Document:

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                                                                   Exhibit 10.38
                              McKESSON HBOC, INC.

                       STATEMENT OF TERMS AND CONDITIONS
                  APPLICABLE TO CERTAIN STOCK OPTIONS GRANTED
                              ON AUGUST 16, 1999

          Unless otherwise stated in an Agreement (as defined herein) the
following terms and conditions shall apply to each stock option ("Option")
granted on August 16, 1999, to an employee of McKesson HBOC, Inc. (the
"Company") or an affiliate of the Company ("Optionee") other than stock options
designated as granted under the McKesson HBOC, Inc. (the "Company") 1994 Stock
Option and Restricted Stock Plan.

          1.  Stock Subject to Options.  All Options shall be for the purchase
              ------------------------
of shares of common stock ($0.01 par value) of the Company (the "Stock") subject
to adjustment as provided in Section 18 of this Statement of Terms and
Conditions.

          2.  Option Agreement.  Options shall be evidenced by a grant notice
              ----------------
("Notice") to be executed by the Company setting forth the basic terms and
conditions of the Option.  Each Notice shall incorporate by reference and be
subject to the terms and conditions set forth in this Statement of Terms and
Conditions.

          3.  Option Purchase Price.  The purchase price of the Stock subject to
              ---------------------
this Option shall be the Option Price Per Share, as specified in the Notice,
which price shall be not less than the per share "fair market value" of such
Stock as of the date such Option was granted (the "Grant Date").  "Fair market
value" means the composite closing price on the Grant Date, as reported in The
Wall Street Journal.

          4.  Option Period and Vesting of Right to Exercise.
              ----------------------------------------------

              (a)   Option Period. Options shall be exercisable only during the
applicable Option Period, and during such Option Period, the exercisability of
an Option shall be subject to the vesting provisions of subparagraph 4(b) herein
as modified by the rules set forth in paragraphs 5 and 6 herein. The Option
Period shall commence on the Grant Date set forth in the Agreement and, except
as otherwise provided in paragraph 5, shall end on the Terminal Date which shall
be ten years from such Grant Date.

              (b)   Vesting of Right to Exercise Options.

                    (1)  Installment Option. Except as provided in paragraph 6
below, an Option shall be exercisable during the Option Period as follows: (i)
As to 50% of the number of shares covered by the Option, at any time after two
years from the Grant Date; and (ii) As to an additional 25% of the number of
shares covered by the Option, at any time after three years from the Grant Date;
and (iii) As to an additional 25% of the number of shares covered by the Option,
at any time after four years from the Grant Date. (iv) At such time as shall be
determined by the Committee or by the Board of Directors, as applicable, at the
time of granting the Option and specified in the Notice.

                    (2)  Any vested portion of an Option not exercised hereunder
shall accumulate and be exercisable at any time on or before the Terminal Date,
subject to the rules set forth in paragraph 6. No Option may be exercised for
less than 5% of the total number of shares then available under such Option. In
no event shall the Company be required to issue fractional shares.

          5.  Limits on Option Period and Acceleration of Vesting.  The Option
              ---------------------------------------------------
Period may end before the Terminal Date, (subject to the provisions of paragraph
6 below), as follows:

              (a)   Unless otherwise provided in an employment agreement
Optionee ceases to be a bona fide employee of the Company or of its affiliates
during the Option Period for reasons other than for Cause (as defined herein),
or death, the Option Period shall end three (3) years after the date of
termination or on the Terminal Date, whichever date shall first occur, and the
Option shall be exercisable to the extent of the entire unexercised portion of
the Option (or any lesser amount) remaining at the date of such termination. For
purposes of this Statement of Terms and Conditions, termination of employment
for Cause shall mean termination upon Optionee's negligent or willful engagement
in misconduct which, in the sole determination of the Company, is injurious to
the
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Company, its employees, or its customers. If Optionee is absent from work with
the Company or an affiliate because of his Disability (as defined in the
Company's Short Term Disability Plan), or if Optionee is on leave of absence for
the purpose of serving the government of the country in which the principal
place of employment of Optionee is located, either in a military or civilian
capacity, or for such other purpose or reason as the Compensation Committee of
the Board of Directors of the Company (the "Committee") may approve, Optionee
shall not be deemed during the period of any such absence, by virtue of such
absence alone, to have terminated employment with the Company or an affiliate
except as the Committee may otherwise expressly determine.

