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                                                                    EXHIBIT 10.5

                              McKESSON CORPORATION

                1997 NON-EMPLOYEE DIRECTORS' EQUITY COMPENSATION
                                AND DEFERRAL PLAN

                      (As Amended through October 25, 2002)

         1. Purpose of the Plan. The purpose of the McKesson Corporation 1997
Non-Employee Directors' Equity Compensation and Deferral Plan (the "Plan") is to
attract and retain qualified individuals not employed by McKesson Corporation
(the "Company") or its subsidiaries to serve on the Board of Directors of the
Company and to further align the interests of such non-employee directors with
those of the stockholders of the Company.

         2. Definitions.

         (a)      "Annual Meeting" shall mean the annual meeting of the
stockholders of the Company.

         (b)      "Annual Retainer" shall mean any retainer fee paid to a
non-employee director for service on the Board during a Director Year.

         (c)      "Board" shall mean the Board of Directors of the Company.

         (d)      "Change in Control" of the Company shall mean the occurrence
of any of the following events:

                  (i)      Any "person" (as such term is used in sections 13(d)
         and 14(d) of the Exchange Act), excluding the Company or any of its
         affiliates, a trustee or any fiduciary holding securities under an
         employee benefit plan of the Company or any of its affiliates, 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) 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 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

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                  (iii)    The stockholders of the Company approve a merger or
         consolidation of the Company with any other corporation, other than (A)
         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
         (B) 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 stockholders 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 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.

         (e)      Effective July 26, 2000 "Committee" shall mean the Committee
on Directors and Corporate Governance of the Board of Directors.

         (f)      "Committee Chairman Retainer" shall mean any fee paid to a
non-employee director for service as the chairman of any committee of the Board.

         (g)      "Common Stock" shall mean shares of Common Stock, par value
$0.01 per share, of the Company.

         (h)      "DCAP II" shall mean the McKesson Corporation Deferred
Compensation Administration Plan II, as amended from time to time.

         (i)      "Director Year" shall mean a calendar year.

         (j)      "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.

         (k)      "Fair Market Value" of a share of Common Stock as of a
particular date shall mean, if the Common Stock is not listed or admitted to
trading on a stock exchange, the average between the lowest reported bid price
and highest reported asked price of the Common Stock on such date in the
over-the-counter market, or, if the Common Stock is then listed or admitted to

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trading on any stock exchange, the composite closing price on such date as
reported in The Wall Street Journal.

         (l)      "Fees" shall mean the sum, for any Director Year, of the
Annual Retainer, Meeting Fees and Committee Chairman Retainer.

         (m)      "Meeting Fees" shall mean any fees paid to a non-employee
director for attending a meeting of the Board or a committee of the Board,
including any fees paid to a non-employee director for extraordinary or special
Board and/or committee meetings.

         (n)      "Participant" shall mean a non-employee director of the
Company participating in the Plan.

         (o)      "Restricted Stock Unit" shall mean a right to receive, in
accordance with the conditions set forth herein, a share of the Common Stock or,
alternatively, a cash payment equal to the Fair Market Value of a share of
Common Stock.

         (p)      "Retainer Option" shall mean a stock option granted pursuant
to the Plan in lieu of all or a portion of a Participant's Annual Retainer, as
provided in Sections 6(c) and 6(d)(iv).

         3. Effective Date, Duration of Plan. This Plan shall become effective
as of January 1, 1997, subject to the approval of the Plan by the stockholders
of the Company; provided, that if the Plan is so approved, any election made
hereunder prior to such approval shall be deemed effective as of the date such
election was made. The Plan will terminate on December 31, 2006 or such earlier
date as determined by the Board; provided that no such termination shall affect
rights earned or accrued under the Plan prior to the date of termination.

         4. Participation. Subject to the prior approval of the Committee, each
member of the Board who is not an employee of the Company or any of its
subsidiaries shall be eligible to participate in the Plan.

