Document:

exv10w11

 

Exhibit 10.11

McKESSON CORPORATION

EXECUTIVE SURVIVOR BENEFITS PLAN

(Amended and Restated as of October 28, 2004)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	A.

	 	PURPOSE
	 	 	1	 
	 
	 	 	 	 	 	 
	B.

	 	ERISA PLAN
	 	 	1	 
	 
	 	 	 	 	 	 
	C.

	 	PARTICIPATION
	 	 	1	 
	 
	 	 	 	 	 	 
	D.

	 	SURVIVOR BENEFITS
	 	 	2	 
	 
	 	 	 	 	 	 
	E.

	 	TERMINATION OF EMPLOYMENT OTHER THAN ON APPROVED RETIREMENT OR DEATH
	 	 	3	 
	 
	 	 	 	 	 	 
	F.

	 	SPECIAL FORFEITURE RULES
	 	 	4	 
	 
	 	 	 	 	 	 
	G.

	 	SOURCE OF PAYMENT
	 	 	6	 
	 
	 	 	 	 	 	 
	H.

	 	MISCELLANEOUS
	 	 	6	 
	 
	 	 	 	 	 	 
	I.

	 	ADMINISTRATION OF THE PLAN
	 	 	7	 
	 
	 	 	 	 	 	 
	J.

	 	AMENDMENT OR TERMINATION OF THE PLAN
	 	 	7	 
	 
	 	 	 	 	 	 
	K.

	 	CLAIMS AND APPEALS
	 	 	7	 
	 
	 	 	 	 	 	 
	L.

	 	DEFINITIONS
	 	 	9	 
	 
	 	 	 	 	 	 
	M.

	 	SUCCESSORS
	 	 	10	 
	 
	 	 	 	 	 	 
	N.

	 	EXECUTION
	 	 	10	 

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McKESSON CORPORATION

EXECUTIVE SURVIVOR BENEFITS PLAN

(Amended and Restated as of October 28, 2004)

A. PURPOSE

     This Plan was established to enable the Company to attract and retain key executive personnel
by providing survivor benefits to Executives’ Beneficiaries. This Plan amends, restates and
supersedes the 1988 Executive Survivor Benefits Plan. Since its original effective date, the Plan
has been amended and restated on various occasions. The amendment and restatement has been
approved by the Board as of October 28, 2004 and shall be effective as of such date except as
otherwise set forth below.

B. ERISA PLAN

     This Plan is a welfare benefit program intended primarily for a select group of management or
highly compensated employees of the Company. The Plan, therefore, is covered by Title I of ERISA.

C. PARTICIPATION

     1. Selection by Compensation Committee. The Compensation Committee may select, at its
discretion and from time to time as it decides, the key Executives who participate in this Plan.
Participation in the Plan shall be limited to those Executives of the Company who are selected by
the Compensation Committee. Selection of a key Executive to participate in the Plan may be
evidenced by the terms of his or her Employment Agreement, if any, with the Company.

     2. Election Not to Participate. An Executive may elect not to participate in this
Plan at any time; such election shall be in writing and shall become effective upon its receipt by
the Administrator. No compensation or benefits in lieu of this Plan shall be paid to an Executive
who elects not to participate, unless otherwise specifically approved by the Compensation
Committee. An election not to participate shall be irrevocable unless otherwise determined by the
Compensation Committee.

     3. Insurability. Executives selected by the Compensation Committee are not
automatically entitled to the benefits provided under this Plan. Each Executive may be required to
satisfy such requirements for insurability as the Company shall establish from time to time, if
any, before he is entitled to benefits under this Plan.

     4. Addition and Removal of Participants. The Compensation Committee may, at its
discretion and at any time, designate additional Executives to participate in the Plan and remove
Executives from participation in the Plan. When an Executive is removed from participation in the
Plan by the Compensation Committee, his or her benefits, if any, shall be determined under Section
E.

     5. Relation to Other Plans. If an Executive participates in this Plan, he or she
shall

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not participate in any other survivor benefit or life insurance plan or similar program solely
for Company Executives unless otherwise specifically approved by the Administrator in writing. For
example, any Executive who participates in this Plan shall not receive any life insurance benefits
under the McKesson Corporation 1984 Executive Insurance Plan, or its predecessor, the McKesson
Executive Benefit Plan. This provision shall not preclude the Executive’s participation in any
Company retirement plan, compensation plan, deferred compensation plan, excess benefit plan, any
group life insurance or survivor benefit plan made generally available by the Company to all
employees. This provision shall not preclude the payment of survivor benefits which are earned and
payable under any Company retirement plan.

D. SURVIVOR BENEFITS

     1. Death of Executive While Employed. In the event of the death of an Executive while
employed by the Company and except as provided in Sections D.3 and D.4 below, the benefit provided
by the Plan and payable to the Executive’s Beneficiary as soon as practicable thereafter shall be a
lump sum equal to the lesser of (a) three times the Annual Base Salary of the Executive at the time
of death, or (b) $2,000,000. The benefit shall be provided to the Executive’s Beneficiary either
through the proceeds of life insurance owned by the Company on the Executive’s life or as a lump
sum cash payment from the general assets of the Company. In the later case, the benefit amount
shall be increased by multiplying it by the Tax Factor. The application of this Section D.1 is
illustrated in Appendix I to the Plan.

     2. Death of Executive After Approved Retirement. In the event of the death of an
Executive after his or her Approved Retirement and except as provided in Sections D.3 and D.4
below, the benefit provided by the Plan and payable to the Executive’s Beneficiary as soon as
practicable thereafter shall be a lump sum equal to the lesser of (a) 1.5 times the Annual Base
Salary of the Executive at retirement, and (b) (i) $500,000 for an Executive who retires on or
before January 1, 1997, or (ii) $1,000,000 for an Executive who retires after January 1, 1997. The
benefit shall be provided to the Executive’s Beneficiary either through the proceeds of life
insurance owned by the Company on the Executive’s life or as a lump sum cash payment from the
general assets of the Company. In the latter case, the benefit amount shall be increased by
multiplying it by the Tax Factor.

     3. Limitations on Benefits. No survivor benefits shall be paid under this Section D
in the following circumstances:

          a. The Administrator shall determine in his or her discretion that Executive has provided
false or misleading information regarding Executive’s health or medical history that materially
adversely affects the Company, or

          b. The Administrator shall determine in his or her discretion that Executive has committed
suicide.

     For purposes of this Section D.3, the Administrator in his or her discretion may waive in
writing the foregoing limitations in whole or in part, and all determinations by the Administrator
shall be final.

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     4. Executives Removed from Participation. Except as otherwise approved by the
Administrator in writing and at his or her sole discretion, no survivor benefits shall be paid
under this Section D to any Beneficiary of an Executive (i) who has elected not to participate
under Section C.2 or (ii) who has been removed from Plan participation prior to his or her death,
or (iii) subject to Section E below, with respect to whom the Plan has been terminated prior to his
or her death.

     5. Designation of Beneficiary. A Participant may designate any person(s) or any
entity as his or her Beneficiary. Designation shall be in writing and shall become effective only
when filed with the Administrator. Such filing must occur before the Participant’s death. A
Participant may change the Beneficiary, from time to time, by filing a new written designation with
the Administrator. Effective January 1, 2003, if the Participant fails to effectively designate a
Beneficiary in accordance with the Administrator’s procedures or the person designated by the
Participant is not living at the time the distribution is to be made, then the Participant’s
Beneficiary shall be the Participant’s surviving spouse, if any, or, if there is no surviving
spouse, the Participant’s surviving children, if any, in equal shares, or if there are no surviving
children, his or her estate.

E. TERMINATION OF EMPLOYMENT OTHER THAN ON APPROVED RETIREMENT OR DEATH

     1. Basic Rule.

          a. In the event of the death of an Executive after his or her termination of employment with
the Company other than on Approved Retirement and except as provided in Section E.2 below, the
Company shall pay Executive’s Beneficiary a lump sum equal to (i) an amount calculated using the
formula in Section D.2 above, subject to the limitations of Section D.3 above, (ii) multiplied by
the Executive’s Pro Rata Percentage, and (iii) reduced by the amount provided in Section E.1.c
below. Except as otherwise approved by the Administrator in writing and at his or her sole
discretion, final Annual Base Salary shall be determined as of the date of the Executive’s
termination of employment, for purposes of this Section E.1.a. The application of this Section
E.1.a is illustrated in Appendix II to the Plan.

          b. In the event of the death of an Executive after the Executive has been removed from Plan
participation in accordance with Section C.4 (“removal”) or with respect to whom the Plan has been
terminated in accordance with Section E (“Plan termination”) prior to his or her termination of
employment, and except as provided in Section E.2 below, the Company shall pay Executive’s
Beneficiary a sum equal to the amount calculated as provided in Section E.1.a above, but treating
the Executive’s date of “removal” or the date of the “Plan termination”, whichever is applicable,
as his or her date of termination of employment for purposes of calculating his or her Pro Rata
Percentage and his or her final Annual Base Salary.

          c. Any amount determined under Section E.1.a or Section E.1.b shall be reduced by any death or
survivor benefit (other than a retirement benefit paid under a tax qualified retirement plan)
payable on account of service rendered by the Executive to another employer after his or her
termination of employment with the Company.

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     2. Limitations on Benefits. No benefits shall be paid under Section E in the
following circumstances:

          a. The Executive is terminated for Cause, or

          b. The Executive has terminated his or her employment in violation of his or her Employment
Agreement, if any; termination is in violation of an Employment Agreement if termination occurs
before the end of the term of the Employment Agreement and is not allowed by the Employment
Agreement (e.g., for “good reason”), or

          c. The Executive has not completed five or more years of participation (whether or not
consecutive) in this Plan and its predecessors, the McKesson Corporation 1984 Executive Benefit
Plan and the McKesson Corporation 1984 Management Benefit Plan; an Executive who would have
completed five or more years (i) if his or her employment was not terminated by the Company in
violation of his or her Employment Agreement or (ii) if his or her employment was not terminated
for “good reason” under such Agreement, shall be treated as having such years of participation.

     3. Pro Rata Percentage. An Executive’s Pro Rata Percentage is the higher of the
following two percentages (but not exceeding 100%): the first percentage is determined by dividing
the number of the Executive’s whole months of employment with the Company by the number of whole
months from the date that the Executive was first hired by the Company to the date that he will
reach age 65, and multiplied by 100. The second percentage is determined by multiplying 4.44% by
the number of his or her whole and partial years of completed employment with the Company.

     4. Periods of Employment. For purposes of determining employment with the Company,
periods that would be disregarded under the Retirement Plan on account of breaks in service shall
be disregarded under this Section E.

     5. Other Agreements. If an Executive’s Employment Agreement provides for higher
survivor benefits than provided under this Section E, such higher benefit shall be paid.

     6. Forfeiture on Other Terminations. Except as provided in this Section E, and as
provided elsewhere in this Plan with respect to the death of an Executive, on the death of the
Executive, an Executive or his or her Beneficiary shall not be entitled to any additional benefits
under this Plan, all obligations of the Company to the Executive and his or her Beneficiary under
this Plan shall cease, and the Company shall have no further liability to the Executive or any
other person under this Plan.

F. SPECIAL FORFEITURE RULES

     Any other provisions of this Plan to the contrary notwithstanding, if the Compensation
Committee determines that any Executive engaged in any of the actions described in F.2 below, the
consequence set forth in F.1 below shall result.

     1. Forfeiture of Benefits. To the extent that the benefit that otherwise would be

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payable under the Plan upon the death of the Executive exceeds the benefit, if any, that would
have been payable if the Executive had died on November 1, 1993, such excess portion shall be
forfeited and shall not be payable under this Plan. In no event shall the amount payable under the
Plan with respect to any Executive who was a participant in the Plan on October 27, 1993 be less
than the amount, if any, determined pursuant to Section J.

     2. Events Resulting in Forfeiture. The consequence described in F.1 above shall apply
if the Executive, either before or after termination of employment with the Company:

          a. Accepts a position as a consultant to or an employee of a business enterprise that is in
direct competition with any line of business engaged in by the Company at the time of the
termination of the Executive’s employment.

          b. Discloses to others, or takes or uses for the Executive’s own purpose or the purpose of
others, any trade secrets, confidential information, knowledge, data or know-how belonging to the
Company and obtained by the Executive during the term of the Executive’s employment, whether or not
they are the Executive’s work product. Examples of such confidential information or trade secrets
include (but are not limited to) 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 Executive knows or has reason to know that the Company intends or
expects secrecy to be maintained.

          c. Fails to promptly return all documents and other tangible items belonging to the Company in
the Executive’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 an Approved Retirement or
otherwise.

          d. Fails to provide the Company with at least 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 subsidiaries. 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 at the time of the termination of the
Executive’s employment with the Company.

          e. Fails to inform any new employer, before accepting employment, of the terms of this section
and of the Executive’s continuing obligation to maintain the confidentiality of the trade secrets
and other confidential information belonging to the Company and obtained by the Executive during
the term of the Executive’s employment with the Company.

          f. Induces or attempts to induce, directly or indirectly, any of the Company’s customers,
employees, representatives or consultants to terminate, discontinue or cease working with or for
the Company, or to breach any contract with the Company, in order to work with or for, or enter
into a contract with, the Executive or any third party.

