-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SGPReiJlSlJjR1Re5jNcPfSL198mdxoSE/0qilId+ov+migvBbQhk7Se84ROLW0K IfOaGVnh3oruK3qGTTG3vQ== 0000898430-98-001286.txt : 19980402 0000898430-98-001286.hdr.sgml : 19980402 ACCESSION NUMBER: 0000898430-98-001286 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 14 FILED AS OF DATE: 19980401 SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCKESSON CORP CENTRAL INDEX KEY: 0000927653 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 943207296 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-49119 FILM NUMBER: 98585595 BUSINESS ADDRESS: STREET 1: ONE POST ST STREET 2: MCKESSON PLAZA CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4159838300 MAIL ADDRESS: STREET 1: ONE POST ST CITY: SAN FRANCISCO STATE: CA ZIP: 94104 FORMER COMPANY: FORMER CONFORMED NAME: SP VENTURES INC DATE OF NAME CHANGE: 19940728 S-4 1 FORM S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1998 REGISTRATION NO. 333- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------- McKESSON CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------------- DELAWARE 5122 94-3207296 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
McKESSON PLAZA ONE POST STREET SAN FRANCISCO, CALIFORNIA 94104 (415) 983-8300 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S EXECUTIVE OFFICES) ---------------- NANCY A. MILLER VICE PRESIDENT AND CORPORATE SECRETARY McKESSON CORPORATION McKESSON PLAZA, ONE POST STREET SAN FRANCISCO, CALIFORNIA 94104 (415) 983-8300 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------- COPY TO: IVAN D. MEYERSON GREGG A. NOEL VICE PRESIDENT AND GENERAL COUNSEL SKADDEN, ARPS, SLATE, MEAGHER McKESSON CORPORATION & FLOM LLP McKESSON PLAZA, ONE POST STREET 300 SOUTH GRAND AVENUE SAN FRANCISCO, CALIFORNIA 94104 LOS ANGELES, CALIFORNIA 90071 (415) 983-8300 (213) 687-5000 ---------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the Securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [_] CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------- PROPOSED PROPOSED MAXIMUM MAXIMUM TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE SECURITIES TO BE TO BE PER SECURITY OFFERING PRICE AMOUNT OF REGISTERED REGISTERED (1)(2) (1)(2) REGISTRATION FEE - -------------------------------------------------------------------------------------- 6.30% Exchange Notes due March 1, 2005.......... $150,000,000 100% $150,000,000 $44,250 - -------------------------------------------------------------------------------------- 6.40% Exchange Notes due March 1, 2008.......... $150,000,000 100% $150,000,000 $44,250 - -------------------------------------------------------------------------------------- Total................... $300,000,000 100% $300,000,000 $88,500 - -------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------
(1) Estimated solely for the purposes of computing the registration fee in accordance with Rule 457 of the Securities Act. (2) Exclusive of accrued interest, if any. ---------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED APRIL 1, 1998 PROSPECTUS OFFERS TO EXCHANGE $150,000,000 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 AND $150,000,000 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 OF McKESSON CORPORATION THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. McKesson Corporation, a Delaware corporation (the "Company" or "McKesson"), is hereby offering (the "Exchange Offers"), upon the terms and subject to the conditions set forth in this Prospectus and the accompanying applicable Letter of Transmittal (the "Letter of Transmittal"), to exchange an aggregate principal amount of up to $300,000,000 of its 6.30% Exchange Notes due March 1, 2005 (the "Exchange Notes due 2005") and 6.40% Exchange Notes due March 1, 2008 (the "Exchange Notes due 2008," and with the Exchange Notes due 2005, collectively, the "Exchange Notes"), which exchange has been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a registration statement of which this Prospectus is a part, for its 6.30% Notes due March 1, 2005 (the "Private Notes due 2005," and with the Exchange Notes due 2005, the "Notes due 2005") and 6.40% Notes due March 1, 2008 (the "Private Notes due 2008," and with the Exchange Notes due 2008, the "Notes due 2008," and with the Private Notes due 2005, collectively, the "Private Notes"), respectively, which Private Notes were issued on February 24, 1998 (the "Closing Date"). The forms and terms of the Exchange Notes and the corresponding Private Notes are identical in all material respects except that (i) the exchange will have been registered under the Securities Act, and therefore, the Exchange Notes will not bear legends restricting the transfer thereof and (ii) holders of the Exchange Notes will not be entitled to certain rights of holders of the Private Notes ("Holders") under the Registration Rights Agreement (as defined herein), which rights will terminate upon the consummation of the Exchange Offers. The Exchange Notes will evidence the same indebtedness as the corresponding Private Notes (which they replace) and will be entitled to the benefits of an indenture dated as of March 11, 1997 governing the Private Notes and the Exchange Notes (the "Indenture"). The Private Notes and the Exchange Notes are sometimes referred to herein collectively as the "Notes." See "The Exchange Offers" and "Description of Notes." The Exchange Notes will be, as are the Private Notes, redeemable as a whole or in part, at the option of the Company, at any time at a redemption price equal to the greater of (i) 100% of their principal amount and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield (as defined herein) plus 10 basis points for each series of Exchange Notes, plus in each case accrued interest to the date of redemption. See "Description of Notes--Optional Redemption." (Continued on following page) ----------- SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DESCRIPTION OF CERTAIN RISKS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR PRIVATE NOTES IN THE EXCHANGE OFFERS. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The date of this Prospectus is , 1998 (Continued from previous page) McKESSON WILL ACCEPT FOR EXCHANGE ANY AND ALL VALIDLY TENDERED PRIVATE NOTES NOT WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON 1998, UNLESS ANY OF THE EXCHANGE OFFERS ARE EXTENDED BY McKESSON IN ITS SOLE DISCRETION (THE "EXPIRATION DATES"). TENDERS OF PRIVATE NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE APPLICABLE EXPIRATION DATE. THE EXCHANGE OFFERS ARE NOT CONDITIONED UPON ANY MINIMUM PRINCIPAL AMOUNT OF PRIVATE NOTES BEING TENDERED FOR EXCHANGE. PRIVATE NOTES MAY BE TENDERED ONLY IN INTEGRAL MULTIPLES OF $1,000. IN THE EVENT McKESSON TERMINATES THE EXCHANGE OFFERS AND DOES NOT ACCEPT FOR EXCHANGE ANY PRIVATE NOTES, McKESSON WILL PROMPTLY RETURN ALL PREVIOUSLY TENDERED PRIVATE NOTES TO THE HOLDERS THEREOF. Prior to the Exchange Offers, there has been no public market for the Notes. McKesson does not intend to list the Notes on any securities exchange or to seek approval for quotation through any automated quotation system. There can be no assurance that an active market for the Notes will develop. To the extent that a market for the Notes does develop, the market value of the Notes will depend on market conditions (such as yields on alternative investments), general economic conditions, McKesson's financial condition and certain other factors. Such conditions might cause the Notes, to the extent that they are traded, to trade at a significant discount from face value. See "Risk Factors--Absence of Public Market." The Exchange Notes are being offered hereunder in order to satisfy certain obligations of McKesson contained in the Registration Rights Agreement. See "The Exchange Offers--Consequences of Failure to Exchange" for a discussion of McKesson's belief, based on interpretations by the staff (the "Staff") of the Securities and Exchange Commission (the "Commission") as set forth in no action letters issued to third parties, as to the transferability of the Exchange Notes upon satisfaction of certain conditions. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. Each Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Private Notes acquired by such broker- dealer as a result of market-making activities or other trading activities. The Company has agreed that, ending on the close of business on the 180th day following the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." McKesson will not receive any proceeds from, and has agreed to bear the expenses of, the Exchange Offers. No underwriter is being used in connection with the Exchange Offers. THE EXCHANGE OFFERS ARE NOT BEING MADE TO, NOR WILL McKESSON ACCEPT SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE OFFERS OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION. 2 AVAILABLE INFORMATION This Prospectus constitutes part of a Registration Statement on Form S-4 (together with all amendments and exhibits thereto, the "Registration Statement") filed by the Company with the Commission under the Securities Act with respect to the Exchange Notes. This Prospectus omits certain of the information contained in the Registration Statement, and reference hereby is made to the Registration Statement and to the exhibits thereto for further information with respect to the Company and the Exchange Notes offered hereby. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and, in each instance, reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement herein is qualified in its entirety by such reference. Each of the Company and AmeriSource Health Corporation ("AmeriSource") is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of the Commission: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material may also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. The Commission also maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding registrants (including McKesson and AmeriSource) that file electronically with the Commission (at http://www.sec.gov). The McKesson common stock is listed on each of the New York Stock Exchange (the "NYSE") and the Pacific Exchange, Inc. (the "PE"), and the AmeriSource common stock is listed on the NYSE. Reports, proxy statements and other information relating to each of McKesson and AmeriSource can be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005 and, in the case of McKesson, at the offices of the PE, 301 Pine Street, San Francisco, California 94104. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE There are hereby incorporated by reference in this Prospectus the following documents previously filed or to be filed by the Company with the Commission pursuant to the Exchange Act: 1. Annual Report of the Company on Form 10-K for the fiscal year ended March 31, 1997 (the "Form 10-K"). 2. Quarterly Reports of the Company on Form 10-Q for the quarters ended June 30, 1997, September 30, 1997 and December 31, 1997. 3. Current Reports of the Company on Form 8-K dated November 22, 1996 (as amended by Amendment No. 1 on Form 8-K/A filed on January 21, 1997 as further amended by Amendment No. 2 on Form 8-K/A, filed on April 28, 1997), April 7, 1997, June 13, 1997, June 24, 1997, September 5, 1997, September 24, 1997, October 31, 1997, February 24, 1998 and March 19, 1998. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering made hereby shall be deemed to be incorporated by reference in this Prospectus and to be part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 3 THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, UPON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHALL BE DIRECTED TO NANCY A. MILLER, VICE PRESIDENT AND CORPORATE SECRETARY, McKESSON CORPORATION, McKESSON PLAZA, ONE POST STREET, SAN FRANCISCO, CALIFORNIA 94104 (TELEPHONE NUMBER (415) 983-8301). IN ORDER TO INSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY 5 BUSINESS DAYS PRIOR TO THE APPLICABLE EXPIRATION DATE. 4 PROSPECTUS SUMMARY The following summary does not purport to be complete and is qualified in its entirety by the detailed information appearing elsewhere in the Prospectus or incorporated by reference herein. THE COMPANY McKesson is the leading health care supply management company in North America. The Company also develops and manages innovative marketing programs for pharmaceutical manufacturers and, through McKesson Water Products Company, processes and markets pure drinking water. The Company's objective is to become the world leader in health care supply and comprehensive pharmaceutical management across the entire supply chain, from manufacturer to patient. For a more complete discussion of the Company and its recent acquisitions, see "The Company." THE EXCHANGE OFFERS Securities Offered ......... The Company is offering to exchange pursuant to the Exchange Offers up to (i) $150,000,000 principal amount of Exchange Notes due 2005 for $150,000,000 principal amount of Private Notes due 2005 and (ii) $150,000,000 principal amount of Exchange Notes due 2008 for $150,000,000 principal amount of Private Notes due 2008, all of which have been registered under the Securities Act. The forms and terms of the Exchange Notes and the corresponding Private Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Private Notes and except that Holders of Private Notes of Exchange Offers that have not been consummated by October 7, 1998 will be entitled to liquidated damages in an amount equal to 0.25% per annum on the Private Notes held by such Holders. Liquidated damages, if any, will accrue from and including October 8, 1998 and will cease to accrue from the consummation of the applicable Exchange Offer. The Exchange Offers......... The Exchange Notes are being offered in exchange for a like principal amount of corresponding Private Notes. The issuance of the Exchange Notes is intended to satisfy obligations of the Company contained in the Registration Rights Agreement. The Exchange Notes evidence the same debt as the Private Notes and will be issued, and Holders thereof are entitled to the same benefits as Holders of the Private Notes, under the Indenture. See "The Exchange Offers." Tenders, Expiration Date, Withdrawals................. The Exchange Offers will expire at 5:00 p.m., New York City time, on , 1998, or such later time and date to which any of them may be extended by the Company in its sole discretion. Tenders of Private Notes may be withdrawn at any time prior to 5:00 p.m., New York City time on the applicable Expiration Date. Private Notes not accepted for exchange for any reason will be returned without expense to the tendering holder thereof as promptly as practicable after the expiration or termination of the applicable Exchange Offer. See "The Exchange Offers." 5 Procedures for Tendering Private Notes .............. Brokers, dealers, commercial banks, trust companies and other nominees who hold Private Notes through the Depository Trust Company ("DTC") must effect tenders by book-entry transfer in accordance with DTC's Automated Tender Offer Program ("ATOP"). Beneficial owners of Private Notes registered in the name of a broker, dealer, commercial bank, trust company or other nominee are urged to contact such person promptly if they wish to tender Private Notes pursuant to the Exchange Offers. Tendering Holders of Private Notes that do not use ATOP must complete and sign the applicable Letter of Transmittal (the YELLOW Letter of Transmittal for the Private Notes due 2005 and the BLUE Letter of Transmittal for the Private Notes due 2008) in accordance with the instructions contained therein and forward the same by mail, facsimile or hand delivery, together with any other required documents, to the Exchange Agent, either with the certificates of the Private Notes to be tendered or in compliance with the specified procedures for guaranteed delivery of Private Notes. Tendering holders of Private Notes that use ATOP will, by so doing, acknowledge that they are bound by the terms of the applicable Letter of Transmittal. See "The Exchange Offers-- Procedures for Tendering Private Notes." Letters of Transmittal and certificates representing Private Notes should not be sent to the Company. Such documents should only be sent to the Exchange Agent. Federal Income Tax Consequences ............... The exchange pursuant to the Exchange Offers will not be a taxable transaction for Federal income tax purposes. See "Certain United States Federal Tax Consequences." Exchange Agent ............. The First National Bank of Chicago is serving as Exchange Agent (the "Exchange Agent") in connection with the Exchange Offers. 6 CONSEQUENCES OF FAILURE TO EXCHANGE PRIVATE NOTES PURSUANT TO THE EXCHANGE OFFERS AND CERTAIN REQUIREMENTS FOR TRANSFER OF EXCHANGE NOTES Holders of Private Notes who do not exchange their Private Notes for the corresponding Exchange Notes pursuant to the Exchange Offers will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Private Notes and the restrictions on transfer of such Private Notes as set forth in the legend thereon as a consequence of the issuance of the Private Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Private Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Private Notes under the Securities Act. See "Description of Notes-- Registration Rights." Based on existing interpretations by the Staff, as set forth in several no-action letters to third parties, and subject to the immediately following sentence, the Company believes that Exchange Notes issued pursuant to the Exchange Offers in exchange for Private Notes may be offered for resale, resold and otherwise transferred by the holders thereof (other than holders who are broker-dealers) without further compliance with the registration and prospectus delivery provisions of the Securities Act. However, any purchaser of Private Notes who is an affiliate of the Company within the meaning of Rule 405 under the Securities Act ("affiliate") or who intends to participate in the Exchange Offers for the purpose of distributing the Exchange Notes, or any broker-dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other available exemption under the Securities Act, (i) will not be able to rely on the interpretations of the Staff set forth in the above-mentioned no- action letters, (ii) will not be entitled to tender its Private Notes in the Exchange Offers and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes unless such sale or transfer is made pursuant to an exemption from such requirements. The Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offers in the context of a no-action letter and there can be no assurance that the Staff would make a similar determination with respect to the Exchange Offers as in such other circumstances. Each Holder of the Private Notes who wishes to exchange the Private Notes for Exchange Notes in the Exchange Offers will be required to represent that (i) it is not an affiliate of the Company, (ii) the Exchange Notes to be received by it were acquired in the ordinary course of its business and (iii) at the time of the Exchange Offers, it has no arrangement with any person to participate in the distribution within the meaning of the Securities Act ("distribution") of the Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Private Notes, where such Private Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." The information set forth above concerning certain interpretations of and positions taken by the Staff is not intended to constitute legal advice, and prospective investors should consult their own legal advisors with respect to such matters. 