               (b)  If the employment of Optionee is terminated for Cause, the
Option Period shall end on the date of such termination of employment and the
Option shall thereupon not be exercisable to any extent whatsoever.

               (c)  If Optionee should die while in the employ of the Company or
an affiliate, or within a period of seven (7) months following retirement from
the employ of the Company or an affiliate, or within the month of termination of
employment with the Company or one of its affiliates, the Option Period shall
end three (3) years after the date of death or on the Terminal Date, whichever
shall first occur, and the Optionee's executor or administrator or the person or
persons to whom Optionee's rights under any Option shall pass by will or by the
applicable laws of descent and distribution, may exercise the entire unexercised
portion of the shares covered by such Option (or any lesser amount) remaining on
the date of death.

               (d)  Upon a "Change in Control" (as defined in the Company's 1994
Stock Option and Restricted Stock Plan), then notwithstanding anything herein to
the contrary, all Options that are outstanding at the time of such Change in
Control shall become immediately exercisable in full.

          6.   Special Forfeiture and Repayment Rules.  Any other provision of
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these terms and conditions to the contrary notwithstanding, if the Committee
determines that an Optionee has engaged in any of the actions described in (c)
below, the consequences set forth in (a) and (b) below shall result:

               (a)  Any outstanding Option shall immediately and automatically
terminate, be forfeited and shall cease to be exercisable, without limitation,
by the Optionee or his or her representatives, in the case of the death of the
Optionee.

               (b)  If the Optionee exercised an Option within six months prior
to the date upon which the Company discovered that the Optionee engaged in any
action described in (c) below, the Optionee, upon written notice from the
Company, shall immediately pay to the Company the economic value realized or
obtained by the exercise of such Option, measured at the date of exercise.

               (c)  The consequences described in (a) and (b) above shall apply
if the Optionee, either before or after termination of employment with the
Company or its affiliates: (i) Discloses to others, or takes or uses for his own
purpose or the purpose of others, any trade secrets, confidential information,
knowledge, data or know-how or any other proprietary information or intellectual
property belonging to the Company or its affiliates and obtained by the Optionee
during the term of his employment, whether or not they are the Optionee's work
product. Examples of such confidential information or trade secrets include,
without limitation, customer lists, supplier lists, pricing and cost data,
computer programs, delivery routes, advertising plans, wage and salary data,
financial information, research and development plans, processes, equipment,
product information and all other types and categories of information as to
which the Optionee knows or has reason to know that the Company or its
affiliates intends or expects secrecy to be maintained; (ii) Fails to promptly
return all documents and other tangible items belonging to the Company or its
affiliates in the Optionee's possession or control, including all complete or
partial copies, recordings, abstracts, notes or reproductions of any kind made
from or about such documents or information contained therein, upon termination
of employment, whether pursuant to retirement or otherwise; (iii) Fails to
provide the Company with at least thirty (30) days' written notice prior to
directly or indirectly engaging in, becoming employed by, or rendering services,
advice or assistance to any business in competition with the Company or its
affiliates. As used herein, "business in competition" means any person,
organization or enterprise which is engaged in or is about to become engaged in
any line of business engaged in by the Company or its affiliates at the

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time of the termination of the Optionee's employment with the Company or its
affiliates; (iv) Fails to inform any new employer, before accepting employment,
of the terms of this paragraph and of the Optionee's continuing obligation to
maintain the confidentiality of the trade secrets and other confidential
information belonging to the Company or its affiliates and obtained by the
Optionee during the term of his employment with the Company or any Subsidiary;
(v) Induces or attempts to induce, directly or indirectly, any of the customers
of the Company or its affiliates, employees, representatives or consultants to
terminate, discontinue or cease working with or for the Company or its
affiliates, or to breach any contract with the Company or any of its affiliates,
in order to work with or for, or enter into a contract with, the Optionee or any
third party; or (vi) Engages in conduct which is not in good faith and which
disrupts, damages, impairs or interferes with the business, reputation or
employees of the Company or its affiliates.

