Document:

exv10w10

EXHIBIT 10.10

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), effective as of November 1,
2008 (the “Effective Date”), by and between McKesson Corporation (the “Company”), a Delaware
corporation with its principal office at One Post Street, San Francisco, California, and John H.
Hammergren (“Executive”).

RECITALS

     A. WHEREAS, Executive and the Company have previously entered into that certain Extended
Employment Agreement dated as of April 1, 2004 (the “Prior Employment Agreement”);

     B. WHEREAS, Executive and the Company have previously amended and restated the terms of the
Prior Employment Agreement effective as of November 1, 2006;

     C. WHEREAS, the Company, in its business, develops and uses certain Confidential Information
(as defined in Paragraph 6(c) below). Such Confidential Information will necessarily be
communicated to or acquired by Executive by virtue of his employment with the Company, and the
Company has spent time, effort and money to develop such Confidential Information and to promote
and increase its goodwill;

     D. WHEREAS, the Company desires to retain the services of, and employ, Executive on its own
behalf and on behalf of its affiliated companies for the period provided in this Agreement and, in
so doing, to protect its Confidential Information and goodwill, and Executive is willing to accept
employment by the Company on a full-time basis for such period, upon the terms and conditions
hereinafter set forth; and

     E. WHEREAS, Executive and the Company wish to amend and restate the terms of the Agreement to
comply with the final regulations promulgated under section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and preserve deductibility of certain compensation under section
162(m) of the Code in accordance with Revenue Ruling 2008-13.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereto agree as follows:

	 	1.	 	Employment. Subject to the terms and conditions of this Agreement,
the Company agrees to employ Executive, and Executive agrees to accept employment
from, and remain in the employ of, the Company for the period stated in Paragraph 3
hereof.
	 
	 	2.	 	Position and Responsibilities. During the period of his employment
hereunder, Executive agrees to serve the Company, and the Company shall employ
Executive, as President and Chief Executive Officer of the

 

 

	 	 	 	Company and in such other senior corporate executive capacities consistent with
such position as may be specified from time to time by the Board of Directors of
the Company (the “Board”). During the period of his employment hereunder,
Executive shall report directly to the Board. Executive also presently serves as
Chairman of the Board of Directors of the Company (“Chairman”).

	 	3.	 	Term and Duties.

	 	(a)	 	Term of Employment. The period of Executive’s
employment under this Agreement shall be deemed to have commenced on the date
of this Agreement and shall continue until the third anniversary of the
Effective Date, unless terminated earlier in accordance with Paragraph 7
below; provided, however, that this Agreement shall renew
automatically, such that the remaining term of this Agreement is always three
(3) years, unless terminated earlier in accordance with Paragraph 7 below (the
“Term”).
	 
	 	(b)	 	Duties. During the period of his employment
hereunder and except for illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all of his business
time, attention, skill and efforts to the business and affairs of the Company
and its affiliated companies, as such business and affairs now exist and as
they may be hereafter changed or added to, under and pursuant to the general
direction of the Board; provided, however, that, (i) with the
approval of the Board (which will not be unreasonably withheld or delayed),
Executive may serve, or continue to serve, on the boards of directors of, hold
any other offices or positions in, for profit companies or organizations,
which, in the Board’s judgment, will not present any conflict of interest with
the Company or any of its subsidiaries or affiliates or divisions, or
materially affect the performance of Executive’s duties pursuant to this
Agreement and (ii) Executive may devote a portion of his time to the
management of his personal affairs or involvement in charitable activities,
which activities shall not materially affect the performance of Executive’s
duties pursuant to this Agreement. The services which are to be employed by
Executive hereunder are to be rendered in the State of California, or in such
other place or places in the United States or elsewhere as may be determined
from time to time by the Board, but are to be rendered primarily at the
Company’s principal place of business at One Post Street in San Francisco,
California. Unless and until otherwise mutually agreed to between the Company
and Executive, Executive shall be at liberty to maintain his residence in the
San Francisco Bay Area, State of California.

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	 	4.	 	Compensation and Reimbursement of Expenses; Other Benefits.

	 	(a)	 	Compensation. During the period of his employment
hereunder, Executive shall be paid a salary, in monthly or semi-monthly
installments (in accordance with the Company’s normal payroll practices for
senior executive officers), at the rate of One Million Five Hundred Eighty
Thousand Dollars ($1,580,000) per year, (or such higher salary as may be from
time to time approved by the Board (or any duly authorized Committee thereof),
any such higher salary so approved to be thereafter the minimum salary payable
to Executive during the remainder of the Term hereof), plus such additional
incentive compensation, if any, as may be awarded to him yearly by the Board
(or any duly authorized Committee thereof). For purposes of the MIP (as
defined in subparagraph (c) below), for each of the Company’s fiscal years
ending during the Term of this Agreement, Executive’s Individual Target Award
(as defined in the MIP) shall be no less than One Hundred and Fifty Percent
(150%), (or such Individual Target Award percentage as may be from time to
time approved by the Board, or any duly authorized Committee thereof, any such
higher percentage so approved to be thereafter the minimum Individual Target
Award percentage for Executive during the remainder of the Term hereof), of
his base salary for the applicable Year (as defined in the MIP).
	 
	 	(b)	 	Reimbursement of Expenses. The Company shall pay or
reimburse Executive, in accordance with its normal policies and practices, for
all reasonable travel and other expenses incurred by Executive in performing
his obligations hereunder; provided, however, any such expenses eligible for
reimbursement that are taxable to Executive and incurred during the course of
Executive’s employment may not affect the expenses eligible for reimbursement
in any other taxable year. The Company further agrees to furnish Executive
with such assistance and accommodations as shall be suitable to the character
of Executive’s position with the Company and adequate for the performance of
his duties hereunder.
	 
	 	(c)	 	Other Benefits. During the period of his employment
hereunder, Executive shall be entitled to receive all other benefits of
employment generally available to other members of the Company’s management
and those benefits for which key executives are or shall become eligible, when
and as he becomes eligible therefor, including without limitation, group
health and life insurance benefits, short and long-term disability plans,
deferred compensation plans, and participation in the Company’s Profit-Sharing
Investment Plan, Employee Stock Purchase Plan, Company-sponsored medical plan,
Management Incentive Plan (“MIP”), Long Term Incentive Plan, Executive Benefit
Retirement Plan (“EBRP”), Executive Survivor Benefits Plan (“ESBP”), Stock

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	 	 	 	Purchase Plan and 1994 Stock Option and Restricted Stock Plan (or any
other similar plan or arrangement), and the Company agrees that none of
such benefits shall be altered in any manner or in such a way as to reduce
any then existing entitlement of Executive thereunder or any entitlement
provided for hereunder. For purposes of the EBRP, beginning with Fiscal
Year 2006, Executive’s “Average Final Compensation” shall mean one-fifth
of the sum of (x) the base salary and (y) one hundred and fifty percent
(150%) of the annual bonuses under the MIP or any successor or replacement
plans (including base salary and annual MIP bonuses or portions thereof
voluntarily deferred under a cash or deferred plan or any other tax
qualified or non-qualified salary deferral plan) in each case earned by
Executive for the five consecutive years of full-time continuous
employment with the Company which (a) fall within the 15-year period
ending on the first day of the month following Executive’s Separation from
Service (as defined in the EBRP) with the Company and (b) produce the
highest such sum. To the extent specific provisions of this Agreement
that relate to other plans or arrangements of the Company are more
favorable than the terms and conditions set forth in such other plan or
arrangement of the Company, the provisions of this Agreement shall
control. Additionally, to the extent any other plan or arrangement of the
Company contains provisions regarding noncompetition, unauthorized use of
confidential information, or nonsolicitation, such provisions shall not be
deemed to have been violated by Executive except to the extent his
activities would also constitute a violation of similar provisions
contained herein.

	 	5.	 	Benefits Payable Upon Disability or Death.

	 	(a)	 	Disability Benefits. If, during the term of
Executive’s employment hereunder, Executive sustains a disability, as defined
in Treasury Regulation section 1.409A-3(i)(4)(i) or -3(i)(4)(iii), the Company
shall continue to pay Executive his then current salary hereunder during the
period of such disability at the time of the regular payroll schedule; or, if
less, for a period of (12) calendar months, at which time the Company’s
obligations hereunder (other than as provided herein) shall cease and
terminate. Following the expiration of such 12-month period, Executive shall
be eligible to receive his benefits pursuant to the EBRP calculated at the
percentage in effect at the time of the disability as described in
Paragraph 8(b)(i)(E) herein, subject to a maximum level of seventy-five
percent (75%), of Average Final Compensation (as defined in Paragraph 4(c)
above) without regard to any reduction for early retirement; provided that the
lump-sum payment for this Approved Retirement shall never be less than the
lump-sum

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	 	 	 	payment that would have been provided under Executive’s Prior Employment
Agreement for an Approved Retirement under EBRP on April 1, 2004 (the
“Minimum Lump-Sum Payment”).

	 	(b)	 	Death Benefits. In the event of the death of
Executive during the term of his employment hereunder, (i) Executive’s salary
payable hereunder shall continue to be paid to Executive’s surviving spouse,
or if there is no spouse surviving, then to Executive’s designee or
representative (as the case may be) at the time of the regular payroll
schedule through the six-month period following the end of the calendar month
in which Executive’s death occurs and (ii) the benefits payable under the
EBRP, subject to the Minimum Lump-Sum Payment described in Paragraph 5(a)
above, calculated at the percentage in effect at the time of his death as
described in Paragraph 8(b)(i)(E) herein, subject to a maximum level of
seventy-five percent (75%), of Average Final Compensation (as defined in
Paragraph 4(c) above) shall be payable without regard to any reduction for
early retirement in a lump sum as soon as practicable, but not later than
ninety (90) days after Executive’s death. Thereafter, all of the Company’s
obligations hereunder (other than as provided herein) shall cease and
terminate.
	 