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          g. 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.

     The Compensation Committee shall determine in its sole discretion whether the Executive has
engaged in any of the acts set forth in Sections F.2.a through F.2.g above, and its determination
shall be conclusive and binding on all interested persons.

     Any provision of this Section 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.

G. SOURCE OF PAYMENT

     Amounts paid under Section D of this Plan may be paid from insurance policy proceeds on the
life of the Executive or from the general funds of the Company, and each Executive and his or her
Beneficiary shall be no more than an unsecured general creditor of the Company with no special or
prior right to any assets of the Company for payment of any obligations hereunder. Nothing
contained in this Plan shall be deemed to create a trust of any kind for the benefit of any
Executive or Beneficiary, or create any fiduciary relationship between the Company and any
Executive or Beneficiary with respect to any assets of the Company.

H. MISCELLANEOUS

     1. Withholding. The Executive or any Beneficiary shall make appropriate arrangements
with the Company for the satisfaction of any federal, state or local income tax withholding
requirements and social security or other employee tax requirements applicable to the provision of
benefits under this Plan. If no such arrangements are made, the Company may provide, at its
discretion, for such withholding and tax payments as may be required.

     2. No Assignment. The benefits provided under this Plan and a Beneficiary’s rights
may not be alienated, assigned, transferred, pledged, or hypothecated by any person, at any time,
unless such benefits are payable from the proceeds of an insurance policy. Such benefits shall be
exempt from the claims of creditors or other claimants and from all orders, decrees, levies,
garnishments, or executions to the fullest extent allowed by law.

     3. Applicable Law and Severability. The Plan hereby created shall be construed,
administered and governed in all respects in accordance with ERISA and the laws of the State of
California to the extent that the latter are not preempted by ERISA. If any provision of this
instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective. If any provision this amendment and
restatement is deemed to be a “material modification” of this Plan which would cause amounts
deferred or accrued under this Plan prior to 2005 to be subject to the deferred compensation
provisions of section 885 of the American Jobs Creation Act of 2004, if such legislation is enacted
into law, such provision shall be null, void and without effect retroactive to

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October 28, 2004.

I. ADMINISTRATION OF THE PLAN

     1. In General. The Plan shall be administered by the Executive Vice President, Human
Resources of McKesson. If the Executive Vice President, Human Resources is an Executive
participating in the Plan, then any discretionary action he or she takes as Administrator which
directly affects him or her as Executive shall be specifically approved by the Compensation
Committee. The Administrator shall have the ultimate 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 Administrator shall be final and binding on all parties who have an
interest in the Plan.

     2. Elections and Notices. All elections and notices made by an Executive under this
Plan shall be in writing and filed with the Administrator.

     3. Action By Board and Compensation Committee. The Board and Compensation Committee
may act under this Plan in accordance with their normal procedures and practice, including, but not
limited to, delegation of their authority to act under this Plan.

J. AMENDMENT OR TERMINATION OF THE PLAN

     The Board may at any time amend, alter, modify or terminate the Plan. Such action shall not
reduce the benefits provided under this Plan with respect to any Executive whose employment has
terminated before such action. Also, such action shall not reduce the benefits provided under this
Plan with respect to any Executive who is participating in the Plan at the time of such action
below the amount provided in Section E, treating for purposes of Section E the amendment,
alteration, modification, or termination which adversely affects the Executive as though it were a
termination of employment. An illustration of the calculation of benefits in the event of
termination of the Plan under this Section J is attached as Appendix III.

K. 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 K.

     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

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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 K.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
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,

8

 

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

L. DEFINITIONS

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

     1. “Administrator” shall mean the person specified in Section I.

     2. “Annual Base Salary” shall mean the annualized rate of pay excluding bonuses, incentive
compensation and perquisites.

     3. “Approved Retirement” shall mean (i) any termination of employment with the Company after
attainment of age 62; (ii) any involuntary termination of employment after both attainment of age
55 and completion of 15 Years of Service; or (iii) any other termination of employment prior to (i)
or (ii) above (but not earlier than the Executive’s attainment of age 55 and completion of five
Years of Service) with the approval of the Compensation Committee. Notwithstanding the foregoing,
if an Executive’s written employment agreement so requires or if the Board so decides, the Board
may, in its sole discretion, grant an Approved Retirement at any earlier termination of employment.

          Notwithstanding the foregoing, “Approved Retirement” shall not include any termination for
“cause,” which shall be determined as provided in Section E.2.a hereof.

     4. “Beneficiary” shall mean the beneficiary or beneficiaries entitled to death benefits under
this Plan, as designated by Executive or otherwise provided in Section D.5.

     5. “Board” shall mean the Board of Directors of McKesson.

     6. “Cause” shall mean the circumstances prescribed in the Executive’s Employment Agreement, if
any, or if there is no Employment Agreement, the circumstances determined by the Compensation
Committee.

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     7. “Company” shall mean McKesson and any member of its controlled group as defined by Sections
414(b) and Section 414(c) of the Internal Revenue Code of 1986, as amended.

     8. “Compensation Committee” shall mean the Compensation Committee of the Board.

     9. “Employment Agreement” shall mean the written contract of employment, if any, between an
Executive and the Company.

     10. “Executive” shall mean an employee of the Company selected by the Compensation Committee
to participate in this Plan pursuant to Section C.

     11. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     12. “McKesson” shall mean McKesson Corporation, a Delaware Corporation.

     13. “Participant” shall mean any Executive who is not otherwise excluded from participation in
the Plan pursuant to Sections C.2, C.3, C.4 or D.4 hereof.

     14. “Pro Rata Percentage” shall mean the percentage determined in Section E.3.

     15. “Retirement Plan” shall mean the McKesson Corporation Retirement Plan.

     16. “Tax Factor” shall mean one divided by one minus the Top Marginal Rate of Tax.

     17. “Top Marginal Rate of Tax” shall be the highest combined marginal individual federal and
state income tax rate, if any (giving effect to any deduction then allowable for federal tax
purposes for the state income tax) for the year survivor benefits are paid to Executive’s
Beneficiary under this Plan. For example, if the highest marginal individual federal and state
income tax rates are 28% and 10% respectively and the state income tax is deductible for federal
tax purposes, the Top Marginal Rate would be 35.2% as follows: [($1.00 x 10% = $.10 state income
tax)] + [($.90 federal taxable income of $1.00 - $.10 state income tax) x 28% = $.252 federal
income tax] = $.352 total state and federal tax, or 35.2%. For purposes of determining the Top
Marginal Rate of Tax, the Administrator in his or her discretion shall determine the highest
marginal individual federal and state income tax rates to be used (including without limitation
whether, and if so to what extent, surtaxes or similar taxes shall be applicable, and what state
income tax, if any, shall be applicable), and all such determinations and all calculations made by
the Administrator hereunder shall be final.

M. SUCCESSORS

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

	N.  	EXECUTION

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     To record the amendment and restatement of the Plan by the Board of Directors of McKesson
Corporation at a meeting held on October 28, 2004.

	 
	McKESSON CORPORATION

	 	 	 
	By:
	 	 
	

	 	 
	

	 	Paul E. Kirincic
	

	 	Executive Vice President, Human Resources

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McKESSON CORPORATION

EXECUTIVE SURVIVOR BENEFITS PLAN

Appendix I

This Appendix illustrates the calculation of benefits under Section D.1 of the Plan.

A. Assumptions

Executive is subject to California Income Tax.

Executive’s Annual Base Salary: $350,000

	 	 	 	 	 
	

	 	Top Marginal Rate of Tax:	 	 
	

	 	 	 	Top Federal Rate: 28.0%
	

	 	 	 	Top California Rate: 10.0%
	

	 	“Top Marginal Rate of Tax”:	 	 
	

	 	.10 +
[(1.0 - .10) x .28] =
35.2%              
	 
	 	 	 	 
	

	 	“Tax Factor”:	 	 
	

	 	1/(1 - .352) = 1.543	 	 

B. Survivor Benefit on Death Before Approved Retirement

	 	 	 	 	 
	

	 	Lesser of (a) $2,000,000 or (b) (3 x $350,000)
	

	 	multiplied
by                      
	 
	 	 
	

	 	Tax Factor
	 
	 	 
	

	 	equals                                  
	

	 	$1,050,000 x 1.543,
	

	 	which yields a
benefit
of:                           
	 
	 	 
	

	 	$1,620,150

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McKESSON CORPORATION

EXECUTIVE SURVIVOR BENEFITS PLAN

Appendix II

This Appendix illustrates the calculation of benefits under Section E.1.a of the Plan.

An Executive is hired at age 50, his or her employment is terminated at age 60 and after January 1,
1997, and he otherwise qualifies for a benefit under Section E. On the death of this Executive, a
benefit will be paid to his or her Beneficiary equal to the Pro Rata Percentage (see calculation
below) times 1-1/2 times the Executive’s final Annual Base Salary at the date of his or her
termination of employment (or $1 million, if smaller) multiplied by the Tax Factor, and reduced by
any death or survivor benefit payable to a beneficiary of the Executive on account of service
rendered to another employer as provided in Section E.1.c. If the above Executive’s Annual Base
Salary was $300,000 at the date of his or her termination of employment and the Tax Factor at the
date the benefit is paid is 1.543, the benefit payable to his or her Beneficiary would be $462,900,
calculated as follows:

The Executive’s Pro Rata Percentage is 66-2/3%, calculated as follows:

The greater of (a) number of whole months of employment divided by total whole
months from date of hire to age 65, or (b) 4.44% times whole and partial years of
completed employment, or 120 months/180 months = 66-2/3%, which is greater than
4.44% x 10 years = 44.4%.

The Executive’s benefit is:

Pro Rata Percentage x [1-1/2 of Annual Base Salary (1-1/2 x $300,000 = $450,000) or
$1 million, if smaller] x Tax Factor

66-2/3% x $450,000 x 1.543 = $462,900.

13

 

McKESSON CORPORATION

EXECUTIVE SURVIVOR BENEFITS PLAN

Appendix III

This Appendix illustrates the calculation of benefits in the event of termination of the Plan under
Section J.

	 	 	 
	A.
	 	Assumptions
	 
	 	 
	 
	 	Executive’s age at date of hire:  40
	 
	 	Executive’s age
	 
	 	     at date of termination of the Plan:  55
	 
	 	Executive’s Annual Base Salary
	 
	 	     at date of termination of the Plan:  $300,000
	 
	 	Executive’s “Tax
Factor” for the year
	 
	 	     benefits are paid (see Section L
	 
	 	     and Appendix I) 1.543
	 
	 	Date of Termination:  After January 1, 1997
	 
	 	 
	B.
	 	Survivor Benefits Under Section D
	 
	 	 
	 
	 	Under Section J, benefits are
determined under Section D by treating the date the Plan is terminated as the date the Executive terminated employment, as follows:
	 
	 	 
	 
	 	Pro Rata Percentage:  66-2/3%
	 
	 	 
	 
	 	Greater of (a) whole months of
service divided by total whole months from hire to age 65 or (b)
4.44% times whole and partial years of service, a greater of 60% (180/300 = 60%) or 66-2/3% (4.44 x 15 years of service)
	 
	 	 
	 
	 	Benefit:  $452,900
	 
	 	 
	 
	 	66-2/3% x (1-1/2 of $300,000, or $1 million if smaller) x "Tax Factor" (1.543)
	 
	 	 
	 
	 	     (66% x $450,000) x 1.543 =
	 
	 	     $300,000 x 1.543 =
	 
	 	     $462,900

14exv10w12

 

Exhibit 10.12

McKESSON CORPORATION

EXECUTIVE MEDICAL PLAN

(As Amended and Restated Effective January 1, 2004)

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	A.

	 	PURPOSE
	 	 	2	 
	 
	 	 	 	 	 	 
	B.

	 	ERISA PLAN
	 	 	2	 
	 
	 	 	 	 	 	 
	C.

	 	PARTICIPATION OF EXECUTIVES
	 	 	2	 
	 
	 	 	 	 	 	 
	D.

	 	PARTICIPATION OF DEPENDENTS
	 	 	3	 
	 
	 	 	 	 	 	 
	E.

	 	ENROLLMENT PERIODS
	 	 	3	 
	 
	 	 	 	 	 	 
	F.

	 	CESSATION OF PARTICIPATION
	 	 	6	 
	 
	 	 	 	 	 	 
	G.

	 	MEDICAL, DENTAL, VISION AND DRUG BENEFITS
	 	 	8	 
	 
	 	 	 	 	 	 
	H.