          The Committee shall determine in its sole discretion whether the
Optionee has engaged in any of the acts set forth in (i) through (vi) above, and
its determination shall be conclusive and binding on all interested persons.

          Any provision of this paragraph which is determined by a court of
competent jurisdiction to be invalid or unenforceable should be construed or
limited in a manner that is valid and enforceable and that comes closest to the
business objectives intended by such invalid or unenforceable provision, without
invalidating or rendering unenforceable the remaining provisions of this
paragraph.

          7.   Method of Exercise.  Optionee may exercise an Option with respect
               ------------------
to all or any part of the shares of Stock then subject to such exercise as
follows:

               (a)  By giving the Company, or its authorized representative
designated for this purpose, written notice of such exercise specifying the
number of such shares as to which the Option is so exercised. Such notice shall
be accompanied by an amount equal to the Option Price of such shares, in the
form of any one or combination of the following: cash or a certified check, bank
draft, postal or express money order payable to the order of the Company in
lawful money of the United States. The Optionee may pay the Option Price, in
whole or in part, by tendering to the Company or its authorized representative
shares of Stock which have been owned by Optionee for at least six (6) months
prior to said tender, and having a fair market value, as determined by the
Company, equal to the Option Price for such shares, or in lieu of the delivery
of actual shares of Stock in such tender, the Company may accept an attestation
by Optionee, in a form prescribed by the Company or its authorized
representative, that Optionee owns sufficient shares of Stock of record or in an
account in street name to satisfy the option exercise price, and such
attestation will be deemed a tender of shares for purposes of this method of
exercise. The Company or its authorized representative may accept payment of the
Option Price in the form of Optionee's personal check. Payment may also be made
by delivery (including by FAX transmission) to the Company of an executed
irrevocable option exercise form together with irrevocable instructions to an
approved registered investment broker to sell shares in an amount sufficient to
pay the exercise price plus any applicable withholding taxes and to transfer the
proceeds of such sale to the Company.

               (b)  If required by the Company, by giving satisfactory assurance
in writing, signed by Optionee, that such shares are being purchased for
investment and not with a view to the distribution thereof; provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which has heretofore been (or may hereafter be) filed and become
effective under the Securities Act of 1933, as amended (the "Securities Act")
and with respect to which no stop order suspending the effectiveness thereof has
been issued, and (2) any other sale of such shares with respect to which, in the
opinion of counsel for the Company, such assurance is not required to be given
in order to comply with the provisions of the Securities Act.

               (c)  As soon as practicable after receipt of the notice and the
assurance described in subparagraphs 7(a) and 7(b), the Company shall, without
transfer or issue tax (except for withholding tax arrangements contemplated in
paragraph 14 hereof) and without other incidental expense to Optionee, deliver
to the Optionee at the office of the Company, McKesson Plaza, One Post Street,
San Francisco, California 94104, or such other place as may be mutually
acceptable to the Company and Optionee, a certificate or certificates of such
shares of Stock; provided, however, that the time of such delivery may be
postponed by the Company for such period as

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may be required for it with reasonable diligence to comply with applicable
registration requirements under the Securities Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act") any applicable listing requirements of
any national securities exchange and requirements under any other law or
regulation applicable to the issuance or transfer of such shares.