7 THE EXCHANGE NOTES The forms and terms of the Exchange Notes and the corresponding Private Notes are identical in all material respects except for certain transfer restrictions and registration rights relating to the Private Notes and except that Holders of Private Notes of Exchange Offers that have not been consummated by October 7, 1998 will be entitled to liquidated damages in an amount equal to 0.25% per annum on the Private Notes held by such Holders. Liquidated damages, if any, will accrue from and including October 8, 1998 and will cease to accrue from the consummation of the applicable Exchange Offer. The Exchange Notes will bear interest from the most recent date to which interest has been paid on the applicable Private Notes or, if no interest has been paid, from February 24, 1998. Accordingly, if the relevant record date for interest payment occurs after the consummation of the applicable Exchange Offer, registered holders of such Exchange Notes on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. If, however, the relevant record date for interest payment occurs prior to the consummation of the applicable Exchange Offer, registered holders of such Private Notes on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. Holders of Private Notes whose Private Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Private Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offers. Securities Offered ......... Up to (i) $150,000,000 principal amount of Exchange Notes due 2005 and (ii) $150,000,000 principal amount of Exchange Notes due 2008. Interest Rates; Payment Dates ...................... Interest on the Exchange Notes due 2005 and the Exchange Notes due 2008 will accrue at the rates of 6.30%, and 6.40% per annum, respectively, payable semiannually in arrears on March 1 and September 1 of each year, commencing September 1, 1998, to the persons in whose name the Exchange Notes are registered at the close of business on the immediately preceding February 15th and August 15th, respectively. Maturity Dates ............. Exchange Notes due 2005: March 1, 2005. Exchange Notes due 2008: March 1, 2008. Optional Redemption ........ The Exchange Notes due 2005 and the Exchange Notes due 2008 will be redeemable as a whole or in part, at the option of the Company, at any time at a redemption price equal to the greater of (i) 100% of their principal amount and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus 10 basis points for each series of Exchange Notes, plus in each case accrued interest to the date of redemption. Ranking .................... The Exchange Notes will constitute unsecured, unsubordinated obligations of the Company. Payment of the principal of and interest on the Exchange Notes will rank pari passu with all other unsecured, unsubordinated debt of the Company. The Exchange Notes will rank pari passu in right of payment to the Private Notes. See "Description of Notes--General." 8 Certain Covenants .......... The Indenture contains certain covenants, including limitations on the ability of the Company to: (i) incur certain liens; (ii) engage in certain sale and lease-back transactions; or (iii) engage in mergers, consolidations or transfer or lease its assets substantially as an entirety to another person. See "Description of Notes--Certain Covenants of the Company." Use of Proceeds ............ The Company will not receive any proceeds from the Exchange Offers. Registration Rights ........ Holders of Exchange Notes are not entitled to any registration rights with respect to the Exchange Notes. Pursuant to the Registration Rights Agreement, McKesson agreed to file, at its expense, a registration statement with respect to the Exchange Offers. The Registration Statement of which this Prospectus is a part constitutes the registration statement for the Exchange Offers. See "Description of Notes--Registration Rights." RISK FACTORS Prospective holders of Exchange Notes should consider carefully all of the information set forth in this Prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" before making a decision to tender their Private Notes in the Exchange Offers. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain of the matters discussed under the captions "Risk Factors," "Financial Review," "The Company" and elsewhere in this Prospectus or in the information incorporated by reference herein may constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Certain of such forward-looking statements can be identified by the use of forward-looking terminology such as, "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or the negative thereof or other comparable terminology, or by discussions of strategy, plans or intentions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These include the speed of integration of acquired businesses, continued competitive pressures, success of strategic initiatives, the changing United States health care environment and other factors discussed herein or incorporated by reference herein. 9 RISK FACTORS Prospective holders of Exchange Notes should consider carefully all of the information set forth in this Prospectus and, in particular, should evaluate the following risks before making a decision to tender their Private Notes in the Exchange Offers. CONSEQUENCES OF FAILURE TO EXCHANGE AND REQUIREMENTS FOR TRANSFER OF EXCHANGE NOTES Holders of Private Notes who do not exchange their Private Notes for corresponding Exchange Notes pursuant to the Exchange Offers will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Private Notes and the restrictions on transfer of such Private Notes as set forth in the legend thereon as a consequence of the issuance of the Private Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Private Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Private Notes under the Securities Act. See "Description of Notes-- Registration Rights." To the extent that Private Notes are tendered and accepted in the Exchange Offers, the trading market for the remaining untendered Private Notes could be adversely affected. Based on existing interpretations by the Staff, as set forth in several no-action letters to third parties, and subject to the immediately following sentence, the Company believes that Exchange Notes issued pursuant to the Exchange Offers in exchange for Private Notes may be offered for resale, resold and otherwise transferred by the holders thereof (other than holders who are broker-dealers) without further compliance with the registration and prospectus delivery provisions of the Securities Act. However, any purchaser of Private Notes who is an affiliate of the Company or who intends to participate in the Exchange Offers for the purpose of distributing the Exchange Notes, or any broker- dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (i) will not be able to rely on the interpretations of the Staff set forth in the above-mentioned no-action letters, (ii) will not be entitled to tender its Private Notes in the Exchange Offers and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes unless such sale or transfer is made pursuant to an exemption from such requirements. The Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offers in the context of a no-action letter and there can be no assurance that the Staff would make a similar determination with respect to the Exchange Offers as in such other circumstances. Each Holder of the Private Notes who wishes to exchange the Private Notes for Exchange Notes in the Exchange Offers will be required to represent that (i) it is not an affiliate of the Company, (ii) the Exchange Notes to be received by it were acquired in the ordinary course of its business and (iii) at the time of the Exchange Offers, it has no arrangement with any person to participate in the distribution of the Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." The Letters of Transmittal state that by so acknowledging and by delivering a Prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Private Notes acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, ending on the close of business on the 180th day following the Expiration Date, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." EXCHANGE OFFERS PROCEDURES Subject to the conditions set forth under "The Exchange Offers--Certain Conditions to the Exchange Offers," delivery of Exchange Notes in exchange for corresponding Private Notes tendered and accepted for exchange pursuant to the Exchange Offers will be made only after timely receipt by the Exchange Agent of (i) a 10 Book-Entry Confirmation (as defined below) evidencing the tender of such Private Notes through ATOP or (ii) certificates representing such Private Notes, a properly completed and duly executed applicable Letter of Transmittal, with any required signature guarantees, and all other required documents. See "The Exchange Offers--Procedures for Tendering Private Notes." Therefore, Holders of the Private Notes desiring to tender such Private Notes in exchange for corresponding Exchange Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to tenders of Private Notes for exchange. Private Notes that are not tendered or that are tendered but not accepted by the Company for exchange will, following consummation of the Exchange Offers, continue to be subject to the existing restrictions upon transfer thereof under the Securities Act and, upon consummation of the Exchange Offers, certain registration rights under the Registration Rights Agreement will terminate. RISKS GENERALLY ASSOCIATED WITH ACQUISITIONS An element of the Company's growth strategy is to pursue strategic acquisitions that either expand or