exv10w35



 





EXHIBIT 10.35




McKESSON CORPORATION

SUPPLEMENTAL PSIP II




(Effective January 1, 2005)





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	A. PURPOSE	 	 	1	 
	 
	 	 	 	 	 	 
	B. ERISA PLAN	 	 	1	 
	 
	 	 	 	 	 	 
	C. PARTICIPATION	 	 	1	 
	 

	 	1.  Eligibility to Participate
	 	 	1	 
	 

	 	2.  Election to Participate by Eligible Executives and Deferral Election
	 	 	2	 
	 

	 	3.  Relation to Other Plans
	 	 	2	 
	 
	 	 	 	 	 	 
	D. AMOUNTS OF DEFERRAL	 	 	3	 
	 

	 	1. PSIP Supplement
	 	 	3	 
	 

	 	2. Amount of Deferrals
	 	 	3	 
	 
	 	 	 	 	 	 
	E. COMPANY MATCH	 	 	3	 
	 

	 	1. Eligibility
	 	 	3	 
	 

	 	2. Amount of Match
	 	 	3	 
	 
	 	 	 	 	 	 
	F. PAYMENT OF DEFERRED COMPENSATION	 	 	4	 
	 

	 	1. Book Account and Interest Credit
	 	 	4	 
	 

	 	2. Vesting
	 	 	4	 
	 

	 	3. Election of Methods of Payment
	 	 	5	 
	 

	 	4. Date Payment Occurs
	 	 	5	 
	 

	 	5. Prohibition on Acceleration
	 	 	6	 
	 
	 	 	 	 	 	 
	G. BENEFITS ON DEATH	 	 	6	 
	 

	 	1. Death of Participant
	 	 	6	 
	 

	 	2. Designation of Beneficiary
	 	 	6	 
	 
	 	 	 	 	 	 
	H. SOURCE OF PAYMENT	 	 	7	 
	 
	 	 	 	 	 	 
	I. MISCELLANEOUS	 	 	7	 
	 

	 	1. Withholding
	 	 	7	 
	 

	 	2. No Assignment
	 	 	7	 
	 

	 	3. Applicable Law; Severability
	 	 	7	 
	 

	 	4. No Right to Continued Employment,
Etc.
	 	 	8	 
	 
	 	 	 	 	 	 
	J. ADMINISTRATION OF THE PLAN	 	 	8	 
	 

	 	1. In General
	 	 	8	 
	 

	 	2. Elections and Notices
	 	 	8	 
	 
	 	 	 	 	 	 
	K. AMENDMENT OR TERMINATION OF THE PLAN	 	 	8	 
	 
	 	 	 	 	 	 
	L. CLAIMS AND APPEALS	 	 	9	 
	 

	 	1. Informal Resolution of Questions
	 	 	9	 
	 

	 	2. Formal Benefits Claim – Review by Executive Vice President, Human Resources
	 	 	9	 
	 

	 	3. Notice of Denied Request
	 	 	9	 






 









 






	 	 	 	 	 	 	 
	 