	 	(c)	 	Other Plans. Except as specifically provided herein,
the provisions of this Paragraph 5 shall not affect (i) any rights of
Executive’s heirs, administrators, executors, legatees, beneficiaries or
assigns under the Company’s Profit-Sharing Investment Plan, EBRP, Long Term
Incentive Plan, ESBP, 1994 Stock Option and Restricted Stock Plan (or any
similar plan or arrangement), any stock purchase plan or any other employee
benefit plan of the Company, and any such rights shall be governed by the
terms of the respective plans, or (ii) any rights that exist with respect to
indemnification or directors and officers insurance or any other rights
hereunder which are intended to continue after a termination of employment.

	 	6.	 	Obligations of Executive During and After Employment.

	 	(a)	 	Noncompetition. Executive agrees that during the
Term of his employment hereunder, he will engage in no other business
activities, directly or indirectly, which are or may be competitive with or
which might place him in a competing position to that of the Company; or any
affiliated company, without the prior written consent of the Board. Without
any inference as to any other activity, the foregoing shall not limit
ownership by Executive of (i) less than one percent (1%) of the common stock
or public debt of any publicly traded entity; (ii) less than five percent (5%)
in any

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	 	 	 	investment pool, hedge fund, private equity fund or other similar vehicle
in which Executive has no control over the investments that are made by
such investment pool, hedge fund, private equity fund or other similar
vehicle; or (iii) the amount of stock or other interests Executive holds
as of the Effective Date of this Agreement in the entities listed on
Schedule 6(a) hereof, provided that Executive is not actively engaged in
the management of such entities.

	 	(b)	 	Unauthorized Use of Confidential Information.
Executive acknowledges and agrees that (i) during the course of his employment
Executive will have produced and/or have access to Confidential Information,
of the Company and its affiliated companies, and (ii) the unauthorized use or
sale of any of such confidential or proprietary information at any time would
harm the Company and would constitute unfair competition with the Company.
Executive promises and agrees not to engage in any unfair competition with the
Company by reason of Executive’s use of Confidential Information either during
or after the Term of his employment hereunder. Therefore, during and
subsequent to his employment by the Company and its affiliated companies,
Executive agrees to hold in confidence and not, directly or indirectly,
disclose, use, copy or make lists of any such information, except (x) pursuant
to his duties hereunder during his employment by the Company, (y) to the
extent expressly authorized by the Company in writing or as required by law or
(z) to comply with a legal process, provided Executive promptly notifies the
Company in order that the Company, at its expense, may seek a protective order
and Executive cooperates with the Company in seeking such order. All records,
files, drawings, documents, equipment, and the like, or copies thereof,
relating to the Company’s business, or the business of any of its affiliated
companies, which Executive shall prepare, use, or come into contact with,
shall be and remain the sole property of the Company, and shall not be removed
(except to allow Executive to perform his responsibilities hereunder while
traveling for business purposes or otherwise working away from his office)
from the Company’s or the affiliated company’s premises without its prior
written consent, and shall be promptly returned to the Company upon
termination of employment with the Company and its affiliated companies. This
Paragraph 6(b) shall survive the termination or expiration of the term of
Executive’s employment hereunder.
	 
	 	(c)	 	Confidential Information Defined. For purposes of
this Agreement, “Confidential Information” means all information (whether
reduced to written, electronic, magnetic or other tangible

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	 	 	 	form) acquired in any way by Executive during the course of his employment
with the Company or any of its affiliated companies concerning the
products, projects, activities, business or affairs of the Company and its
affiliated companies or the Company’s or any of its affiliated companies’
customers, including, without limitation, (i) all information concerning
trade secrets of the Company and its affiliated companies, including
computer programs, system documentation, special hardware, product
hardware, related software development, manuals, formulae, processes,
methods, machines, compositions, ideas, improvements or inventions of the
Company and its affiliated companies, (ii) all sales and financial
information concerning the Company and its affiliated companies, (iii) all
customer and supplier lists of the Company and its affiliated companies,
(iv) all information concerning products or projects under development of
the Company and its affiliated companies or marketing plans for any of
those products or projects, and (v) all information in any way concerning
the products, projects, activities, business or affairs of customers of
the Company and its affiliated companies which was furnished to him by the
Company or any of its agents or customers; provided, however, that
Confidential Information does not include information which (A) becomes
available to the public or the industry in which the Company operates
other than as a result of a disclosure by Executive (other than in the
normal course of Executive’s duties hereunder), (B) was available to him
on a nonconfidential basis outside of his employment with the Company, or
(C) becomes available to him on a non-confidential basis from a source
that Executive believes in good faith is not under an obligation of
confidentiality to the Company.

	 	(d)	 	Nonsolicitation. Executive recognizes and
acknowledges that it is essential for the proper protection of the business of
the Company and its affiliated companies that Executive be restrained for a
reasonable period following the termination of Executive’s employment with the
Company and its affiliated companies from:  (i) soliciting or inducing any
employee of the Company or any of its affiliated companies to leave the employ
of the Company or any of its affiliated companies; or (ii) hiring or
attempting to hire any employee of the Company or any of its affiliated
companies. Accordingly, Executive agrees that during the Term of his
employment hereunder, and for the Restricted Period thereafter following the
termination of Executive’s employment with the Company and its affiliated
companies for any reason, Executive shall not, directly or indirectly, hire,
solicit, aid in or encourage the hiring and/or solicitation of, contract with,
aid in or encourage the contracting with, or induce or encourage to leave the
employment of the Company or any of its affiliated companies, any employee

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	 	 	 	of the Company or any of its affiliated companies. Notwithstanding the
foregoing, nothing in this Paragraph 6(d) shall prohibit Executive from
providing references on an unsolicited basis with respect to employees of
the Company. For purposes of this Paragraph 6(d), the “Restricted Period”
shall be deemed to be equal to the longer of (i) two (2) years following
the termination of Executive’s employment for any reason, or (ii) the
period during which Executive is receiving salary continuation payments
hereunder. This Paragraph 6(d) shall survive the termination or
expiration of this Agreement.

	 	(e)	 	Nonsolicitation of Customers. Executive recognizes
and acknowledges that it is essential for the proper protection of the
business of the Company and its affiliated companies that Executive be
restrained for a reasonable period following the termination of Executive’s
employment with the Company and its affiliated companies from directly and
personally soliciting the trade of or trading with the customers of the
Company or any of its affiliated companies for any competitive business
purpose. Accordingly, Executive agrees that during the Term of his employment
hereunder, and for the Restricted Period thereafter following the termination
of Executive’s employment with the Company and its affiliated companies for
any reason, Executive shall not directly and personally solicit, or use
Confidential Information to aid in the solicitation of, contract with, or
service any person or entity which is, or was, within two (2) years prior to
the termination of Executive’s employment with the Company and its affiliated
companies, a customer or client of the Company or any of its affiliated
companies for the purpose of offering or selling a product or service
competitive with any of those offered by the Company or any of its affiliated
companies. For purposes of this Paragraph 6(e), the “Restricted Period” shall
be deemed to be equal to the longer of (i) two (2) years following the
termination of Executive’s employment for any reason, or (ii) the period
during which Executive is receiving salary continuation payments hereunder.
This Paragraph 6(e) shall survive the termination or expiration of this
Agreement.
	 
	 	(f)	 	Remedy for Breach. Executive agrees that in the
event of a breach or threatened breach of any of the covenants contained in
this Paragraph 6, the Company shall have the right and remedy to have such
covenants specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that any material breach of any of the covenants will
cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company.

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	 	(g)	 	Mutual Dependence. Executive understands and agrees
that his full compliance with the provisions of this Section 6 is an express
condition for and mutually dependent upon the obligations of the Company to
pay Executive his compensation and benefits, including severance pay, during
the remainder of the Term. Executive further understands and agrees that in
the event that any of the provisions of this Section 6 are rendered void,
invalid, illegal or otherwise unenforceable, in whole or in substantial part,
as a result of actions not initiated by the Company or its agent, the
Company’s obligations to pay Executive his Base Salary, bonus or any other
compensation and benefits, including severance pay, may be terminated
immediately.

	 	7.	 	Termination.

	 	(a)	 	For Cause. Notwithstanding anything herein to the
contrary, the Company may, without liability, terminate Executive’s employment
hereunder for Cause (as defined below) at any time within ninety (90) days of
the date the Board of Directors, or of any Committee thereof, first has
knowledge of the event justifying such termination by delivery of a Notice of
Termination (as defined in subparagraph (d) below) from the Board (or any duly
authorized Committee thereof) specifying such Cause, and thereafter, the
Company’s obligations hereunder shall cease and terminate.

	 	(i)	 	Definition of Cause. Except as
provided in Paragraph 8(c)(iii) below, as used herein, the term
“Cause” shall mean (i) Executive’s willful engaging in misconduct
with regard to the Company or any of its affiliated companies which
is demonstrably and materially injurious to the Company and its
affiliated companies taken as a whole, (ii) Executive’s willful
dishonesty of a material nature involving the Company’s or any of its
affiliated companies’ assets, or (iii) a material failure by
Executive to comply with any of the provisions of this Agreement. No
act, or failure to act, on Executive’s part shall be considered
“willful” unless done, or omitted to be done, by Executive not in
good faith and without reasonable belief that Executive’s action or
omission was in the best interest of the Company or its subsidiaries.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause pursuant to this Paragraph 7(a) unless and
until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
three quarters of the entire membership of the Board at a meeting of
the Board called and held for the

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	 	 	 	purpose of making a determination of whether Cause for termination
exists (after reasonable notice to Executive and an opportunity
for Executive to be heard before the Board), finding that in the
good faith opinion of the Board, Executive was guilty of
misconduct as set forth above in this subparagraph 7(a)(i) and
specifying the particulars thereof in detail. In addition, if the
conduct alleged to have constituted Cause is curable (as
determined by the Board), the Notice of Termination shall not be
delivered until after the Board (or any duly authorized Committee
thereof) shall have given Executive written notice specifying the
conduct alleged to have constituted such Cause and Executive has
failed to cure such conduct, within fifteen (15) days following
receipt of such notice.

	 	(ii)	 	Arbitration Required to Confirm
Cause. In the event of a termination for Cause pursuant to this
Paragraph 7(a) or pursuant to subparagraph 8(c)(iii), the Company
shall continue to pay Executive’s then current compensation as
specified in this Agreement until the issuance of an arbitration
award affirming the Company’s action. Such arbitration shall be held
in accordance with the provisions of Paragraph 10(c) below. In the
event the award upholds the action of the Company, Executive shall
promptly repay to the Company any sums received pursuant to
Paragraph 8 below, following termination of employment.