         5. Common Stock Subject to the Plan.

         (a)      Subject to Section 5(b) below, the maximum aggregate number of
shares authorized to be issued under the Plan shall be 1,286,000. All Restricted
Stock Units issued hereunder, whether or not distributed in the form of Common
Stock, shall count against such maximum. If any options granted hereunder cease
to be exercisable in whole or in part, any shares subject thereto but with
respect to which such option had not been exercised, shall not count against
such maximum. As the Committee shall determine from time to time, the Common
Stock may consist of either shares of authorized but unissued Common Stock, or
shares of authorized and issued Common Stock reacquired by the Company and held
in its treasury.

         (b)      In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, stock or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination,

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repurchase or share exchange or other similar corporate transaction or event
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in its sole discretion and in such manner as it may deem
equitable, adjust any or all of (i) the number of shares of Common Stock subject
to the Plan, (ii) the number of shares of Common Stock subject to outstanding
awards under the Plan, and (iii) the grant or exercise price with respect to any
option.

         6. Restricted Stock Units; Deferrals.

         (a)      Transition Grant. As soon as practicable following January 1,
1997, each Participant shall receive an initial grant (the "Transition Grant")
of a number of Restricted Stock Units in consideration for the termination of
such Participant's accrued benefits and rights under the Company's Director's
Retirement Program (the "Prior Plan"); provided that the Transition Grant shall
be subject to the receipt by the Company of a written release from the
Participant, in the form approved by the Committee, consenting to such
termination. The number of Restricted Stock Units granted to a Participant in
respect of the Transition Grant shall equal the Accrued Benefit (as defined
below), divided by the Fair Market Value of a share of Common Stock as of
December 31, 1996. A Participant's Accrued Benefit shall equal his or her
accrued benefit under the Prior Plan, as of December 31, 1996.

         (b)      Annual Grant. On the date of each Annual Meeting prior to the
termination or expiration of the Plan, beginning with the 1997 Annual Meeting,
each Participant shall receive a grant of 400 Restricted Stock Units. Effective
January 27, 1999, the annual grants of 400 Restricted Stock Units shall be
discontinued.

         (c)      Mandatory Deferral. On each date that any portion of the
Annual Retainer would otherwise be payable to a Participant prior to the
termination or expiration of the Plan, each such Participant shall be required
to defer the receipt of an amount equal to 50% of such portion of Annual
Retainer (the "Mandatory Deferral"), which amount shall be deferred in the form
of Restricted Stock Units or Retainer Options, as elected by the Participant
prior to the end of the calendar year preceding the year in which the Annual
Retainer is payable. In the event that a participant fails to make such an
election with respect to any calendar year in which he or she receives payment
of an Annual Retainer, the Participant shall be deemed to have elected to
receive the Annual Retainer in the form of Restricted Stock Units. The number of
Restricted Stock Units granted to a Participant in respect of such Mandatory
Deferral shall equal the Mandatory Retainer, divided by the Fair Market Value of
a share of Common Stock as of the last trading day of the calendar quarter
immediately preceding the date such Mandatory Retainer would otherwise be
payable. Fractional Shares shall be rounded up to the nearest whole share. To
the extent applicable, Restricted Stock Units granted pursuant to this paragraph
shall be subject to the same terms and conditions described in Section 6(d)(ii)
below. The number of Retainer Option shares granted to a Participant in respect
of such deferral shall be determined using the same conversion rate as employed
in that year for the purpose of determining the number of stock option shares to
be granted to employees in lieu of awards under the Company's Management
Incentive Plan.

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         (d)      Optional Deferral. All Fees (other than the portion of Annual
Retainer subject to Mandatory Deferral described above) earned by a Participant
in each Director Year prior to the termination or expiration of the Plan shall
be subject to the following payment and deferral options. Each Participant may
elect by written notice to the Company, in accordance with the procedures
established by the Company, to participate in such payment and deferral options.

                  (i)      Cash Alternative. Unless a valid election is made in
         accordance with the procedures established by the Company, each
         Participant shall receive payment of all Fees (other than the portion
         of Annual Retainer subject to Mandatory Deferral described above) in
         the form of cash.