          8.   Limitations on Transfer.  An Option shall, during Optionee's
               -----------------------
lifetime, be exercisable only by Optionee.  No Option nor any right granted
thereunder shall be transferable by Optionee by operation of law or otherwise,
other than by will, the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act.  In the event of any attempt by
Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose of an
Option or of any right thereunder, except as provided herein, or in the event of
the levy of any attachment, execution, or similar process upon the rights or
interest hereby conferred, the Company at its election may terminate the
affected Option by notice to Optionee and the Option shall thereupon become null
and void.

          9.   No Shareholder Rights.  Neither Optionee nor any person entitled
               ---------------------
to exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a shareholder with respect to the shares of Stock subject to an
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of an Option.

          10.  No Effect on Terms of Employment.  Subject to the terms of any
               --------------------------------
employment contract entered into by the Company and Optionee to the contrary,
the Company (or its affiliate which employs him) shall have the right to
terminate or change the terms of employment of Optionee at any time and for any
reason whatsoever.

          11.  Notice.  Any notice required to be given under the terms of an
               ------
Agreement shall be addressed to the Company in care of its Secretary at McKesson
Plaza, One Post Street, San Francisco, California 94104, and any notice to be
given to Optionee shall be addressed to him at the address indicated beneath his
signature on the Agreement or such other address as either party may designate
in writing to the other.  Any such notice shall be deemed to have been duly
given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified and deposited (postage or registration or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States.

          12.  Committee Decisions Conclusive.  All decisions of the Committee
               ------------------------------
upon any questions arising under this Statement of Terms and Conditions or under
an Agreement shall be conclusive.

          13.  No Effect on Other Benefit Plans.  Nothing herein contained shall
               --------------------------------
affect Optionee's right to participate in and receive benefits from and in
accordance with the then current provisions of any pensions, insurance, or other
employment welfare plan or program offered by the Company.

          14.  Withholding.  Optionee agrees to make appropriate arrangements
               -----------
with the Company and his employer for satisfaction of any applicable federal,
state or local income tax, withholding requirements or social security
requirements.  Such arrangements may include an election by Optionee to have the
Company retain some portion of the Shares acquired pursuant to exercise of the
Option to satisfy such withholding requirements.  The election must be made
prior to the date on which the amount to be withheld is determined.

               If a qualifying election is made, then upon exercise of this
Option, in whole or in part, the Company will retain the number of shares of
stock having a value equal to the amount necessary to satisfy any withholding
requirements. Calculation of the number of shares to be withheld shall be made
based on the closing price of the Stock on the New York Stock Exchange on the
date that the amount of tax to be withheld is determined. In no event, however,
shall the Company be required to issue fractional shares of Stock.

               The Committee shall be authorized to establish such rules, forms
and procedures as it deems necessary to implement the foregoing.

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          15.  Successors.  Agreements shall be binding upon and inure to the
               ----------
benefit of any successor or successors of the Company.  "Optionee" as used
herein shall include Optionee's executor, administrator, or other legal
representative or the person or persons to whom Optionee's rights under any
Option pass by will or by the applicable laws of descent and distribution.

          16.  California Law.  The interpretation, performance, and enforcement
               --------------
of all Agreements shall be governed by the laws of the State of California.

          17.  Stock Appreciation Rights.  Options may include stock
               -------------------------
appreciation rights if the grant of such rights is specified in the applicable
Agreement.  Any stock appreciation rights granted under an Option subject to the
Plan shall be subject to the following:

                  (a)  On or after the date an Option which includes stock
appreciation rights becomes exercisable under paragraphs 4 and 5 hereof, the
Optionee may request the Committee in writing to accept the surrender of up to
one half of the Shares then exercisable as provided in paragraphs 4 and 5 hereof
and to authorize payment in consideration therefor. The amount of such payment
shall be equal to the difference obtained by subtracting the Option Price Per
Share of the Stock from the per share fair market value of such Stock on the
date of surrender multiplied by the number of shares included in the surrendered
portion of the Option. Such payment may be made, in the absolute discretion of
the Committee, in shares of Stock valued at fair market value (as defined in the
Plan) on the date of surrender or in cash, or partly in such shares and partly
in cash.