	 	(b)	 	Other Than for Cause, Performance, Reorganization; Any
Reason or Reasons. Notwithstanding anything herein to the contrary, the
Company may also terminate Executive’s employment (without regard to any
general or specific policies of the Company relating to the employment or
termination of its employees) (i) should Executive fail to perform his duties
hereunder in a manner satisfactory to the Board, provided that Executive shall
first be given written notice of such unsatisfactory performance and a period
of ninety (90) days to improve such performance to a level deemed acceptable
to the Board, (ii) should Executive’s position be eliminated as a result of a
reorganization or restructuring of the Company or any of its affiliated
companies or (iii) for any other reason or reasons.
	 
	 	(c)	 	Termination by Executive. Executive may terminate
his employment hereunder with or without Good Reason, including Retirement as
defined in Paragraph 8(a)(iv) below, by delivery of a Notice of Termination to
the Company, provided that any such Notice of Termination for Good Reason
shall be given within ninety (90) days after the occurrence of the event
giving rise to

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	 	 	 	Good Reason, which notice shall specify the act, or failure to act,
alleged to give rise to Good Reason hereunder and shall otherwise comply
with the provisions of subparagraph (d) below. If Executive gives the
Company such Notice of Termination, the Company shall have fifteen (15)
days after receipt of such notice to remedy the facts and circumstances
that allegedly gave rise to Good Reason. In the event Executive does not
provide a Notice of Termination to the Company of termination for Good
Reason, such termination shall be deemed a voluntary resignation by
Executive.

	 	(i)	 	Definition of Good Reason. As used
herein, the term “Good Reason” shall mean any of the following acts
or failures to act, if taken without the express written consent of
Executive, (A) any material change by the Company in Executive’s
functions, duties or responsibilities as President and Chief
Executive Officer, which change would cause Executive’s position with
the Company to become of less dignity, responsibility, importance, or
scope as compared to the position and attributes that applied to
Executive as of the Effective Date, or an adverse change in
Executive’s title, position or his obligation and right to report
directly to the Board, provided, however that “Good Reason shall not
be deemed to exist if Executive ceases to serve as Chairman; (B) any
reduction in Executive’s base annual salary, MIP target or Long Term
Incentive compensation (LTI) targets, which LTI targets include cash
awards with performance periods greater than one year and equity
based grants, except for reductions that are equivalent to reductions
applicable to executive officers of the Company; (C) any material
failure by the Company to comply with any of the provisions of the
Agreement; (D) the Company’s requiring Executive to be based at any
office or location more than 25 miles from the office at which
Executive is based as of the Effective Date, except for travel
reasonably required in the performance of Executive’s
responsibilities; (E) any failure by the Company to obtain the
express assumption of the Agreement by any successor or assign of the
Company; (F) cancellation of the automatic renewal mechanism set
forth in Paragraph 3(a) above; (G) if the Board removes Executive as
Chairman at or after a Change in Control (or prior to a Change in
Control if at the request of any third party participating in or
causing the Change in Control), unless such removal is required by
then-applicable law; or (H) a change in the majority of the members
of the Company’s Board of Directors as it was construed immediately
prior to the Change in Control. Executive’s

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	 	 	 	right to terminate employment for Good Reason pursuant to this
Paragraph 7 shall not be affected by Executive’s incapacity due to
physical or mental illness.

	 	(d)	 	Notice of Termination. Any termination of
Executive’s employment by the Company or by Executive, including Retirement as
defined in Paragraph 8(a)(iv) below, hereunder shall be communicated by a
Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provisions in this Agreement relied upon and
which sets forth (i) in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive’s employment under the
provision so indicated and (ii) the date of Executive’s termination of
employment, which shall be no earlier than sixty (60) days after such Notice
is received by the other party. Any purported termination of Executive’s
employment by the Company which is not effected pursuant to a Notice of
Termination satisfying the requirements of this Agreement shall not be
effective. In the case of a termination for Cause, the Notice of Termination
shall also satisfy the requirements set forth in Paragraph 7(a).

	 	8.	 	Obligations of the Company on Termination of Employment.

	 	(a)	 	For Cause; Voluntary Resignation; Retirement.

	 	(i)	 	For Cause. If (i) the Company
terminates Executive’s employment for Cause hereunder or
(ii) Executive terminates his employment with the Company other than
for Good Reason, then, except as otherwise specifically set forth
herein, all of the Company’s obligations hereunder shall immediately
cease and terminate. Executive shall thereupon have no further right
or entitlement to additional salary, incentive compensation payments
or awards, or any perquisites from the Company whatsoever, and
Executive’s rights, if any, under the Company’s employee and
executive benefit plans shall be determined solely in accordance with
the express terms of the respective plans. Notwithstanding the
foregoing, Executive shall be entitled to receive any accrued base
salary, accrued but unused vacation and unreimbursed expenses.
	 
	 	(ii)	 	Voluntary Resignation. If
Executive terminates employment other than for Good Reason, Executive
shall receive upon termination of employment (1) the benefits under
Paragraphs 8(b)(i)(C) and 8(b)(i)(H) below and

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	 	 	 	(2) subject to the express special forfeiture and repayment
provisions of the EBRP (or the terms and conditions applicable
thereto), an Approved Retirement (as defined in the EBRP)
commencing on the expiration of this Agreement, which shall be
calculated at the initial level of 60% of Average Final
Compensation (as modified by Paragraph 4(c) above) and increased
by 1.5% per full year from April 1, 2004 until his resignation,
with a maximum benefit level of 75% of Average Final Compensation
and without any reduction for early retirement; provided that the
foregoing EBRP benefit shall be subject to the Minimum Lump-Sum
Payment described in Paragraph 5(a) above.

	 	(iii)	 	Retirement. If Executive
terminates employment due to Retirement, as defined in Paragraph
8(a)(iv) below, then the Company shall provide to Executive the same
benefits in Paragraph 8(a)(ii) above, and shall,

	 	(A)	 	allow any unvested equity,
granted under a stock plan that the Company has adopted, to
continue vesting as scheduled after Executive’s termination
of employment,
	 
	 	(B)	 	extend the post-termination
exercise period of any outstanding stock option, granted
under a stock plan that the Company has adopted, to the full
term of the stock option; provided that the post-termination
exercise period shall not extend beyond the earlier of (i)
the term of the stock option, or (ii) ten years after the
applicable stock option has been granted;
	 
	 	(C)	 	allow the continued
participation in the Company’s Long Term Incentive Plan, MIP
and performance restricted stock units program (“PeRSUs”)
pursuant to the Company’s 2005 Stock Plan (or successor
plan(s)) for performance period(s) in which the performance
metrics and targets were approved by the Company’s Board (or
duly authorized Committee thereof) prior to Executive’s
Retirement, but which performance period is scheduled to end
after Executive’s Retirement; provided that

(1) the awards made under those plans shall be
made at the same time, determined on the same
basis and subject to the same criteria and
results as other executive

13

 

officers who participate in those plans;
provided, however, that the individual modifier
applied for the determination of payments under
MIP, if any, shall be the modifier equal to the
average modifier applied to Executive’s MIP
awards in the three previous consecutive
performance periods preceding Executive’s
Retirement,

(2) the awards or payments under this Paragraph
8(a)(iii)(C) shall not be prorated for actual
services rendered during the applicable
performance period, and

(3) in lieu of a grant of PeRSUs, the Company
shall pay to Executive on the third-year
anniversary of the date that Executive would have
received a PeRSU grant if he remained an employee
of the Company, a cash lump sum equal to the
product of the closing price of the Company
common stock on such third-year anniversary and
the number of PeRSUs that would have been granted
to Executive at the end of the performance period
if he remained an employee of the Company;
provided, however, that the individual modifier
applied for the determination of PeRSUs that
would have been granted, if any, to Executive at
the end of the performance period (if he had
remained an employee) shall be the modifier equal
to the average modifier applied to Executive’s
PeRSUs in the three previous consecutive
performance periods preceding Executive’s
Retirement,

	 	(iv)	 	For purposes of Paragraphs 7(c), 7(d) and
8(a)(iii), “Retirement” shall mean

	 	(A)	 	Executive voluntarily
terminates employment other than for Good Reason after the
close of the fiscal year in which Executive has attained at
least age fifty-five (55) and has completed fifteen (15)
years of continuous service in one or more of the following
positions: Executive Chairman of the
Board, Chief Executive Officer and/or Co-Chief Executive
Officer; and

14

 

	 	(B)	 	the Board has either (1)
elected or approved by resolution Executive’s successor as
Chief Executive Officer or (2) approved a plan of succession.

	 	(v)	 	If Executive breaches his obligations under
Section 6, then Executive shall forfeit any compensation or benefit
provided in Paragraphs 8(a)(iii)(A) through (C).

	 	(b)	 	Termination Other than for Cause; Termination for Good
Reason.