	 	GENERAL PLAN EXCLUSIONS
	 	 	8	 
	 
	 	 	 	 	 	 
	I.

	 	COBRA CONTINUATION COVERAGE
	 	 	12	 
	 
	 	 	 	 	 	 
	J.

	 	CLAIMS AND APPEALS
	 	 	18	 
	 
	 	 	 	 	 	 
	K.

	 	COORDINATION OF BENEFITS
	 	 	24	 
	 
	 	 	 	 	 	 
	L.

	 	PAYMENT OF BENEFITS
	 	 	28	 
	 
	 	 	 	 	 	 
	M.

	 	SOURCE OF CONTRIBUTIONS
	 	 	30	 
	 
	 	 	 	 	 	 
	N.

	 	ADMINISTRATION OF THE PLAN
	 	 	31	 
	 
	 	 	 	 	 	 
	O.

	 	DURATION AND AMENDMENT OF THE PLAN
	 	 	32	 
	 
	 	 	 	 	 	 
	P.

	 	DEFINITIONS
	 	 	32	 
	 
	 	 	 	 	 	 
	Q.

	 	SUCCESSORS
	 	 	36	 
	 
	 	 	 	 	 	 
	R.

	 	EXECUTION
	 	 	36	 

i

 

McKESSON CORPORATION

EXECUTIVE MEDICAL PLAN

(As of January 1, 2004)

A. PURPOSE

     This Plan was established to enable the Company to attract and retain key executive personnel
by providing medical, prescription drug, dental and vision benefits to Executives and their
eligible Dependents. This Plan has been amended and restated to read as set forth herein effective
January 1, 2004. Claims for benefits under the Plan incurred prior to January 1, 2004 shall be
governed by the terms of the Plan as in effect at the time the claim was incurred.

B. ERISA PLAN

     This Plan is a welfare benefit plan intended primarily 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 the reporting and disclosure provisions of Part 1 of Title I of
ERISA.

     All benefits under the Plan are provided through a group insurance contract or contracts
issued by an Insurance Company or Companies.

C. PARTICIPATION OF EXECUTIVES

     1. Selection by Compensation Committee. The Compensation Committee may select, at its
discretion and from time to time as it decides, the key Executives who participate in this Plan.
Participation in the Plan shall be limited to those Executives of the Company who are selected by
the Compensation Committee. Selection of a key Executive to participate in the Plan may be
evidenced by the terms of his contract of employment with the Company. Prior to January 1, 2004,
the Board had reserved to itself the power to select Executives to participate in the Plan.

     2. Each eligible Executive shall commence participation in the Plan on the date specified by
the Compensation Committee provided that such Executive makes an election to participate in
accordance with Section E. and has commenced Active Service with the Company.

     An Executive who has been selected by the Compensation Committee to participate in the Plan
and has enrolled in the Plan may continue to actively participate in the Plan following the
Executive’s Approved Retirement from the Company.

     3. Election Not to Participate. Subject to the restrictions on cessation of
participation in the McKesson Corporation Cafeteria Arrangement, an Executive may elect not to
participate in this Plan. Such election shall be in writing and shall become effective upon its
receipt by the Administrator. No compensation or benefits in lieu of this Plan shall be paid to an
Executive who elects not to participate.

2

 

     4. Addition and Removal of Participants. The Compensation Committee may, at its
discretion and at any time, designate additional Executives to participate in the Plan and remove
Executives from participation in the Plan. When an Executive is removed from participation in the
Plan by the Compensation Committee, he or she shall be treated, solely for purposes of this Plan,
as if he or she had terminated his or her employment with the Company for reasons other than
Approved Retirement. Prior to January 1, 2004, the Board had reserved to itself the power to
designate additional Executives to participate in the Plan and to remove Executives from
participation in the Plan.

     5. Notification of Participants. The Administrator shall annually notify each
Executive that he or she is a participant in the Plan.

     6. Relation to Other Plans. If an Executive participates in this Plan, he or she
shall not participate in any other medical, prescription drug, dental and/or vision plan or similar
program sponsored by the Company unless otherwise specifically approved by the Administrator in
writing.

D. PARTICIPATION OF DEPENDENTS

     A Dependent of an Executive is eligible to commence participation in the Plan on the same date
as the Executive or, if later, the date on which the Dependent becomes eligible for coverage. If
the Dependent is newly acquired and the Executive is already covered, the Dependent becomes
eligible on the date the Executive first acquires the Dependent. The date that an Executive first
acquires a Dependent is:

     1. In the case of marriage, on the date of marriage; or

     2. In the case of a Domestic Partnership, within 30 days of meeting the Affidavit Declaring
Domestic Partners requirements, provided, however, that the six month Domestic Partner relationship
requirement is waived if the Executive had a Domestic Partner who died during the six months prior
to meeting the remaining requirements of the Affidavit Declaring Domestic Partners or

     3. In the case of a Dependent’s birth, on the date of such birth; or

     4. In the case of a Dependent’s adoption or placement for adoption, on the date of such
adoption or placement for adoption.

     Notwithstanding the foregoing, no Dependent may become covered for benefits prior to the date
the Executive becomes covered.

E. ENROLLMENT PERIODS

     1. Initial Enrollment Period. Following an Executive’s selection to participate in
the Plan by the Compensation Committee, an Executive may elect participation for himself and his
eligible Dependents by submitting a notice of election in any manner permitted by the Plan to the
Company within 31 days of the later of the following: the date the Executive becomes eligible to

3

 

participate or the date enrollment materials are provided by the Plan to the Executive.
Coverage will commence on the date the Executive commences Active Service.

     If an Executive has a Spouse or child who meets the definition of Dependent but the Executive
has not elected coverage for the Spouse or child during the Initial Enrollment Period, the Spouse
or child may be enrolled upon the Plan’s receipt of a court order requiring the Executive to
provide coverage for such Spouse or child. Coverage will become effective on the date of the court
order.

     2. Special Enrollment Periods. Certain Executives and Dependents may be eligible to
enroll mid-year because (a) his or her prior coverage under a different group health plan was lost,
or (b) a new Dependent was acquired

          a. Criteria to enroll for those losing other coverage. An Executive who has
previously waived coverage under the Plan or an eligible Dependent for whom the Executive has
previously waived coverage under the Plan is eligible to enroll in the Plan within 31 days after
the termination of coverage under any other group medical plan or health insurance. For this
purpose, “termination of coverage” includes loss of coverage resulting from:

               i. Reduction in the number of hours of employment of the Dependent through whom the Executive
or Dependent had the other coverage; or

               ii. Termination of employment of the Dependent through whom the Executive or Dependent had the
other coverage; or

               iii. Death of the Dependent through whom the Executive or Dependent had the other coverage; or

               iv. Divorce or legal separation; or

               v. The termination of employer contributions towards such coverage; or

               vi. The exhaustion of COBRA coverage if the prior coverage was pursuant to COBRA; or

               vii. The termination of no share-of-cost Medi-Cal coverage if the prior coverage was no
share-of-cost Medi-Cal coverage.

     An Executive or Dependent will not be eligible to enroll in the Plan pursuant to this Section
if the prior medical coverage was terminated due to (i) the failure of the Executive or participant
in the other medical plan to pay premiums on a timely basis, or (ii) misconduct such as making a
fraudulent claim or intentionally misrepresenting a material fact in connection with the prior
plan.

     Coverage pursuant to this section will become effective on the date of the election.

4

 

          b. Criteria to enroll for those who acquired a new Dependent through birth, adoption or
placement for adoption: An otherwise eligible Executive who has previously waived medical and
prescription drug coverage under the Plan who later acquires a Dependent through birth, adoption,
or placement for adoption is eligible to commence participation in the Plan on the date that the
Executive first acquires the Dependent (i.e., the date of birth, adoption, or placement for
adoption), provided that the Dependent enrolls concurrently with the Executive and such enrollment
occurs within 31 days of the Executive’s acquiring the new Dependent.

     Coverage pursuant to this section will commence on the date of the newly acquired Dependent’s
birth, adoption or placement for adoption.

          c. Criteria to enroll for those who acquired a new Dependent through marriage. An
otherwise eligible Executive who has previously waived coverage under the Plan and who later
acquires a Dependent through marriage is eligible to commence participation in the Plan for himself
and his Spouse, provided that the Dependent enrolls concurrently with the Executive and such
enrollment occurs within 31 days of the Executive’s acquiring the new Dependent. Coverage pursuant
to this section will commence on the date of the election.

          d. Criteria to enroll for those who acquired a new Dependent through Domestic
Partnership: An otherwise eligible Executive who has previously waived coverage under the Plan
who later acquires a Dependent through a Domestic Partnership is eligible to commence participation
in the Plan on the date that the Executive first acquires the Dependent (i.e., within 30 days of
meeting the Affidavit Declaring Domestic Partners requirements provided, however, that the six
month Domestic Partnership requirement is waived if the Executive had a Domestic Partner who died
during the six months prior to meeting the remaining requirements of the Affidavit Declaring
Domestic Partners) provided that the Dependent enrolls concurrently with the Executive and such
enrollment occurs within 31 days of the Executive’s acquiring the new Dependent.

     Coverage pursuant to this section will become effective on the date of the election.

     3. Annual enrollment period. An otherwise eligible Executive or Dependent who is not
covered by the Plan may enroll or may be enrolled by the Executive during the annual enrollment
period conducted by the Company. Such coverage will commence on the date prescribed by the
Company, provided the Executive is in Active Service on that date. If the Executive is not in
Active Service on that date, coverage will become effective on the date he returns to Active
Service.

     4. Procedures with Respect to Medical Child Support Orders. In the event that a
Medical Child Support Order is received by the Plan, the Company shall promptly notify the affected
Executive and the Alternate Recipient (or such recipient’s designated representative) of the
receipt of such order and the Plan’s procedures for determining the qualified status of such order
under Section 609 of ERISA. The Company shall then, within a reasonable period after receipt of
such order, determine whether such order is a Qualified Medical Child Support Order and notify the
Executive and each Alternate Recipient (or such Alternate Recipient’s designated representative) of
its determination. If the Plan receives a National Medical Support Notice, the

5

 

Company shall, within 40 business days after the date of the notice or sooner if reasonable,
determine whether such notice is a Qualified Medical Child Support Order and notify the applicable
State IV-D agency, the affected Executive and the Alternate Recipient (or such Alternate
Recipient’s designated representative) of the Company’s determination. Coverage for the Alternate
Recipient will become effective on the date of the Qualified Medical Child Support Order.

     Notwithstanding any other provision of the Plan, any payment for benefits made by the Plan
pursuant to a Qualified Medical Child Support Order shall be made to the Alternate Recipient’s
custodial parent, unless that person authorizes payment to be made directly to the provider of
services or supplies.

F. CESSATION OF PARTICIPATION

     1. Executives. Subject to Section I., an Executive shall cease to participate in the
Plan on the earliest of:

          a. The last day of the month for which the Executive makes the required contribution, if any,
as determined by the Company; or

          b. The date that the Executive terminates employment with the Company, unless the Executive
retires from the Company under an Approved Retirement and is eligible to receive benefits under the
McKesson Corporation Retirement Plan; or

          c. The date the Executive enters the armed forces of any country, unless he is on a leave of
absence that requires continued participation in the Plan during the period of the leave, as
described in Section I.; or

          d. The date the individual ceases to qualify as an Executive;

          e. The date the Executive dies; or

          f. The date the Plan is terminated.

     2. Executives on Leave. An Executive’s employment will be considered to terminate
when he is no longer actively engaged in work for the Company or its subsidiary or affiliate.
However, the Executive may continue participation in the Plan for himself and his Dependents, upon
payment of any required contribution, in the event of certain approved circumstances according to
the following leave classifications:

          a. Personal Leave and Educational Leave. Duration of the Company approved leave but
not to exceed the end of the month following the month in which the leave commenced;

          b. Family and Medical Leave. Duration of the leave as established under the Family
and Medical Leave Act;

6

 

          c. Military Leave. Duration of the leave up to the limits as established under the
Uniformed Services Employment and Reemployment Act of 1994, as described in Section I.;

          d. Layoff. Duration of leave but not to exceed the end of the month following the
month in which the layoff began;

          e. Disability Leave. Duration of the Company approved leave but not to exceed beyond
30 months from the start of the leave.

     3. Dependents of Executives. Subject to Section I. a Dependent of an Executive ceases
to participate in the Plan on the earliest of:

          a. The last day of the month that the Executive ceases to participate in the Plan; or

          b. The last day of the month for which the Executive makes the required contributions, if any,
as determined by the Company; or

          c. The last day of the month in which the Dependent ceases to be eligible as defined herein;
or

          d. The date that Dependent coverage under the Plan is discontinued; or

          e. The date the Plan is terminated.