complement its business, and McKesson routinely reviews such potential acquisition opportunities. Acquisitions involve a number of special risks, including the diversion of management's attention to the assimilation of the operations from other business concerns, difficulties in the integration of operations and systems, delays or difficulties in opening and operating larger distribution centers in an integrated distribution network, the assimilation and retention of the personnel of the acquired companies, challenges in retaining the customers of the combined businesses and potential adverse short-term effects on operating results. In addition, the Company may require additional debt or equity financing for future acquisitions, which may not be available on terms favorable to the Company, if at all. The inability of the Company to successfully finance, complete and integrate strategic acquisitions in a timely manner could have an adverse impact on the Company's results of operations and its ability to effect a portion of its growth strategy. In September 1997, the Company entered into a merger agreement (the "Merger Agreement") to acquire AmeriSource. On March 3, 1998, the U.S. Federal Trade Commission (the "FTC") voted to block the proposed merger (the "Merger"). On March 9, 1998, the FTC filed a complaint with the United States District Court for the District of Columbia seeking a preliminary injunction to halt the Merger. On March 18, 1998, McKesson and AmeriSource each announced that they will oppose the FTC's motion for a preliminary injunction. A pre-trial hearing on the matter is set for May 11, 1998. Although the Merger and the transactions contemplated thereby have been approved by stockholders of both companies, there can be no assurance that McKesson and AmeriSource will prevail in their opposition to the FTC's request for a preliminary injunction, that the Merger will be completed, or that it will be completed as contemplated or what the results of the Merger might be. CHANGING UNITED STATES HEALTH CARE ENVIRONMENT In recent years, the health care industry has undergone significant change driven by various efforts to reduce costs, including potential national health care reform, trends toward managed care, cuts in Medicare, consolidation of pharmaceutical and medical/surgical supply distributors and the development of large, sophisticated purchasing groups. This industry is expected to continue to undergo significant changes for the foreseeable future. Changes in governmental support of health care services, the method by which such services are delivered or the prices for such services, or other legislation or regulations governing such services or mandated benefits, or changes in pharmaceutical manufacturers' pricing or distribution policies, may have a material adverse effect on the Company's results of operations. ABSENCE OF PUBLIC MARKET FOR THE NOTES To the extent that Private Notes are tendered and accepted in the applicable Exchange Offer, the trading market for the remaining untendered Private Notes could be adversely affected. There is no existing trading market for the Exchange Notes. Although Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc. (collectively, the "Initial Purchasers") have advised the Company that they currently intend to make a market in the Exchange Notes, they are not obligated to do so and may discontinue such market making at any time without 11 notice. In addition, such market making activity will be subject to the limits imposed by the Securities Act and the Exchange Act. Accordingly, there can be no assurance that any market for the Exchange Notes will develop, or, if one does develop, that it will be maintained. If an active market for the Exchange Notes fails to develop or be sustained, the trading price of the Exchange Notes could be materially adversely affected. The Company does not intend to apply for listing or quotation of the Exchange Notes on any securities exchange, stock market or interdealer quotation system. COMPUTER TECHNOLOGIES McKesson relies heavily on computer technologies to operate its business. McKesson has conducted an assessment of its computer systems and has begun to make the changes necessary to make its computer systems Year 2000 compliant. McKesson believes that with modifications to or replacements of its existing computer-based systems, it will be Year 2000 compliant by March 31, 1999, although the Company cannot provide any assurance in this regard. McKesson's systems rely in part on the computer-based systems of its trading partners. As part of the Company's assessment, an overview of certain of its trading partners' Year 2000 compliance strategies is being performed and the Company plans to conduct extensive systems testing with such trading partners during calendar 1999. Nevertheless, if any trading partner or other entity upon which they rely failed to become Year 2000 compliant, McKesson could be adversely affected. The Company incurred approximately $7 million in fiscal 1998 and expects to incur between $10 and $15 million in each of the next two fiscal years in costs associated with modifications to the Company's existing systems to make them Year 2000 compliant and related testing, including planned testing with trading partners. Such costs are being expensed as incurred. Year 2000 project costs are difficult to estimate accurately and the projected cost could change due to unanticipated technological difficulties, project vendor delays and project vendor cost overruns. 12 THE COMPANY GENERAL McKesson is the leading health care supply management company in North America. The Company also develops and manages innovative marketing programs for pharmaceutical manufacturers and, through McKesson Water Products Company ("Water Products"), processes and markets pure drinking water. The Company's objective is to become the world leader in health care supply and comprehensive pharmaceutical management across the entire supply chain, from manufacturer to patient. In pursuit of this goal, the Company has completed a number of acquisitions in its core health care business. Since late 1995, the Company has acquired General Medical Inc. (now "McKesson General Medical"), the nation's leading distributor of medical and surgical supplies to the total acute care, physician care and extended care market, the pharmaceutical distribution business of FoxMeyer Corporation ("FoxMeyer"), Automated Healthcare, Inc. (now "McKesson Automated Healthcare, Inc."), a manufacturer of automated pharmaceutical dispensing equipment for hospitals, and Ogden BioServices Corporation (now "McKesson BioServices Corporation"), a provider of support services to government and commercial organizations engaged in pharmaceutical research and development. In addition, on September 23, 1997, the Company announced an agreement to acquire AmeriSource, a leading distributor of pharmaceutical and related health care products and services. However, the FTC is seeking a preliminary injunction to block the Merger. The Company conducts its operations through two operating business segments which generated annual sales in fiscal 1997 of $12.9 billion, approximately 98% of which were generated by the Health Care Services segment and approximately 2% of which were generated primarily by Water Products. In fiscal 1997, operating profits for the Health Care Services business and the Water Products business were $92.8 million (including charges for restructuring, asset impairment, write-off of in-process purchased technology and other operating items of $140.0 million) and $34.6 million (including $7.0 million of charges for asset impairment), respectively. The principal executive offices of the Company are located at McKesson Plaza, One Post Street, San Francisco, California 94104, and the telephone number is (415) 983-8300. RECENT ACQUISITIONS AND DISPOSITIONS McKesson has undertaken several initiatives in recent years to further focus the Company on its core health care business: . In September 1997, the Company signed a definitive merger agreement providing for the Company to acquire AmeriSource. . In March 1997, the Company disposed of Millbrook Distribution Services Inc. ("Millbrook"), a non-health care business, for an amount on an after-tax basis which approximated Millbrook's book value. . In March 1997, the Company sold its Aqua-Vend vended water business ("Aqua-Vend"), a unit of Water Products. . In February 1997, the Company acquired McKesson General Medical for approximately $775 million. . In December 1996, the Company disposed of its 55% equity interest in Armor All Products Corporation ("Armor All"), a non-health care business. . In November 1996, the Company acquired FoxMeyer out of bankruptcy for approximately $598 million. . In April 1996, the Company acquired McKesson Automated Healthcare, Inc. for approximately $65 million. . In December 1995, the Company acquired McKesson BioServices Corporation for approximately $20 million. McKESSON HEALTH CARE SERVICES Through its Health Care Services segment, the Company is the leading distributor of ethical and proprietary drugs and health and beauty care products in North America, generating approximately 73% of the Company's operating profits from continuing operations in fiscal 1997. U.S. health care operations also include Healthcare 13 Delivery Systems, Inc. ("HDS") and McKesson BioServices Corporation, through which the Company provides marketing and other support services to pharmaceutical manufacturers; McKesson Automated Healthcare, Inc., a business that specializes in the manufacture and sale of automated pharmaceutical dispensing systems for hospitals; Zee Medical, Inc., a distributor of first- aid and safety products and supplies to