	 	(i)	 	If the Company terminates Executive’s
employment pursuant to Paragraph 7(b) above or Executive terminates
his employment with the Company for Good Reason, in both cases prior
to a Change in Control of the Company or at any time other than
within the two (2) years immediately following a Change in Control,
then in lieu of any benefits payable pursuant to the Company’s
Executive Severance Policy (so long as the compensation and benefits
payable hereunder equal or exceed those payable under said Policy)
and in complete satisfaction and discharge of all of its obligations
to Executive hereunder (other than obligations that arise under
Paragraphs 9 or 10 hereof), the Company shall, while Executive is not
in breach of the provisions of Paragraph 6 hereof; provided any such
suspended payments and/or benefits shall resume once any such breach
has been cured,

	 	(A)	 	provide Executive with
monthly cash payments equal to Executive’s final monthly base
salary (“Severance”) for the remainder of the Term (the
“Severance Period”); provided that, the amount of severance
that would be paid during the six (6) months after
Executive’s termination of employment shall be paid in a lump
sum in the seventh (7th) month following such
termination, and such lump sum amount shall accrue interest
at the Deferred Compensation Administration Plan III Rate
(the “DCAP Rate”) for the period of such deferral, which
interest shall be paid together with such payment,
	 
	 	(B)	 	provide Executive with a
cash payment equal to Executive’s incentive award
compensation under the terms of the Company’s MIP for each
fiscal

15

 

	 	 	 	year ending with or within the Severance Period, such MIP
awards to be based on performance metrics established for
the applicable performance period and Executive’s
Individual Target Award existing at the time of his
termination of employment, and to be made at the time and
in the manner applicable to MIP payments for current
employees; provided, however, that the individual modifier
applied for the determination of payments under MIP, if
any, shall be the modifier equal to the average modifier
applied to Executive’s MIP awards in the three previous
consecutive performance periods preceding Executive’s
Retirement,

	 	(C)	 	provide Executive with
lifetime (x) medical benefits which are the greater of (1)
medical benefits that Executive has as of the date of this
Agreement or (2) medical benefits that are comparable to the
medical benefits made available to the Company’s then current
Chief Executive Officer (the determination of which benefit
is greater shall be determined based on the fair market value
of the medical benefit), (y) financial counseling program
under the applicable policies as they existed on the date of
his termination, and (z) office space and secretarial support
services as may be suitable and adequate for Executive’s
needs, which costs any of the preceding benefits will be paid
directly to the third-party provider of such benefits, if
any; provided, however, the benefits provided under this
sub-paragraph (C) may not affect the benefits provided in any
other taxable year and are not subject to liquidation or
exchange for another benefit,
	 
	 	(D)	 	[left blank intentionally],
	 
	 	(E)	 	subject to the express
special forfeiture and repayment provisions of the respective
plans (or the terms and conditions applicable thereto),
continue the accrual and vesting of Executive’s rights,
benefits and existing awards for the Severance Period for
purposes of the EBRP and ESBP (with Executive’s benefits, for
purposes of those two plans only, calculated on the basis of
Executive receiving (x) an Approved Retirement (as defined in

16

 

	 	 	 	the EBRP) commencing on the expiration of this Agreement,
regardless of Executive’s age at termination, and, (y)
with respect to the EBRP, a benefit calculated at the
initial level of 60% of Average Final Compensation (as
defined in Paragraph 4(c) above) and increased by 0.125%
per completed month (i.e., 1.5% per full year) from April
1, 2004 until the expiration of the Severance Period, with
a maximum benefit level of 75% of Average Final
Compensation under the EBRP without any reduction for
early retirement); provided that, in the event Executive’s
employment is terminated in connection with a Change of
Control pursuant to Paragraph 8(c) below, the foregoing
EBRP benefit shall be subject to the Minimum Lump-Sum
Payment described in Paragraph 5(a) above,

	 	(F)	 	subject to both (x) the
express special forfeiture and repayment provisions of the
applicable plans or arrangements (or the terms and conditions
applicable thereto) and (y) the provisions of
subparagraph (b)(ii) below, accelerate the vesting of all
Executive’s awards granted prior to such termination of
employment pursuant to the Company’s 1994 Stock Option and
Restricted Stock Plan (or any similar plan or arrangement);
provided, that Executive shall in no event be entitled to or
receive additional grants or awards subsequent to the date of
his termination of employment,
	 
	 	(G)	 	continue Executive’s
participation in the Company’s Long Term Incentive Plan for
the Severance Period (but not thereafter) (pro-rating
performance periods as of the date Executive ceased rendering
services to the Company); provided, that Executive shall not
participate in any way whatsoever in any performance period
commencing subsequent to the date of termination,
	 
	 	(H)	 	deem Executive’s
termination to have occurred as if he had retired for
purposes of both the Deferred Compensation Administration
Plan III and the 1994 Stock Option and Restricted Stock Plan
(or any similar plan or arrangement), and

17

 

	 	(I)	 	terminate Executive’s
participation in the Company’s tax-qualified profit-sharing
plans and stock purchase plans, pursuant to the terms of the
respective plans, as of the date Executive’s employment ends.

During the Severance Period, Executive shall have no obligation to
seek other employment and the Company shall not (x) have the right
of offset as a result of any compensation Executive may receive
from a subsequent employer or, (y) while Executive is not in
breach of the provisions of Paragraph 6, reduce its payments
pursuant to this Paragraph 8(b)(i).

	 	(c)	 	Termination in Connection with a Change in Control.
Notwithstanding the provisions of Paragraph 8(a) and (b) hereof, in the event
of an occurrence of a Change in Control (which shall include the 1999 Change
in Control), the following provisions shall apply in the event of Executive’s
termination of employment (i) within two (2) years following such Change in
Control or (ii) within the six (6) month period immediately preceding such
Change in Control if such termination of employment occurs at the direction of
the person or entity that is involved in, or otherwise in connection with,
such Change in Control:

	 	(i)	 	If the Company terminates Executive’s
employment pursuant to Paragraph 7(b) above or otherwise without
Cause (as defined in subparagraph 8(c)(iii) below) or Executive
terminates his employment with the Company for Good Reason, then the
Company shall, in lieu of the benefits payable under
subparagraphs (A) and (B) of Paragraph 8(b)(i) above, immediately pay
to Executive in a cash lump sum an amount equal to the greater
of:  (x) 2.99 multiplied by Executive’s “base amount” determined
pursuant to section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) and (y) the sum of the amounts described in
clauses (A) and (B) in Paragraph 8(b)(i) above and shall take all
actions described in clauses (C) through (I) in Paragraph 8(b)(i)
hereof; provided that, payment under (x) shall be delayed in the same
manner as payments provided under paragraph b(i)(A) and payments
under (y) relating to Paragraphs (b)(i)(A) and (b)(i)(B) shall be
delayed in the same manner as provided in paragraphs (b)(i)(A) and
(b)(i)(B), respectively and such payments shall accrue interest at
the DCAP Rate for the period of such delay, which interest shall be
paid together with such payment.

18

 

	 	(ii)	 	Change in Control. For purposes of
this Agreement, a “Change in Control” of the Company shall be deemed
to have occurred if any of the events set forth in any one of the
following subparagraphs shall occur; (A) during any period of not
more than twelve consecutive months, any “person” (as such term is
used in sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), excluding the Company or any
of its affiliates, a trustee or any fiduciary holding securities
under an employee benefit plan of the Company or any of its
affiliates, an underwriter temporarily holding securities pursuant to
an offering of such securities, or a corporation owned, directly or
indirectly, by stockholders of the Company in substantially the same
proportions as their ownership of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13(d)(3) under the Exchange
Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting power of the
Company’s then outstanding securities; (B) during any period of not
more than twelve consecutive months, individuals who at the beginning
of such period constitute the Board and any new director (other than
a director designated by a Person who has entered into an agreement
with the Company to effect a transaction described in clause (A), (C)
or (D) of this subparagraph) whose election by the Board or
nomination for election by the Company’s stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; (C) the
stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than (x) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, at least 50% of the combined
voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (y) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction) in which
no Person acquires more than 50% of

19

 

	 	 	 	the combined voting power of the Company’s then outstanding
securities; or (D) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of
the Company’s assets.

	 	 	 	Notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if there is consummated any transaction or
series of integrated transactions immediately following which, in
the judgment of the Compensation Committee of the Board, the
holders of the Company’s common stock immediately prior to such
transaction or series of transactions continue to have the same
proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately prior
to such transaction or series of transactions.

	 	(iii)	 	Notwithstanding anything to the contrary
contained in subparagraph 7(a)(i), for purposes of this Paragraph 8
(c), termination by the Company of Executive’s employment for “Cause”
shall mean termination upon Executive’s willful engaging in
misconduct which is demonstrably and materially injurious to the
Company and its subsidiaries taken as a whole. No act, or failure to
act, on Executive’s part shall be considered “willful” unless done,
or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive’s action or omission was in the best
interest of the Company or its subsidiaries. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for
Cause pursuant to this subparagraph 8(c)(iii) unless and until there
shall have been delivered to Executive a copy of a resolution duly
adopted by the affirmative vote of not less than three quarters of
the entire membership of the Board at a meeting of the Board called
and held for the purpose of making a determination of whether Cause
for termination exists (after reasonable notice to Executive and an
opportunity for Executive to be heard before the Board), finding that
in the good faith opinion of the Board, Executive was guilty of
misconduct as set forth above in this subparagraph 8(c)(iii) and
specifying the particulars thereof in detail. In addition, if the
conduct alleged to have constituted Cause is curable (as determined
by the Board), the Notice of Termination shall not be delivered until
after the Board (or any duly authorized Committee thereof) shall have
given Executive written notice specifying the conduct alleged to have

20

 

	 	 	 	constituted such Cause and Executive has failed to cure such
conduct, within fifteen (15) days following receipt of such
notice.

	 	(iv)	 	Remedy by Company. If, within two
years following a Change in Control, Executive terminates employment
for Good Reason in accordance with the provisions of Paragraph 8(c),
Executive shall make a good faith reasonable determination
immediately after the fifteen-day period whether the facts and
circumstances that allegedly gave rise to Good Reason have been
remedied and shall communicate such determination in writing to the
Company (the “Executive Determination”). If Executive determines
that adequate remedy has not occurred, then the initial Notice of
Termination shall remain in effect. The Company shall not be bound
by any Executive Determination that applies to any termination other
than a termination for Good Reason that occurs within two years
following a Change in Control. Notwithstanding any dispute
concerning whether Good Reason exists for termination of employment
or whether adequate remedy has occurred, the Company shall
immediately pay to Executive, as specified in subparagraph 8(c)(i),
any amounts otherwise due under this Agreement. Executive may be
required to repay such amounts to the Company if any such dispute is
finally determined adversely to Executive.

	 	(d)	 	Definition of Termination of Employment. For
purposes of this Section 8, the terms termination, terminate(s), terminated,
termination of employment, terminates his employment, termination of
Executive’s employment, any such term or terms that have the similar meaning
in context as Executive’s employment ending, shall have the same meaning as
separation from service as defined in Treasury Regulation section 1.409A-1(h).
	 
	 	(e)	 	Separate Payments. Each payment or benefit provided
for in this Agreement is a separate “payment” within the meaning of Treasury
Regulation section 1.409A-2(b)(2)(i).
	 