                  (ii)     Restricted Stock Unit Alternative. Subject to
         executing a valid election with the Company (the "RSU Election"), each
         Participant may elect to defer all or any portion of his or her Fees
         (other than the portion of Annual Retainer subject to Mandatory
         Deferral described above) in the form of Restricted Stock Units. The
         number of Restricted Stock Units granted shall equal the amount of Fees
         so deferred, divided by the Fair Market Value of the Common Stock as of
         the last trading day of the calendar quarter in which the date such
         Fees would otherwise be payable. Fractional Shares shall be rounded up
         to the nearest whole share. The RSU Election (A) shall be in the form
         of a document executed by the Participant and filed with the Secretary
         of the Company, (B) shall be made before the first day of the calendar
         year in which the applicable Fees are earned and shall become
         irrevocable on the last day prior to the beginning of such calendar
         year, and (C) shall continue until the Participant ceases to serve as a
         director of the Company or until he or she terminates or modifies such
         election by written notice to the Company in accordance with the
         procedures established by the Company, any such termination or
         modification to be effective as of the end of the calendar year in
         which such notice is given with respect to Fees otherwise payable in
         subsequent calendar years. Any person who becomes a Participant during
         any Director Year may execute an RSU Election prior to commencing
         service on the Board with respect to Fees to be earned for the
         remainder of such year and for future Director Years in accordance with
         the procedures established by the Company.

                  Each Restricted Stock Unit shall entitle the holder to, upon
         distribution thereof (A) receive a cash payment equal to the Fair
         Market Value of one share of Common Stock, or (B) have issued in his or
         her name one share of Common Stock. In either case, each such
         Restricted Stock Unit shall terminate upon distribution.

                  The Company shall credit each Participant holding Restricted
         Stock Units with a number of additional Restricted Stock Units equal to
         any dividends and other distributions paid by the Company on an
         equivalent number of shares of Common Stock, as of the date such
         dividends or distributions are payable. Such additional Restricted
         Stock Units shall thereafter be treated as any other Restricted Stock
         Units issued under the Plan. Restricted Stock Units may not be sold,
         transferred, assigned, pledged or otherwise encumbered or disposed of
         until such time as share certificates for Common Stock are issued.

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                  Each Participant issued Restricted Stock Units shall execute a
         valid distribution election in accordance with the procedures
         established by the Committee (the "Distribution Election"). The
         Distribution Election shall indicate (A) whether distribution shall be
         made in the form of Common Stock or cash, (B) whether the distribution
         shall be made in a single allotment or in substantially equal annual
         installments over a period not to exceed ten (10) years and (C) with
         respect to Distribution Elections filed on or after October 28, 1998,
         the date on which the distribution shall commence in accordance with
         the next paragraph. The Distribution Election (D) shall be in the form
         of a document executed by the participant and filed with the Secretary
         of the Company, (E) shall be made no later than twelve (12) months
         prior to the distribution date and (F) shall become irrevocable twelve
         (12) months prior to the distribution date.

                  With respect to a Distribution Election completed on or after
         October 28, 1998, the Participant shall elect whether distributions
         shall commence as soon as practicable after (i) the first business day
         of January of the calendar year following the Participant's cessation
         from service as a director of the Company; or (ii) the first business
         day of January of any calendar year, provided that such calendar year
         is not later than the calendar year following the calendar year in
         which the Participant attains age 72. All other distributions shall
         commence as soon as practicable after the first business day of the
         January following the Participant's cessation from service as a
         director of the Company. If no valid Distribution Election is made, the
         Restricted Stock Units shall be distributed in a lump sum as soon as
         practicable after the first business day of January of the calendar
         year following the Participant's cessation from service as a director
         of the Company, in the form of cash. Participants who receive
         Restricted Stock Units shall have no rights as stockholders with
         respect to such Restricted Stock Units until share certificates for
         Common Stock are issued. Notwithstanding any provision to the contrary,
         any fractional shares of Common Stock issuable hereunder shall be paid
         in cash.

                  Upon the occurrence of a Change in Control, Common Stock to be
         issued in respect of all Restricted Stock Units shall be immediately
         distributed.

                  (iii)    DCAP II Alternative. Subject to executing an election
         in accordance with the procedures established by the Company and the
         terms of DCAP II, each Participant may elect to defer all or any
         portion of his or her Fees (other than the portion of Annual Retainer
         subject to Mandatory Deferral described above) under DCAP II.

