Document:

exhibit10-1.htm

    Exhibit 10.1

    
      

    

    SIXTH
      MODIFICATION AGREEMENT AND COVENANT WAIVER

     

    This
      Sixth Modification Agreement and Covenant Waiver (this “Agreement”) is made
      as of October 27, 2008 but effective October 28, 2008 (the “Effective Date”), by
      and between VINEYARD NATIONAL BANCORP, a California corporation (“Borrower”) and FIRST
      TENNESSEE BANK NATIONAL ASSOCIATION (“Lender”).  Unless
      otherwise set forth herein, all capitalized terms used herein shall have the
      meaning given such terms in the Loan Documents (defined below).

    

               
      WHEREAS, in connection with a loan from Lender to Borrower in the original
      principal amount of $70,000,000.00, with a current outstanding principal loan
      balance of $48,300,000.00 (the “Loan”), the Borrower
      executed and delivered to Lender that certain Amended and Restated Promissory
      Note (“Note”)
      dated March 29, 2007, that certain Loan Agreement (“Loan Agreement”),
      that certain  Pledge Agreement together with Addendum to Pledge
      Agreement (collectively the “Pledge”), each dated
      as of March 17, 2006, that certain Modification Agreement effective as of May
      11, 2006 (“First
      Modification”), that certain Second Modification Agreement and Covenant
      Waiver effective as of March 29, 2007 (“Second
      Modification”), that certain Third Modification Agreement and Covenant
      Waiver effective as of March 15, 2008 (“Third Modification”),
      that certain Fourth Modification Agreement and Covenant Waiver effective as
      of
      June 30, 2008 (“Fourth
      Modification”), that certain Fifth Modification Agreement and Covenant
      Waiver dated and effective as of August 29, 2008 (“Fifth Modification”)
      and that certain Amendment to Fifth Modification Agreement and Covenant Waiver
      dated and effective as of September 23, 2008 (“Amendment to Fifth
      Modification”) (this Agreement, the Note, the Loan Agreement, the Pledge,
      the First Modification, the Second Modification, the Third Modification, the
      Fourth Modification, the Fifth Modification, and the Amendment to Fifth
      Modification and any other documents executed by Borrower in connection with
      the
      Loan are collectively herein referred to as the “Loan
      Documents”);

    

               
      WHEREAS, Borrower desires to extend the maturity date of the Loan through
      November 28, 2008;

    

    WHEREAS,
      Borrower has requested that
      Lender extend the Waivers (as defined in the Fifth Modification and Amendment
      to
      Fifth Modification) through and including November 28, 2008;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
      subject to the terms and
      conditions contained herein, Lender is willing to (i) extend the Maturity Date
      of the Loan and (ii) extend the Waivers.

    

               
      NOW, THEREFORE, FOR MUTUAL CONSIDERATIONS, the receipt and sufficiency of which
      is hereby acknowledged, the undersigned Borrower and Lender do hereby modify
      the
      Loan Documents as follows:

    

    1) Capitalized
      Terms.  Any
      capitalized term used but not defined herein shall have the meaning ascribed
      to
      it in the Loan Documents.  All references to the “Loan Documents” in
      the Loan Agreement and any of the other Loan Documents shall include, without
      limitation, this Agreement and all other such Loan Documents, as modified by
      this Agreement.

     

    2) Extension
      of
      Maturity Date; Waiver.
      Subject to Borrower’s compliance with all representations, warranties, covenants
      and agreements contained in this Agreement and all the other Loan Documents
      as
      modified hereby:

     

    (a) Maturity
      Date.  The “Maturity Date” set forth in the Loan Agreement and
      elsewhere in the Loan Documents is hereby modified to mean November 28, 2008
      (the “New Maturity
      Date”).

     

    (b) Waivers.  Lender
      hereby extends the Waivers for a period through and including the New Maturity
      Date.