     A Dependent child’s coverage whose coverage is continued after attainment of age 19 as a
result of the Dependent child’s handicap will cease on the earliest of the following: (1) the
cessation of the child’s handicap; (2) the failure to provide proof of the continuation of the
child’s handicap; (3) the failure to undergo any exam required by the Plan or the Insurance
Company; and (4) the termination of child’s coverage for any reason other than reaching the maximum
age for coverage.

     4. Termination of Coverage for False Representations. Notwithstanding any other
provision of the Plan, if an Executive or Dependent makes a false representation to the Plan or the
Insurance Company, coverage for the Executive and his Dependent(s) may be immediately and
permanently terminated by the Plan in its sole discretion. The Plan reserves the right to seek
financial damages resulting from such false representation, and may pursue legal action against the
Participant and/or Dependent who made the false representation. For purposes of the Plan, “false
representation” includes, but is not limited to, submitting falsified claims or covering an
individual who does not qualify as a Dependent under the terms of the Plan.

     5. Certificate of Group Health Plan Coverage. An Executive or a Dependent having
coverage will receive a Certificate of Creditable Coverage upon losing coverage under the Plan for
any reason. This Certificate offers proof that the individual had been covered under the Plan, and
it may allow the individual to receive credit toward a new plan’s waiting period for preexisting
conditions.

7

 

G. MEDICAL, DENTAL, VISION AND DRUG BENEFITS

     The benefits provided under the Plan shall be insured under a group insurance contract or
contracts that shall be issued in a form approved by the Company by one or more Insurance Companies
selected by the Company. The terms of this Plan together with the Certificate of Coverage and
Summary of Coverage issued by the Insurance Company are hereby incorporated by reference and shall
be an integral part of the Plan. The Certificate of Coverage and Summary of Coverage describe the
terms of coverage, under the group insurance contract or contracts including, but not limited to,
the covered services and supplies, exclusions, limitations on benefits, coordination of benefits,
right of reimbursement and/or subrogation, any applicable copayments or coinsurance, deductibles,
out-of-pocket maximums, lifetime maximum benefits, provider networks, continuation of coverage and
conversion privileges, if any, and claims and appeal procedures.

     Covered Expenses. The Plan pays benefits for medically necessary medical (including
over the counter drugs and medicines), dental and vision expenses that would be considered “medical
care” as defined under Internal Revenue Code section 213(d).

     The Lifetime Maximum Benefit per covered person under the Plan is $2,000,000. If, as of the
end of a calendar year during which a Participant has been covered by this Plan the Participant has
used some but not all of his Lifetime Maximum Benefit, then at the beginning of the following
calendar year any previously used portion of a Participant’s Lifetime Maximum Benefit will be
automatically reinstated for future charges to the extent of the lesser of (1) $10,000 or (2) the
amount needed to reinstate his entire Lifetime Maximum Benefit. No portion of the Participant’s
Lifetime Maximum Benefit will be reinstated under this paragraph in the following calendar year if,
as of the end of a calendar year, the Participant has used his entire Lifetime Maximum Benefit.

     The Insurance Company is independent of the Company, and the Company does not guarantee nor
shall it be responsible for the financial soundness of the Insurance Company or the quality of care
provided by the Insurance Company. The Company cannot assist Executives or their Dependents in
recovering from the Insurance Company any benefits due to the Executive or Dependent or protect the
Executive or Dependent from any liability due to the Insurance Company’s failure to fulfill its
obligations. Although the terms of coverage under the group insurance contract or contracts may
differ from the terms of the Plan and may state different age requirements for dependents, an
individual must be eligible to participate under the terms of this Plan in order to obtain benefits
under the insurance contract or contracts.

H. GENERAL PLAN EXCLUSIONS

     Coverage under the Plan is not provided for any of the following charges:

     1. Those for care, treatment, services, or supplies that are not prescribed, recommended, or
approved by the person’s attending physician or dentist.

8

 

     2. Those for or in connection with services or supplies that are, as determined by the
Insurance Company in its sole discretion, to be experimental or investigational. A drug, a device,
a procedure, or treatment will be determined to be experimental or investigational if:

          a. There are insufficient outcomes data available from controlled clinical trials published in
the peer reviewed literature to substantiate its safety and effectiveness for the disease or injury
involved; or

          b. If required by the FDA, approval has not been granted for marketing; or

          c. A recognized national medical or dental society or regulatory agency has determined, in
writing, that it is experimental, investigational, or for research purposes ; or

          d. The written protocol or protocols used by the treating facility, or the protocol or
protocols of any other facility studying substantially the same drug, device, procedure, or
treatment, or the written informed consent used by the treating facility or by another facility
studying the same drug, device, procedure, or treatment states that it is experimental,
investigational, or for research purposes.

     However, this exclusion will not apply with respect to services or supplies (other than drugs)
received in connection with a disease; if the Insurance Company determines that:

               i. the disease can be expected to cause death within one year, in the absence of effective
treatment; and

               ii. the care or treatment is effective for that disease or shows promise of being effective
for that disease as demonstrated by scientific data. In making this determination the Insurance
Company will take into account the results of a review by a panel of independent medical
professionals. They will be selected by the Insurance Company. This panel will include
professionals who treat the type of disease involved.

     Also, this exclusion will not apply with respect to drugs that:

               iii. have been granted treatment investigational new drug (IND) or Group c/treatment IND
status; or

               iv. are being studied at the Phase III level in a national clinical trial sponsored by the
National Cancer Institute;

if the Insurance Company determines that available scientific evidence demonstrates that the drug
is effective or shows promise of being effective for the disease.

     3. Those for or related to services, treatment, education testing, or training related to
learning disabilities or developmental delays.

     4. Those for care furnished mainly to provide a surrounding free from exposure that can worsen
the person’s disease or injury.

9

 

     5. Those for or related to the following types of treatment: primal therapy; rolfing;
psychodrama; megavitamin therapy; bioenergetic therapy; vision perception training; or carbon
dioxide therapy.

     6. Those for treatment of covered health care providers who specialize in the mental health
care field and who receive treatment as a part of their training in that field.

     7. Those for services of a resident physician or intern rendered in that capacity.

     8. Those that are made only because there is health coverage.

     9. Those that a covered person is not legally obliged to pay.

     10. Those, as determined by the Insurance Company, to be for custodial care.

     11. To the extent allowed by the law of the jurisdiction where the group contract is
delivered, those for services and supplies:

          a. Furnished, paid for, or for which benefits are provided or required by reason of the past
or present service of any person in the armed forces of a government.

          b. Furnished, paid for, or for which benefits are provided or required under any law of a
government. (This exclusion will not apply to “no fault” auto insurance if it: is required by law;
is provided on other than a group basis; and is included in the definition of “other plan” in
Section K.1. In addition, this exclusion will not apply to: a plan established by government for
its own employees or their dependents; or Medicaid.)

     12. Those for education, special education, or job training whether or not given in a facility
that also provides medical or psychiatric treatment.

     13. Those for therapy, supplies, or counseling for sexual dysfunctions or inadequacies that do
not have a physiological or organic basis.

     14. Those for or related to sex change surgery or to any treatment of gender identity
disorders.

     15. Those for or in connection with career, social adjustment, pastoral, or financial
counseling.

     16. Those for or in connection with speech therapy. This exclusion does not apply to charges
for speech therapy that is expected to restore speech to a person who has lost existing speech
function (the ability to express thoughts, speak words, and form sentences) as the result of a
disease or injury.

     17. Those to the extent they are not reasonable charges.

     18. Those for more than a 90 day supply per prescription or refill.

10

 

     19. Those for the administration or injection of any drug.

     20. Those for the following injectable drugs:

          a. Allergy sera or extracts; and

          b. Imitrex, if it is more than the 48th such kit or 96th such vial
dispensed to the person in any year

     21. Those for any refill of a drug if it is more than the number of refills specified by the
prescriber. Before recognizing charges, the Insurance Company may require a new prescription or
evidence as to need;

     22. If the prescriber has not specified the number of refills; or

     23. If the frequency or number of prescriptions or refills appears excessive under accepted
medical practice standards.

     24. Those for any refill of a drug dispensed more than one year after the latest prescription
for it or as permitted by the law of the jurisdiction in which the drug is dispensed.

     25. Those for any drug provided by or while the person is an inpatient in any health care
facility; or for any drug provided on an outpatient basis in any health care facility to the extent
benefits are paid for it under any other part of this Plan or under any other medical or
prescription drug expense benefit plan carried or sponsored by the Company.

     26. Those for immunization agents.

     27. Those for any contraceptive drugs, except oral contraceptives.

     28. Those for more than four unit doses per 30 day supply for the following treatment of
erectile dysfunction, impotence, or sexual dysfunction or inadequacy:

          a. Sildenafil citrate;

          b. Phentolamine;

          c. Apomorphine;

          d. Alprostadil;

     29. Any other prescription drug that is in a similar or identical class and has a similar or
identical mode of action or exhibits similar or identical outcomes.

     30. This limitation applies whether or not the prescription drug is delivered in oral,
injectable, or topical (including, but not limited to, gels, creams, ointments, and patches) forms.
If the drug is not taken orally, the dosage covered will be determined by the Insurance Company
based on the comparable cost for a 30 day supply of pills.

11

 

     31. Those for a prescription drug dispensed by a mail order pharmacy.

     32. Any other item excluded in the Certificate of Coverage provided by the Insurance Company.

     33. Any exclusion above will not apply to the extent that coverage of the charges is required
under any law that applies to the coverage.

     34. The law of the jurisdiction where a person lives when a claim occurs may prohibit some
benefits. If so, they will not be paid.

	I.  	COBRA CONTINUATION COVERAGE

     The COBRA Continuation Coverage described in this Section I. shall apply in regard to an
Executive’s or Dependent’s right to continuation coverage under federal law. The Certificate of
Coverage issued by the Insurance Company may provide for additional rights to continuation coverage
under state law.

     1. Eligibility for COBRA Continuation Coverage. If an Executive’s or a Dependent’s
coverage under the Plan terminates under Section F. due to a Qualifying Event, such Executive or
Dependent shall be eligible for COBRA Continuation Coverage under the Plan pursuant to the
provisions of this Section I. For the purposes of this Section I. “Dependent” includes a child born
to, adopted or placed for adoption with a covered Executive during a period of COBRA Continuation
Coverage; thus such a child has equivalent COBRA rights as other Dependents whose coverage under
the Plan was terminated due to a Qualifying Event. An Executive’s “Qualifying Event” is the event
which causes the Executive’s loss of status as an Executive due to termination of employment,
retirement or reduction of hours. For purposes of this Section I., the “Qualifying Event” for an
Executive on an unpaid leave covered by the federal Family and Medical Leave Act shall be deemed to
occur at the end of such leave or, if earlier, on the date the Executive notifies the Company that
he will not return to employment following such leave. A “Qualifying Event” of a covered Dependent
of an Executive is one of the following events:

          a. The Qualifying Event of the Executive; or

          b. The death of the Executive; or

          c. The divorce or legal separation of the Executive from the Executive’s Spouse, or
termination of Domestic Partnership; or

          d. The loss of status as a Dependent for any reason, including age, marriage, cessation of
disability, or cessation of financial dependence on the Executive.

     COBRA Continuation Coverage is not available to any individual who was not a Executive or
covered Dependent immediately before the Qualifying Event, except as provided in Section I.2.b.
below.

12

 

     2. Benefits Available During COBRA Continuation Coverage.

     An individual who elects COBRA Continuation Coverage under this Section I. shall continue his
or her status as an Executive or a Dependent under the Plan, except that a Dependent who
individually elects COBRA Continuation Coverage under Section I.4. shall be treated as an
Executive. Such individuals are entitled to the same rights and benefits available to individuals
who became Executives or Dependents pursuant to Sections C or D, except to the extent otherwise
provided in this Section I.

          a. Medical Benefits. An Executive or an individual who is treated as an Executive may
elect COBRA Continuation Coverage for medical and prescription drug coverage.

          b. Added Dependents. An Executive or an individual who is treated as an Executive may
add an individual as a Dependent during a period of COBRA Continuation Coverage pursuant to the
provisions of Sections E.2. and E.3. Any individual so added is entitled to benefits under the
Plan until the earlier of the date the Executive’s COBRA Continuation Coverage ends or the date the
individual ceases to be a Dependent.

          c. Maximum Benefits.

               i. Lifetime Maximum Benefit. Any amounts paid under the Plan that counted towards an
individual’s Lifetime Maximum Benefit under Section G. before a Qualifying Event, shall apply
against such individual’s Lifetime Maximum Benefit after the Qualifying Event.

               ii. Annual Maximums. Any amounts paid under the Plan that counted towards any annual
maximum payable under the Plan under Section G. before a Qualifying Event are counted toward the
individual’s annual maximum after the Qualifying Event.

          d. Annual Enrollment Periods. Any individual who elects COBRA Continuation Coverage
under Section I.4.a. is entitled to change coverage during the annual enrollment period to any
option that would be available to such individual immediately before COBRA Continuation Coverage
became effective for such individual. Each individual who is an Executive or covered Dependent
pursuant to this Section I. (other than an individual who was added as a Dependent under Section
I.2.b. above) may make such election on an individual basis.

          e. Certificate of Group Health Plan Coverage. An individual covered under Section
I.3. will receive a Certificate of Group Health Plan Coverage upon losing COBRA Continuation
Coverage for any reason. This Certificate offers proof that the individual had been covered under
the McKesson Corporation Executive Medical Plan, and it may allow the individual to receive credit
toward a new health plan’s waiting period for preexisting conditions.