	 	(f)	 	Delay of Payments. Notwithstanding the foregoing, if
any of the payments or benefits payable to Executive under this Agreement when
considered together with any other payments or benefits which may be
considered deferred compensation under section 409A of Code would result in
the imposition of additional tax under section 409A of the Code if paid to
Executive on or within

21

 

	 	 	 	the six (6) month period following his termination of employment, then to
the extent such portion of the payments or benefits resulting in the
imposition of additional tax would otherwise have been payable on or
within the first six (6) months following his termination of employment,
shall be paid in a lump sum in the seventh (7th) month
following such termination (or such longer period as is required to avoid
the imposition of additional tax under section 409A of the Code), and such
lump sum amount shall accrue interest at DCAP Rate for the period of such
deferral, which interest shall be paid together with such payment. All
subsequent payment or benefits will be payable in accordance with the
payment schedule applicable to each such payment or benefits.

	 	9.	 	Compliance with Section 409A
	 
	 	 	 	Notwithstanding anything in this Agreement to the contrary, the Company shall
administer and construe this Agreement in accordance with Section 409A, the
regulations promulgated thereunder, and any other published interpretive authority,
as issued or amended from time to time, so as not to subject the Executive to the
additional tax and interest imposed under Section 409A. To the extent that the
Company and/or the Executive reasonably determine that any amount payable under
this Agreement would trigger the additional tax imposed by Section 409A, the
Company and Executive shall promptly agree in good faith on appropriate
modifications to the Agreement (including delaying or restructuring payments) to
avoid such additional tax yet preserve (to the nearest extent reasonably possible)
the intended benefit payable to the Executive. If Executive incurs liability under
Section 409A(a)(1)(B) as a direct result of the Company’s failure to fulfill the
foregoing obligations, the Company will indemnify and hold Executive harmless from
such liability; provided, however, that the Company shall have no obligation under
this provision for any such failures that are attributable to Executive’s own
willful acts or omissions or to Executive’s demand for a distribution of benefits
notwithstanding a recommendation of the Company against the distribution.
	 
	 	10.	 	Excise Tax Payment.

	 	(a)	 	If, as a result of Executive’s employment with the Company or
termination thereof, the benefits received by Executive (the “Total Payments”)
are subject to the excise tax provision set forth in section 4999 of the Code
(the “Excise Tax”), the Company shall pay to Executive an additional amount
(the “Gross-Up Payment”) such that the net amount retained by Executive, after
deduction of any Excise Tax on the benefits received hereunder and any
Federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total

22

 

	 	 	 	Payments. Subject to Paragraph 8(f), the Company shall pay to Executive
as soon as administratively practicable, but in no event later than by end
of the calendar year following the year in which Executive remits the
Excise Tax, any Gross-Up Payment due under this paragraph (a).

	 	(b)	 	For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) all
of the Total Payments shall be treated as “parachute payments” (within the
meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel (“Tax Counsel”) reasonably acceptable to Executive and selected by the
accounting firm which was, immediately prior to the Change in Control, the
Company’s independent auditor (the “Auditor”), such payments or benefits (in
whole or in part) do not constitute parachute payments, including by reason of
section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within
the meaning of section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute
payments (in whole or in part) represent “reasonable compensation” for
services actually rendered (within the meaning of section 280G(b)(4)(B) of the
Code) in excess of the Base Amount (as defined in section 280G(b)(3) of the
Code) allocable to such reasonable compensation, or are otherwise not subject
to the Excise Tax, and (iii) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Auditor in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive’s residence on the date of termination (or if there is
no date of termination, then the date on which the Gross-Up Payment is
calculated for purposes of this Paragraph 10(b)), net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes.
	 
	 	(c)	 	In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment, Executive shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income and employment taxes imposed on

23

 

	 	 	 	the Gross-Up Payment being repaid by Executive, to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar
reduction in Executive’s taxable income and wages for purposes of federal,
state and local income and employment taxes, plus interest on the amount
of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder in calculating the Gross-Up Payment
(including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company
shall make an additional Gross-Up Payment in respect of such excess plus
any interest, penalties or additions payable by Executive with respect to
such excess) within five (5) business days following the time that the
amount of such excess is finally determined, but in no event later than
the end of the calendar year following the year in which Executive remits
the Excise Tax, subject to Paragraph 8(f). Executive and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount
of liability for Excise Tax with respect to the Total Payments.

	 	(d)	 	Notwithstanding anything else herein, this Paragraph 10 shall
survive any termination of employment, any payments hereunder or any
termination of obligations hereunder; provided, however, that this
Paragraph 10 shall not survive any termination of employment for Cause that
occurs prior to a Change in Control, or any payments or termination of
obligations in connection with such termination for Cause.

	 	11.	 	General Provisions.

	 	(a)	 	Executive’s rights and obligations hereunder shall not be
transferable by assignment or otherwise; provided, however, that this
Agreement shall inure to the benefit of and be enforceable by Executive’s
personal and legal representatives, executors, administrator, successors,
heirs, distributees, devisees and legatees. If Executive should die while any
amounts are still payable to Executive hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive’s devisee, legatee or other designee or, if there be no
such designee, to Executive’s estate. Nothing in this Agreement shall prevent
the consolidation of the Company with, or its merger into, any other
corporation, or the sale by the Company of all or substantially all of its
properties or assets; and this Agreement shall inure to the benefit of, be
binding upon and be enforceable by, any successor surviving or resulting
corporation, or

24

 

	 	 	 	other entity to which such assets shall be transferred. Unless otherwise
agreed to by Executive, the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to Executive
(such agreement not to be unreasonably withheld or delayed), to assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
assignment had taken place. This Agreement shall not otherwise be
assigned by the Company. As used in this Agreement, “Company” shall mean
the Company as hereinbefore defined and any successor or assign to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this paragraph or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
This Agreement shall not be terminated by the voluntary or involuntary
dissolution of the Company.

	 	(b)	 	This Agreement and the rights of Executive with respect to
the benefits of employment referred to in Paragraph 4 (c) constitute the
entire agreement between the parties hereto in respect of the employment of
Executive by the Company. This Agreement supersedes and replaces in its
entirety all prior oral and written agreements, understandings, commitments,
and practices between the parties, including, but not limited to, the Prior
Employment Agreement and the Termination Agreement.
	 
	 	(c)	 	Executive and the Company agree that any dispute, controversy
or claim between them, other than any dispute, controversy claim or breach
arising under Paragraph 6 of this Agreement, shall be settled exclusively by
final and binding arbitration in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (the
“AAA Rules”). A neutral and impartial arbitrator shall be chosen by mutual
agreement of the parties or, if the parties are unable to agree upon an
arbitrator within a reasonable period of time, then a neutral and impartial
arbitrator shall be appointed in accordance with the arbitrator nomination and
selection procedure set forth in the AAA Rules. The arbitrator shall apply
the same substantive law, with the same statutes of limitations and remedies,
that would apply if the claims were brought in court. The arbitrator also
shall prepare a written decision containing the essential findings and
conclusions upon which the decision is based. Either party may bring an
action in court to compel arbitration under this Agreement or to enforce an
arbitration award. Otherwise, neither party shall initiate or prosecute any
lawsuit in any way related to any claim

25

 

	 	 	 	subject to this agreement to arbitrate. Any arbitration held pursuant to
this paragraph shall take place in San Francisco, California. If any
proceeding is necessary to enforce or interpret the terms of this
Agreement, or to recover damages for breach thereof, the prevailing party
shall be entitled to reasonable attorneys’ fees and costs and
disbursements, not to exceed in aggregate one percent (1%) of the net
worth of the other party, in addition to any other relief to which he or
it may be entitled. The Company agrees to pay the costs and fees of the
arbitrator. THE PARTIES UNDERSTAND AND AGREE THAT THIS AGREEMENT
CONSTITUTES A WAIVER OF THEIR RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR
CONTROVERSIES COVERED BY THIS AGREEMENT.

	 	(d)	 	The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are declared
invalid or unenforceable by a court of competent jurisdiction, the validity
and enforceability of the remainder of such provisions or parts hereof and the
applicability hereof shall not be affected thereby.
	 
	 	(e)	 	This Agreement may not be amended or modified except by a
written instrument executed by the Company and Executive.
	 
	 	(f)	 	This Agreement and the rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of
California without regard to its principles of conflict of laws.
	 
	 	(g)	 	For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by messenger or in person, or
when mailed by United States registered mail, return receipt requested,
postage prepaid, as follows:

	 	 	 	 	 
	 

	 	If to the Company:
	 	McKesson Corporation
	 

	 	 	 	One Post Street
	 

	 	 	 	San Francisco, CA   94104
	 

	 	 	 	Attention:  Office of the General Counsel
	 
	 	 	 	 
	 

	 	If to Executive:
	 	John H. Hammergren
	 

	 	 	 	c/o McKesson Corporation
	 

	 	 	 	One Post Street
	 

	 	 	 	San Francisco, CA 94104

	 		 	or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

26

 

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

	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	McKesson Corporation	 	 
	 

	 	 	 	A Delaware Corporation	 	 
	 
	 	 	 	 	 	 
	/s/ Laureen E. Seeger
 

Laureen E. Seeger

	 	 	 	/s/ Jorge L. Figueredo
 

Jorge L. Figueredo
	 	 
	Executive Vice President, General

	 	 	 	Executive Vice President,	 	 
	Counsel and Secretary

	 	 	 	Human Resources	 	 
	 
	 	 	 	 	 	 
	
By the Authority of the Compensation

Committee of the McKesson
Corporation

	 	 	 	/s/ John H. Hammergren
 

John H. Hammergren

Chairman, President and Chief
Executive Officer
	 	 
	On October 24, 2008
	 	 	 	 	 	 

27exv10w11

EXHIBIT 10.11

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), effective as of November 1,
2008 (the “Effective Date”), is by and between McKesson Corporation (the “Company”), a Delaware
corporation with its principal office at One Post Street, San Francisco, California, and Pamela J.
Pure (“Executive”).