                  (iv)     Retainer Option Alternative. Subject to executing an
         election in accordance with the procedures established by the Company,
         each Participant may elect to receive the portion of Annual Retainer
         not subject to Mandatory Deferral, as described in Section 6(c) above,
         in the form of Retainer Options. The number of Retainer Option shares
         granted to a Participant with respect to such deferral shall be
         determined in the manner described in Section 6(c) above.

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         7. Stock Options.

         (a)      Discretionary Grants. The Committee may, in its sole
discretion, grant options to purchase Common Stock to Participants, pursuant to
such terms and conditions that it may deem advisable, so long as not
inconsistent with Section 7(d) below or any other terms of this Plan.

         (b)      Formula Grants. Each Participant then serving as a
non-employee director of the Company shall automatically receive, on the date of
each January meeting of the Board, an option to purchase 10,000 shares of Common
Stock (subject to adjustment as provided in Section 5(b) above); provided,
however, that a Participant who is elected to the Board after the January
meeting of the Board shall be granted, as of the date of election, a prorated
number of options with respect to the initial year of participation in the Plan,
based on the number of full calendar quarters remaining in the calendar year in
which the Participant is elected to the Board. The options granted pursuant to
this Section 7(b) shall be immediately exercisable in full and have an option
term of ten years.

         (c)      Retainer Option Grants. At the same time that the Company
makes stock option grants annually to eligible employees, each Participant who
has made an election to receive a Retainer Option pursuant to Section 6(c) or
6(d)(iv) with respect to all or any portion of the Annual Retainer to be paid in
such year shall be granted an option to purchase that number of shares of Common
Stock determined pursuant to Section 6(c) and/or Section 6(d)(iv), as
applicable. The terms of such Retainer Options shall be as prescribed by the
Committee, so long as such terms are not inconsistent with Section 7(d) below or
any other terms of this Plan.

         (d)      Terms and Conditions of Options. Except as provided in Section
7(b) above, the following terms and conditions shall apply to all options
granted to Participants under the Plan.

                  (i)      The exercise price of each option shall not be less
         than the Fair Market Value of the Common Stock covered by the option on
         the date the option is granted.

                  (ii)     Each option granted pursuant to the Plan shall be
         evidenced by a written grant agreement (the "Agreement") executed by
         the Company and the person to whom such option is granted which shall
         provide such terms and conditions as the Committee may determine, in
         its sole discretion, so long as not inconsistent with the terms of this
         Plan.

                  (iii)    The term of each option shall be for no more than ten
         years.

                  (iv)     The Agreement may contain such other terms,
         provisions, and conditions as may be determined by the Committee (not
         inconsistent with this Plan). Unless otherwise provided in the
         Agreement and excluding options granted under paragraph (b) above, the
         Committee may, in its sole discretion, extend the post-termination
         exercise period with respect to an option (but not beyond the original
         term of such option).

                  (v)      Payment of the purchase price upon exercise of any
         option shall be made in cash; provided that the Committee, in its sole
         discretion, may permit an option holder

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         to pay the option price by such other method that it may deem
         appropriate, including, without limitation, by tendering to the Company
         shares of Common Stock owned by the option holder, and having a Fair
         Market Value equal to the option price. Such stock surrender method may
         permit an election by the option holder to have the unrealized gain
         with respect to the option denominated in stock units (based on the
         fair market value of a share of Common Stock on the date of exercise)
         and paid in shares of Common Stock at the time specified by the
         Participant at the time of making the stock surrender option gain
         deferral election. During the deferral period each such stock unit
         shall be credited with additional stock units equal to any dividends or
         other distributions paid by the Company on an equivalent number of
         shares of Common Stock, as of the date such dividends or distributions
         are payable. Stock units may not be sold, transferred, assigned,
         pledged or otherwise encumbered or disposed of until such time as share
         certificates for Common Stock are issued.

                  (vi)     All such options shall be designated as stock options
         which do not qualify under Section 422 of the Internal Revenue Code of
         1986, as amended.

                  (vii)    Unless otherwise provided in an Agreement, options
         granted under the Plan will become immediately and fully vested and
         exercisable upon the occurrence of a Change in Control.