                  (b)  The Committee may accept any requested surrender of up to
one half of the Shares hereunder at any time, provided, that any such acceptance
shall be made in any event prior to the Terminal Date of an Option, or earlier,
the date the Option ceases to be exercisable; and provided, however, that
Optionee may exercise his right to surrender such Option in exchange for cash or
a combination of cash and Stock only during an Authorized Surrender Period. If
Optionee is absent from work with the Company or an affiliate because of
disability or if Optionee is on leave of absence for the purpose of serving the
government of the country in which the principal place of employment of Optionee
is located, either in military or civilian capacity, or for such other purpose
or reason as the Committee may approve, Optionee shall not be deemed during the
period of such absence, by virtue of such absence alone, to have terminated his
employment with the Company or an affiliate, except as the Committee may
otherwise expressly provide.

                  (c)  Optionee may make the request referred to in this
paragraph 17 by giving the Committee written notice of such request, specifying
the number of Shares subject to the Option as to which the right to surrender is
requested.

                  (d)  Notwithstanding the foregoing, if an Optionee's
employment is terminated by reason of retirement, then such Optionee's stock
appreciation rights shall not be exercisable after seven (7) months after the
date of such retirement or after the Terminal Date, whichever shall first occur.

          18.     Adjustment of Shares Subject to Option.  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, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to preserve (but not increase) the rights of the Optionee, then the
Committee shall make such equitable changes or adjustments as it deems necessary
or appropriate to (i) the number and kind of Shares issued in respect of an
Option and (ii) the Option Price Per Share of an Option.

          19.     Amendments.  This Statement of Terms and Conditions and any
                  ----------
Agreement may be amended at any time by the Committee; provided, that no
amendment may adversely affect the Option without the written consent of the
Optionee.

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                                                                   Exhibit 10.39

                              McKESSON HBOC, INC.
                       STATEMENT OF TERMS AND CONDITIONS
                   APPLICABLE TO SHARES OF RESTRICTED STOCK
             GRANTED PURSUANT TO OUTSIDE THE PLAN III STOCK OPTION
                           AND RESTRICTED STOCK PLAN

                     (As amended through January 20, 2000)

     Unless otherwise stated in an Agreement (as defined herein) the following
terms and conditions shall apply to shares of restricted stock ("Restricted
Stock") granted under the McKesson HBOC, Inc. (the "Company") Outside the Plan
III Stock Option and Restricted Stock Plan (the "Plan") to an employee eligible
to participate in the Plan ("Grantee").

     1.   Stock Subject to Options. Shares of Restricted Stock granted under the
          ------------------------
Plan shall be common stock ($0.01 par value) of the Company, subject to
adjustment as provided in the Plan.

     2.   Restricted Stock Agreement. Restricted Stock granted under the Plan
          --------------------------
shall be evidenced by an agreement ("Agreement") to be executed by the Grantee
and the Company setting forth the restrictions, terms and conditions of the
Restricted Stock grant. Each Agreement shall incorporate by reference and be
subject to the restrictions, terms and conditions set forth herein and the
restrictions, terms and conditions of the Plan.

     3.   Adjusted Awards. Restricted Stock which is designated as an Adjusted
          ---------------
Award (as defined in the Plan) shall remain subject to the same restrictions,
terms and conditions to which they were subject immediately prior to its
becoming an Adjusted Award under the Plan.

     4.   Rights with Respect to Shares of Restricted Stock. Upon written
          -------------------------------------------------
acceptance of a grant by a Grantee, including the restrictions and other terms
and conditions described in the Plan, the Agreement and herein, the Company
shall cause to be issued or transferred to the name of the Grantee a certificate
or certificates for the number of shares of Restricted Stock granted. The date
of issue or transfer of such shares of Restricted Stock on the books of the
Company shall be deemed to be the date of grant (the "Date of Grant") of the
Restricted Stock for all purposes of the Plan. From and after the Date of Grant,
the Grantee shall have absolute ownership of such shares of stock, including the
right to vote and to receive dividends thereon, subject to the terms, conditions
and restrictions described in the Plan, the Agreement and herein.