	 	4. Appeal to Executive Vice President
	 	 	9	 
	 

	 	5. Exhaustion of Remedies
	 	 	10	 
	 
	 	 	 	 	 	 
	M. DEFINITIONS	 	 	11	 
	 

	 	1. “Account”
	 	 	11	 
	 

	 	2. “Additional Company Match”
	 	 	11	 
	 

	 	3. “Administrator”
	 	 	11	 
	 

	 	4. “Beneficiary”
	 	 	11	 
	 

	 	5. “Board”
	 	 	11	 
	 

	 	6. “Code”
	 	 	11	 
	 

	 	7. “Company”
	 	 	11	 
	 

	 	8. “Compensation”
	 	 	11	 
	 

	 	9. “Compensation Committee”
	 	 	11	 
	 

	 	10. “DCAP III”
	 	 	11	 
	 

	 	11. “Disability”
	 	 	11	 
	 

	 	12. “Eligible Executive”
	 	 	11	 
	 

	 	13. “ERISA”
	 	 	11	 
	 

	 	14. “Identification Date”
	 	 	11	 
	 

	 	15. “Key Employee”
	 	 	11	 
	 

	 	16. “Monthly Company Match”
	 	 	12	 
	 

	 	17. “Participant”
	 	 	12	 
	 

	 	18. “Payment Event”
	 	 	12	 
	 

	 	19. “Plan”
	 	 	12	 
	 

	 	20. “Plan Year”
	 	 	12	 
	 

	 	21. “Prior Plan”
	 	 	12	 
	 

	 	22. “PSIP”
	 	 	12	 
	 

	 	23. “Separation from Service”
	 	 	12	 
	 
	 	 	 	 	 	 
	N. SUCCESSORS	 	 	13	 
	 
	 	 	 	 	 	 
	O. EXECUTION	 	 	13	 
	 
	 	 	 	 	 	 
	APPENDIX A EXAMPLE OF DEFERRALS UNDER PLAN	 	 	A-1	 






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McKESSON CORPORATION

SUPPLEMENTAL PSIP II




(Effective January 1, 2005)




A. PURPOSE





	 	1.	 	This Plan is established to allow certain Company executives to elect to defer
compensation which cannot be deferred under the McKesson Corporation Profit Sharing
Investment Plan (“PSIP”) because of limitations of tax laws and to provide for a
Monthly Company Match and an Additional Company Match on those deferrals at a rate
equivalent to the PSIP’s “Matching Employer Contribution” and “Additional Matching
Employer Contribution.”
	 
	 	2.	 	This Plan is the successor plan to the Supplemental PSIP, as in effect on
December 31, 2004 (the “Prior Plan”). Effective December 31, 2004, the Prior Plan was
frozen and no new deferrals shall be made to it nor shall any matching contributions be
allocated or vested under it after such date; provided, however, that any deferrals
that were made to the Prior Plan or matching contributions that were allocated and
vested 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 deferrals made to or matching contributions that were allocated or vested
under the Prior Plan after December 31, 2004 are deemed to have been made or allocated
under this Plan and all such deferrals and matching contributions 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 Code Section 409A.
	 
	 	5.	 	Capitalized terms used in this Plan shall have the meaning set forth in Section
M hereof.





B. ERISA PLAN



This Plan is an unfunded deferred compensation program for a select group of management or highly
compensated employees of the Company. The Plan, therefore, is covered by Title I of ERISA except
that it is exempt from Parts 2, 3, and 4 of Title I of ERISA.




C. PARTICIPATION





	 	1.	 	Eligibility to Participate.¶ The Administrator may, at his or her
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 in writing by the




 









 






	 	 	 	Administrator. The Administrator may, at his or her discretion, and at any time,
and from time to time, provide that executives previously designated as Eligible
Executives 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).






	 	2.	 	Election to Participate by Eligible Executives and Deferral Election.¶
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 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 other terms and conditions of this Plan.
	 
	 	 	 	All elections to defer amounts under this Plan shall be irrevocable and shall be
made pursuant to an election executed and filed with the Administrator before the
amounts so deferred are earned. An election to defer Compensation shall be made
prior to the beginning of the Plan Year in which it is earned and shall become
irrevocable on the December 31 preceding such Plan Year. However, if an executive
becomes an Eligible Executive after the beginning of a Plan Year, he or she may make
an election to defer Compensation for that Plan Year no later than 30 days after the
date he or she becomes an Eligible Executive, and such election shall apply only to
Compensation earned after the election is filed with the Administrator. An election
filed in accordance with the provisions of the preceding paragraph shall be
applicable to the Plan Year with respect to which it is made and shall continue for
subsequent Plan Years until suspended or modified in a writing delivered by the
Participant to the Administrator as set forth below. An election to suspend further
deferrals or to increase or decrease the amount deferred under the Plan shall apply
only to Compensation otherwise payable to the Participant after the end of the Plan
Year in which the election is delivered to the Administrator.
	 
	 	3.	 	Relation to Other Plans.






	 	(a)	 	DCAP III. An Eligible Executive may participate in
this Plan and may also participate in DCAP III or any successor plan. However,
no amounts may be deferred under this Plan which have been deferred under DCAP
III 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 DCAP III, including, but not limited to, the definition of
“Average Final Compensation” under the Executive Benefit Retirement Plan.