     

    3) Modification
      of the
      Note.  The Note and, where applicable, the other Loan Documents
      are hereby modified as follows:

     

    a. Interest
      Rate.  From and after October 28, 2008 through and including
      the New Maturity Date, interest shall accrue on the outstanding principal
      balance of the Note at a fixed annual rate equal to the LIBOR Rate, as
      hereinafter defined, plus three hundred fifty (350) basis points (LIBOR Rate
      +
      3.50%). As used herein, the term "LIBOR Rate" refers to the sixty (60) day
      London Interbank Offered Rate, as determined by Lender in its sole (but
      reasonable) discretion.  The LIBOR Rate shall be determined by Lender
      as of October 28, 2008 (or, if such date is not a business day, then on the
      next
      preceding business day).  Interest shall be calculated on the basis of
      a 360 day year and the actual number of calendar days
      elapsed.  Notwithstanding anything else in this instrument to the
      contrary, in no event shall the maximum rate of interest payable in respect
      to
      the indebtedness evidenced hereby exceed the maximum rate of interest allowed
      to
      be charged by applicable law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b. Payment
      Schedule.  Said principal and accrued interest thereon shall be
      due and payable as hereinafter set forth:

     

    On
      the New Maturity Date the entire outstanding principal balance of the Loan,
      any
      accrued and unpaid interest thereon, and all incurred fees shall be due and
      payable without demand.

     

    c. No
      New
      Advances.  Borrower may not reborrow any sums repaid under the
      Loan, and Lender has no obligation to advance any new loan proceeds under the
      Loan.

     

    4) Conditions
      of Extension of Maturity Date;
      Waiver. Lender’s
agreement
      to extend the Maturity Date
      and Waivers
is conditioned upon and
      subject to the timely satisfaction by Borrower of each of the following
      conditions (collectively the “Conditions
      of Modification”):

     

    a. Correctness
      and
      Warranties.  Except as expressly modified or waived herein, all
      representations and warranties made by Borrower to Lender under this Agreement
      and the other Loan Documents (including without limitation all of Borrower’s
      representations and warranties set forth in Sections 3.5 and 3.9 of the Loan
      Agreement) are and shall remain true and correct through and including the
      New
      Maturity Date and payment in full of the Loan.

     

    b. No
      Defaults
      Hereunder.  Borrower shall not breach
      any promise or covenant contained in this Agreement
      and shall not be in default
      under any provision of this Agreement or the other Loan Documents(except with respect
      to the Waivers, as
      waived hereby).

     

    5) Termination
      Events.  Each of
      the following shall constitute a Termination Event and an Event of Default
      under
      this Agreement and all
      other Loan Documents without any further cure or grace period, notwithstanding
      anything to the contrary in the Loan Documents (each, a “Termination
      Event”):

     

    a. Conditions
      of Modification; Compliance.  If
      Borrower shall fail to comply in a
      timely manner with any of the Conditions of Modificationset
      forth above.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    b. Bankruptcy. If
      Borrower shall become a debtor in
      bankruptcy by means of either a voluntary or involuntary
      petition.

     

    c. Receivership;
      Insolvency.  If
      any kind of receivership or
      insolvency proceeding is commenced by or against Borrower.

     

    6) New
      Maturity
      Date; Acceleration of Loan.  Borrower
      agrees that the Loan automatically,
      and without notice, shall
be immediately all due
      and
      payable in full upon the
      earlier of:

     

    a. New
      Maturity Date; or

     

    b. The
      occurrence of any Termination Event,
      as defined above.

     

    The
      entire amount of the
      Loan, including all accrued
      and unpaid interest, shall
      be immediately due and payable upon the earlier to occur
      of the New Maturity
      Date or the occurrence of any Termination Event,and Lendershall
      be entitled immediately to
      exercise all of its rights and remedies under the Loan Documents, all without
      further notice to Borrower.

     

    7) Representations,
      Warranties and Covenants.  As an inducement to
Lenderto
      enter into this Agreement, Borrower
      makes the following representations, warranties and
      covenants:

     

    a. Enforceability.  The
      Loan, this
      Agreement, and all
      the other Loan Documents are fully
      enforceable,
      and the Loan is not subject to any defense or counterclaim or any claim of
      setoff or recoupment by Borrower.

     

    b. Representation
      by Counsel. Borrower
      has been represented by, or
      advised to consult with, counsel in connection with the negotiation and
      execution of this Agreement; this Agreement represents an arms-length
      transaction; and Borrower has acted in good faith in the making of this
      Agreement.

     

    c. Consents. The
      execution and performance of this
      Agreement by Borrower does not and will not violate any agreement to which
      Borrower is a party, and the execution and performance of this Agreement by
      Borrower does not require the consent of any third party, or if the consent
      of a
      third party is required, such consent has been previously obtained by
      Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    d. Saleof
      Assets.  Through
      and including the
      New Maturity Date, Borrower
      will not dispose of any of its property outside the ordinary course of business
      or as otherwiseprovided for
      in this Agreement.

