default Form of Distribution. If no valid election is made with respect
to Section E.4, then payment of the amount credited to the Participant’s Account
shall be made in a single sum to be paid in the earlier of the first January or
June that is at least six months following the earlier of the Participant’s
Retirement, Disability or death.
     7. Payments on Separation from Service. If a Participant Separates from
Service for any reason other than Retirement, Disability or death, then,
notwithstanding the election made by the Participant pursuant to Section E.4
above, the entire undistributed amount credited to his or her Account shall be
paid in the form of a lump sum in the earlier of the first January or June that
is at least six months following the date the Participant Separates from
Service.
     8. Delayed Distribution to Specified Employees. Notwithstanding any other
provision of this Section E to the contrary, a distribution scheduled to be made
upon Separation from Service to a Participant who is identified as a Specified
Employee as of the date he Separates from Service shall not be paid within the
time that is six months following the Participant’s Separation from Service. Any
payment that otherwise would have been made pursuant to this Section E during
such six-month period, if any, shall be made in the seventh month following the
month in which Participant’s Separation from Service occurs. The identification
of a Participant as a Specified Employee shall be made by the Administrator in
his or her sole discretion in accordance with Section K.25 of the Plan and
Sections 416(i) and 409A of the Code and the regulations promulgated thereunder.
     9. Payments on Death. An election made as to the the payment of the
Participant’s Account pursuant to Participant’s death shall be paid to his or
her Beneficiary if such Participant has not yet received or begun receiving a
distribution under the Plan. If, however, a Participant is in-pay status at the
time of death, distribution of the Account, or portion of the Account, that is
in-pay shall continue to be distributed to the Beneficiary as Participant
elected to receive such distribution. The Beneficiary shall have to right to
elect a different time or form of payment of distributions made under the Plan.

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     10. Deminimis Cashout. Notwithstanding the Participant’s election, the
Administrator in its sole discretion may distribute an Account to a Participant
or a Beneficiary in a single payment if the value of the Account, and any other
plan or arrangement with respect to which deferrals of compensation are treated
as having been deferred under a single nonqualified deferred compensation plan
under Treasury Regulation section 1.409A-1(c)(2), is less than the Code Section
401(g)(1)(B) limit.
     11. 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 fails to effectively designate a Beneficiary in accordance
with the Administrator’s procedures or the person designated by the Participant
is not living at the time the distribution is to be made, then the Participant’s
Beneficiary shall be the Participant’s surviving spouse, if any, or, if there is
no surviving spouse, the Participant’s surviving children, if any, in equal
shares, or if there are no surviving children, the Participant’s estate.
     12. Payments Due to an Unforeseen Emergency. The Administrator may, in his
or her sole discretion, cancel Participant’s deferral election and direct
payment to a Participant of all or of any portion of the Participant’s Account
balance, if necessary, notwithstanding an election under Section E.4 above, at
any time that the Administrator determines that such Participant has suffered an
Unforeseeable Emergency and requires action to be taken under this Section E.12.
     13. Prohibition on Acceleration. Notwithstanding any other provision of the
Plan to the contrary, no distribution will be made from the Plan that would
constitute an impermissible acceleration of payment as defined in
Section 409A(a)(3) of the Code and the regulations promulgated thereunder.
F. SOURCE OF PAYMENT
     Amounts paid under this Plan shall be paid from the general funds of
McKesson, and each Participant and his or her Beneficiaries shall be no more
than unsecured general creditors of McKesson 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 McKesson 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, McKesson may provide, at its discretion, for such
withholding and tax payments as may be required.

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     2. No Assignment.
     a. Other than as provided in Section G.2.b below, the benefits provided
under this Plan may not be alienated, assigned, transferred, pledged or
hypothecated by any person, at any time or to any person whatsoever. These
benefits shall be exempt from the claims of creditors or other claimants and
from all orders, decrees, levies, garnishments or executions to the fullest
extent allowed by law.
     b. If a court of competent jurisdiction determines pursuant to a judgment,
order or approval of a marital settlement agreement that all or any portion of
the benefits payable hereunder to a Participant constitute community property of
the Participant and his or her spouse or former spouse (hereafter, the
“Alternate Payee”) or property which is otherwise subject to division by the
Participant and the Alternate Payee, a division of such property shall not
constitute a violation of Section G.2.a, and any portion of such property may be
paid or set aside for payment to the Alternate Payee. The preceding sentence of
this Section G.2.b, however, shall not create any additional rights and
privileges for the Alternate Payee (or the Participant) not already provided
under the Plan; in this regard, the Administrator shall have the right to refuse
to recognize any judgment, order or approval of a martial settlement agreement
that provides for any additional rights and privileges not already provided
under the Plan, including without limitation, with respect to form and time of
payment.
     3. Applicable Law and 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 Administrator of the Plan shall be the Executive Vice
President, Human Resources, of McKesson. If the Executive Vice President, Human
Resources, is a Participant, any discretionary action taken as Administrator
which directly affects him or her as a Participant shall be specifically
approved by the Compensation Committee. The Administrator 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 Administrator 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 filed with the Administrator at the time and in the manner specified by
him or her. All elections to defer compensation under this Plan shall be
irrevocable.
I. AMENDMENT OR TERMINATION OF THE PLAN
     1. Amendment. The Compensation Committee may at any time amend this Plan.
Such action shall be prospective only and shall not adversely affect the rights
of any Participant