RECITALS

     A. WHEREAS, Executive and the Company have previously entered into that certain Employment
Agreement dated as of April 1, 2004 (the “Prior Employment Agreement”);

     B. WHEREAS, Executive and the Company have previously amended and restated the terms of the
Prior Employment Agreement, effective as of November 1, 2006;

     C. WHEREAS, the Company, in its business, develops and uses certain Confidential Information
(as defined in Paragraph 7(b)(iii) below). Such Confidential Information will necessarily be
communicated to or acquired by Executive by virtue of her employment with the Company, and the
Company has spent time, effort and money to develop such Confidential Information and to promote
and increase its goodwill;

     D. WHEREAS, the Company desires to retain the services of, and employ, Executive on its own
behalf and on behalf of its affiliated companies for the period provided in this Agreement and, in
so doing, to protect its Confidential Information and goodwill, and Executive is willing to accept
employment by the Company on a full-time basis for such period, upon the terms and conditions
hereinafter set forth; and

     E. WHEREAS, Executive and the Company wish to amend and restate the terms of the Agreement to
comply with the final regulations promulgated under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and preserve deductibility of certain compensation under Section
162(m) of the Code in accordance with Revenue Ruling 2008-13.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereto agree as follows:

1. Employment. Subject to the terms and conditions of this Agreement, the Company agrees to
employ Executive, and Executive agrees to accept employment from, and remain in the employ of, the
Company for the period stated in Paragraph 3 below.

2. Position and Responsibilities. During the period of her employment hereunder, Executive
agrees to serve the Company, and the Company shall employ Executive, as Executive Vice President
and President, McKesson Technology Solutions, or in such other senior corporate executive capacity
or capacities as may be specified from time to time by the Chief Executive Officer of the Company
(the “Chief Executive Officer”).

 

 

3. Term and Duties.

     (a) Term of Employment. The period of Executive’s employment under this Agreement
shall be deemed to have commenced on the date of this Agreement and shall continue until the third
(3rd) anniversary of the Effective Date, unless terminated earlier in accordance with
Paragraphs 6-9 below; provided, however, that the term of this Agreement shall automatically be
extended for one (1) additional year on each anniversary of the Effective Date, unless terminated
earlier in accordance with Paragraph 8 below (the “Term”).

     (b) Duties. During the period of her employment hereunder and except for illness,
reasonable vacation periods and reasonable leaves of absence, Executive shall devote her best
efforts and all her business time, attention and skill to the business and affairs of the Company
and its affiliated companies, as such business and affairs now exist and as they may be hereafter
changed or added to, under and pursuant to the general direction of the Board of Directors of the
Company (the “Board”); provided, however, that, with the approval of the Chief Executive Officer,
Executive may serve, or continue to serve, on the boards of directors of, hold any other offices or
positions in, companies or organizations which, in such officer’s judgment, will not present any
conflict of interest with the Company or any of its subsidiaries or affiliates or divisions, or
materially adversely affect the performance of Executive’s duties pursuant to this Agreement. The
Company shall retain full direction and control of the means and methods by which Executive
performs the services for which she is employed hereunder. The services which are to be employed by
Executive hereunder are to be rendered in the State of Georgia, or in such other place or places in
the United States or elsewhere as may be determined from time to time by the Board.

4. Compensation and Reimbursement of Expenses.

     (a) Compensation. During the period of her employment hereunder, Executive shall be
paid a salary, in monthly or semi-monthly installments (in accordance with the Company’s normal
payroll practices for senior executive officers), at the rate of Seven Hundred Sixty-Six Thousand
Dollars ($776,000) per year, or such higher salary as may be from time to time approved by the
Board (or any duly authorized Committee thereof) (any such higher salary so approved to be
thereafter the minimum salary payable to Executive during the remainder of the Term hereof), plus
such additional incentive compensation, if any, as may be awarded to her yearly by the Board (or
any duly authorized Committee thereof). For purposes of the MIP (as defined in Paragraph 5 below),
for each of the Company’s fiscal years ending during the Term of this Agreement, Executive’s
Individual Target Award (as defined in the MIP) shall be ninety percent (90%) of her base salary
for the applicable Year (as defined in the MIP). Executive shall also receive a Mortgage Allowance
of Two Thousand Six Hundred Forty-Six Dollars and Four Cents ($2,646.04), which amount will be paid
in a lump sum each month through February 2013, or termination of employment, if earlier, provided
that her current residence remains her principal residence.

     (b) Reimbursement of Expenses. The Company shall pay or reimburse Executive, in
accordance with its normal policies and practices, for all reasonable travel and other expenses
incurred by Executive in performing her obligations hereunder; provided, however, any such expenses
eligible for reimbursement that are taxable to Executive and incurred during the course

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of Executive’s employment may not affect the expenses eligible for reimbursement in any other
taxable year.

5. Other Benefits. During the period of her employment hereunder, Executive shall be
entitled to receive all other benefits of employment generally available to other members of the
Company’s senior management and those benefits for which key executives are or shall become
eligible, when and as she becomes eligible therefore, including without limitation, group health
and life insurance benefits, short and long-term disability plans, deferred compensation plans, and
participation in the Company’s Profit-Sharing Investment Plan, Company-sponsored medical plan,
Management Incentive Plan (“MIP”), Executive Benefit Retirement Plan (“EBRP”), Executive Survivor
Benefits Plan (“ESBP”), Long-Term Incentive Plan, Employee Stock Purchase Plan, and the 1994 Stock
Option and Restricted Stock Plan, the 1999 Stock Option and Restricted Stock Plan, the 2005 Stock
Plan and any other similar plan or arrangement (collectively, the “Stock Incentive Plans).

6. Benefits Payable Upon Disability or Death.

     (a) Disability Benefits. If, during the term of this Agreement, Executive sustains a
disability, as defined in Treasury Regulation section 1.409A-3(i)(4)(i) or -3(i)(4)(iii), the
Company shall continue to pay Executive her then current salary hereunder at the time of the
regular payroll schedule during the period of such disability or, if less, for a period of twelve
(12) calendar months, at which time the Company’s obligations hereunder shall cease and terminate.

     (b) Death Benefits. In the event of the death of Executive during the Term of this
Agreement, Executive’s salary payable hereunder shall continue to be paid to Executive’s surviving
spouse or, if there is no spouse surviving, then to Executive’s designee or representative (as the
case may be) at the time of the regular payroll schedule through the six-month period following the
end of the calendar month in which Executive’s death occurs. Thereafter, all of the Company’s
obligations hereunder shall cease and terminate.

     (c) Other Plans. The provisions of this Paragraph 6 shall not affect any rights of
Executive’s heirs, administrators, executors, legatees, beneficiaries or assigns under the
Company’s Profit-Sharing Investment Plan, EBRP, ESBP, Stock Incentive Plans, any Employee Stock
Purchase Plan or any other employee benefit plan of the Company, and any such rights shall be
governed by the terms of the respective plans.

7. Obligations of Executive During and After Employment.

     (a) Noncompetition. Executive agrees that during the term of her employment hereunder,
that she will work exclusively for and devote her substantial working energies solely to the
benefit of the Company. Executive further agrees that for a period of two (2) years following the
termination of her employment for whatever reason, that Executive will not perform, in any state of
the United States of America, any like or similar services that Executive performed during the
course of her employment with Company, for any competitor of Company. Executive agrees that, at the
time of execution of this Agreement, (1) the Company is currently conducting or planning to solicit
and conduct business in each of the states of the United States
of America, and (2) that she has direct or indirect supervisory responsibilities for such
conduct or plans in each such state.

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     (b) Trade Secret and Confidential Information. Executive acknowledges and agrees that,
during the course of her employment, Executive will have produced and/or have access to trade
secrets and Confidential Information (as defined below), of the Company and that the unauthorized
use or disclosure of any of such trade secrets and Confidential Information would harm the Company.

          (i) Trade Secrets. Executive promises and agrees to take all reasonable steps to
maintain and protect the trade secrets of the Company and its affiliates during and after
Executive’s employment with the Company. Executive further agrees not to use or disclose any trade
secret of the Company and its affiliates after the termination of her employment.

          (ii) Confidential Information. Executive promises and agrees to take all reasonable
steps to maintain and protect the Confidential Information (as defined below) of the Company during
and for a period of three (3) years after Executive’s employment with the Company. Executive
further agrees not to use or disclose any Confidential Information of the Company for a three-year
period after the termination of her employment with the Company. Therefore subject to these
restrictions, Executive agrees to hold in confidence and not, directly or indirectly, disclose,
use, copy or make lists of any such information, except to the extent expressly authorized by the
Company in writing or as required by law. All records, files, drawings, documents, equipment, and
the like, or copies thereof, relating to the Company’s business which Executive shall prepare, use,
or come into contact with, shall be and remain the sole property of the Company, and shall not be
removed (except to allow Executive to perform her responsibilities hereunder while traveling for
business purposes or otherwise working away from her office) from the Company’s premises without
its prior written consent, and shall be promptly returned to the Company upon termination of
employment with the Company. This Paragraph 7 (b) shall survive the termination or expiration of
this Agreement.

          (iii) Confidential Information Defined. For purposes of this Agreement, “Confidential
Information” excludes trade secrets of the Company, but includes all other information (whether
reduced to written, electronic, magnetic or other tangible form) acquired in any way by Executive
during the course of her employment with the Company concerning the products, projects, activities,
business or affairs of the Company, or the Company’s customers, including without limitation, (i)
all information concerning computer programs, system documentation, special hardware, product
hardware, related software development, manuals, formulae, processes, methods, machines,
compositions, ideas, improvements or inventions of the Company and its affiliated companies, (ii)
all sales and financial information concerning the Company and its affiliated companies, (iii) all
customer and supplier lists of the Company and its affiliated companies, (iv) all information
concerning products or projects under development by the Company or any of its affiliated companies
or marketing plans for any of those products or projects, and (v) all information in any way
concerning the products, projects, activities, business or affairs of customers of the Company or
any of its affiliated companies which was furnished to her by the Company or any of its agents or
customers; provided, however, that Confidential Information does not include information which (A)
becomes available to the public other than as a result of a disclosure by Executive, (B) was
available to her on a non-confidential basis

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outside of her employment with the Company, or (C) becomes available to her on a
non-confidential basis from a source other than the Company or any of its agents, creditors,
suppliers, lessors, lessees or customers.