     

    e. New
      Debt.  Through
      and including the New Maturity Date,Borrower will not incur
      any additional
      debt except for unsecured trade debt incurred in the ordinary course of
business without the
      prior
      written consent of Lender in its sole and absolute
      discretion.

     

    f. Impairment.  Borrower
      will take no
      action which would impair its ability to perform its obligations hereunder
      or to satisfy
      any of the Conditions of Modification.

     

    g. Extension
      Fee.  Promptly
      after with Borrower’s
      execution hereof, Borrower shall pay
Lender’s attorneys fees in
      connection herewith.

     

    8) Further
      Assurances.  At
      any time and from time to time after the date of thisAgreement,
      at the request of
Lender,
      Borrower shall, without further
      consideration, and at Borrower’s
      sole expense, execute and deliver such
      documents and instruments, and take such actions, as Lendermay
      deem necessary (a) to perfect any of
Lender’s
      security interests or liens granted in
      any of the Loan Documents, and/or (b) to carry out the purposes and intentions
      of this Agreement and the Loan Documents.

     

    9) Effectiveness
      of the Loan.  This Agreement shall
      not
      constitute a novation of any of the other Loan Documents, and all the Loan
      Documents shall survive the execution of this Agreement and remain in full
      force
      and effect subject
      only to
      the Waivers as set forth herein and
to any express
      modifications thereto as herein provided.  The lien and security
      interest on the
      Collateral granted pursuant to the Pledge is hereby extended, and the lien
      and
      security interest on the Collateral shall continue to secure the remaining
      amounts outstanding in respect of all indebtedness that may be due and owing
      pursuant to the terms of the Loan Documents, including without limitation
      principal and interest on all amounts loaned pursuant to the Note. There
      are no oral representations or
      assurances from Lenderto
      Borrower which survive the execution
      of this Agreement.

     

    10) Release
      and
      Waiver.  Borrower
      hereby acknowledges and stipulates that it has no claims or causes of action
      of
      any kind whatsoever against Lender.  Borrower
      represents that it
      is entering into this Agreement freely, and with the advice of counsel as to
      its
      legal alternatives.  Borrower hereby releases Lenderfrom
      any and all claims, causes of
      action, demands and liabilities of any kind whatsoever whether direct or
      indirect, fixed or contingent, liquidated or unliquidated, disputed or
      undisputed, known or unknown, which Borrower has or may acquire in the future
      relating in any way to any event, circumstance, action or failure to act to
      the
      date of this Agreement.  The release by Borrower herein, together with
      the other terms and provisions of this Agreement, is executed by Borrower
      advisedly and without coercion or duress from Lender,
      Borrower having determined that the
      execution of this Agreement, and all its terms and provisions are in
      Borrower’s
      economic best
      interest.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11) No
      Obligation to Extend; No Waiver.  Borrower
      acknowledges and agrees that
Lenderis
      not obligated and does not agree to
any additional extensions
      of the New Maturity Date or any further Waivers except as expressly
      set forth
      herein.  Except as expressly provided herein as to the New Maturity
      Date and the Waivers, (i) this Agreement shall not constitute
      a waiver by
Lender of
      any defaults under the Loan
      Documents, (ii) Lender reserves
      all of its rights and remedies
      under the other Loan Documents, and (iii) all of the
      Loan Documents
      are in all respects confirmed, ratified and approved and are in full force
      and
      affect as of the date hereof.  No action or course of
      dealing on the part of Lender,
      its officers, employees, consultants,
      or agents, nor any failure or delay by Lender with
      respect to exercising any right,
      power or privilege of Lender under
      the Loan Documents or this
      Agreement, shall operate as a waiver thereof, except to the extent expressly
      provided herein.

     

    12) Costs
      and
      Expenses.  Borrower agrees to pay
      on
      demand all out-of-pocket costs and expenses of Lender,
      including the fees and out-of-pocket
      expenses of counsel for Lender,
      in connection with the administration,
      enforcement, or protection of Lender’s
      rights under this Agreement and/or the
      Note and other Loan Documents.

     

    13) Governing
      Law.  This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Tennessee.

     

    14) Amendments.  This
      Agreement cannot be
      amended, rescinded, supplemented or modified except in writings signed by the
      parties hereto.