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or Beneficiary to any benefit previously earned under this Plan. The foregoing
notwithstanding, no amendment adopted following the occurrence of a Change in
Control shall be effective if it (a) would reduce the Declared Rate for the
balance of the calendar year in which the Change in Control occurs or for the
two calendar years immediately following the year in which the Change in Control
occurs to a rate lower than the Declared Rate as in effect on the day before the
Change in Control occurred or (b) modify the provisions of (a) above.
     2. Termination. The Board in its discretion may at any time terminate the
Plan in accordance with Treasury Regulation section 1.409A-3(j)(4)(ix).
J. CLAIMS AND APPEALS
     1. Informal Resolution of Questions. Any Participant or Beneficiary who has
questions or concerns about his or her benefits under the Plan is encouraged to
communicate with the Human Resources Department of McKesson. If this discussion
does not give the Participant or Beneficiary satisfactory results, a formal
claim for benefits may be made in accordance with the procedures of this
Section J.
     2. Formal Benefits Claim – Review by Executive Vice President, Human
Resources. A Participant or Beneficiary may make a written request for review of
any matter concerning his or her benefits under this Plan. The claim must be
addressed to the Executive Vice President, Human Resources, McKesson
Corporation, One Post Street, San Francisco, California 94104. The Executive
Vice President, Human Resources or his or her delegate (“Executive Vice
President”) shall decide the action to be taken with respect to any such request
and may require additional information if necessary to process the request. The
Executive Vice President shall review the request and shall issue his or her
decision, in writing, no later than 90 days after the date the request is
received, unless the circumstances require an extension of time. If such an
extension is required, written notice of the extension shall be furnished to the
person making the request within the initial 90-day period, and the notice shall
state the circumstances requiring the extension and the date by which the
Executive Vice President expects to reach a decision on the request. In no event
shall the extension exceed a period of 90 days from the end of the initial
period.
     3. Notice of Denied Request. If the Executive Vice President denies a
request in whole or in part, he or she shall provide the person making the
request with written notice of the denial within the period specified in
Section J.2. The notice shall set forth the specific reason for the denial,
reference to the specific Plan provisions upon which the denial is based, a
description of any additional material or information necessary to perfect the
request, an explanation of why such information is required, and an explanation
of the Plan’s appeal procedures and the time limits applicable to such
procedures, including a statement of the claimant’s right to bring a civil
action under Section 502(a) of ERISA following an adverse benefit determination
on review.
     4. Appeal to Executive Vice President.
          a. A person whose request has been denied in whole or in part (or such
person’s authorized representative) may file an appeal of the decision in
writing with the Executive Vice President within 60 days of receipt of the
notification of denial. The appeal must

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be addressed to: Executive Vice President, Human Resources, McKesson
Corporation, One Post Street, San Francisco, California 94104. The Executive
Vice President, for good cause shown, may extend the period during which the
appeal may be filed for another 60 days. The appellant and/or his or her
authorized representative shall be permitted to submit written comments,
documents, records and other information relating to the claim for benefits.
Upon request and free of charge, the applicant should be provided reasonable
access to and copies of, all documents, records or other information relevant to
the appellant’s claim.
          b. The Executive Vice President’s review shall take into account all
comments, documents, records and other information submitted by the appellant
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination. The Executive Vice President
shall not be restricted in his or her review to those provisions of the Plan
cited in the original denial of the claim.
          c. The Executive Vice President shall issue a written decision within
a reasonable period of time but not later than 60 days after receipt of the
appeal, unless special circumstances require an extension of time for
processing, in which case the written decision shall be issued as soon as
possible, but not later than 120 days after receipt of an appeal. If such an
extension is required, written notice shall be furnished to the appellant within
the initial 60-day period. This notice shall state the circumstances requiring
the extension and the date by which the Executive Vice President expects to
reach a decision on the appeal.
          d. If the decision on the appeal denies the claim in whole or in part
written notice shall be furnished to the appellant. Such notice shall state the
reason(s) for the denial, including references to specific Plan provisions upon
which the denial was based. The notice shall state that the appellant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the claim
for benefits. The notice shall describe any voluntary appeal procedures offered
by the Plan and the appellant’s right to obtain the information about such
procedures. The notice shall also include a statement of the appellant’s right
to bring an action under Section 502(a) of ERISA.
          e. The decision of the Executive Vice President on the appeal shall be
final, conclusive and binding upon all persons and shall be given the maximum
possible deference allowed by law.
     5. Exhaustion of Remedies. No legal or equitable action for benefits under
the Plan shall be brought unless and until the claimant has submitted a written
claim for benefits in accordance with Section J.2, has been notified that the
claim is denied in accordance with Section J.3, has filed a written request for
a review of the claim in accordance with Section J.4, and has been notified in
writing that the Executive Vice President has affirmed the denial of the claim
in accordance with Section J.4.
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.