13

 

     3. Period of COBRA Continuation Coverage.

          a. In General. Each Executive or Dependent’s period of COBRA Continuation Coverage
shall begin on the date coverage is lost as a result of the Qualifying Event which made the
Executive or Dependent eligible for COBRA Continuation Coverage and shall end on the earliest of
the following dates:

               i. The date for which COBRA Contributions were not timely made for the individual, pursuant to
Section I.5.; or

               ii. The date after the election of COBRA Continuation Coverage when the individual first
becomes covered under another group health plan, as an employee or otherwise, unless the other
group health plan contains an exclusion or limitation for any preexisting condition of that
individual; or

               iii. The date after the election of COBRA Continuation Coverage when the individual first
becomes covered by and entitled to Medicare; or

               iv. The date when the employer ceases to provide any group health plan to any employee; or

               v. The date specified in (b), (c), (d), (e), or (f) below, whichever is applicable to the
Qualifying Event; or

               vi. The last day of the month for which contributions were made when the Executive or
Dependent elects to terminate COBRA Continuation Coverage.

          b. Special Rule for Periods of COBRA Continuation Coverage Subject to the Uniformed
Services Employment and Reemployment Rights Act of 1994. Notwithstanding the foregoing, an
Executive or Dependent’s period of COBRA Continuation Coverage that is subject to the Uniformed
Services Employment and Reemployment Rights Act of 1994 (“USERRA”) shall begin on the date of the
Qualifying Event which results in the Executive or Dependent becoming eligible for COBRA
Continuation Coverage and shall end on the earliest of the following dates:

               i. The 18-month period beginning on the date on which the Executive’s absence begins; or

               ii. The period ending on the day after the date on which the Executive fails to apply for or
return to a position of employment with the Company, as determined under § 4312(e) of USERRA.

          c. Termination of Employee Status. If the first Qualifying Event of an Executive or a
Dependent is the event which causes the Executive’s loss of status as an Executive as a result of a
termination of employment, each individual’s period of COBRA Continuation Coverage will end 18
months after the date that coverage is lost due to the Qualifying Event (unless an earlier date is
required by Section I.3.a.). Notwithstanding the above

14

 

ending date, if a Covered Executive or Dependent is determined by the Social Security
Administration to be disabled under Title II or XVI of the Social Security Act at any time during
the first 60 days of COBRA Continuation Coverage and notifies the Company of such determination
within 18 months following the loss of coverage due to the Qualifying Event then the disabled
Executive or Dependent (and such person’s family members who also have COBRA Continuation Coverage)
is entitled to continue their COBRA Continuation Coverage for up to 29 months from the date of the
Qualifying Event; provided, however, that if following the end of the initial 18 months of COBRA
Continuation Coverage, the disabled individual is determined by the Social Security Administration
to no longer be disabled, COBRA Continuation Coverage shall end on the first day of the month that
is at least 30 days after the date of the final Social Security determination that the individual
is no longer disabled. Notwithstanding both of the above ending dates, if an individual incurs a
subsequent Qualifying Event before end of the initial 18-month period of COBRA Continuation
Coverage and elects COBRA Continuation Coverage for that Qualifying Event, COBRA Continuation
Coverage for the prior Qualifying Event shall terminate immediately and coverage shall continue in
accordance with Section I.3.f. below.

          d. Death of the Executive. If a Dependent’s first Qualifying Event is the death of
the Executive, then the Dependent’s period of COBRA Continuation Coverage shall end 36 months after
the date coverage is lost due to the Executive’s death unless an earlier ending date is required by
Section I.3.a.

          e. Loss of Status as a Dependent. If a Dependent’s first Qualifying Event is his or
her loss of status as a Dependent for any reason, including age, marriage, cessation of disability,
cessation of financial dependence or divorce from the Executive, then the Dependent’s period of
COBRA Continuation Coverage will end 36 months after coverage is lost due to such loss of status,
unless an earlier ending date is required by Section I.3.a.

          f. Special Rule for Multiple Qualifying Events. If COBRA Continuation Coverage of an
Executive or a Dependent ceases under Section I.3.a. due to a subsequent Qualifying Event which
occurs coincident with or prior to the close of the 18-month period of COBRA Continuation Coverage,
such Executive or Dependent will be entitled to COBRA Continuation Coverage for the subsequent
Qualifying Event; provided, however, that the total period of COBRA Continuation Coverage for all
Qualifying Events with respect to any individual shall not exceed 36 months from the date coverage
is lost due to the first Qualifying Event.

          g. Executive’s Entitlement to Medicare. If an Executive becomes entitled to Medicare
following the Executive’s termination of employment, retirement or reduction in hours of
employment, the Dependent’s period of COBRA Continuation Coverage for this event will not be
extended.

     4. Election of COBRA Continuation Coverage; Notice Requirements.

          a. Method of Election. An individual who is or will become eligible for COBRA
Continuation Coverage under this Section I. may elect such coverage by filing the

15

 

prescribed form with the Company at any time during the Election Period. The “Election
Period” begins on or before the date of the Qualifying Event applicable to the individual and ends
60 days following the later of the date of such Qualifying Event or the date notice of availability
of COBRA Continuation Coverage is sent to the individual pursuant to (b) below. Any election of
COBRA Continuation Coverage which is not made during the Election Period shall be void. An
election by the Executive or by the surviving Spouse or such Executive’s Domestic Partner, or
former Spouse of an Executive will be deemed an election of COBRA Continuation Coverage on behalf
of any Dependent who would lose coverage by reason of the same Qualifying Event; provided, however,
that a Dependent (other than a minor child) may elect COBRA Continuation Coverage for himself if
the Executive or the Spouse or such Executive’s Domestic Partner or former Spouse of the Executive
does not elect COBRA Continuation Coverage for the Dependent. The election shall be effective as
of the first day that the individual otherwise would lose coverage under the Plan. The former
Spouse, surviving Spouse or surviving Domestic Partner or child of an Executive who individually
elects COBRA Continuation Coverage pursuant to this Section I.4. a shall be treated as an Executive
for all Plan purposes, including the required contributions under Section I.5.

          b. Notice by Employer. Within 44 days following the date that the Executive ceases to
be an Executive as a result of a termination of employment, the Company or employing subsidiary
shall notify the Executive and each Dependent of the Executive of the right to elect COBRA
Continuation Coverage under this Section I. Within 44 days following an Executive’s death, the
Company shall notify each Dependent of the Executive of the right to elect COBRA Continuation
Coverage under this Section I. Within 14 days following receipt of a timely notice described in
Section I.4.c. below, the Company shall notify each Dependent of the right to elect COBRA
Continuation Coverage. Notification to the Spouse or Domestic Partner of the Executive will be
deemed notification to all other Dependents of the Executive.

          c. Notice by Executive or Dependent. Each Executive or Dependent is responsible for
notifying the Company or employing subsidiary of the divorce of the Executive and the Executive’s
Spouse or the termination of a Domestic Partnership or the loss of status as a Dependent child.
Such notification must be made within 60 days following such divorce, termination of a Domestic
Partnership or loss of Dependent status. Each Executive or Dependent is responsible for notifying
the Company or employing subsidiary within 30 days of a determination by the Social Security
Administration that such Executive or Dependent is disabled within 18 months following the loss of
coverage due to the Qualifying Event. Each Executive or Dependent is also responsible for
notifying the Company or employing subsidiary of a later final determination by the Social Security
Administration that such individual is no longer disabled within 30 days following such
determination.

          d. Notice to the Insurance Company. As often as the Company or a party to whom such
responsibility is properly delegated by the Company deems appropriate, the Company will notify the
Insurance Company of an individual’s status as an Executive or Dependent under this Section I.

     5. COBRA Contributions.

16

 

          a. Amount of COBRA Contributions. “COBRA Contributions” are required to be paid by
the Participant for each period of the Participant’s COBRA Continuation Coverage. The COBRA
Contributions for continued coverage cannot exceed 102% of the estimated cost of providing such
benefits under the Plan for the current year for similarly situated beneficiaries with respect to
whom a Qualifying Event has not occurred. Notwithstanding the foregoing, the COBRA Contributions
during the 19th through 29th month of COBRA Continuation Coverage, for Executives and Dependents
who are determined by the Social Security Administration to be disabled under Title II or XVI of
the Social Security Act at any time during the first 60 days of COBRA Continuation Coverage, shall
be an amount determined by the Company, in its sole discretion; provided, however that such amount
will not exceed 150% of such estimated cost. Such estimated cost will be determined by the Company
based on (i) the projected costs for such year determined on the basis of actuarial factors
prescribed by regulations under section 4980B(f) of the Code, or (ii) the actual cost to the Plan
for the preceding year for such similarly situated beneficiaries, adjusted by the percentage
increase or decrease in the implicit price deflator of the gross national product (calculated by
the Department of Commerce and published in the Survey of Current Business) for the 12-month period
ending on the last day of the sixth month of such preceding year. However, (ii) above will not
apply in any year in which there is a significant difference in Plan benefits or in the number of
Executives covered by the Plan since the preceding year.

     Notwithstanding the foregoing, the COBRA Contributions for continued medical, dental or vision
coverage, or any combination thereof, as applicable, for Executive who perform service in the
Uniformed Services of the United States for less than 31 days as provided under USERRA, cannot
exceed the Executive share, if any, with respect to an Executive for whom a Qualifying Event has
not occurred.

          b. Due Dates of COBRA Contributions. An Executive’s COBRA contributions for each
month of COBRA Continuation Coverage are due prior to the first day of that month. However, any
payment made within 30 days after the due date will be considered timely made. COBRA Contributions
for any retroactive election of COBRA Continuation Coverage made pursuant to Section I.5. are due
and payable within 45 days after the date of election.

          c. COBRA Contribution Shortfalls. If an Executive or an individual who is treated as
an Executive remits a timely monthly contribution to the Plan or Insurance Company that is
significantly less than the actual COBRA Contribution due for the month, the period of COBRA
Continuation Coverage of the Executive or the individual who is treated as an Executive will be
terminated immediately. If an Executive or an individual who is treated as an Executive remits a
timely monthly payment that is not significantly less than the actual COBRA Contribution due for
the month, the payment will be deemed to satisfy the Plan’s requirement for the amount that must be
paid, unless the Plan notifies the Executive or the individual who is treated as an Executive of
the amount of the deficiency and permits the Executive or the individual who is treated as an
Executive to pay the deficiency within 30 days of the date of the notice of deficiency. Executives
and individuals who are treated as Executives are responsible for paying all deficiencies. A
monthly contribution of an Executive or an individual who is treated as an Executive will not be
considered significantly less than the actual COBRA

17

 

Contribution due if the amount paid is less than or equal to the lesser of $50 (or such other
amount as the Commissioner may provide in an IRS revenue ruling, notice, or other guidance
published in the Internal Revenue Bulletin) or 10% of the actual COBRA Contribution due.

J. CLAIMS AND APPEALS

     The claims procedures described in this Section J shall apply except to the extent that there
are alternate claims procedures described in the Certificate of Coverage issued by the Insurance
Company.

     1. Claims Procedure.

          a. Application for Benefits. To entitle himself to the payment of any benefits for
which he is eligible under the Plan, the Participant shall comply with such rules and procedures as
the Company and the Insurance Company may prescribe with reference to the completion and filing of
a claim form or forms and the furnishing of such pertinent information as the Insurance Company may
request, together with documentary evidence in support of his claim to the Insurance Company. The
Insurance Company may require that itemized bills, receipts and other proof of the loss be
submitted in addition to the claim form. The Insurance Company may request that the Participant
give the Insurance Company written authorization to obtain information from the Participant’s
Physician pertaining to the diagnosis and related matters. Except as otherwise stated below,
claims for benefits under this Plan must be submitted to the Insurance Company within 20 days after
the date of the loss causing the claim or as soon as reasonably possible. The Insurance Company
will furnish the Participant with a claim form within 15 days of the notice of the claim

     All claims must be filed no later than 90 days after the date of the loss causing the claim.
If a Participant is not able to meet this deadline for filing a claim, a claim will still be
accepted if the Participant’s delay was not caused by the Participant’s own fault and the
Participant files the claim as soon as possible. If a Participant is legally incapacitated, a late
claim will still be accepted if it is filed no more than two years after the deadline.

          b. Health Care Examinations. While a certification or claim is pending, the claimant
must undergo a health care examination whenever reasonably required by the Insurance Company. No
benefits will be paid if a claimant refuses to undergo such health care examination. The Insurance
Company will have the right to have a physician or dentist of its choice conduct the examination.
Such examinations shall be at the Insurance Company’s expense.

          c. Timing of Claims Decision. The Insurance Company shall adhere to certain time
limits when processing a claim for a Plan benefit. If a claimant does not follow the proper
procedures for submitting a claim, the Insurance Company shall notify the claimant of the proper
procedures within the time frames shown in the chart below. If additional information is needed to
process a claimant’s claim, the Insurance Company shall notify the claimant within the time frames
shown in the chart below, and the claimant shall be provided additional time within which to
provide the requested information.