     

    15) Entire
      Agreement.  This
      Agreement contains the entire agreement of the parties and supersedes any other
      discussions or agreements relating to the subject of this
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    16) Time
      of the
      Essence.                                                      
TIME
      IS OF THE ESSENCE OF THIS
      AGREEMENT.

     

    17) Counterpart
      Signature Pages.  This Agreement may be
      executed in one or more counterparts and may be delivered by facsimile or
      electronic mail, each of which shall be deemed an original and all of which
      together shall constitute one and the same instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [Signatures
      on Following
      Page]

    COUNTERPART
      SIGNATURE PAGE
      TO

    SIXTH
      MODIFICATION AGREEMENT AND COVENANT WAIVER

    

    IN
      WITNESS WHEREOF, the parties have
      executed this Agreement as of the date first above written.

    

    BORROWER:

    

    VINEYARD
      NATIONAL
      BANCORP,

    a Californiacorporation

    

    By: /s/
      Donald
      Pelgrim                                                     

    

    Name: Donald
      Pelgrim                                                               

    

    Title: Executive
      Vice
      President                                                               

    

    STATE
      OF CALIFORNIA

    COUNTY
      OF RIVERSIDE

    

    Before
      me, Donna Johns, Notary Public of
      the state and county aforesaid, personally appeared Donald Pelgrim, with whom
      I
      am personally acquainted (or proved to me on the basis of satisfactory
      evidence), and who, upon oath, acknowledged himself to be Executive Vice
      President  (or other officer authorized to execute the instrument) of
VINEYARD
      NATIONAL BANCORP, a
      California corporation, the within named bargainor, and that he as such
      Executive Vice President , executed the foregoing instrument for the
      purpose therein contained, by signing the name of the corporation by himself
      as
      Donald Pelgrim, Executive Vice President .

    

    WITNESS
      MY HAND, at office,
      this 27th day of October,
      2008.

    

    

    /s/
      Donna
      Johns_____________

    Notary
      Public

    

    My
      Commission
      Expires:

    

    _June
      23,
      2011_______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    COUNTERPART
      SIGNATURE PAGE
      TO

    SIXTH
      MODIFICATION AGREEMENT AND COVENANT WAIVER

    

    IN
      WITNESS WHEREOF, the parties have
      executed this Agreement as of the date first above written.

    

    

    LENDER:

    

    FIRST
      TENNESSEE BANK
      NATIONALASSOCIATION,
      a national banking
      association

    

    By: /s/
      David S.
      Work                                                     

    Name:
      David S.
      Work                                                                                                                    

    

    Title: Executive
      Vice
      President                                                                                                                               

    

    STATE
      OF TENNESSEE

    COUNTY
      OF SHELBY

    

    Before
      me, G. Porter Robinson, Notary
      Public of the state and county aforesaid, personally appeared David S. Work,
      with whom I am personally acquainted (or proved to me on the basis of
      satisfactory evidence), and who, upon oath, acknowledged himself to be Executive
      Vice President (or other officer authorized to execute the instrument) of First
      Tennessee Bank National Association, a national banking association, the within
      named bargainor, and that he as such Executive Vice President, executed the
      foregoing instrument for the purpose therein contained, by signing the name
      of
      the national banking association by himself as David S. Work, Executive Vice
      President.

    

    WITNESS
      MY HAND, at office,
      this 28th day of October,
      2008.

    

    

    _/s/
      G. Porter
      Robinson_______________

    Notary
      Public

    

    My
      Commission
      Expires:

    

    _April
      28,
      2009_____________________exv10w1

EXHIBIT 10.1

McKESSON CORPORATION

SUPPLEMENTAL PSIP II

Effective January 1, 2009

(Amended
and Restated October 24, 2008)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	A.
	 	PURPOSE	 	 	1	 
	 
	B.
	 	ERISA PLAN	 	 	1	 
	 
	C.
	 	PARTICIPATION	 	 	1	 
	 
	D.
	 	AMOUNTS OF DEFERRAL	 	 	3	 
	 
	E.
	 	COMPANY MATCH	 	 	3	 
	 
	F.
	 	PAYMENT OF DEFERRED COMPENSATION	 	 	4	 
	 
	G.
	 	BENEFICIARY DESIGNATION	 	 	7	 
	 
	H.
	 	SOURCE OF PAYMENT	 	 	8	 
	 
	I.
	 	MISCELLANEOUS	 	 	8	 
	 
	J.
	 	ADMINISTRATION OF THE PLAN	 	 	9	 
	 
	K.
	 	AMENDMENT OR TERMINATION OF THE PLAN	 	 	9	 
	 
	L.
	 	CLAIMS AND APPEALS	 	 	10	 
	 
	M.
	 	DEFINITIONS	 	 	12	 
	 
	N.
	 	SUCCESSORS	 	 	14	 
	 
	O.
	 	EXECUTION	 	 	14	 
	 
	APPENDIX A EXAMPLE OF DEFERRALS UNDER PLAN	 	 	A-1	 

i

 