     5.   Special Restrictions. Each Restricted Stock grant made under the Plan
          --------------------
shall contain the following terms, conditions and restrictions and such
additional terms, conditions and restrictions as may be determined by the
Committee; provided, however, that no Restricted Stock grant shall be subject to
additional terms, conditions and restrictions which are more favorable to a
Grantee than the terms, conditions and restrictions set forth elsewhere in the
Plan, the Agreement or herein.

          (a)  Restrictions.  Until the restrictions imposed on any Restricted
               ------------
Stock grant shall lapse, shares of Restricted Stock granted to a
Grantee:(i)shall not be sold, assigned, transferred, pledged, hypothecated, or
otherwise disposed of, and  (ii) shall, if the Grantee's continuous employment
with the Company or any of its affiliates shall terminate for any reason (except
as otherwise provided in the Plan) be returned to the Company forthwith, and all
the rights of the Grantee to such shares shall immediately terminate.

          (b)  Termination of Employment by Reason of Death, Disability,
               ---------------------------------------------------------
Retirement or Approved Retirement. Notwithstanding any provision contained
---------------------------------
herein or in the Plan or the Agreement to the contrary, if a Grantee who has
been in the continuous employment of the Company or any of its affiliates since
the Date of Grant of a Restricted Stock grant to such Grantee shall, while in
such employment, be terminated as a result of death, Disability (as defined in
the Company's Short Term Disability Plan), retirement at or after age 65 with at
least ten years of service with the Company, or Approved Retirement (as defined
in the Company's 1984 Executive Benefit Retirement Plan), then the restrictions
imposed on any Restricted Stock grant shall lapse as to all shares of stock
granted to such Grantee pursuant to such Restricted Stock grant on the date of
such termination.
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     6.   Special Forfeiture and Repayment Rules. Any other provision of this
          --------------------------------------
Statement of Terms and Conditions to the contrary notwithstanding, if the
Committee determines that a Grantee has engaged in any of the actions described
in (c) below, the consequences set forth in (a) and (b) below shall result:

          (a)  Any shares of Restricted Stock as to which the restrictions have
not lapsed shall immediately and automatically be forfeited and such shares
shall be returned to the Company and all of the rights of the Grantee to such
shares shall immediately terminate;

          (b)  If the restrictions imposed on any shares of Restricted Stock
lapsed within six months prior to the date the Company discovered that the
Grantee engaged in any action described in (c) below, the Grantee, upon written
notice from the Company, shall immediately pay to the Company the economic value
realized or obtained with respect to such shares of Restricted Stock, measured
at the date such shares vested.

          (c)  The consequences described in (a) and (b) above shall apply if
the Grantee, either before or after termination of employment with the Company
or any of its affiliates:

               (i)    discloses to others, or takes or uses for his own purpose
or the purpose of others, any trade secrets, confidential information,
knowledge, data or know-how belonging to the Company or any of its affiliates
and obtained by the Grantee during the term of his employment, whether or not
they are the Grantee's work product. Examples of such confidential information
or trade secrets include, without limitation, customer lists, supplier lists,
pricing and cost data, computer programs, delivery routes, advertising plans,
wage and salary data, financial information, research and development plans,
processes, equipment, product information and all other types and categories of
information as to which the Grantee knows or has reason to know that the Company
or any of its affiliates intends or expects secrecy to be maintained;

               (ii)   fails to promptly return all documents and other tangible
items belonging to the Company or any of its affiliates in the Grantee's
possession or control, including all complete or partial copies, recordings,
abstracts, notes or reproductions of any kind made from or about such documents
or information contained therein, upon termination of employment for any reason;