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D. AMOUNTS OF DEFERRAL





	 	1.	 	PSIP Supplement.¶ This Plan allows an Eligible Executive to defer
Compensation, and receive credit for a Monthly Company Match and Additional Company
Match, to the extent that such deferrals (and corresponding Monthly Company Match and
Additional Company Match) cannot be made under the PSIP because of the limitations in
Code Section 401(a)(17) (limiting the amount of annual compensation to be taken into
account under the PSIP to $210,000 in 2005, as adjusted from time to time under the
Code).
	 
	 	2.	 	Amount of Deferrals.¶ As illustrated in Appendix A, an Eligible
Executive may elect to defer under this Plan up to an amount equal to (a) minus (b),
where:






	 	(a)	 	is the maximum rate of deferral for “Basic Contributions” under
the PSIP multiplied by the Eligible Executive’s Compensation, and
	 
	 	(b)	 	is the maximum amount that the Eligible Executive is able to
defer as a “Basic Contribution” under the PSIP, taking into account the limits
of Code Section 401(a)(17).





E. COMPANY MATCH





	 	1.	 	Eligibility.






	 	(a)	 	Monthly Company Match. A Monthly Company Match shall
be credited, with respect to each calendar month, to the Accounts of Eligible
Executives who actually defer Compensation under this Plan for such calendar
month.
	 
	 	(b)	 	Additional Company Match. An Additional Company Match
may be credited, with respect to each PSIP plan year, to the Accounts of
Eligible Executives who actually defer Compensation under this Plan with
respect to a fiscal year.






	 	2.	 	Amount of Match.






	 	(a)	 	Monthly Company Match. The amount of the Monthly
Company Match to be credited to the Account of an Eligible Executive for any
calendar month shall be a percentage of the Eligible Executive’s deferrals
under this Plan for the calendar month. This percentage shall be the same
percentage as the “Matching Employer Contribution” (as defined in the PSIP)
percentage that would have been credited to the Eligible Executive’s PSIP
account if the Eligible Executive’s deferrals under this Plan had been made
under the PSIP. In determining this amount, the Administrator shall take into
account the different “Matching Employer Contribution” rates that may apply.




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	 	(b)	 	Additional Company Match. The amount of the Additional
Company Match to be credited to the Account of an Eligible Executive for any
PSIP plan year shall be a percentage of the Eligible Executive’s deferrals
under this Plan for the PSIP plan year. This percentage shall be the same
percentage as the “Additional Matching Employer Contribution” (as defined in
the PSIP) percentage that would have been credited to the Eligible Executive’s
PSIP account if the Eligible Executive’s deferrals under this Plan had been
made under the PSIP. In determining this amount, the Administrator shall take
into account the different “Additional Matching Employer Contribution” rates
that may apply.





F. PAYMENT OF DEFERRED COMPENSATION





	 	1.	 	Book Account and Interest Credit.¶ Both Compensation deferred by a
Participant and any Monthly Company Match or Additional Company Match for the benefit
of a Participant shall be credited to a separate bookkeeping account maintained for
such Participant (the “Account”). Earnings shall be credited to each Account (both on
the Participant’s deferrals and on any Monthly Company Match or Additional Company
Match credited to the Participant’s Account hereunder) at a rate equal to the amount
earned during that same period by amounts invested under the PSIP’s Standish Mellon
Stable Value Fund investment option. Interest shall be credited to each Account as of
the end of each business day.






	 	2.	 	Vesting.






	 	(a)	 	A Participant shall be 100% vested at all times in the value of
the Participant’s elective deferrals and earnings thereon credited to the
Participant’s Account.
	 
	 	(b)	 	A Participant shall vest in the amounts of Monthly Company
Match and the Additional Company Match and earnings thereon credited to the
Participant’s Account at the same time and in the same manner as if these
amounts were “Matching Employer Contributions” or “Additional Matching Employer
Contributions” under the PSIP and as if the rules of the PSIP concerning
vesting applied to such amounts. For this purpose, any Monthly Company Match
shall be deemed to be credited to an Account as of the last day of the calendar
month with respect to which such Monthly Company Match is determined and any
Additional Company Match shall be deemed to be credited to an Account as of the
March 31 with respect to which such Company Match is determined. Any amounts
that would be forfeited under the rules of the PSIP applicable to “Matching
Employer Contributions” or “Additional Matching Employer Contributions” under
the PSIP shall be forfeited hereunder. Any forfeiture under this Plan of any
portion of the Monthly Company Match or the Additional Company Match credited
to a Participant’s Account shall eliminate any obligation of the Company to pay
the forfeited amount hereunder.