McKESSON CORPORATION

SUPPLEMENTAL PSIP II

Effective January 1, 2009

	A.	 	PURPOSE

	 	1.	 	This Plan is established to allow certain executives of the Company 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 executives of an Employer
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

1

 

	 	 	 	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.

	 	(a)	 	Timing of Elections. 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.
	 
	 	(b)	 	Newly Eligible Executive Elections. 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, which
election shall become irrevocable at the end of the 30-day period or an earlier
date that the Administrator prescribed; provided, however, such election shall
apply only to Compensation earned after the election becomes irrevocable or at
such later time the Administrator prescribes.
	 
	 	(c)	 	Modification of Elections. An election filed in
accordance with the provisions of the preceding paragraphs (a) and (b) 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 described in this paragraph (c). 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 and such election shall become irrevocable on
the date that the Administrator prescribes, but in no event later than December
31 of the Plan Year in which such election is made.

	 	3.	 	Relation to Other Plans.

2

 

	 	(a)	 	Other Plans. An Eligible Executive may participate in
this Plan and may also participate in DCAP III or any successor plan. No
amounts may be deferred under this Plan which have been deferred under any
other plan of the Company and the Administrator may modify or render invalid a
Participant’s election prior to such election becoming irrevocable to
accommodate deferrals made under other plan(s).
	 
	 	(b)	 	Effect on Other Plans. For all other benefit programs
maintained by the Company, amounts deferred by an Eligible Executive under this
Plan may result in a reduction of benefits payable under the Social Security
Act, the McKesson Corporation Retirement Plan, the PSIP and the McKesson
Corporation Executive Benefit Retirement Plan.

	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.

3

 

	 	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.
	 
	 	(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”). Interest or earnings shall be credited to each
Account for each Plan Year at a rate equal to a rate declared or any other measurement
device (the “Declared Rate”) approved by the Compensation Committee acting in its sole
discretion after taking into account, among other things, the following factors:
McKesson’s cost of funds, corporate tax brackets, expected amount and duration of
deferrals, number and age of eligible Participants, expected time and manner of payment
of deferred amounts, and expected performance of available fixed-rate insurance
contracts covering the lives of Participants. Notwithstanding the foregoing, if a
Change in Control occurs, the Declared Rate for the balance of the calendar year in
which the Change in Control occurs and for the two calendar years immediately following
the year in which the Change in Control occurs shall not be less than the Declared Rate
as in effect on the day before the Change in Control occurs. Interest or earnings on
each Account balance shall be compounded daily on each business day within the Plan
Year to yield the Declared Rate for the Plan Year. Interest or earnings shall be
credited to each Account as of the end of each business day.

4

 

	 	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.

	 	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, 2007 or (ii) 30 days after the date
the Participant first becomes an Eligible Executive.

	 	(a)	 	Retirement or Disability. If the Payment Event is due
to the Participant’s Retirement 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 Retirement or Disability 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
Retirement or Disability.

5

 

	 	(iii)	 	If a Participant does not make any election
with respect to the payment of the Participant’s Account, then such
benefit shall be payable in a lump sum upon the occurrence of
Participant’s Retirement or Disability, whichever is applicable.

	 	 	 	Payment under this paragraph (a) pursuant to Participant’s Retirement, is
subject to Section 5.
	 
	 	(b)	 	Death. 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 if such
Participant has not yet received or begun receiving a distribution under the
Plan. At the election of the Participant, benefits shall be paid in a lump sum
or in up to ten annual installments; provided, however, if a Participant is
in-pay status at the time of death, distribution of the Account, or portion of
the Account, that is in-pay shall continue to be distributed to the Beneficiary
as Participant elected to receive such distribution. A Beneficiary may not
elect to accelerate, change the form of the payments pursuant to the
Participant’s election, or further defer the payment of the Participant’s
Account as described in Section F.4.
	 