industrial and commercial customers; and McKesson General Medical, the nation's leading supplier of medical- surgical supplies to the full range of alternate-site health care facilities, including physicians and clinics (primary care), long-term care and home-care sites (extended care), and the third largest distributor of medical-surgical supplies to hospitals (acute care). International operations include Medis Health and Pharmaceutical Services Inc. ("Medis"), a wholly-owned subsidiary and the largest pharmaceutical distributor in Canada; and the Company's 22.7% equity interest in Nadro, S.A. de C.V., the largest pharmaceutical distributor in Mexico. The Company's domestic distribution operations supply pharmaceuticals and health and beauty care products to independent and chain pharmacies, hospitals, alternate-site health care facilities, food stores and mass merchandisers in all fifty states. Using the names Economost(R) and Econolink(R) and a number of related service marks, the Company has promoted electronic order entry systems and a wide range of computerized merchandising and asset management services for pharmaceutical retailers and hospitals. The Company also supplies computer-based practice management systems to pharmaceutical retailers. The Company believes that its financial strength, purchasing leverage, nationwide network of distribution centers, and advanced logistics and information technologies provide competitive advantages to its pharmaceutical distribution operations. Health Care Services serves three primary customer segments: institutional providers (including hospitals, health care facilities and pharmacy service operators), retail independent pharmacies and retail chains which represented approximately 32%, 35% and 33%, respectively, of U.S. Health Care Services revenues in the third fiscal quarter of 1998. Health Care Services has been organized into three groups to address the specific needs of the Company's key market segments and the pharmaceutical manufacturers: McKesson Health Systems Group, McKesson Pharmaceutical Services and International Group, and McKesson Customer Operations Group. McKESSON HEALTH SYSTEMS GROUP. McKesson Health Systems Group comprises McKesson Health Systems, McKesson General Medical, and McKesson Automated Healthcare Inc. These three business units provide distribution services for pharmaceuticals, medical and surgical products, automated technologies, and related logistics and management information systems support to the institutional market, which includes hospitals, alternate-site providers, and integrated health networks. The McKesson Health Systems unit serves the pharmaceutical and supply management needs of hospitals, health care organizations, and integrated health networks. McKesson General Medical provides medical-surgical supply management across the continuum of care, including acute care, primary care and extended care. McKesson Automated Healthcare, Inc. manufactures and markets automated pharmacy systems, including the RxOBOT(TM) system, a robotic pharmacy dispensing and utilization tracking system that enables hospitals to lower pharmacy costs while significantly improving the accuracy of pharmaceutical dispensing. McKESSON PHARMACEUTICAL SERVICES AND INTERNATIONAL GROUP. McKesson Pharmaceutical Services and International Group combines the Company's pharmaceutical procurement and product management functions in a single group that is focused on (i) helping manufacturers meet their marketing goals and (ii) creating affiliation programs and information technologies for the Company's retail customers. The linkage of these functions allows the Company to enhance the flow of pharmaceutical products from manufacturers to retailers to patients through advanced marketing programs and information services, including the Valu-Rite(R), Valu-Rite/CareMaxSM and Health Mart(R) retail networks, the OmniLink(R) centralized pharmacy technology platform, which offers streamlined transaction processing through OmniLink's connectivity with managed care organizations while promoting compliance with managed care plans, and Pay$ystems, which provides 24-hour advanced funding of third-party reimbursements. The group includes HDS, which performs specialized logistics and patient services for manufacturers, and McKesson BioServices Corporation, which provides biomedical support services to the pharmaceutical and biotechnology industries, the U.S. Government, universities and institutions, and contract research organizations. Also included in this group is Medis, the largest pharmaceutical distributor in Canada. 14 MCKESSON CUSTOMER OPERATIONS GROUP. McKesson Customer Operations Group comprises the Company's pharmaceutical distribution operations and retail pharmacy sales and service, addressing the needs of independent pharmacies, retail pharmacy chains, food stores and mass merchandisers. The Company is in the process of implementing its Acumax(R) Plus warehouse management system in its pharmaceutical distribution centers, providing real-time inventory statistics and tracking product from the receiving dock to shipping through scanned bar-code information with accuracy levels of more than 99%. This ensures that the right product arrives at the right time and place for both the Company's customers and their patients. MCKESSON WATER PRODUCTS COMPANY Water Products is a leading provider in the $3.4 billion bottled water industry in the United States. It is one of the largest bottled water companies in most of the geographic markets in which it competes. In fiscal 1997, Water Products generated $34.6 million in pretax operating profit, and its operating margin was 13%. Water Products is primarily engaged in the processing and sale of bottled drinking water delivered to more than 530,000 homes and businesses under its Sparkletts(R), Alhambra(R), and Crystal(TM) brands in California, Arizona, Nevada, Oklahoma, Washington, Texas and New Mexico. It also sells packaged water through retail stores. AMERISOURCE MERGER AGREEMENT On September 23, 1997, the Company and AmeriSource announced the execution of a definitive Merger Agreement providing for the Company to acquire AmeriSource. On March 3, 1998, the FTC voted to block the proposed Merger. On March 9, 1998, the FTC filed a complaint with the United States District Court for the District of Columbia seeking a preliminary injunction to halt the Merger. On March 18, 1998, McKesson and AmeriSource each announced that they will oppose the FTC's motion for preliminary injunction. A pre-trial hearing on the matter is set for May 11, 1998. Although the Merger and the transactions contemplated thereby have been approved by stockholders of both companies, there can be no assurance that McKesson and AmeriSource will prevail in their opposition to the FTC's request for a preliminary injunction, that the Merger will be completed, or that it will be completed as contemplated or what the results of the Merger might be. Under the terms of the Merger Agreement, stockholders of AmeriSource would receive a fixed exchange ratio of 1.42 shares of McKesson Common Stock for each share of AmeriSource common stock. The Company would issue up to 36.4 million new shares of Common Stock in the Merger, and would assume the long- term debt of AmeriSource which was approximately $781.0 million at December 31, 1997. The merger of the two companies has been structured as a tax-free transaction and would be accounted for as a pooling of interests. The combined company would operate under the McKesson name and would be headquartered in San Francisco. Upon completion of the Merger, R. David Yost, currently president and chief executive officer of AmeriSource, would become group president of the AmeriSource Services Group and a McKesson corporate vice president. Also upon completion of the Merger, McKesson's board of directors would be expanded from nine to twelve members, which would include Mr. Yost and two other directors from the current AmeriSource board. AmeriSource has reported that it is one of the nation's top three distributors in serving the hospital and managed care market segment and the fourth largest full-service wholesale distributor of pharmaceutical products and related health care services in the United States. AmeriSource is a publicly traded company for which certain information is available. See "Available Information." USE OF PROCEEDS The Company will not receive any cash proceeds from the issuance of the Exchange Notes offered hereby. In consideration for issuing the Exchange Notes as described in this Prospectus, the Company will receive tendered Private Notes in like principal amount, the terms of which are identical in all material respect to those of the Exchange Notes. The Private Notes surrendered in exchange for the Exchange Notes will be retired and cancelled and cannot be reissued. Accordingly, the issuance of the Exchange Notes will not result in any change in the indebtedness of the Company. 