4









 












	 	3.	 	Election of Methods of Payment.¶ A Participant shall elect in writing,
and file with the Administrator, a method of payment of benefits under this Plan from
the following methods based upon the nature of the Payment Event. This election must
be made no later than the later of (i) December 31, 2006 or (ii) 30 days after the date
the Participant first becomes an Eligible Executive. Once such an election is made, a
Participant may alter the method of payment or the timing of receipt of amounts
deferred under the Plan by a writing filed with the Administrator, provided that such
alteration is made at least one year prior to the earliest date the Participant could
have received distribution of such amounts under the previous election and does not
provide for the receipt of such amounts earlier than five years from the previously
scheduled date of distribution.






	 	(a)	 	If the Payment Event is due to the Participant’s Separation
from Service on account of Retirement (as defined under PSIP) or Disability,
the Participant may choose one of the following payment methods:






	 	(i)	 	Payment of the vested amounts credited to the
Participant’s Account in any specified number of approximately equal
annual installments, not in excess of the number of whole years
remaining of the Participant’s life expectancy, determined as of his or
her Payment Event and based upon the mortality tables then in use under
the McKesson Corporation Retirement Plan, the first installment to be
paid at a designated interval following the Payment Event. For
purposes of the Plan, installment payments shall be treated as a single
distribution under Code Section 409A.
	 
	 	(ii)	 	Payment of the vested amounts credited to the
Participant’s Account in a single lump sum upon the occurrence of the
Payment Event.






	 	(b)	 	If the Payment Event occurs as a result of the Participant’s
Separation from Service with the Company, and such separation is not due to the
Participant’s death or one of the Payment Events described above, payment of
the vested amounts credited to the Participant’s Account shall be made in a
single lump sum upon the occurrence of the Payment Event.
	 
	 	 	 	(If any Monthly Company Match or Additional Company Match is payable under
Section E hereunder, that amount may be paid separately and at a later date
as provided in such section but not later than the end of the calendar year
in which the Monthly Company Match or Additional Company Match is credited
to the Participant’s Account.)






	 	4.	 	Date Payment Occurs.¶ Payment shall be made or commence not later than
first day of the fourth month following the date the earliest Payment Event occurs.
Notwithstanding the foregoing, a distribution scheduled to be made upon Separation from
Service to a Participant who is identified as a Key Employee as of the date he or she
Separates from Service shall be delayed for a minimum of




5









 






	 	 	 	six months following the Participant’s Separation from Service. Any payment that
otherwise would have been made pursuant to this Section F during such six-month
period, if any, shall be paid on the first day of the eighth month following the
Participant’s Separation from Service. The identification of a Participant as a Key
Employee shall be made by the Administrator in his or her sole discretion in
accordance with Section M.15 of the Plan and Code Sections 416(i) and 409A and the
regulations promulgated thereunder.






	 	5.	 	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 Code Section
409A(a)(3) and the regulations promulgated thereunder.





G. BENEFITS ON DEATH





	 	1.	 	Death of Participant.¶ Each Participant shall make an election of the
manner in which any amount remaining in the Participant’s Account at the time of the
Participant’s death shall be paid to his or her Beneficiary. Such election shall be
made in writing and filed with the Administrator not later than the later of (i)
December 31, 2006 or (ii) 30 days after the date the Participant first becomes an
Eligible Executive. At the election of the Participant, benefits shall be paid in a
lump sum or in up to ten annual installments. The Participant may modify such election
at any time up until twelve months prior to the date of the Participant’s death in a
writing filed with the Administrator. Notwithstanding the Participant’s election, the
Administrator shall distribute all benefits to a Beneficiary in a single payment if the
value of the Account is less than $5,000 on the date of death of the Participant.
Payment shall be made or commence on the first day of the month following the date of
the Participant’s death. Beneficiaries may not elect to accelerate or further defer
the payment of the Participant’s Account as described in this Section G.1.
	 