         8. Administration. The Plan shall be administered by the Committee. The
Committee shall have full power to interpret the Plan and formulate additional
details and regulations for carrying out the Plan. Any decision or
interpretation adopted by the Committee shall be final and conclusive.

         9. No Right to Serve. Nothing in the Plan shall confer upon any
Participant the right to remain in service as a member of the Board.

         10. Amendment and Termination. The Board at any time may amend or
terminate the Plan; provided that any such amendment or termination does not
adversely affect the rights of any Participant.

         11. Governing Law. The validity, construction and effect of the Plan
and any such actions taken under or relating to the Plan shall be determined in
accordance with the laws of the State of California.

         12. Notices. All notices under this Plan shall be sent in writing to
the Secretary of the Company. All correspondence to the Participants shall be
sent in writing to the Participant at the address which is their recorded
address as listed on the most recent election form or as specified in the
Company's records.

         13. Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. Nothing contained
hereunder shall give any Participant any rights that are greater than those of
an unsecured general creditor of the Company.

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         14. Assignability.

         (a)      General Rule. Each option granted pursuant to this Plan shall,
during the Participant's lifetime, be exercisable only by him. No option nor any
right thereunder shall be transferable by the Participant by operation of law or
otherwise except to the extent permitted by Section 14(b).

         (b)      Exceptions to General Rule. Notwithstanding Section 14(a),
this Plan shall not preclude:

                  (i)      any Participant from designating a beneficiary to
         succeed, after the Participant's death, to all of the Participant's
         options outstanding on the date of the Participant's death (including,
         without limitation, the right to exercise any unexercised options); or

                  (ii)     any Participant from transferring an option or any
         right thereunder pursuant to a qualified domestic relations order as
         defined in the Internal Revenue Code of 1986, as amended, or the
         Employee Retirement Income Security Act of 1974, as amended; or

                  (iii)    any Participant from voluntarily transferring any
         option granted pursuant to this Plan to a family member as a gift or
         through a transfer to an entity in which more than fifty percent of the
         voting interests are owned by family members (or the Participant) in
         exchange for an interest in that entity.

         (c)      Definitions.

                  (i)      Beneficiary. The term "beneficiary" shall mean a
         person or persons designated by the Participant to succeed to, in the
         event of death, all outstanding options granted to the Participant or
         any right thereunder. Any Participant, subject to applicable laws and
         such limitations as may be prescribed by the Committee, to designate
         one or more persons primarily or contingently as beneficiaries in
         writing by notice delivered to the Company, and to revoke such
         designations in writing. If a Participant fails effectively to
         designate a beneficiary, or if the Participant's designated
         beneficiary(ies) does not survive the Participant, the Participant's
         estate shall be the Participant's beneficiary.

                  (ii)     Family Member. The term "family member" shall include
         any person identified as an "immediate family" member in Rule
         16(a)-1(e) of the Exchange Act, as such Rule may be amended from time
         to time. Notwithstanding the foregoing, the Committee may designate any
         other person(s) or entity(ies) as a "family member."

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                                                                    EXHIBIT 10.6

                              McKESSON CORPORATION

                                SUPPLEMENTAL PSIP

                                                         Effective June 30, 1989
                                     Amended and restated as of January 29, 2003

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                              McKESSON CORPORATION
                                SUPPLEMENTAL PSIP

                                     PURPOSE

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 "Monthly Matching Employer
Contribution" and "Additional Matching Employer Contribution."

                                   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.

                                  PARTICIPATION

         -        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).

         -        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. However, no Eligible Executive shall
                  defer any Compensation under this Plan for the first Plan Year
                  in which the Eligible Executive becomes eligible to make
                  deferrals under this Plan unless his or her "Basic
                  Contributions" under the PSIP made with respect to
                  Compensation earned before November 1 of the Plan Year are
                  limited by Code Sections 402(g) or 401(a) (17). If the
                  Eligible Executive's "Basic Contributions" under the PSIP are
                  not so limited by November 1 of the first Plan Year in which
                  the Eligible Executive becomes eligible to elect deferrals
                  under this Plan, then the Eligible Executive's deferral
                  election for that Plan Year shall be void. An election to
                  defer shall be in writing and shall be made at the time and in
                  the form specified by the Administrator. As a condition of
                  electing to defer Compensation under this Plan for a Plan
                  Year, the Eligible Executive shall agree not to change (either
                  by increasing or decreasing) the rate at which the Eligible
                  Executive's compensation is reduced under Section 3.3 of the
                  PSIP to make "Basic Contributions" under PSIP. 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

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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.