	 	(c)	 	Separation from Service Not Due to Retirement or Death.
If the Payment Event occurs as a result of the Participant’s Separation from
Service, and such separation is not due to the Participant’s death or
Retirement, payment of the vested amounts credited to the Participant’s Account
shall be made in a single lump sum upon the occurrence of the Participant’s
Separation from Service, subject to Section 5.
	 
	 	 	 	(If any Monthly Company Match or Additional Company Match is payable under
Section E hereunder, that amount or first installment amount, whichever is
applicable, 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.	 	Subsequent Change in Form of Payment. Once an election is made as to
the form of payment upon a Payment Event, a Participant may alter the form of payment
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 Payment Event and
does not provide for the receipt of such amounts earlier than five years from the
previously scheduled Payment Event. A change to the form of a distribution may be
modified or revoked until one year prior to the time a distribution is originally
scheduled to be made, at which time such change shall become irrevocable. The last
valid election accepted by the Administrator shall govern the payout. A change to the
form of distribution may be modified or revoked until 12 months prior to the earliest
scheduled Payment Event, at which
time any such modification or revocation shall become irrevocable. The last valid
election accepted by the Administrator shall govern the form of payment.

6

 

	 	5.	 	Deminimis Cashout. Notwithstanding the Participant’s election, the
Administrator in its sole discretion may distribute an Account to a Participant or a
Beneficiary in a single payment if the value of the Account, and any other plan or
arrangement with respect to which deferrals of compensation are treated as having been
deferred under a single nonqualified deferred compensation plan under Treasury
Regulation section 1.409A-1(c)(2), is less than the Code Section 401(g)(1)(B) limit.
	 
	 	6.	 	Special Distribution Election on or before December 31, 2006.
Participants who are identified by the Compensation Committee, in its sole discretion,
may make a special distribution election to receive a distribution of their Account in
calendar year 2007 or later; provided that the distribution election is made at least
twelve months in advance of the newly elected distribution date (and the previously
scheduled distribution date, if any) and the election is made no later than December
31, 2006. An election made pursuant to this Section F.6 shall be subject to any
special administrative rules imposed by the Compensation Committee including rules
intended to comply with Code Section 409A. No election under this Section F.6 shall
(i) change the payment date of any distribution otherwise scheduled to be paid in 2006
or cause a payment to be paid in 2006, or (ii) be permitted after December 31, 2006.
	 
	 	7.	 	Date Payment Occurs. Payment shall be made or commence not later than
ninety (90) days 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 Specified Employee as of the date he or she
Separates from Service shall be delayed for a minimum of 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 seventh month following the Participant’s Separation from Service.
The identification of a Participant as a Specified Employee shall be made by the
Administrator in his or her sole discretion in accordance with Section M.26 of the Plan
and Code Sections 416(i) and 409A and the regulations promulgated thereunder.
	 
	 	8.	 	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.	 	BENEFICIARY DESIGNATION

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

7

 

McKesson. 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 McKesson in the
manner prescribed by McKesson in its sole discretion. 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.

	H.	 	SOURCE OF PAYMENT

Amounts paid under this Plan shall be paid from the general funds of McKesson, and each Participant
and his or her Beneficiaries shall be no more than unsecured general creditors of McKesson with no
special or prior right to any assets of the Company for payment of any obligations hereunder.
Nothing contained in this Plan shall be deemed to create a trust of any kind for the benefit of any
Participant or Beneficiary or create any fiduciary relationship between an Employer 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 McKesson for the satisfaction of any federal, state, or local income
tax withholding requirements and Social Security or other employment tax requirements
applicable to the payment of benefits under this Plan. If no other arrangements are
made, McKesson may provide, at its discretion, for such withholding and tax payments as
may be required.
	 
	 	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.

8

 

	 	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.
	 
	 	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 an Employer or shall affect the
right of an Employer 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 McKesson. If the Executive Vice President, Human
Resources is a Participant, any discretionary action taken as Administrator which
directly affects him or her as a Participant shall be specifically approved by the
Compensation Committee. The 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. The Plan Administrator or Compensation Committee shall have the
authority to delegate its authority under the Plan to an officer or group of officers
of McKesson.
	 
	 	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.

	K.	 	AMENDMENT OR TERMINATION OF THE PLAN

	 	1.	 	Amendment. The Compensation Committee may at any time, and from time
to time, amend the Plan. Unless otherwise specified, 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.
	 