	 	2.	 	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 the
Company. Such filing must occur before the Participant’s death. A Participant may
change the Beneficiary, from time to time, by filing a completed beneficiary
designation with the Company.
	 
	 	 	 	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 his or her Beneficiary shall
be his or her beneficiary under the PSIP.




6









 











H. 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.




I. 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.¶ Except as otherwise provided in this Section I.2. or
by applicable law, 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.
	 
	 	 	 	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
Alternative Payee, a division of such property shall not constitute a violation of
this Section I.2, and any portion of such property may be paid or set aside for
payment to the Alternate Payee. The preceding sentence, 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 already
not already provided under the Plan, including without limitation with respect to
form and time of payment.
	 
	 	3.	 	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.




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	 	4.	 	No Right to Continued Employment, Etc.¶ Neither the establishment or
maintenance of the Plan nor the crediting of any amount to any Participant’s Account,
nor the designation of an executive as an Eligible Executive, shall confer upon any
individual any right to be continued as an employee of the Company or shall affect the
right of the Company to terminate any executive’s employment or change any terms of any
executive’s employment at any time.





J. ADMINISTRATION OF THE PLAN





	 	1.	 	In General.¶ The Plan Administrator shall be the Executive Vice
President, Human Resources of the Company. 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 Compensation Committee shall have 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.





K. AMENDMENT OR TERMINATION OF THE PLAN



The Compensation Committee may at any time, and from time to 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 at any time terminate the Plan; thereupon all amounts credited to the Participant’s
Account for periods preceding the termination date, plus interest credited thereon, may be paid
during the period beginning twelve months after the date the Plan was terminated and ending
twenty-four months after the date the Plan was terminated, or pursuant to Section F or G if
earlier, in single sums to the respective Participants or Beneficiaries entitled thereto. If the
Plan is terminated and the Accounts are distributed, the Company shall terminate all account
balance non-qualified deferred compensation plans with respect to all participants and shall not
adopt a new account balance non-qualified deferred compensation plan for at least five years after
the date the Plan was terminated.



In addition to the foregoing, the Board, in its discretion, may terminate the Plan upon a corporate
dissolution of the Company that is taxed under Code Section 331 or with the approval of a
bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1(A), provided that the Participants’
Accounts are distributed and included in the gross income of the Participants by the latest of (i)
the Plan Year in which the Plan terminates or (ii) the first Plan Year in which payment of accrued
benefits is administratively practicable.




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L. 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 L.
	 
	 	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 L.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 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




9









 






	 	 	 	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 L.2, has been notified that the claim is
denied in accordance with Section L.3, has filed a written request for a review of the
claim in accordance with Section L.4, and has been notified in writing that the
Executive Vice President has affirmed the denial of the claim in accordance with
Section L.4.




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M. DEFINITIONS



For purposes of the Plan, the following terms shall have the meanings indicated:





	 	1.	 	“Account”¶ shall mean the Account specified in Section F.l.
	 
	 	2.	 	“Additional Company Match”¶ shall mean, with respect to any Plan Year, the
amount credited to the Account of an Eligible Employee in accordance with Section
E.l(b).
	 
	 	3.	 	“Administrator”¶ shall mean the person specified in Section J.1.
	 
	 	4.	 	“Beneficiary”¶ shall mean the person or entity described by Section G.2.
	 
	 	5.	 	“Board”¶ shall mean the Board of Directors of McKesson Corporation, a Delaware
corporation.
	 
	 	6.	 	“Code”¶ shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	7.	 	“Company”¶ shall mean McKesson Corporation, a Delaware corporation, and any of
the corporations or other business entities subsidiary to or affiliated with it, whose
employees are authorized to participate in the Plan.
	 
	 	8.	 	“Compensation”¶ shall mean “Compensation” as defined in Section 15.17 of the
PSIP; provided, however, that Compensation for purposes of this Plan shall be
determined without regard to the limit of Code Section 401(a)(17).
	 
	 	9.	 	“Compensation Committee”¶ shall mean the Compensation Committee of the Board.
	 
	 	10.	 	“DCAP III”¶ shall mean the McKesson Corporation Deferred Compensation
Administration Plan III and predecessor or successor plans.
	 