         -        Relation to Other Plans.

                           -        DCAP and DCAP II. An Eligible Executive may
                                    participate in this Plan and may also
                                    participate in the DCAP and DCAP II.
                                    However, no amounts may be deferred under
                                    this Plan which have been deferred under the
                                    DCAP or DCAP II or any other plan of the
                                    Company.

                           -        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 DCAP and DCAP II, including, but not
                                    limited to, the definition of "Average Final
                                    Compensation" under the Executive Benefit
                                    Retirement Plan.

                               AMOUNTS OF DEFERRAL

         -        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 402(g) (limiting
                  annual elective deferrals under the PSIP to $11,000, as
                  adjusted from time to time under the Code) and Code Section
                  401(a)(17) (limiting the amount of annual compensation to be
                  taken into account under the PSIP to $200,000, as adjusted
                  from time to time under the Code).

         -        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 Sections 402(g) and 401(a)(17).

                                  COMPANY MATCH

         -        Eligibility.

                                       2

<PAGE>

                  -        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.

                  -        Additional Company Match. An Additional Company Match
                           may be credited, with respect to each fiscal year of
                           the Company ending March 31, to the Accounts of
                           Eligible Executives who actually defer Compensation
                           under this Plan with respect to such fiscal year and
                           who are employed by the Company on March 31 of such
                           fiscal year. An Eligible Executive shall be deemed to
                           remain employed by the Company during an unpaid leave
                           of absence covered by the federal Family Medical
                           Leave Act. The requirement of employment on March 31
                           shall not apply to any Eligible Executive who
                           terminates employment with the Company (i) due to
                           retirement under the terms of the McKesson
                           Corporation Retirement Plan, (ii) upon accumulating
                           at least 65 "Payment Points" as defined in the PSIP,
                           or (iii) due to permanent and total disability as
                           determined under the PSIP. In this case, any
                           Additional Company Match for the year of such
                           Eligible Executive's termination of employment shall
                           be credited to the Eligible Executive's Account
                           hereunder as soon as practicable after the amount of
                           that Additional Company Match is determined by the
                           Company.

         -        Amount of Match.

                  -        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
                           "Monthly 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 "Monthly Matching Employer Contribution"
                           rates that may apply.

                  -        Additional Company Match. The amount of the
                           Additional Company Match to be credited to the
                           Account of an Eligible Executive for any Plan Year
                           shall be a percentage of the Eligible Executive's
                           deferrals under this Plan for the 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.

                        PAYMENT OF DEFERRED COMPENSATION

         -        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

                                       3

<PAGE>

                  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 Certus Stable
                  Value Fund investment option. Interest shall be credited to
                  each Account as of the end of each business day.

         -        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 "Monthly 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 "Monthly 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.

         -        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. 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 a previous election and does not provide for the
                  receipt of such amounts earlier than one year from the date of
                  alteration.

                           (a)      If the Payment Event is due to the
Participant's retirement or permanent and total disability as defined under the
PSIP, the Participant may choose one of the following payment methods:

                                        -     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.

                                       4

<PAGE>

                                        -     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 termination of the Participant's employment with the Company, and such
termination 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.)

         -        Date Payment Occurs. Payment shall be made or commence as soon
                  as reasonably practicable after the earliest Payment Event
                  occurs.

                                BENEFITS ON DEATH

         -        Death of Participant. Each Participant shall make an election
                  at the time of any election to defer Compensation under the
                  Plan of the time and 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.
                  Benefits shall be paid in one of the methods specified in
                  Section F.3. The Participant may modify such election at any
                  time up until the date of the Participant's death in a writing
                  filed with the Administrator. In addition, within one year
                  following the death of the Participant the Beneficiary may
                  elect to receive payment in a lump sum; provided, however,
                  that such election shall not take effect until 12 months after
                  the date it is made, and payment otherwise scheduled to be
                  made in that 12-month period shall be made on schedule. The
                  Administrator may, at his or her discretion, 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.