     (c) Non-solicitation of Employees. Executive agrees that for a period of two (2) years
following the termination of Executive’s employment for any reason, that Executive will not
solicit, recruit or hire any employee of Company with whom Executive had business contact or about
whom Executive had access to Confidential Information regarding the employee’s pay, performance,
duties or customer contacts.

     (d) Non-solicitation of Customers. Executive recognizes and acknowledges that it is
essential for the proper protection of the business of the Company that Executive be restrained for
a reasonable period following the termination of Executive’s employment with the Company from
soliciting customers of the Company. Executive agrees for a period of two (2) years following the
termination of Executive’s employment for whatever reason, that Executive will not solicit for any
competitive purpose the customers of Company, such customers shall be limited to those customers
with whom Executive had material personal, business contact within the last three years of
Executive’s employment with Company.

     (e) Remedy for Breach. Executive agrees that in the event of a breach or threatened
breach of any of the covenants contained in this Paragraph 7, the Company shall have the right and
remedy to have such covenants specifically enforced by any court having jurisdiction, it being
acknowledged and agreed that any material breach of any of the covenants will cause irreparable
injury to the Company and that money damages will not provide an adequate remedy to the Company.

     (f) Blue-Penciling. Executive acknowledges and agrees that the noncompetition and
nonsolicitation provisions contained herein are reasonable and valid in geographic, temporal and
subject matter scope and in all other respects, and do not impose limitations greater than are
necessary to protect the goodwill, Confidential Information and other business interests of the
Company. Nevertheless, if any court determines that any of said noncompetition and other
restrictive covenants and agreements, or any part thereof, is unenforceable because of the duration
or geographic scope of such provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form, such provision shall then be
enforceable to the maximum extent permitted by applicable law.

     (g) Mutual Dependence. Executive understands and agrees that her full compliance with
Section 7 of this Agreement is an express condition for and mutually dependent upon the obligations
of the Company to pay Executive her compensation and benefits, including severance pay, during the
remainder of the Term. Executive further understands and agrees that in the event that any
provisions of Section 7 of this Agreement are rendered void, invalid, illegal or otherwise
unenforceable, in whole or in substantial part, as a result of actions not initiated by the Company
or its agent, the Company’s obligations to pay Executive her Base Salary, bonus or any other
compensation and benefits, including severance pay, may be terminated immediately.

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     (h) Right to Resign. The parties expressly acknowledge that Executive may terminate
her employment at any time for any reason upon giving written notice of termination to the Company,
and that such resignation shall not constitute a breach of this Agreement.

8. Termination.

     (a) For Cause. Notwithstanding anything herein to the contrary, the Company may,
without liability, terminate Executive’s employment hereunder for Cause (as defined below) at any
time upon written notice from the Board (or any duly authorized Committee thereof) specifying such
Cause, and thereafter, the Company’s obligations hereunder shall cease and terminate; provided,
however, that such written notice shall not be delivered until after the Board (or any duly
authorized Committee thereof) shall have given Executive written notice specifying the conduct
alleged to have constituted such Cause and Executive has failed to cure such conduct, if curable,
within fifteen (15) days following receipt of such notice. As used herein, the term “Cause” shall
mean (i) Executive’s willful misconduct, habitual neglect or dishonesty with respect to matters
involving the Company or its subsidiaries which is materially and demonstrably injurious to the
Company, or (ii) a material breach by Executive of one or more terms of this Agreement.

     (b) Arbitration Required to Confirm Cause. In the event of a termination for Cause
pursuant to Paragraph 8(a) above, the Company shall continue to pay Executive’s then current
compensation as specified in this Agreement until the issuance of an arbitration award affirming
the Company’s action. Such arbitration shall be held in accordance with the provisions of Paragraph
12(d) below. In the event the award upholds the action of the Company, Executive shall promptly
repay to the Company any sums received pursuant to this subparagraph (b), following termination of
employment.

     (c) Other Than for Cause, Performance, Reorganization. Notwithstanding anything herein
to the contrary, the Company may also terminate Executive’s employment (without regard to any
general or specific policies of the Company relating to the employment or termination of its
employees) (i) should Executive fail to perform her duties hereunder in a manner satisfactory to
the Chief Executive Officer, (ii) should Executive’s position be eliminated as a result of a
reorganization or restructuring of the Company or any of its affiliated companies, or (iii) for any
other reason or reasons, in the Company’s sole discretion.

     (d) Obligations of the Company on Termination of Employment or Separation from
Service.

          (i) If the Company terminates Executive’s employment pursuant to Paragraph 8(a) above and the
Company’s action is affirmed as specified in Paragraph 8(b) above or Executive terminates her
employment with the Company other than for Good Reason (as defined in subparagraph (d)(iii) below),
then all of the Company’s obligations hereunder shall immediately cease and terminate. Executive
shall thereupon have no further right or entitlement to additional salary, incentive compensation
payments or awards, or any perquisites from the Company whatsoever, and Executive’s rights, if any,
under the Company’s employee and executive benefit plans shall be determined solely in accordance
with the express terms of the respective plans.

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          (ii) If the Executive has a separation from service (as defined in Treasury Regulation section
1.409A-1(h) (“Separation from Service”), which is involuntary and pursuant to Paragraph 8(c) above
or Executive has a Separation from Service with the Company for Good Reason prior to the expiration
of the Term, then in lieu of any benefits payable pursuant to the Company’s Executive Severance
Policy (so long as the compensation and benefits payable hereunder equal or exceed those payable
under said Policy) and in complete satisfaction and discharge of all of its obligations to
Executive hereunder, the Company shall, provided Executive is not in breach of the provisions of
Paragraph 7 above and except as provided in Paragraph 9 below, and conditioned upon Executive’s
execution of a standard, full release of claims, (it being understood that such release shall be
mutual, and shall contain standard “carve-outs” from Executive’s release for indemnification
rights, vested rights under pension, insurance and other benefit plans, and the like) and such
release becoming effective within forty-five (45) days of Executive’s Separation from Service, or
such longer period of time as required by law, (A) provide Executive with monthly cash payments
equal to Executive’s final monthly base salary (“Severance”) for the remainder of the Term (the
“Severance Period”); provided that, any such payment that would be paid in the six-month period
beginning from Executive’s Separation from Service shall be paid in the seventh (7th)
month following the month in which such Separation from Service occurs and the amount subject to
the six-month delay shall accrue interest at the Deferred Compensation Administration Plan III Rate
(the “DCAP Rate”) for the period of such delay, which interest shall be paid together with such
payment, and further provided that the Company’s obligation to make such Severance payments shall
be reduced by any compensation received by Executive from a subsequent employer during the
Severance Period, (B) consider Executive for a bonus under the terms of the Company’s MIP for the
fiscal year in which termination occurs (but not for any subsequent year); provided that any such
bonus shall be based on performance metrics established for the applicable performance period and
shall be pro-rated to reflect the portion of the year for which Executive was actively employed,
and shall be made at the time and in the manner applicable to MIP payments for current employees,
unless validly deferred under a Company-sponsored deferred compensation program, then the payment
shall be made in accordance with the applicable program, (C) continue Executive’s Company-sponsored
medical plan benefits or provide comparable medical plan benefits until the end of the Severance
Period, (D) subject to the express special forfeiture and repayment provisions of the respective
plans (or the terms and conditions applicable thereto), (1) continue the accrual and vesting of
Executive’s rights, benefits and outstanding awards for the remainder of the Severance Period for
purposes of the ESBP, and the Stock Incentive Plans; provided, however, that (unless otherwise
provided by the terms of the applicable plan, or unless the Board, or any duly authorized Committee
thereof, in its sole discretion determines otherwise), Executive shall in no event receive or be
entitled to either additional grants or awards subsequent to the date of termination or “Approved
Retirement” status, under the foregoing plans, and (2) calculate Executive’s EBRP benefit as if she
continued employment until the end of the Severance Period, and (E) terminate Executive’s
participation in the Company’s tax-qualified profit-sharing plans, long-term incentive plan, and
Employee Stock Purchase Plan, pursuant to the terms of the respective plans, as of the date of
Executive’s termination of employment.

          (iii) For purposes of this Agreement, “Good Reason” shall mean any of the following actions,
if taken without the express written consent of Executive: (A) any material change by the Company
in Executive’s functions, duties or responsibilities as Executive Vice President and President,
McKesson Technology Solutions, which change would cause

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Executive’s position with the Company to become of less dignity, responsibility, importance,
or scope as compared to the position and attributes that applied to Executive as of the Effective
Date; (B) any reduction in Executive’s base salary, other than a proportional reduction effected as
part of an across-the-board reduction affecting all executive employees of the Company; (C) any
material failure by the Company to comply with any of the provisions of the Agreement; (D) the
Company’s requiring Executive to be based at any office or location more than twenty-five (25)
miles from the office at which Executive is based as of the Effective Date, except for travel
reasonably required in the performance of Executive’s responsibilities and consistent with
practices as of the Effective Date; or (E) in the event of a Change in Control, any change in the
level of officer within the Company to whom Executive reports, as this reporting relationship
existed immediately prior to a Change in Control.

9. Separation from Service in Connection with a Change in Control. Notwithstanding the
provisions of Paragraph 8(d) above, in the event of an occurrence of a Change in Control, the
following provisions shall apply in the event of Executive’s Separation from Service (i) within two
(2) years following such Change in Control, or (ii) within the six-month period immediately
preceding and proximate to such Change in Control if such Separation from Service occurs at the
direction of the person or entity that is involved in, or otherwise in connection with, such Change
in Control:

     (a) If Executive has a Separation from Service, which is involuntary and pursuant to Paragraph
8(c) above or otherwise without Cause or Executive has a Separation from Service with the Company
for Good Reason, then the Company shall, in lieu of the benefits payable under Paragraph 8(d)(ii)
above, immediately pay to Executive in a cash lump sum an amount equal to 2.99 multiplied by
Executive’s Earnings (as defined in the Company’s Change in Control Policy for Selected Executive
Employees) and shall take all actions described in clauses (C) through (E) in Paragraph 8(d)(ii)
above; provided however, any such payment that would be paid in the six-month period beginning from
Executive’s Separation from Service) shall be paid in the seventh (7th) month following the month
in which such Separation from Service occurs and the amount subject to the six-month delay shall
accrue interest at the DCAP Rate for the period of such delay, which interest shall be paid
together with such payment.