               (iii)  fails to provide the Company with at least thirty (30)
days' written notice prior to directly or indirectly engaging in, becoming
employed by, or rendering services, advice or assistance to any business in
competition with the Company or any of its affiliates. As used herein, "business
in competition" means any person, organization or enterprise which is engaged in
or is about to become engaged in any line of business engaged in by the Company
or any of its affiliates at the time of the termination of the Grantee's
employment with the Company or any of its affiliates;

               (iv)   fails to inform any new employer, before accepting
employment, of the terms of this section and of the Grantee's continuing
obligation to maintain the confidentiality of the trade secrets and other
confidential information belonging to the Company or any of its affiliates and
obtained by the Grantee during the term of his employment with the Company or
any of its affiliates;

               (v)    induces or attempts to induce, directly or indirectly, any
of the customers of the Company or any of its affiliates, employees,
representatives or consultants to terminate, discontinue or cease working with
or for the Company or any of its affiliates, or to breach any contract with the
Company or any of its affiliates, in order to work with or for, or enter into a
contract with, the Grantee or any third party; or

               (vi)   engages in conduct which is not in good faith and which
disrupts, damages, impairs or interferes with the business, reputation or
employees of the Company or any of its affiliates.

     The Committee shall determine in its sole discretion whether the Grantee
has engaged in any of the acts set forth in (i) through (vi) above, and its
determination shall be conclusive and binding on all interested persons.

     Any provision of this Section 6 which is determined by a court of competent
jurisdiction to be invalid or unenforceable shall be construed or limited in a
manner that is valid and enforceable and that comes closest to the business
objectives intended by such invalid or unenforceable provision, without
invalidating or rendering unenforceable the remaining provisions of this Section
6.

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     7.   Election to Recognize Gross Income in the Year of Grant. If any
          -------------------------------------------------------
Grantee validly elects within thirty (30) days of the date of grant, to include
in gross income for federal income tax purposes an amount equal to the fair
market value of the shares of Restricted Stock granted on the Date of Grant,
such Grantee shall pay to the Company, or make arrangements satisfactory to the
Committee to pay to the Company in the year of such grant, any federal, state or
local taxes required to be withheld with respect to such shares. If such Grantee
shall fail to make such payments, the Company and its affiliates shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to the Grantee any federal, state or local taxes of any kind
required by law to be withheld with respect to such shares of Restricted Stock.

     8.   Restrictive Legend; Certificates May be Held in Custody. Each
          -------------------------------------------------------
certificate evidencing shares of stock granted pursuant to a Restricted Stock
grant may bear an appropriate legend referring to the terms, conditions and
restrictions described in the Plan and in the instrument evidencing the
Restricted Stock grant. Any attempt to dispose of such shares of Restricted
Stock in contravention of such terms, conditions and restrictions shall be
invalid. The Committee may enact rules which provide that the certificates
evidencing such shares may be held in custody by a bank or other institution, or
that the Company may itself hold such shares in custody, until restrictions
thereon shall have lapsed.

     9.   Assignability. Except as expressly provided in the Plan, no shares of
          -------------
Restricted Stock granted under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any such attempted action shall be void and no such shares of
Restricted Stock shall be subject to debts, contracts, liabilities, engagements,
or torts of any Grantee or beneficiary. If any Grantee or beneficiary shall
become bankrupt or shall attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any shares of Restricted Stock granted under
the Plan, then the Committee in its discretion may hold or apply such benefit or
interests or any part thereof to or for the benefit of such Grantee or his
beneficiary, his spouse, children, blood relatives, or other dependents, or any
of them, in such manner and in such proportions as the Committee may consider
proper.

     10.  Designation of Beneficiary. Each Grantee who shall be granted a
          --------------------------
Restricted Stock grant under the Plan may designate a beneficiary or
beneficiaries and may change such designation from time to time by filing a
written designation of beneficiaries with the Committee on a form to be
prescribed by it; provided, that no such designation shall be effective unless
received prior to the death of such Grantee.