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     2. “Administrator” shall mean the person specified in Section H.
     3. “Beneficiary” shall mean the person or entity described by Section E.11.
     4. “Board” shall mean the Board of Directors of McKesson.
     5. “Change in Control” shall mean the occurrence of any change in ownership
of McKesson, change in effective control of McKesson, or change in the ownership
of a substantial portion of the assets of McKesson, as defined in Treasury
Regulation section 1.409A-3(i)(5), the regulations thereunder, and any other
published interpretive authority, as issued or amended from time to time..
     6. “Code” shall mean the Internal Revenue Code of 1986, as amended.
     7. “Company” shall mean McKesson and any affiliate that would be considered
a service recipient for purposes of Treasury Regulation section 1.409A-1(g).
     8. “Compensation Committee” shall mean the Compensation Committee of the
Board.
     9. “Declared Rate” shall have the meaning described in Section E.1.
     10. “Disabled” or “Disability” shall mean that an individual is determined
by the Social Security Administration to be totally disabled.
     11. “Eligible Director” shall mean a member of the Board described by
Section C.1.b.
     12. “Eligible Executive” shall mean an employee of the Company selected as
being eligible to participate in this Plan under Section C.1.a.
     13. “Employer” shall mean McKesson and any other affiliate that would be
considered a service recipient or employer for purposes of Treasury Regulation
section 1.409A-1(h)(3).
     14. “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as amended.
     15. “Identification Date” shall mean each December 31.
     16. “Maximum Period of Deferral” shall mean the January following the year
in which the Eligible Executive reaches age 72 or, in the case of an Eligible
Director, the January after McKesson’s annual meeting of stockholders next
following the Eligible Director’s 72nd birthday.
     17. “McKesson” shall mean McKesson Corporation, a Delaware corporation.
     18. “Participant” shall be any executive of the Company or member of the
Board for whom amounts are credited to an Account under this Plan. Upon the
Participant’s death, the Participant’s Beneficiary shall be a Participant until
all amounts are paid out of the Participant’s Account.

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     19. “Plan” shall mean the McKesson Corporation Deferred Compensation
Administration Plan III (“DCAP III”).
     20. “PSIP” shall mean the McKesson Corporation Profit-Sharing Investment
Plan.
     21. “Prior Plan” shall mean the McKesson Corporation Deferred Compensation
Administration Plan II (“DCAP II”)
     22. “Retirement” shall mean Separation from Service after the date in which
the Participant attains age 50 and has at least five Years of Service with the
Company. Notwithstanding the foregoing, for purposes of this Plan, Retirement
for an Eligible Director shall mean cessation of service as a member of the
Board on or after the completion of at least six successive years as a member of
the Board.
     23. “Retirement Plan” shall mean the McKesson Corporation Retirement Plan.
     24. “Separation from Service” or “Separates from Service” shall mean
termination of employment with the Employer, except in the event of death or
Disability. A Participant shall be deemed to have had a Separation from Service
if the Participant’s service with the Employer is reduced to an annual rate that
is equal to or less than twenty percent of the services rendered, on average,
during the immediately preceding three years of service with the Employer (or if
providing service to the Employer less than three years, such lesser period).
     25. “Specified Employee” shall mean a Participant who, on an Identification
Date, is:
          a. An officer of the Company having annual compensation greater than
the compensation limit in Section 416(i)(1)(A)(i) of the Code, provided that no
more than fifty officers of the Company shall be determined to be Specified
Employees as of any Identification Date;
          b. A five percent owner of the Company; or
          c. A one percent owner of the Company having annual compensation from
the Company of more than $150,000.
For purposes of determining whether a Participant is a Specified Employee,
Treasury Regulation section 1.415(c)-2(d)(11)(ii) shall be used to calculate
compensation. If a Participant is identified as a Specified Employee on an
Identification Date, then such Participant shall be considered a Specified
Employee for purposes of the Plan during the period beginning on the first April
1 following the Identification Date and ending on the next March 31.
     26. “Unforeseeable Emergency” shall have the same meaning as provided in
Section 409A(a)(2)(B)(ii) of the Code.
     27. “Year” shall mean the calendar year.

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     28. “Year of Service” shall have the same meaning as “Year of Service” as
defined in the PSIP.
L. SUCCESSORS
     This Plan shall be binding on McKesson and any successors or assigns
thereto.
M. EXECUTION
     To record the adoption of the Plan by the Compensation Committee of the
Board of Directors of McKesson Corporation at a meeting held on October 24,
2008, effective as of January 1, 2009.
McKESSON CORPORATION

             
By:
  /s/ Jorge L. Figueredo
 
       
 
  Jorge L. Figueredo             Executive Vice President, Human Resources    

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