	 	2.	 	Termination. The Board in its discretion may at any time terminate the
Plan in accordance with Treasury Regulation section 1.409A-3(j)(4)(ix).

9

 

	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

10

 

	 	 	 	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.

11

 

	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.1(b).
	 
	 	3.	 	“Administrator” shall mean the person specified in Section J.1.
	 
	 	4.	 	“Beneficiary” shall mean the person or entity described by Section G.
	 
	 	5.	 	“Board” shall mean the Board of Directors of McKesson.
	 
	 	6.	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	7.	 	“Company” shall mean McKesson and any affiliate that would be considered a
service recipient for purposes of Treasury Regulation section 1.409A-1(g).
	 
	 	8.	 	“Compensation” 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, if applicable.
	 
	 	11.	 	“Disability” shall mean that an individual is determined to be totally disabled
by the Social Security Administration.
	 
	 	12.	 	“Eligible Executive” shall mean an employee of the Employer, or its affiliate
or subsidiary, who is eligible to participate in this Plan under Section C.
	 
	 	13.	 	“Employer” shall mean McKesson and any other affiliate that would be considered
a service recipient or employer for purposes of Treasury Regulation section
1.409A-1(h)(3).
	 
	 	14.	 	“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
	 
	 	15.	 	“Identification Date” shall mean each December 31.
	 
	 	16.	 	“McKesson” shall mean McKesson Corporation, a Delaware corporation.

12

 

	 	17.	 	“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).
	 
	 	18.	 	“Participant” shall be any Eligible Executive or former Eligible Executive for
whom amounts are credited to an Account under this Plan. Upon a Participant’s death
his or her Beneficiary shall be a Participant until all amounts are paid out of the
decedent-Participant’s Account.
	 
	 	19.	 	“Payment Event” shall mean the earliest of the following: Retirement, death,
Separation from Service other than due to Retirement or death, or Disability.
	 
	 	20.	 	“Plan” shall mean the McKesson Corporation Supplemental PSIP II.
	 
	 	21.	 	“Plan Year” shall mean the calendar year.
	 
	 	22.	 	“Prior Plan” shall mean the McKesson Corporation Supplemental PSIP.
	 
	 	23.	 	“PSIP” shall mean the McKesson Corporation Profit-Sharing Investment Plan, as
amended from time to time.
	 
	 	24.	 	“Retirement” shall mean Separation from Service from the Employer after the
date on which the Participant has attained age 50 and has at least five Years of
Service.
	 
	 	25.	 	“Separation from Service” shall mean termination of employment with the
Employer, except in the event of death or Disability. A Participant shall be deemed to
have had a Separation from Service if the Participant’s service with the Employer is
reduced to an annual rate that is equal to or less than twenty percent of the services
rendered, on average, during the immediately preceding three years of service with the
Employer (or if providing service to the Employer less than three years, such lesser
period).
	 
	 	26.	 	“Specified Employee” shall mean a Participant who, on an Identification Date,
is:

	 	(a)	 	An officer of the Company having annual compensation greater
than the compensation limit in Section 416(i)(1)(A)(i) of the Code, provided
that no more than fifty officers of the Company shall be determined to be
Specified Employees as of any Identification Date;
	 
	 	(b)	 	A five percent owner of the Company; or
	 
	 	(c)	 	A one percent owner of the Company having annual compensation
from the Company of more than $150,000.

	 	 	For purposes of determining whether a Participant is a Specified Employee, Treasury
Regulation section 1.415(c)-2(d)(11)(ii) shall be used to calculate compensation. If a
Participant is identified as a Specified Employee on an Identification Date, then such

13

 

	 	 	Participant shall be considered a Specified Employee for purposes of the Plan during the
period beginning on the first April 1 following the Identification Date and ending on the
next March 31.

	 	27.	 	“Year of Service” shall have the same meaning as “Year of Service” as defined
in the PSIP.

	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 Compensation Committee of the Board of McKesson Corporation at a meeting held on
October 24, 2008, effective as of January 1, 2009.

McKESSON CORPORATION

	 	 	 	 	 	 	 
	By

	 	/s/ Jorge L. Figueredo
 

	 	 	 	  
	 

	 	Jorge L. Figueredo	 	 	 	 
	 	 	Executive Vice President, Human Resources	 	 

14

 

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.

A-1

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