	 	11.	 	“Disability”¶ shall mean that an individual is eligible for disability benefits
under the Federal Social Security Act as determined by the Social Security
Administration.
	 
	 	12.	 	“Eligible Executive”¶ shall mean an employee of the Company who is eligible to
participate in this Plan under Section C.
	 
	 	13.	 	“ERISA”¶ shall mean the Employee Retirement Income security Act of 1974, as
amended.
	 
	 	14.	 	“Identification Date”¶ shall mean each December 31.
	 
	 	15.	 	“Key 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 Code Section 416(i)(1)(A)(i), provided that no
more




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	 	 	 	than fifty officers of the Company shall be determined to be Key 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.






If a Participant is identified as a Key Employee on an Identification Date, then
such Participant shall be considered a Key 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.




	 	16.	 	“Monthly Company Match”¶ shall mean, with respect to a calendar month, the
amount credited to the Account of an Eligible Executive in accordance with Section
E.1(a).
	 
	 	17.	 	“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.
	 
	 	18.	 	“Payment Event”¶ shall mean the earliest of the following: Retirement from the
Company as determined under the PSIP, death, other Separation from Service with the
Company, or Disability. If a subsidiary or affiliate of McKesson Corporation ceases to
be a Company, and the Participant is employed by that subsidiary or affiliate, such
Participant shall be treated as having Separated from Service with the Company upon
such event.
	 
	 	19.	 	“Plan”¶ shall mean the McKesson Corporation Supplemental PSIP II.
	 
	 	20.	 	“Plan Year”¶ shall mean the calendar year.
	 
	 	21.	 	“Prior Plan”¶ shall mean the McKesson Corporation Supplemental PSIP.
	 
	 	22.	 	“PSIP”¶ shall mean the McKesson Corporation Profit-Sharing Investment Plan, as
amended from time to time.
	 
	 	23.	 	“Separation from Service”¶ shall mean termination of employment with the
Company, other than by reason of Disability or death. A Participant shall not be
deemed to have Separated from Service if the Participant continues to provide services
to the Company in a capacity other than as an employee and if the former employee is
providing services at an annual rate that is fifty percent or more of the services
rendered, on average, during the immediately preceding three full calendar years of
employment with the Company (or if employed by the Company less than three years, such
lesser period) and the annual remuneration for such services is fifty percent or more
of the average annual remuneration earned during the final three full calendar years of
employment (of if less, such lesser period); provided, however, that a Separation from
Service will be deemed




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	 	 	 	to have occurred if a Participant’s service with the Company is reduced to an annual
rate that is less than twenty percent of the services rendered, on average, during
the immediately preceding three full calendar years of employment with the Company
(or if employed by the Company less than three years, such lesser period) or the
annual remuneration for such services is less than twenty percent of the average
annual remuneration earned during the three full calendar years of employment with
the Company (or if less, such lesser period).





N. SUCCESSORS



This Plan shall be binding on the Company and any successors or assigns thereto.




O. EXECUTION



To record the adoption of the Plan by the Board of McKesson Corporation at a meeting held on
October 27, 2006.




	 	 	 	 	 
	McKESSON CORPORATION	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	 

	 	 	 	 
	 

	 	Paul E. Kirincic	 	 
	 

	 	Executive Vice President, Human Resources	 	 






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APPENDIX A




EXAMPLE OF DEFERRALS UNDER PLAN



The following example illustrates the extent to which a Participant could make deferrals under this
Plan. The example assumes that the applicable compensation limit under Code Section 401(a)(17) is
$210,000.



E’s Compensation is $350,000. E elects to make Basic Contributions under PSIP at the rate of 5% of
his Compensation. Because Code Section 401(a)(17) limits the amount of E’s compensation which may
be considered by PSIP to $210,000, E’s Basic Contributions for the year are limited to $10,500 (5%
of $210,000). Accordingly, E may defer $7,000 (5% of his Compensation in excess of $210,000) into
this Plan. This deferral will then be eligible for a Monthly Company Match and an Additional
Company Match based on the PSIP’s “Matching Employer Contribution” and “Additional Matching
Employer Contribution” for the relevant PSIP calendar months and plan year.