18

 

     The Insurance Company will make a determination on a claim for a Plan benefit within the time
frames indicated below based upon the type of claim: Urgent Care Claim, Pre-Service Claim,
Post-Service Claim or Concurrent Care Claim.

	 	 	 	 	 	 	 	 	 	 	 	 
	 	Type of Notice or	 	 	 	 	 	 	 	 	 	 
	 	Claim Event	 	 	Urgent Care Claim	 	 	Pre-Service Care Claim	 	 	Post-Service Care Claim	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Notice of Failure to
Follow the Proper
Procedure to File a
Claim

	 	 	Not later than 24
hours after receiving
the improper claim.
	 	 	Not later than 5 days
after receiving the
improper claim.
	 	 	Not later than 30 days
after receiving the
improper claim	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	Notice of Initial
Claim Decision

	 	 	If the claim when
initially filed is
proper and complete, a
decision will be made
as soon as possible,
taking into account
the medical
exigencies, but not
later than 72 hours
after receiving the
initial claim.

If the claim is not
complete, the
Insurance Company
shall notify the
claimant as soon as
possible, but not
later than 24 hours
after receipt of the
claim. The claimant
shall have 48 hours to
provide the
information necessary
to complete the claim.
A decision will be
made not later than 48
hours after receiving
the requested
information or, within
48-hours after the
expiration of the
48-hour claimant
deadline, whichever is
earlier.
	 	 	If the claim when
initially filed is
proper and complete,
a decision will be
made within a
reasonable period of
time appropriate to
the medical
circumstances, but
not later than 15
days after receiving
the initial claim,
unless an extension,
of up to 15 days, is
necessary due to
matters beyond the
control of the Plan.
The claimant shall be
notified within the
initial 15 days if an
extension will be
needed by the Plan.
The notice shall
state the reason for
the extension.

A decision will be
made not later than
15 days after
receiving the initial
claim, unless
additional
information is
required from the
claimant. The
claimant will be
notified during the
initial 15 day
period, and shall
have 45 days to
provide the
additional
information requested
by the Plan. A
decision will be made
within 15 days after
receiving the
additional
information or,
within 15 days after
the expiration of the
45-day claimant
deadline, whichever
is earlier.
	 	 	If the claim when
initially filed is
proper and complete, a
decision will be made
within a reasonable
period of time, but
not later than 30 days
after receiving the
initial claim, unless
an extension, of up
to 15 days, is
necessary due to
matters beyond the
control of the Plan.
The claimant shall be
notified within the
initial 30 days if an
extension will be
needed by the Plan.
The notice shall state
the reason for the
extension.

A decision will be
made not later than 30
days after receiving
the initial claim,
unless additional
information is
required from the
claimant. The
claimant will be
notified during the
initial 30 day period,
and shall have 45 days
to provide the
additional information
requested by the Plan.
A decision will be
made within 15 days
after receiving the
additional information
or, within 15 days
after the expiration
of the 45-day claimant
deadline, whichever is
earlier.	 
	 	 	 	 	 	 	 	 	 	 	 	 

     If the claimant’s Concurrent Care Claim is also an Urgent Care Claim to extend a
previously approved on-going course of treatment provided over a period of time or number of
treatments, the Insurance Company will make a determination as soon as possible, taking into
account the medical exigencies, and notify the claimant of the determination within 24 hours

19

 

after receipt of the claim, provided that the claim was made to the Insurance Company at least
24 hours prior to the expiration of the prescribed period of time or number of treatments
previously approved. If the claimant’s request for extended treatment is not made at least 24
hours prior to the end of the prescribed period of time or number of treatments, the request will
be treated as an Urgent Care Claim and decided according to the timeframes described in the chart
above.

     If an ongoing course of treatment was previously approved for a specific period of time or
number of treatments, and the claimant requests to extend treatment in a non-urgent circumstance,
the claimant’s request will be considered a new claim and decided according to the Post-Service
Claim or Pre-Service Claim time limits, whichever applies.

     If the claimant’s Concurrent Care Claim is not an Urgent Care Claim, and there is a reduction
or termination of the previously approved on-going course of treatment provided over a period of
time or number of treatments (other than by Plan amendment or termination) before the end of the
period of time or number of treatments, the claimant will be notified by the Insurance Company
sufficiently in advance of the reduction or termination to allow the claimant to appeal the denial
and receive a determination on appeal before the reduction or termination of the benefit. To
appeal a denial of a Concurrent Care Claim, the claimant must follow the appeal procedures
described in Section J.2.

          d. Denial of Claims. In the event any claim for benefits is denied, in whole or in
part, the Insurance Company shall notify the claimant of such denial in writing within the time
frames set forth in Section J.1.c.; provided, however, that the notice of denial for an Urgent Care
Claim may be provided orally and a written or electronic confirmation shall follow within three (3)
days. Such written notice shall set forth, in a manner calculated to be understood by the
claimant, the following information:

               i. The specific reason(s) for the denial; and

               ii. Reference to the specific Plan provision(s) on which the denial is based; and

               iii. A description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary; and

               iv. A description of the Plan’s review 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 second review; and

               v. If an internal rule, guideline, protocol, or other similar criterion was relied upon in
denying the claim, either the specific rule, guideline, protocol, or other similar criterion, or a
statement that such rule, guideline, protocol or other similar criterion was relied upon in denying
the claim, and that a copy of such rule, guideline, protocol, or other similar criterion will be
provided to the claimant free of charge upon request; and

20

 

               vi. If the denial is based on a medical necessity or experimental treatment or similar
exclusion or limit, either an explanation of the scientific or clinical judgment for the
determination, applying the terms of the Plan to the claimant’s medical circumstances, or a
statement that such explanation will be provided to the claimant free of charge upon request.

     2. Review of Denied Claims.

          a. Named Fiduciary. The Insurance Company is the named fiduciary which has the
discretionary authority to act with respect to any appeal from a denial of benefits. The Company
is the named fiduciary which has the discretionary authority to determine eligibility for benefits
and to construe the terms of the Plan.

          b. Right to Appeal. The Insurance Company provides for a two-level appeal process.
Any person whose claim for benefits is denied, in whole or in part, or such person’s authorized
representative, may appeal the denial by submitting a written request for a review of the claim to
the Insurance Company within one hundred eighty (180) days after receiving written notice of the
denial from the Insurance Company. A request for review shall set forth all of the grounds upon
which it is based, all facts in support thereof, and any other matters which the claimant deems
pertinent. The claimant shall be solely responsible for submitting a written request for review of
the claim and any other information or evidence which the claimant intends the Insurance Company to
consider in order to render a decision on review. A claimant requesting an appeal of a denied
Urgent Care Claim may initiate an expedited appeal by calling the Insurance Company at the
toll-free number on the ID card issued by the Insurance Company. The Insurance Company may require
the claimant to submit such additional facts, documents or other material as it may deem necessary
or appropriate in making its review.

          c. Procedures on Review. If the claimant (or the claimant’s authorized
representative) requests a review of a denied claim, the following procedures shall apply:

               i. The claimant (or the claimant’s authorized representative) shall have the opportunity to
submit written comments, documents, records, and other information relating to the claim; and

               ii. The claimant (or the claimant’s authorized representative) shall be provided, upon request
and free of charge, reasonable access to, and copies of, all documents, records, and other
information Relevant to the claimant’s claim for benefits (other than legally or medically
privileged documents); and

               iii. The review shall take into account all comments, documents, records, and other
information submitted by the claimant relating to the claim, without regard to whether such
comments, documents, records, and other information were submitted or considered in the initial
benefit determination; and

               iv. The review shall not afford deference to the initial claim denial and shall be conducted
by an appropriate named fiduciary of the Plan who is neither the individual

21

 

who made the adverse benefit determination that is the subject of the appeal, nor the
subordinate of that individual; and

               v. In deciding an appeal that is based in whole or in part on a medical judgment, including
determinations with regard to whether a particular treatment, drug or other item is experimental,
investigational, or not medically necessary or appropriate, the appropriate named fiduciary shall
consult with a health care professional who has appropriate training and experience in the field of
medicine involved in the medical judgment, and such health care professional shall not be the
individual who was consulted in connection with the adverse benefit determination that is the
subject of the appeal (nor the subordinate of such individual); and

               vi. The Insurance Company shall, upon request, provide for the identification of any medical
or vocational experts whose advice was obtained on behalf of the Plan in connection with the
claimant’s adverse benefit determination, without regard to whether the advice was relied upon in
making the benefit determination.

          d. Decision on First Review. The Insurance Company shall act upon each request for a
first review within the time frames indicated in the chart below.

	 	 	 	 	 	 	 	 	 
	 	Urgent Care Claim	 	 	Pre-Service Claim	 	 	Post-Service Claim	 
	 	 	 	 	 	 	 	 	 
	 	Not later than 36 hours after receiving the appeal

	 	 	Not later than 15 days after receiving the appeal
	 	 	Not later than 30 days after receiving the appeal.	 
	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

     In the event that the Insurance Company determines on first review that benefits are
payable under the Plan, the Insurance Company will process payment of the claim in accordance with
the provisions of Section L.1. In the event that the Insurance Company confirms the denial of the
claim, in whole or in part, the Insurance Company shall notify the claimant of such denial in
writing. Such written notice shall set forth, in a manner calculated to be understood by the
claimant, the following information:

               i. The specific reason(s) for the denial; and

               ii. Reference to the specific Plan provision(s) on which the denial is based; and

               iii. A statement that the claimant 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
claimant’s claim for benefits; and

               iv. A statement describing any voluntary appeal procedures offered by the Plan and the
claimant’s right to obtain the information about such procedures, and a statement of the claimant’s
right to bring an action under Section 502(a) of ERISA following the completion of all levels of
appeal required by the Plan; and

22

 

               v. If an internal rule, guideline, protocol, or other similar criterion was relied upon in
denying the claim, either the specific rule, guideline, protocol, or other similar criterion, or a
statement that such rule, guideline, protocol or other similar criterion was relied upon in denying
the claim, and that a copy of such rule, guideline, protocol, or other similar criterion will be
provided to the claimant free of change upon request; and

               vi. If the denial is based on a medical necessity or experimental treatment or similar
exclusion or limit, either an explanation of the scientific or clinical judgment for the
determination, applying the terms of the Plan to the claimant’s medical circumstances, or a
statement that such explanation will be provided to the claimant free of charge upon request.

          e. Right to Second Appeal. If on first review, the Insurance Company upholds the
denial of a claimant’s claim for benefits, the claimant (or the claimant’s authorized
representative) may again appeal the denial by submitting a written request for a second review of
the claim to the Insurance Company within 60 days after receiving the written notice described in
Section J.2.d.

     A request for a second review shall set forth all of the grounds upon which it is based, all
facts in support thereof, and any other matters that the claimant deems pertinent. The procedures
set forth in Section J.2.c. shall apply to the second review.

          f. Decision on Second Review. The Insurance Company shall act upon each request for a
second review within the time frames indicated below.

               i. For Urgent Care Claims, not later than 36 hours after receiving the second appeal.

               ii. For Pre-Service Claims, not later than 15 days after receiving the second appeal.

               iii. For Post-Service Claims, not later than 30 days after receiving the second appeal.

     In the event that the Insurance Company determines on second review that benefits are payable
under the Plan, the Insurance Company will process payment of the claim in accordance with the
provisions of Section L.1. In the event that the Insurance Company confirms the denial of the
claim, in whole or in part, the Insurance Company shall notify the claimant of such denial in
writing. Such written notice shall set forth, in a manner calculated to be understood by the
claimant, the information specified in Section J.2.d.

     3. Voluntary Appeal.

     The Insurance Company provides for a voluntary level of appeal if a claimant’s claim for
benefits has been denied following the required second level of review. The procedure for the
voluntary level of appeal is described in the Certificate of Coverage or Summary of Coverage
provided by the Insurance Company.