     (b) Change in Control. For purposes of this Agreement, a “Change in Control” of the
Company shall mean the occurrence of any change in ownership of the Company, change in effective
control of the Company, or change in the ownership of a substantial portion of the assets of the
Company, as defined in Section 409A(a)(2)(A)(v), the regulations thereunder, and any other
published interpretive authority, as issued or amended from time to time.

10. Excise Tax Payment.

     (a) If, as a result of Executive’s employment with the Company or termination thereof, the
benefits received by Executive under Paragraph 9 above (the “Total Payments”) are subject to the
excise tax provision set forth in Section 4999 of the Code (the “Excise Tax”), the Company shall
pay to Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by
Executive, after deduction of any Excise Tax on the benefits received hereunder and any Federal,
state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, shall be
equal to the Total Payments. Subject to Paragraph 11(b) below,

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the Company shall pay to Executive as soon as administratively practicable, but in no event
later than by end of the calendar year following the year in which Executive remits the Excise Tax,
any Gross-Up Payment due under this subparagraph (a)

     (b) For purposes of determining whether any of the Total Payments will be subject to the
Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as
“parachute payments” (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion
of tax counsel (“Tax Counsel”) reasonably acceptable to Executive and selected by the accounting
firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the
“Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments”
within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent “reasonable compensation” for services actually rendered (within the meaning of Section
280G(b)(4)(B) of the Code) in excess of the Base Amount (as defined in Section 280G(b)(3) of the
Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax,
and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined
by the Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For
purposes of determining the amount of the Gross-Up Payment, Executive shall be deemed to pay
federal income tax at the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive’s residence on the date of termination (or
if there is no date of termination, then the date on which the Gross-Up Payment is calculated for
purposes of this subparagraph (b)), net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.

     (c) In the event that the Excise Tax is finally determined to be less than the amount taken
into account hereunder in calculating the Gross-Up Payment, Executive shall repay to the Company,
within five (5) business days following the time that the amount of such reduction in the Excise
Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local
income and employment taxes imposed on the Gross-Up Payment being repaid by Executive, to the
extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar
reduction in Executive’s taxable income and wages for purposes of federal, state and local income
and employment taxes, plus interest on the amount of such repayment at one hundred twenty percent
(120%) of the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment
(including by reason of any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess plus any interest, penalties or additions payable by Executive with respect to such
excess) within five (5) business days following the time that the amount of such excess is finally
determined, but in no event later than the end of the calendar year following the year in which
Executive remits the Excise Tax, subject to Paragraph 11(b) below. Executive and the Company shall
each reasonably cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with respect to the
Total Payments.

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     (d) Notwithstanding anything else herein, this Paragraph 10 shall survive any termination of
employment, any payments hereunder or any termination of obligations hereunder; provided, however,
that this Paragraph 10 shall not survive any termination of employment for Cause that occurs prior
to a Change in Control or any payments or termination of obligations in connection with such
termination for Cause.

11. Compliance with Section 409A.

     (a) Separate Payments. Each payment or benefit provided for in this Agreement is a
separate “payment” within the meaning of Treasury Regulation section 1.409A-2(b)(2)(i).

     (b) Delay of Payments. Notwithstanding the foregoing, if any of the payments or
benefits payable to Executive under this Agreement when considered together with any other payments
or benefits which may be considered deferred compensation under Section 409A would result in the
imposition of additional tax under Section 409A if paid to Executive on or within the six (6) month
period following her Separation from Service, then to the extent such portion of the payments or
benefits resulting in the imposition of additional tax would otherwise have been payable on or
within the first six (6) months following her Separation from Service, shall be paid in a lump sum
in the seventh (7th) month following the month in which such Separation occurs (or such longer
period as is required to avoid the imposition of additional tax under Section 409A), and such lump
sum amount shall accrue interest at the DCAP Rate for the period of such deferral, which interest
shall be paid together with such payment. All subsequent payment or benefits will be payable in
accordance with the payment schedule applicable to each such payment or benefits.

     (c) Administration. Notwithstanding anything in this Agreement to the contrary, the
Company shall administer and construe this Agreement in accordance with Section 409A, the
regulations promulgated thereunder, and any other published interpretive authority, as issued or
amended from time to time, so as not to subject Executive to the additional tax and interest
imposed under Section 409A. To the extent that the Company and/or Executive reasonably determine
that any amount payable under this Agreement would trigger the additional tax imposed by Section
409A, the Company and Executive shall promptly agree in good faith on appropriate modifications to
the Agreement (including delaying or restructuring payments) to avoid such additional tax yet
preserve (to the nearest extent reasonably possible) the intended benefit payable to Executive. If
Executive incurs liability under Section 409A(a)(1)(B) as a direct result of the Company’s failure
to fulfill the foregoing obligations, the Company will indemnify and hold Executive harmless from
such liability; provided, however, that the Company shall have no obligation under this provision
for any such failures that are attributable to Executive’s own willful acts or omissions or to
Executive’s demand for a distribution of benefits notwithstanding a recommendation of the Company
against the distribution.

12. General Provisions.

     (a) Executive’s rights and obligations hereunder shall not be transferable by assignment or
otherwise. Nothing in this Agreement shall prevent the consolidation of the Company with, or its
merger into, any other corporation, or the sale by the Company of all or substantially all of its
properties or assets; and this Agreement shall inure to the benefit of, be

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binding upon and be enforceable by, any successor surviving or resulting corporation, or other
entity to which such assets shall be transferred. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.

     (b) This Agreement and Executive’s “Indemnification Agreement” (as defined below) constitutes
the entire agreement between the parties hereto in respect of the matters addressed herein
regarding the employment of Executive by the Company. This Agreement and Executive’s
Indemnification Agreement supersedes and replaces all prior oral and written agreements,
understandings, commitments, and practices between the parties pertaining to Executive’s employment
by the Company, including, but not limited to, the Prior Employment Agreement. “For purposes of
this Agreement, “Indemnification Agreement” means the Company’s standard form of indemnification
agreement for executives, as amended, restated and revised from time to time.

     (c) In the event Executive’s employment with the Company shall terminate under circumstances
otherwise providing Executive with a right to benefits under both the Company’s Severance Policy
for Executive Employees and Paragraph 8(d)(ii) above, Executive shall be entitled to receive the
greater of the benefits provided therein or herein, calculated individually, without duplication;
provided, however, if the benefits are greater under the Severance policy for Executive Employees,
such greater amount shall be paid in the same time and form provided for payment under Paragraph
8(d)(ii) above.

     (d) Executive and the Company agree that any dispute, controversy or claim between them, other
than any dispute, controversy claim or breach arising under Paragraph 7 of this Agreement, shall be
settled exclusively by final and binding arbitration in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association (the “AAA Rules”). A
neutral and impartial arbitrator shall be chosen by mutual agreement of the parties or, if the
parties are unable to agree upon an arbitrator within a reasonable period of time, then a neutral
and impartial arbitrator shall be appointed in accordance with the arbitrator nomination and
selection procedure set forth in the AAA Rules. The arbitrator shall apply the same substantive
law, with the same statutes of limitations and remedies, that would apply if the claims were
brought in court. The arbitrator also shall prepare a written decision containing the essential
findings and conclusions upon which the decision is based. Either party may bring an action in
court to compel arbitration under this Agreement or to enforce an arbitration award. Otherwise,
neither party shall initiate or prosecute any lawsuit in any way related to any claim subject to
this agreement to arbitrate. Any arbitration held pursuant to this subparagraph (d) shall take
place in San Francisco, California. Each party shall pay its own costs and attorneys’ fees, unless
a party prevails on a statutory claim and the statute provides that the prevailing party is
entitled to payment of its or her attorneys’ fees. In that case, the arbitrator may award
reasonable attorneys’ fees and costs to the prevailing party as provided by law. The Company agrees
to pay any administrative costs and fees of the AAA, as well as the costs and fees of the
arbitrator. THE PARTIES UNDERSTAND AND AGREE THAT THIS AGREEMENT CONSTITUTES A WAIVER OF THEIR
RIGHT TO A TRIAL BY JURY OF ANY CLAIMS OR CONTROVERSIES COVERED BY THIS AGREEMENT.

11

 

     (e) Executive expressly acknowledges and agrees that, except as expressly set forth in
Paragraph 10 of this Agreement, in the event the benefits provided hereunder are subject to the
excise tax provision set forth in Section 4999 of the Code (i) Executive shall be responsible
for, and (ii) Executive shall not be entitled to any additional payment from the Company for, any
Federal, state, and local income and employment taxes, interest or penalties that may arise in
connection with such benefits.

     (f) The provisions of this Agreement shall be regarded as divisible, and if any of said
provisions or any part hereof are declared invalid or unenforceable by a court of competent
jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof
and the applicability hereof shall not be affected thereby.

     (g) This Agreement may not be amended or modified except by a written instrument executed by
the Company and Executive.

     (h) This Agreement and the rights and obligations hereunder shall be governed by and construed
in accordance with the laws of the State of Georgia, without regard to its principles of conflict
of laws.

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

	 	 	 	 	 	 	 
	ATTEST:

	 	 	 	McKesson Corporation

A Delaware Corporation	 	 
	 
	 	 	 	 	 	 
	/s/ Laureen E. Seeger
 

Laureen E. Seeger

	 	 	 	/s/ Jorge L. Figueredo
 

Jorge L. Figueredo
	 	 
	Executive Vice President, General
Counsel and Secretary

	 	 	 	Executive Vice President,

Human Resources	 	 
	 
	 	 	 	 	 	 
	
By the Authority of the Compensation

Committee of the McKesson Corporation

	 	 	 	/s/ Pamela J. Pure
 

Pamela J. Pure

Executive Vice President and President,
	 	 
	On October 24, 2008

	 	 	 	McKesson Technology Solutions	 	 

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