         -        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 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.

                                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

                                       5

<PAGE>

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.

                                  MISCELLANEOUS

         -        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.

         -        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.

         -        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.

         -        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.

                           ADMINISTRATION OF THE PLAN

         -        In General. The Plan Administrator shall be the Senior Vice
                  President, Human Resources and Administration of the Company.
                  If the Senior Vice President, Human Resources and
                  Administration 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.

         -        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.

                                       6

<PAGE>

                      AMENDMENT OR TERMINATION OF THE PLAN

A majority of the Outside Directors 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. A majority of the Outside Directors 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. A majority of the
Outside Directors 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, shall promptly be paid, on termination, in
single sums to the respective Participants or Beneficiaries entitled thereto.

                                   DEFINITIONS

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

         -        "Account" shall mean the Account specified in Section F.l.

         -        "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.1(b).

         -        "Administrator" shall mean the person specified in Section
                  J.l.

         -        "Beneficiary" shall mean the person or entity described by
                  Section G.3.

         -        "Board" shall mean the Board of Directors of McKesson
                  Corporation, a Delaware corporation.

         -        "Code" shall mean the Internal Revenue Code of 1986, as
                  amended.

         -        "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.

         -        "Compensation" shall mean "Compensation" as defined in Section
                  17.17 of the PSIP; provided, however, that Compensation for
                  purposes of this Plan shall be determined without regard to
                  the limit of Section 401(a)(17).

         -        "Compensation Committee" shall mean the Compensation Committee
                  of the Board.

         -        "DCAP" shall mean the McKesson Corporation Deferred
                  Compensation Administration Plan.

         -        "DCAP II" shall mean the McKesson Corporation Deferred
                  Compensation Administration Plan II.

         -        "Eligible Executive" shall mean an employee of the Company who
                  is eligible to participate in this Plan under Section C.

         -        "ERISA" shall mean the Employee Retirement Income security Act
                  of 1974, as amended.

                                       7

<PAGE>

         -        "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).

         -        "Outside Directors" shall mean those members of the Board who
                  are not employees of the Company and who have not deferred
                  under this Plan Compensation earned as an employee.

         -        "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.

         -        "Payment Event"

                           (a)      For any Participant shall mean the earliest
of the following: retirement from the Company, death, other termination of
employment with the Company, or permanent and total disability as determined
under the PSIP. 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 terminated such Participant's
employment with the Company upon such event.

                           (b)      With respect to every Participant who has so
elected, Payment Event also shall mean a Change in Control as defined in DCAP
II.

         -        "Plan" shall mean the McKesson Corporation Supplemental PSIP.

         -        "Plan Year" or "Year" shall mean the calendar year.

         -        "PSIP" shall mean the McKesson Corporation Profit-Sharing
                  Investment Plan, as amended from time to time.

Executed as of January 29, 2003.

McKESSON CORPORATION

By ___________________________________________
   Paul E. Kirincic
   Senior Vice President, Human Resources and Administration

                                       8

<PAGE>

                                   APPENDIX A

                        Examples of Deferrals under Plan

The following examples illustrate the extent to which a Participant could make
deferrals under this Plan. The examples assume that the applicable deferral
limit under Section 402(g) of the Code is $11,000 and that the applicable
compensation limit under section 401(a)(17) of the Code is $200,000. The
examples further assume that the Participant is not eligible to make "catch-up
contributions" under the PSIP.

1.       Example 1

E's Compensation for the Plan Year is $200,000. At all times during the Plan
Year E has elected to make Basic Contributions under PSIP at the rate of 6% of
his Compensation. Because of section 402(g) of the Code, E may only defer
$11,000 under PSIP during the Plan Year instead of $12,000 (i.e., .06 X
$200,000). Accordingly, E may defer $1,000 for the Plan Year under the Plan
(i.e., $12,000 - $11,000).

The Monthly Matching Employer Contribution under PSIP for the PSIP plan year in
which E's deferrals are made under this Plan is 50%. Accordingly, E's Account
will be credited with a Monthly Company Match of $500 (i.e., .50 X $1,000).