23

 

     4. Exhaustion of Remedies.

     No action at law or in equity shall be brought to recover benefits under the Plan unless the
action is commenced within three years after the occurrence of the loss for which a claim is made.
No action at law or in equity shall be brought to recover a benefit unless and until the claimant
has:

          a. Submitted a written claim for benefits; and

          b. Been notified by the Insurance Company that the claim is denied; and

          c. Timely filed a written request for a first review of the claim with the Insurance Company;
and

          d. Been notified in writing that the denial of the claim has been affirmed on first review;
and

          e. Timely filed a written request for a second review of the claim with the Insurance Company,
if applicable; and

          f. Been notified in writing that the denial of the claim has been affirmed on second review,
if applicable.

     5. Right to Receive and Release Necessary Information.

     For the purposes of determining the applicability of and implementing the terms of the
provisions of the Plan or any provision of similar purpose of any other plan, the Insurance Company
may, without the consent of or notice to any individual, release to or obtain from any insurance
company or other organization or individual any information with respect to any individual which
the Insurance Company deems to be necessary for such purposes.

     Any individual claiming benefits under this Plan shall furnish to the Insurance Company such
information as may be necessary to implement this provision.

     Notwithstanding the above, no release of individual identifiable medical information will be
made without the written authorization of that individual or his parent, conservator or guardian,
if appropriate.

K. COORDINATION OF BENEFITS

     1. Provision for Coordination of Benefits.

          a. Coordination of Benefits.

               In coordinating benefits, one of the two or more plans involved shall be designated the
primary plan and the others shall be designated secondary plans. The primary plan shall pay
without regard to the other plans. If the Plan is secondary, the Insurance Company

24

 

on behalf of the Plan shall coordinate its payments with those of the other plan(s) in
accordance this Section K.

          b. Active Executives.

               With respect to active Executives and Dependents covered under the Plan, the benefits for each
claim for benefits that would otherwise be payable during a calendar year under this Plan in the
absence of this provision shall be reduced by the benefits payable for such claim under the other
plans listed in Section K.1.d. below, for the expenses covered in whole or in part under this Plan.
The rules in this paragraph apply whether or not a claim is made under one of the other plans
listed in Section K.1.d. below. When another plan provides benefits in the form of services, the
reasonable cash value of each service rendered, as determined within the sole discretion of the
Insurance Company will be considered both an expense incurred and a benefit payable.

          c. Allowable Expense.

               “Allowable Expense” for purposes of this Section K. means any health expense, part or all of
which is covered under any of the plans covering the person for whom a claim is made. The
difference between the cost of a private hospital room and the semiprivate rate is not considered
an Allowable Expense unless the patient’s stay in a private hospital room is medically necessary,
either in terms of generally accepted medical practice or as specifically defined in the Plan and
the Insurance Contract.

          d. Other Plans.

               As used in this Section K., the term “other plans” means any other plan of health expense
coverage under group insurance or any other type of coverage for persons in a group. This includes
plans that are insured and those that are not.

          e. Determination of Primary Plan.

               Except with respect to an involved plan which is the Medicare program, the primary plan shall
be determined as follows:

               i. A plan with no rules for coordination with other benefits will be deemed to pay its
benefits before a plan which contains such rules.

               ii. A plan which covers a person other than as a dependent will be deemed to pay its benefits
before a plan which covers the person as a dependent.

               iii. Except in the case of a dependent child whose parents are divorced or separated, the plan
which covers the person as a dependent of a person whose birthday comes first in a calendar year
will be primary to the plan which covers the person as a dependent of a person whose birthday
comes later in that calendar year. If both parents have the same birthday, the benefits of a plan
which covered one parent longer are determined before those of a plan which covered the other
parent for a shorter period of time.

25

 

               If the other plan does not have the rule described in Section K.1.e.iii. but instead has a
rule based on the gender of the parent and if, as a result, the plans do not agree on the order of
benefits, the rule in the other plan will determine the order of benefits.

               iv. In the case of a dependent child whose parents are divorced or separated:

                    (i) If there is a court decree which states that the parents shall share joint custody of a
dependent child, without stating that one of the parents is responsible for the health care
expenses of the child, the order of benefit determination rules specified in K.1.e.iii. will apply.

                    (ii) If there is a court decree which makes one parent financially responsible for the
medical, dental or other health care expenses of such child, the benefits of a plan which covers
the child as a dependent of such parent will be determined before the benefits of any other plan
which covers the child as a dependent child.

                    (iii) If there is no such court decree:

                         (1) If the parent with custody has not remarried, the benefits of a plan which covers the
child as a dependent of the parent with custody of the child will be determined before the benefits
of a plan which covers the child as a dependent of the parent without custody.

                         (2) If the parent with custody of the child has remarried, the benefits of a plan which covers
the child as a dependent of the parent with custody shall be determined before the benefits of a
plan which covers that child as a dependent of the stepparent. The benefits of a plan which covers
that child as a dependent of the stepparent will be determined before the benefits of a plan which
covers that child as a dependent of the parent without custody.

               v. If the rules specified in Sections K.1.e.i, K.1.e.ii, K.1.e.iii. or K.1.e.iv do not
establish an order of payment, the plan under which the person has been covered for the longest
will be deemed to pay its benefits first; except that the benefits of a plan which covers the
person on whose expenses a claim is based as a laid off or retired employee or the dependent of
such person shall be determined after the benefits of any other plan which covers such person as an
employee who is not laid-off or retired or a dependent of such person.

               If the other plan does not have provision regarding laid-off or retired employees and, as a
result, each plan determines its benefits after the other, then the above paragraph will not apply.

               vi. The benefits of a plan which covers the person on whose expenses a claim is based under a
right of continuation pursuant to federal or state law shall be determined after the benefits of
any other plan which covers the person other than under such right of continuation.

26

 

               If the other plan does not have a provision regarding the right of continuation coverage
pursuant to federal or state law and, as a result, each plan determines its benefits after the
other, then the above paragraph will not apply.

     2. Effect of Medicare.

          a. If an involved plan is Medicare, Medicare shall be the primary plan and this Plan shall be
the secondary plan except as provided below. This Plan shall be the primary plan with respect to
Medicare for the following expenses:

               i. For expenses incurred by a Participant who is either an Executive or a Dependent who is the
Spouse of an Executive, all Covered Expenses incurred during the period:

                    (i) Beginning on the first day of the first month in which the Participant became eligible for
benefits under 42 U.S.C. § 426(a) (relating to attainment of age 65); and

                    (ii) Ending on the day on which the Participant ceases to be an Executive or a Dependent of an
Executive;

Provided, however, that this period shall not include any month in which the Participant would,
upon application, be entitled to end-stage renal disease benefits under 42 U.S.C. § 426-1.

               ii. For expenses incurred by a Participant who is either an Executive or a Dependent of an
Executive, all Covered Expenses incurred during the period when:

                    (i) The Participant is eligible for or receives benefits under 42 U.S.C. § 426(b) (relating to
certain disabled individuals); or

                    (ii) The Participant is not or would not be, upon application, entitled to end-stage renal
benefits under 42 U.S.C. § 426-1; and

                    (iii) The Participant is covered by the Plan by virtue of the Member’s status as an Executive
under the Plan.

          b. Any covered person who eligible for Medicare will be subject to the following requirements:

               i. All health expenses covered under the Plan will be reduced by any Medicare benefits
available for those expenses. This reduction will be done before the health benefits of the Plan
are figured.

               ii. Charges used to satisfy a persons Medicare Part B deductible will be applied under the
Plan in the order received by the Insurance Company. Two or more charges received at the same time
will be applied starting with the largest first.

27

 

               iii. Medicare benefits will be taken into account for any person while he or she is eligible
for Medicare, regardless of whether the person is entitled to Medicare benefits.

               iv. Any rule for coordinating “other plan” benefits with those under the Plan will be applied
after the Plan’s benefits have been figured under the rules of this Section K.2. Allowable
Expenses will be reduced by any Medicare benefits available for those expenses.

     A person is “eligible for Medicare” if the person is covered under Medicare or is eligible for
Medicare but has refused Medicare coverage, dropped Medicare coverage or failed to make a proper
requires for Medicare coverage.

     Coverage will not be changed at any time when the Company’s compliance with federal law
requires this Plan’s benefits for a person to be figured before benefits are figured under
Medicare.

     3. Effect on Benefits.

     When the provisions of Section K. operate to reduce the total amount of benefits otherwise
payable to a person covered under this Plan during a calendar year, each benefit that would be
payable in the absence of this provision will be reduced proportionately, and such reduced amount
will be charged against any applicable benefit limit of this Plan.

     4. Right to Information and Recovery.

          a. Whenever payments which should have been made under this Plan in accordance with Section K.
have been made under any other plans, the Insurance Company has the right to transfer to any
organizations making these payments any amounts the Insurance Company determines to be warranted in
order to satisfy the intent of the above provisions, and amounts paid in this manner will be
considered to be benefits paid under this Plan and, to the extent of these payments, the Insurance
Company will be fully discharged from liability under this Plan.

          b. Whenever payments have been made by the Insurance Company, at any time, for Allowable
Expenses in a total amount at any time in excess of the maximum amount of payment necessary at that
time to satisfy the intent of the above provisions, the Insurance Company will have the right to
recover these payments to the extent of such excess, from among one or more of the following as the
Insurance Company shall determine: any individuals to or for or with respect to whom these
payments were made, any insurance companies, health care service plans or any organizations.

	L.  	PAYMENT OF BENEFITS

     1. Payment of Claims. The Insurance Company will process a claim in accordance with
this Section L promptly after it receives complete proof of the claim. If the Insurance Company
finds that the claim is payable under the Plan, it will send payment to the Executive. The
Insurance Company has the right to pay any benefits directly to the provider of services or

28

 

supplies, unless the Executive has informed the Insurance Company otherwise at the time the
claim is filed. Notwithstanding the foregoing, if the Plan has received a Qualified Medical Child
Support Order, payment will be made to the Alternate Recipient’s custodial parent or legal
guardian, unless payment directly to the provider of services or supplies has been authorized. In
the event the Insurance Company pays any person less than the amount to which he or she is entitled
under the Plan, the Insurance Company will promptly adjust the underpayment to the correct amount.

     2. Assignment. A Executive may assign his interest and property rights in the Plan
only with the consent of the Insurance Company as provided in the Insurance Contract.

     3. Payment to Representative. In the event that a guardian, conservator, committee or
other legal representative has been duly appointed for an Executive entitled to any payment under
the Plan, any such payment due may be made to the legal representative making a claim therefore,
and such payment so made shall be in complete discharge of the liabilities of the Plan therefore
and the obligations of the Insurance Company and the Company.

     4. Recovery of Overpayments. If the Insurance Company makes a benefit payment to or
on behalf of any person which exceeds the amount to which such person is entitled to receive under
the Plan and Insurance Contract, the Insurance Company is entitled to require the return of the
overpayment on request or to reduce any future benefit payment to such person or another person in
such person’s family by the amount of the overpayment. This Section L.4 shall not affect any other
right of recovery the Insurance Company may have with respect to such overpayment.

     5. Recovery for Third Party Expenses.

          a. Expenses Resulting From Acts of Third Person.

          When charges are incurred by a Participant for services relating to an accident, injury, or
sickness for which any benefits are payable under the Plan., and the accident, injury or sickness
arises under circumstances that my create a legal liability in another individual or organization,
and whenever the Plan pays any amount to or on behalf of a Participant (a “Third Party Expense”),
the Participant’s right of recovery (if any) from a third party shall be subrogated to the Plan to
the extent of the Third Party Expense.

          b. Duty of Notification of Third Party Expenses.

          Any Participant claiming benefits under this Plan with respect to Third Party Expenses shall
notify the Claims Administrator of expenses which are Third Party Expenses, in such manner as the
Committee shall require, at the time a claim for benefits is submitted under this Plan.

          The Participant shall submit all information, documents and any other evidence which the
Claims Administrator shall request in order to assist it in determining whether the Participant has
or will be reimbursed by any person for the Third Party Expense.

29

 

     6. Participant’s Obligations.

          If any Participant is injured through the act or omission an any third person, or if expenses
relating to an injury are reimbursable under a contract of no fault automobile insurance, the
Participant shall receive benefits under the Plan only on the condition that the Participant agrees
in writing to the following:

          a. To reimburse the Plan for the full amount of the Third Party Expense, not to exceed the
amount of recovery received from the third party or no fault automobile insurance. The Company has
the discretion to agree to a lesser amount of reimbursement, if determined to be in the best
interest of the Plan. Such amounts shall be payable immediately upon the receipt of any damages
collected against a third party or under no fault automobile insurance, whether in a legal
judgment, settlement or otherwise; provided, however, that such reimbursement shall not include
reasonable expenses in collecting such amount, including reasonable attorneys’ fees; and

          b. To execute and deliver, at the request of the Claims Administrator, such instruments,
including an assignment to the Claims Administrator of any and all claims to recover amounts from
any person for a Third Party Expense up to the amount of any benefits that would be paid under the
Plan for such Third Party Expense, and do whatever else is reasonably necessary to secure the
Plan’s rights to reimbursement out of such proceeds and

          c. To provide the Plan with a lien and order directing reimbursement of medical payments
against any damages collected against a third party or under no fault automobile insurance, whether
in a legal judgment, settlement or otherwise provided, however, that such reimbursement shall not
include reasonable expenses in collecting such amount, including reasonable attorneys’ fees. Said
lien and order shall be equal to the total amount of all benefits paid under the Plan; and

          d. To agree to a credit against payments to be made under the Plan in the future equal to the
amount of any damages collected against a third party or under no fault automobile insurance,
whether by legal judgment, settlement or otherwise, less any amount paid to the Plan pursuant to
(1) above.