     11.  Restrictions upon Making of Restricted Stock Grants. The registration
          ---------------------------------------------------
or qualification under any federal or state law of any shares of Common Stock to
be granted pursuant to Restricted Stock grants or the resale or other
disposition of any such shares of Common Stock by or on behalf of a Grantee
receiving such shares may be necessary or desirable as a condition of or in
connection with such Restricted Stock grants, and, in any such event, if the
Committee in its sole discretion so determines, delivery of the certificates for
such shares of Common Stock shall not be made until such registration or
qualification shall have been completed.

     12.  Restrictions Upon Resale of Common Stock. If the shares of Common
          ----------------------------------------
Stock that have been granted to a Grantee pursuant to the terms of the Plan are
not registered under the Securities Act of 1933, as amended ("Securities Act"),
pursuant to an effective registration statement, such Grantee, if the Committee
shall deem it advisable, may be required to represent and agree in writing (i)
that any shares of Common Stock acquired by such Grantee pursuant to the Plan
will not be sold except pursuant to an effective registration statement under
the Securities Act and (ii) that such Grantee is acquiring such shares of Common
Stock for his or her own account and not with a view to the distribution
thereof.

     13.  No Effect on Terms of Employment. Subject to the terms of any
          --------------------------------
employment contract entered into by the Company and Grantee to the contrary, the
Company (or any affiliate of the Company which employs him) shall have the right
to terminate or change the terms of employment of Grantee at any time and for
any reason whatsoever.

     14.  Notice. Any notice required to be given under the terms of an
          ------
Agreement or the Plan shall be addressed to the Company in care of its Secretary
at McKesson Plaza, One Post Street, San Francisco, California 94104, and any
notice to be given to Grantee shall be addressed to him or her at the address
indicated beneath his or her signature on the Agreement or such other address as
either party may designate in writing to the other. Any such notice shall be
deemed to have been duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified and deposited (postage
or registration or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.

                                       3
<PAGE>

     15.  Committee Decisions Conclusive. All decisions of the Committee
          ------------------------------
administering the Plan upon any questions arising under the Plan, under this
Statement of Terms and Conditions, or under an Agreement shall be conclusive and
binding on Grantees.

     16.  No Effect on Other Benefit Plans. Nothing herein contained shall
          --------------------------------
affect Grantee's right to participate in and receive benefits from and in
accordance with the then current provisions of any pensions, insurance, or other
employment welfare plan or program of the Company.

     17.  Withholding. Grantee agrees to make appropriate arrangements with the
          -----------
Company for satisfaction of any applicable federal, state or local income tax
withholding requirements or social security requirements. Such arrangements may
include an election by Grantee to have the Company retain some portion of the
Restricted Stock to satisfy such withholding requirements. The election must be
made prior to the date on which the amount to be withheld is determined.

     If a qualifying election is made, then upon the lapse of restrictions, in
whole or in part, the Company will retain the number of shares of stock having a
value equal to the amount necessary to satisfy any withholding requirements.
Calculation of the number of shares to be withheld shall be made based on the
closing price of the Company's Common Stock on the New York Stock Exchange on
the date that the amount of tax to be withheld is determined. In no event,
however, shall the Company be required to issue fractional shares of Common
Stock.

     The Committee shall be authorized to establish such rules, forms and
procedures as it deems necessary to implement the foregoing.

     18.  Successors. Agreements shall be binding upon and inure to the benefit
          ----------
of any successor or successors of the Company. "Grantee" as used herein shall
include Grantee's executor, administrator, or other legal representative or the
person or persons to whom Grantee's rights under any Restricted Stock grant pass
by will or by the applicable laws of descent and distribution.

     19.  California Law. The interpretation, performance, and enforcement of
          --------------
the Plan and all Agreements shall be governed by the laws of the State of
California.

                                       4

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