The Additional Matching Employer Contribution under PSIP for the PSIP plan year
in which E's deferrals are made under this Plan is 25%. Accordingly, E's Account
will be credited with an Additional Company Match of $250 (i.e., .25 X $1,000).

2.       Example 2

E's Compensation is $350,000. E elects to make Basic Contributions under PSIP at
the rate of 2% of his Compensation. Section 402(g) of the Code would not limit
E's Basic Contributions (2% of $350,000 equals $7,000), even in the absence of
any compensation limit. However, because Section 401(a)(17) of the Code limits
the amount of E's compensation which may be considered by PSIP to $200,000, E's
Basic Contributions for the year are limited to $4,000 (2% of $200,000).
Accordingly, E may defer $3,000 (2% of his Compensation in excess of $200,000)
into this Plan. This deferral will then be eligible for a Monthly Company Match
and an Additional Company Match based on the PSIP's "Monthly Matching Employer
Contribution" and "Additional Matching Employer Contribution" for the relevant
PSIP calendar months and plan year.

                                       9

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   PAGE
                                                                                                                   ----
<S>                                                                                                                <C>
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............................     1
         3.    Relation to Other Plans.........................................................................     2
                  (a)      DCAP and DCAP II....................................................................     2
                  (b)      Other Plans.........................................................................     2

D.    AMOUNTS OF DEFERRAL......................................................................................     2
         1.    PSIP Supplement.................................................................................     2
         2.    Amount of Deferrals.............................................................................     2

E.    COMPANY MATCH............................................................................................     2
         1.    Eligibility.....................................................................................     2
                  (a)      Monthly Company Match...............................................................     3
                  (b)      Additional Company Match............................................................     3
         2.    Amount of Match.................................................................................     3
                  (a)      Monthly Company Match...............................................................     3
                  (b)      Additional Company Match............................................................     3

F.    PAYMENT OF DEFERRED COMPENSATION.........................................................................     3
         1.    Book Account and Interest Credit................................................................     3
         2.    Vesting.........................................................................................     4
         3.    Election of Methods of Payment..................................................................     4
         4.    Date Payment Occurs.............................................................................     5

G.    BENEFITS ON DEATH........................................................................................     5
         1.    Death of Participant............................................................................     5
         2.    Designation of Beneficiary......................................................................     5

H.    SOURCE OF PAYMENT........................................................................................     5

I.    MISCELLANEOUS............................................................................................     6
         1.    Withholding.....................................................................................     6
         2.    No Assignment...................................................................................     6
         3.    Applicable Law; Severability....................................................................     6
         4.    No Right to Continued Employment, Etc...........................................................     6

J.    ADMINISTRATION OF THE PLAN...............................................................................     6
         1.    In General......................................................................................     6
         2.    Elections and Notices...........................................................................     6

K.    AMENDMENT OR TERMINATION OF THE PLAN.....................................................................     7

L.    DEFINITIONS..............................................................................................     7
         1.    "Account".......................................................................................     7
         2.    "Additional Company Match"......................................................................     7
</TABLE>

                                       i

<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                          ----
<S>                                                                                                       <C>
3.    "Administrator".................................................................................     7
4.    "Beneficiary"...................................................................................     7
5.    "Board".........................................................................................     7
6.    "Code"..........................................................................................     7
7.    "Company".......................................................................................     7
8.    "Compensation"..................................................................................     7
9.    "Compensation Committee"........................................................................     7
10.   "DCAP"..........................................................................................     7
11.   "DCAP II".......................................................................................     7
12.   "Eligible Executive"............................................................................     7
13.   "ERISA".........................................................................................     7
14.   "Monthly Company Match".........................................................................     8
15.   "Outside Directors".............................................................................     8
16.   "Participant"...................................................................................     8
17.   "Payment Event".................................................................................     8
18.   "Plan"..........................................................................................     8
19.   "Plan Year" or "Year"...........................................................................     8
20.   "PSIP"..........................................................................................     8
APPENDIX A............................................................................................     9
Examples of Deferrals Under Plan......................................................................     9
</TABLE>

                                       ii

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