     In the event that the Participant fails to comply with the requirements of this Section, such
Participant shall not be eligible to receive any further benefits under the Plan until such
Participant has so complied.

     The Plan shall have the right to intervene in any suit or other proceeding to protect the
reimbursement rights hereunder. The Participant shall be responsible for all fees of the attorney
handling the claim against the third party.

M. SOURCE OF CONTRIBUTIONS

     1. Insurance Contract. Benefits under the Plan are provided pursuant to an insurance
contract or contracts. Nothing contained in this Plan shall be deemed to create a trust of any
kind for the benefit of any Executive or Beneficiary, or create any fiduciary relationship between
the Company and any Executive or Beneficiary with respect to any assets of the Company.

30

 

     2. COBRA Contributions. Individuals who have COBRA Continuation Coverage under
Section H, shall be required to make COBRA Contributions as provided therein. The amount of COBRA
Contributions shall be determined by the Company, in the manner provided by Section I.5.A, and the
Company shall communicate any change in these amounts to individuals who are required to
contribute.

     3. Required Contributions. Each Executive who is receiving compensation from the
Company or a subsidiary or affiliate under the regular Payroll shall make any required
contributions to the Plan by Payroll deductions. Each other Executive shall make any required
contributions to the Plan on a monthly or quarterly basis or in such other manner as determined by
the Company. The Company will remit such contributions to the Insurance Company as necessary to
pay required premiums under the Insurance Contract. The amount of an Executive’s required
contributions shall be determined by the Company on the basis of premiums due under the Insurance
Contract. The Company shall communicate any change in the amount of an Executive’s required
contributions to such individuals from time to time.

     4. Company Contributions. The Company shall contribute to the Plan such amounts as
are necessary to pay required premiums under the Insurance Contract or any reasonable
administrative expenses of the Plan not paid by the Insurance Company. Except to the extent used
to pay the reasonable administrative expenses of the Plan, all Company Contributions shall be
remitted to the Insurance Company in accordance with the terms of the Insurance Contract.

     5. Payment of Expenses. The Company shall pay all expenses of the Plan except for
such expenses as are paid by the Insurance Company pursuant to the terms of the Insurance Contract
or any other agreement between the Insurance Company and the Company. The Company, or its
delegate, shall have sole discretion to determine whether an expense of the Plan shall be paid by
the Company or the Insurance Company, subject to the terms of the Insurance Contract or any other
agreement between the Insurance Contract and the Company.

     6. Limitation of Liability. No liability for the payment of benefits under the Plan
shall be imposed upon the Compensation Committee, the Company or its Officers, members of its Board
of Directors or shareholders.

N. ADMINISTRATION OF THE PLAN

     1. In General. The Plan shall be administered by the Senior Vice President, Human
Resources of McKesson. If the Senior Vice President, Human Resources is an Executive participating
in the Plan, then any discretionary action he or she takes as Administrator which directly affects
him or her as an Executive shall be specifically approved by the Compensation Committee. The
Administrator shall have the ultimate 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 Administrator shall be final and binding on all parties who have an interest in the Plan.

     2. Elections and Notices. All elections and notices made by an Executive under this
Plan shall be in writing and filed with the Administrator.

31

 

     3. Action By Board and Compensation Committee. The Board and Compensation Committee
may act under this Plan in accordance with their normal procedures and practice, including but not
limited to delegation of their authority to act under this Plan.

     4. Applicable Law and Severability. The Plan hereby created shall be construed,
administered and governed in all respects in accordance with ERISA and the laws of the State of
California to the extent that the latter are not preempted by ERISA. If any provision of this
instrument shall be held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereunder shall continue to be effective.

O. DURATION AND AMENDMENT OF THE PLAN

     1. Permanence of the Plan.

     The Plan shall continue in full force and effect unless terminated, modified, altered or
amended by the Company as provided in this Section O.

     Although the Company has established the Plan with the bona fide intention and expectation
that it will be able to make contributions indefinitely, nevertheless the Company is not and shall
not be under any obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time. The Company, through action of its Board of Directors, may,
in its sole and absolute discretion, discontinue such contributions or terminate the Plan in
accordance with its provisions at any time without any liability whatsoever for such discontinuance
or termination.

     2. Right to Amend.

     The Company shall have the power to modify, alter, amend or terminate the Plan at any time.
The Company, acting through the Board of Directors, may delegate the power and authority to amend
the Plan to other designated Company employees. The Company has delegated the power and authority
to amend the Plan to the Vice President of Human Resources and Administration as discussed in this
Section O.2. The Vice President of Human Resources and Administration shall have the power and
authority to amend the Plan in order to comply with new or changed legal requirements if such
amendments do not materially increase the cost of the Plan. The Company shall have the power and
authority to amend the Plan in all other instances. The Company shall also have the power to amend
or terminate any agreement with an Insurance Company in connection with the Plan at any time;
provided, however, that any amendment to any such agreement may be made only in accordance with the
provisions of such agreement. The Company shall have the power to increase the COBRA Contributions
or required contributions under the Plan of Members and their Dependents. Anything in Section O to
the contrary notwithstanding, no such amendment, termination, or substitution shall operate to
reduce the amount of any benefit payment otherwise payable under the Plan for charges incurred
prior to the effective date of such amendment or termination.

P. DEFINITIONS

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

32

 

relevant terms are described in the Certificate of Coverage provided by the Insurance
Company):

     1. “Active Service” means service with the Company by an Executive on a day which is one of
the Company’s scheduled work days if he is performing in the customary manner the regular duties of
his employment with the Company on that day either at one of the Company’s business establishments
or at some location to which the Company’s business requires him to travel. An Executive will be
considered in Active Service on a day which is not one of the Company’s scheduled work days only if
he was performing in the customary manner the regular duties of his employment on the next or
preceding scheduled work day or is on a Company approved vacation. Notwithstanding the foregoing,
provided that an Executive has actually begun employment (i.e., shown for work) with the Company,
for purposes of the Plan, such Executive shall also be considered to be in Active Service on a day
which is one of the Company’s scheduled work days if he is not performing in the customary manner
the regular duties of his employment with the Company due to injury or illness.

     2. “Administrator” shall mean the person specified in Section N.1.

     3. “Approved Retirement” shall mean any termination of employment with the Company after
attainment of age 65 or any retirement before age 65 (other than a termination prior to the date
the Executive has both attained age 55 and completed five “Years of Service” as defined in the
[McKesson Corporation Retirement Plan] with the approval of the Compensation Committee).

     4. “Board” shall mean the Board of Directors of McKesson.

     5. “Company” shall mean McKesson Corporation and any member of its controlled group as defined
by Sections 414(b) and 414(c) of the Internal Revenue Code of 1986, as amended.

     6. “Compensation Committee” shall mean the Compensation Committee of the Board.

     7. “Dependent” shall mean an Executive’s:

          a. Legally married Spouse unless legally separated;

          b. Domestic Partner;

          c. Unmarried children under 19 years of age from birth. Such children include the Executive’s
or Executive’s Domestic Partner’s (1) biological children, (2) legally adopted children, (3)
stepchildren, and (4) any other children with whom the Executive lives in a parent-child
relationship or whose parent is the Executive’s child and is covered as a Dependent under the
Plan.;

          d. Unmarried children after attainment of age 19 but under age 25 who are wholly dependent on
the Executive for maintenance and support and are regular, full-time students at an accredited
secondary school, college, university, vocational or technical school for

33

 

training of nurses. Such children must otherwise meet the definition of Dependent children as
provided in Section P.7.c above.

          e. Unmarried children after attainment of age 19 who are fully handicapped and who have not
been issued a personal medical conversion policy. A child is fully handicapped if the child is
not able to earn his or her own living because of mental retardation or a physical handicap which
commenced prior to the child’s attainment of age 19 and is chiefly dependent on the Executive for
maintenance and support. Such children must otherwise meet the definition of Dependent children as
contained in Section P.7.c above. An Executive must provide proof that a child is fully
handicapped to the Insurance Company and Plan Administrator no later than 31 days after the date
the child reaches age 19. The Insurance Company has the right to examine such a child as often as
needed while the handicap continues at the Insurance Company’s expense. The Insurance Company will
not require an exam more often than once each year after two years from the date the child reached
age 19.

     No one may be a Dependent of more than one Executive and no one may be covered under this Plan
as both an Executive and a Dependent. Any Dependent who is also an Executive of the Company may
elect not to be covered as an Executive under the Plan.

     8. “Domestic Partner” shall mean a person who meets and continues to meet all of the criteria
detailed in McKesson Corporation’s Affidavit Declaring Domestic Partners, provided that the
Executive has confirmed that his or her Domestic Partnership meets the requirements of the McKesson
Corporation Affidavit Declaring Domestic Partners in any manner authorized by the Company and
received a confirmation statement from the Company.

     9. “Domestic Partnership” shall mean a relationship between an Executive and a Domestic
Partner.

     10. “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

     11. “Executive” shall mean an employee of the Company selected by the Compensation Committee
to participate in this Plan pursuant to Section C.

     12. “Insurance Company” shall mean Aetna Life Insurance Company and any successor insurance
companies that may be appointed by the Company to provide benefits under the Plan.

     13. “Insurance Contract” shall mean the group health insurance contract or contracts issued to
the Company by the Insurance Company pursuant to the Plan.

     14. “McKesson” shall mean McKesson Corporation, a Delaware corporation.

     15. “Medical Child Support Order” shall mean any judgment, decree, or order (including
approval of a settlement agreement) issued by a court of competent jurisdiction which either (1)
provides for child support with respect to a child of an Executive or provides for health benefit
coverage to such a child, is made pursuant to a State domestic relations law (including a

34

 

community property law), and which relates to benefits under the Plan or (2) enforces a law
relating to medical child support described in Section 1908 of the Social Security Act, as added by
Section 13623 of the Omnibus Budget Reconciliation Act of 1993, with respect to the Plan.

     16. “Member” shall mean each Executive of the Company and Retiree and who elects to
participate in the Plan in accordance with applicable eligibility and enrollment procedures.

     17. “National Medical Support Notice” shall mean any notice issued by a State IV-D agency
pursuant to Section 466(a)(19) of the Social Security Act and Section 609(a)(5)(C) of ERISA, to the
Company pursuant to an order that obligates a Member to provide health benefit coverage for the
Member’s child or children. If properly completed, a National Medical Support Notice will be
deemed to be a Qualified Medical Child Support Order.

     18. “Participant” shall mean any individual who is covered under the Plan.

     19. “Plan” shall mean this McKesson Corporation Management Survivor Benefits Plan.

     20. “Qualified Medical Child Support Order” means a Medical Child Support Order which creates
or recognizes the existence of an Alternate Recipient’s right to, or assigns to an Alternate
Recipient the right to, receive benefits for which a Member or beneficiary is eligible under the
Plan, and satisfies the requirements stated in a. and b. below:

          a. A Qualified Medical Child Support Order must clearly specify:

               i. The name and last known mailing address of the Member and of each Alternate Recipient (or
the applicable State official if the name and address of a State official has been substituted for
the mailing address of an Alternate Recipient); and

               ii. A reasonable description of the type of coverage to be provided by the Plan to the
Alternate Recipient, or the manner in which such type of coverage is to be determined; and

               iii. The period to which such order applies.

          b. A Qualified Medical Child Support Order may not require the Plan to provide any type or
form of benefit, or any option, not otherwise provided under the Plan, except to the extent
necessary to meet the requirements of a law relating to medical child support described in Section
1396(g) of the Social Security Act (title 42).

     A Qualified Medical Child Support Order shall also include a properly completed National
Medical Support Notice.

          c. “Retiree” shall mean a former Executive who had been selected to participate in the Plan
and who is eligible to continue coverage following his Approved Retirement.

35

 

          d. “Spouse” shall mean the person to whom the Executive is legally married.

          e. “Uniformed Services” means the uniformed services specified in 38 U.S.C. § 4303(16).

          f. “USERRA” means the Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended from time to time.

Q. SUCCESSORS

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

R. EXECUTION

     This Plan Document has been restated and adopted by McKesson Corporation and such adoption is
certified to by the undersigned Officer of the Company to be effective January 1, 2004, except as
otherwise stated herein.

	 	 	 	 	 
	 	 	McKesson Corporation
	 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	Paul E. Kirinic
	

	 	 	 	Senior Vice President, Human Resources

36

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