15 THE EXCHANGE OFFERS PURPOSE OF THE EXCHANGE OFFERS The Private Notes were sold by the Company on the Closing Date to the Initial Purchasers, pursuant to a Purchase Agreement entered into by the Company and the Initial Purchasers on February 19, 1998 (the "Purchase Agreement"). The Initial Purchasers subsequently sold the Private Notes to "qualified institutional buyers," as defined in Rule 144A, in reliance on Rule 144A. As a condition to the sale of the Private Notes, the Company and the Initial Purchasers entered into the Registration Rights Agreement on February 24, 1998 (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, the Company agreed that, unless the Exchange Offers are not permitted by applicable law or Commission policy, it would file with the Commission a registration statement under the Securities Act with respect to the Exchange Notes and use its reasonable efforts to cause such registration statement to become effective under the Securities Act within 180 days after the Closing Date. A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement. The Registration Statement is intended to satisfy certain of the Company's obligations under the Registration Rights Agreement and the Purchase Agreement. TERMS OF THE EXCHANGE OFFERS Promptly after the Registration Statement has been declared effective, the Company will offer Exchange Notes in exchange for surrender of the corresponding Private Notes. The Company will keep the Exchange Offers open for not less than 30 calendar days (or longer if required by applicable law) after the date on which notice of the Exchange Offers is mailed to the holders of the Private Notes. For each Private Note validly tendered to the Company pursuant to the Exchange Offers and not withdrawn by the Holder thereof, the Holder of such Private Note will receive a corresponding Exchange Note having a principal amount equal to the principal amount of such surrendered Private Note. The Exchange Notes will bear interest from the most recent date to which interest has been paid on the applicable Private Notes or, if no interest has been paid, from February 24, 1998. Accordingly, if the relevant record date for interest payment occurs after the consummation of the applicable Exchange Offer registered holders of such Exchange Notes on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. If, however, the relevant record date for interest payment occurs prior to the consummation of the applicable Exchange Offer registered holders of such Private Notes on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. Holders of Private Notes whose Private Notes are accepted for exchange will not receive any payment in respect of accrued interest on such Private Notes otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offers. The Exchange Notes evidence the same debt as the corresponding Private Notes and are issued under and are entitled to the same benefits under the Indenture as the Private Notes. In the event that (i) the Company is permitted under the law and currently prevailing interpretations of the Commission's staff to effect the Exchange Offers and the Registration Statement is not declared effective on or prior to the 180th day following the Closing Date, (ii) either of the Exchange Offers are not consummated and the applicable Shelf Registration Statement (as defined herein) is not declared effective on or prior to the 225th day following the Closing Date or (iii) after a Shelf Registration Statement is declared effective, it thereafter ceases to be effective or the Shelf Registration Statement or the related Prospectus ceases to be usable in connection with resales of Private Notes or Exchange Notes, as the case may be, covered by such Shelf Registration Statement for the period specified in the Registration Rights Agreement due to certain circumstances (each such event referred to in clauses (i) through (iii) above a "Registration Default"), then the Company will pay to each Holder of any applicable Private Notes, accruing from and including the next day following such Registration Default (or if such Registration Default has been cured, from and including the next day following the next Registration Default), liquidated damages in an amount equal to 0.25% per annum of the principal amount of the Private Notes held by such Holder, which provision for liquidated damages will continue until such Registration Default has been cured. Any amounts of Liquidated Damages due pursuant to the foregoing paragraphs will be payable in cash on March 1 and September 1 of each year to the holders of record on the preceding February 15 and August 15, respectively. 16 PERIOD FOR TENDERING PRIVATE NOTES Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying applicable Letter of Transmittal (which together constitute the Exchange Offers), the Company will accept for exchange Private Notes which are properly tendered on or prior to the Expiration Date and not withdrawn as permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City time, on , 1998; provided, however, that if the Company, in its sole discretion, has extended the period of time for which any of the Exchange Offers are open, the term "Expiration Date" means the latest time and date to which the applicable Exchange Offer is extended. As of the date of this Prospectus, $150,000,000 aggregate principal amount of the Private Notes due 2005 and $150,000,000 aggregate principal amount of the Private Notes due 2008 are outstanding. This Prospectus, together with the applicable Letter of Transmittal, is first being sent on or about , 1998, to all holders of Private Notes known to the Company. The Company's obligation to accept Private Notes for exchange pursuant to the Exchange Offers are subject to certain conditions as set forth below under "--Certain Conditions to the Exchange Offers." The Company expressly reserves the right, at any time or from time to time, to extend the period of time during which any of the Exchange Offers are open, and thereby delay acceptance for exchange of any Private Notes, by giving oral or written notice of such extension to the Holders thereof as described below. During any such extension, all Private Notes previously tendered will remain subject to the Exchange Offers and may be accepted for exchange by the Company. Any Private Notes not accepted for exchange for any reason will be returned without expense to the tendering Holder thereof as promptly as practicable after the expiration or termination of the applicable Exchange Offer. Private Notes tendered in the Exchange Offers must be in integral multiples of $1,000. The Company expressly reserves the right (i) to terminate any or all of the Exchange Offers, and not to accept for exchange any Private Notes not therefore accepted for exchange, upon the occurrence of any of the events specified below under "--Certain Conditions to the Exchange Offers" and (ii) to amend any or all of the Exchange Offers. The Company will give oral or written notice of any extension, amendment, non-acceptance or termination to the Holders of the Private Notes as promptly as practicable, such notice in the case of any extension to be issued by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. PROCEDURES FOR TENDERING PRIVATE NOTES The tender to the Company of Private Notes by a Holder thereof as set forth below and the acceptance thereof by the Company will constitute a binding agreement between the tendering Holder and the Company upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying applicable Letter of Transmittal. Book-Entry Transfer. For purposes of the Exchange Offers, the Exchange Agent will establish an account with respect to the Private Notes at DTC within two business days after the date of this Prospectus. Any tendering financial institution that is a participant in DTC's book-entry transfer facility system must make a book-entry delivery of the Private Notes by causing DTC to transfer such Private Notes into the Exchange Agent's account at DTC in accordance with DTC's ATOP procedure for transfers. Such holder of Private Notes using ATOP should transmit its acceptance to DTC on or prior to the Expiration Date (or comply with the guaranteed delivery procedures set forth below). DTC will verify such acceptance, execute a book-entry transfer of the tendered Private Notes into the Exchange Agent's account at DTC and then send to the Exchange Agent confirmation of such book-entry transfer, including an agent's message confirming that DTC has received an express acknowledgment from such holder that such holder has received and agrees to be bound by the applicable Letter of Transmittal and that the Company may enforce the applicable Letter of Transmittal against such holder (a "Book-Entry Confirmation"). 17 A beneficial owner of Private Notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial owner wishes to participate in the Exchange Offers. Certificates. If the tender is not made through ATOP, certificates representing Private Notes, as well as the applicable Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by the applicable Letter of Transmittal, must be received by the Exchange Agent at its address set forth under "--Exchange Agent" on or prior to the Expiration Date in order for such tender to be effective (or the guaranteed delivery procedures set forth below must be complied with). If less than all of the Private Notes are tendered, a tendering holder should fill in the amount of Private Notes being tendered in the appropriate box on the applicable Letter of Transmittal. The entire amount of Private Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. THE METHOD OF DELIVERY OF PRIVATE NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR PRIVATE NOTES SHOULD BE SENT TO THE COMPANY. Signature Guarantees. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Private Notes surrendered for exchange pursuant thereto are tendered (i) by a registered holder of the Private Notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on such Letter of Transmittal or (ii) for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantees must be by an Eligible Institution. If Private Notes are registered in the name of a person other than a signer of a Letter of Transmittal, the Private Notes surrendered for exchange must be endorsed by, or be accompanied by a written instrument or instruments of transfer or exchange, in satisfactory form as determined by the Company in its sole discretion, duly executed by, the registered Holder with the signature thereon guaranteed by an Eligible Institution. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of Private Notes tendered for exchange will be determined by the Company in its sole discretion, which determination shall be final and binding. The Company reserves the absolute right to reject any and all tenders of any particular Private Notes not properly tendered or to not accept any particular Private Notes which acceptance might, in the judgment of the Company or its counsel, be unlawful. The Company also reserves the absolute right to waive any defects or irregularities or conditions of the Exchange Offers as to any particular Private Notes either before or after the Expiration Date (including the right to waive the ineligibility of any Holder who seeks to tender Private Notes in the Exchange Offers). The interpretation of the terms and conditions of the Exchange Offers as to any particular Private Notes either before or after the Expiration Date (including the applicable Letter of Transmittal and the instructions thereto) by the Company shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Private Notes for exchange must be cured within such reasonable period of time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Private Notes for exchange, nor shall any of them incur any liability for failure to give such notification. If a Letter of Transmittal is signed by a person or persons other than the registered holder or holders of Private Notes, such Private Notes must be endorsed or accompanied by appropriate powers of attorney, in either case signed exactly as the name or names of the registered holder or holders that appear on the Private Notes. 18 If a Letter of Transmittal or any Private Notes or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. By tendering, each Holder of the Private Notes will represent to the Company that, among other things, (i) it is not an affiliate of the Company, (ii) the Exchange Notes to be received by it were acquired in the ordinary course of its business and (iii) at the time of the Exchange Offers, it has no arrangement with any person to participate in the distribution of the Exchange Notes. If any Holder is an affiliate of the Company or intends to participate in the Exchange Offers for the purpose of distributing the Exchange Notes, or any broker-dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (i) will not be able to rely on the interpretations of the Staff set forth in the above-mentioned no-action letters, (ii) will not be entitled to tender its Private Notes in the Exchange Offers and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes unless such sale or transfer is made pursuant to an exemption from such requirements. Each broker- dealer that receives Exchange Notes for its own account in exchange for Private Notes, where such Private Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a Prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." Each Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker- dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. ACCEPTANCE OF PRIVATE NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES Upon satisfaction or waiver of all of the conditions to the applicable Exchange Offers, the Company will accept, promptly after the applicable Expiration Date, all applicable Private Notes properly tendered and will issue the applicable Exchange Notes promptly after acceptance of such Private Notes. See "--Certain Conditions to the Exchange Offers." For purposes of the Exchange Offers, the Company shall be deemed to have accepted properly tendered Private Notes for exchange when, as and if the Company has given oral or written notice thereof to the Exchange Agent, with written confirmation of any oral notice to be given promptly thereafter. In all cases, issuance of Exchange Notes for Private Notes that are accepted for exchange pursuant to the Exchange Offers will be made only after timely receipt by the Exchange Agent of (i) a Book-Entry Confirmation with respect to such Private Notes or (ii) certificates for such Private Notes and a properly completed and duly executed applicable Letter of Transmittal (or facsimile thereof), with any required signature guarantees and all other required documents. If any tendered Private Notes are not accepted for any reason set forth in the terms and conditions of the Exchange Offers or if Private Notes are submitted for a greater principal amount than the holder desired to exchange, such unaccepted or non-exchanged Private Notes will be returned without expense to the tendering holder thereof (or, in the case of Private Notes tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry procedures described above, such non-exchanged Private Notes will be credited to an account maintained with DTC) as promptly as practicable after the expiration or termination of the applicable Exchange Offer. GUARANTEED DELIVERY PROCEDURES If a registered holder of the Private Notes desires to tender such Private Notes and the Private Notes are not immediately available, or time will not permit such holder's Private Notes or other required documents to reach the Exchange Agent before the applicable Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if (i) the tender is made by or through an Eligible Institution, (ii) prior to the applicable Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Company (by telegram, telex, facsimile transmission, mail or hand delivery), setting forth the name and address of the holder of Private Notes and the amount of Private Notes tendered, stating that the tender 19 is being made thereby and guaranteeing that within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery, the certificates for all physically tendered Private Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case may be, and any other documents required by the applicable Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent, and (iii) (a) a Book- Entry Confirmation or (b) the certificates for all physically tendered Private Notes, in proper form for transfer, and a duly executed applicable Letter of Transmittal (or facsimile thereof) with any required signature guarantees, and all other documents required by such Letter of Transmittal, are received by the Exchange Agent within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery. WITHDRAWAL RIGHTS Tenders of Private Notes may be withdrawn at any time prior to the applicable Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by telegram, facsimile transaction (receipt confirmed by telephone) or letter to the Exchange Agent at its address as set forth below under "-- Exchange Agent" on or prior to the applicable Expiration Date. Any such notice of withdrawal must specify the name of the person having tendered the Private Notes to be withdrawn, identify the Private Notes to be withdrawn (including the series and the principal amount of such Private Notes), and (where certificates for Private Notes have been transmitted) specify the name in which such Private Notes are registered, if different from that of the withdrawing holder. If certificates for Private Notes have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the certificate numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Private Notes have been tendered pursuant to the procedure for book entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Private Notes and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Private Notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offers. Any Private Notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Private Notes tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described above, such Private Notes will be credited to an account maintained with DTC for the Private Notes) as soon as practicable after withdrawal, rejection of tender or termination of the applicable Exchange Offer. Properly withdrawn Private Notes may be retendered by following one of the procedures described under "-- Procedures for Tendering Private Notes" above at any time on or prior to the applicable Expiration Date. CERTAIN CONDITIONS TO THE EXCHANGE OFFERS Notwithstanding any other provision of the applicable Exchange Offer, the Company shall not be required to accept for exchange, or to issue Exchange Notes in exchange for, any applicable Private Notes and may terminate the applicable Exchange Offer, if at any time before the acceptance of such Private Notes for exchange or the exchange of the applicable Exchange Notes for such Private Notes, any of the following events shall occur: (a) there shall be threatened, instituted or pending any action or proceeding before, or any injunction, order of decree shall have been issued by, any court or governmental agency or other governmental regulatory or administrative agency or commission with respect to the applicable Exchange Offer; or (b) such acceptance or issuance would violate applicable law or any applicable interpretation of the Staff of the Commission; or (c) there shall have occurred (i) any general suspension of or general limitation on prices for, or trading in, securities on any national securities exchange or in the over-the-counter market, (ii) any limitation by any governmental agency or authority which may adversely affect the ability of the Company to complete the transactions contemplated by any of the Exchange Offers, (iii) a declaration of a banking moratorium or 20 any suspension of payments in respect of banks in the United States or any limitation by any governmental agency or authority which adversely affects the extension of credit or (iv) a commencement of a war, armed hostilities or other similar international calamity directly or indirectly involving the United States, or, in the case of any of the foregoing existing at the time of the commencement of the Exchange Offers, a material acceleration or worsening thereof; or (d) any change (or any development involving a prospective change) shall have occurred or be threatened in the business, properties, assets, liabilities, financial condition, operations, results of operations or prospects of the Company and its subsidiaries taken as a whole that, in the sole judgment of the Company, is or may be adverse to the Company, or the Company shall have become aware of facts that, in the sole judgment of the Company, have or may have adverse significance with respect to the value of any of the Private Notes or the Exchange Notes; which in the sole judgment of the Company in any case, and regardless of the circumstances (including any action by the Company) giving rise to any event described above, prohibits the Company from or makes it inadvisable for the Company to proceed with any of the Exchange Offers and/or with such acceptance for exchange or with such exchange. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to any such condition or may be waived by the Company in whole or in part at any time and from time to time in its sole discretion. The failure by the Company at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. In addition, the Company will not accept for exchange any Private Notes tendered, and no Exchange Notes will be issued in exchange for any such Private Notes, if at such time any stop order shall be threatened or in effect with respect to the Registration Statement or the qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the "TIA"). EXCHANGE AGENT The First National Bank of Chicago has been appointed as the Exchange Agent for the Exchange Offers. All executed Letters of Transmittal should be directed to the Exchange Agent as set forth below. Questions and requests for assistance, requests for additional copies of this Prospectus or of the applicable Letter of Transmittal and requests for Notices of Guaranteed Delivery should be directed to the Exchange Agent addressed as follows: By Mail: By Hand or Overnight Delivery: (Registered or Certified Mail recommended) The First National Bank of Chicago The First National Bank of Chicago c/o First Chicago Trust c/o First Chicago Trust Company of New York Company of New York 14 Wall Street 14 Wall Street 8th Floor, Window 2 8th Floor, Window 2 New York, New York 10005 New York, New York 10005 Facsimile Transmissions: (Eligible Institutions Only) (212) 240-8938 To Confirm by Telephone or for Information Call: (212) 240-8801 DELIVERY OF LETTERS OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. 21 FEES AND EXPENSES The Company will not make any payment to brokers, dealers, or others soliciting acceptances of the Exchange Offers. The Company will pay certain other expenses to be incurred in connection with the Exchange Offers, including the fees and expenses of the Exchange Agent, accounting and certain legal fees. TRANSFER TAXES Holders who tender their Private Notes for exchange will not be obligated to pay any transfer taxes in connection therewith, except that Holders who instruct the Company to register Exchange Notes in the name of, or request that Private Notes not tendered or not accepted in the Exchange Offers be returned to, a person other than the registered tendering Holder will be responsible for the payment of any applicable transfer tax thereon. CONSEQUENCES OF FAILURE TO EXCHANGE Holders of Private Notes who do not exchange their Private Notes for the corresponding Exchange Notes pursuant to the Exchange Offers will continue to be subject to the provisions in the Indenture regarding transfer and exchange of the Private Notes and the restrictions on transfer of such Private Notes as set forth in the legend thereon as a consequence of the issuance of the Private Notes pursuant to exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws. In general, the Private Notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. The Company does not currently anticipate that it will register Private Notes under the Securities Act. See "Description of the Notes--Registration Rights." To the extent that Private Notes are tendered and accepted in the Exchange Offers, the trading market for the remaining untendered Private Notes could be adversely affected. Issuance of the Exchange Notes in exchange for Private Notes pursuant to the Exchange Offers will be made only after timely receipt by the Exchange Agent of (i) a Book-Entry Confirmation with respect to such Private Notes or (ii) certificates for such Private Notes and a properly completed and duly executed applicable Letter of Transmittal (or facsimile thereof), with any required signature guarantees and all other required documents. Therefore, Holders of the Private Notes desiring to tender such Private Notes in exchange for corresponding Exchange Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to tenders of Private Notes for exchange. Private Notes that are not tendered or that are tendered but not accepted by the Company for exchange will, following consummation of the applicable Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof under the Securities Act and, upon consummation of the applicable Exchange Offer, certain registration rights under the Registration Rights Agreement will terminate. Based on existing interpretations by the Staff, as set forth in several no- action letters to third parties, and subject to the immediately following sentence, the Company believes that Exchange Notes issued pursuant to the Exchange Offers in exchange for Private Notes may be offered for resale, resold and otherwise transferred by the holders thereof (other than holders who are broker-dealers) without further compliance with the registration and prospectus delivery provisions of the Securities Act. However, any purchaser of Private Notes who is an affiliate of the Company or who intends to participate in the Exchange Offers for the purpose of distributing the Exchange Notes, or any broker-dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (i) will not be able to rely on the interpretations of the Staff set forth in the above-mentioned no-action letters, (ii) will not be entitled to tender its Private Notes in the Exchange Offers and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes unless such sale or transfer is made pursuant to an exemption from such requirements. The Company does not intend to request the Commission to consider, and the Commission has not considered, the Exchange Offers in the context of a no-action letter and there can be no assurance that the Staff would make a similar determination with respect to the Exchange Offers as in such other circumstances. 22 Each Holder of the Private Notes who wishes to exchange the Private Notes for Exchange Notes in the Exchange Offers will be required to represent that (i) it is not an affiliate of the Company, (ii) the Exchange Notes to be received by it were acquired in the ordinary course of its business and (iii) at the time of the Exchange Offers, it has no arrangement with any person to participate in the distribution of the Exchange Notes. Each broker-dealer that receives Exchange Notes for its own account in exchange for Private Notes, where such Private Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." 23 DESCRIPTION OF NOTES The Private Notes were issued and the Exchange Notes will be issued pursuant to an Indenture, dated as of March 11, 1997 (the "Indenture") between the Company and The First National Bank of Chicago, as trustee (the "Trustee"), a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus constitutes a part. Upon the effectiveness of the Registration Statement, the Indenture will be subject to and governed by the TIA. The Private Notes and the Exchange Notes are treated as two series of Notes under the Indenture and holders thereof are entitled to the benefit of the Indenture. Accordingly, unless specifically stated to the contrary, the following description applies equally to all Notes. The following summary of certain provisions of the Indenture and the Notes does not purport to be complete and such summary is subject to the detailed provisions of the Indenture to which reference is hereby made for a full description of such provisions, including the definition of certain terms used herein, and for other information regarding the Notes. Wherever particular sections or defined terms of the Indenture are referred to, such sections or defined terms are incorporated herein by reference as part of the statement made, and the statement is qualified in its entirety by such reference. As used under this caption, the term "Company" means McKesson Corporation and not any of its subsidiaries unless otherwise expressly stated or the context otherwise requires. The forms and terms of the Exchange Notes and the corresponding Private Notes are identical in all material respects, except for certain transfer restrictions and registration rights relating to the Private Notes and except that Holders of Private Notes of Exchange Offers that have not been consummated by October 7, 1998 will be entitled to liquidated damages in an amount equal to 0.25% per annum on the Private Notes held by such Holders. Liquidated damages, if any, will accrue from and including October 8, 1998 and will cease to accrue from the consummation of the applicable Exchange Offer. GENERAL The Exchange Notes due 2005 will be unsecured, unsubordinated obligations of the Company limited in aggregate principal amount to $150 million and will mature on March 1, 2005. The Exchange Notes due 2008 will be unsecured, unsubordinated obligations of the Company limited in aggregate principal amount to $150 million and will mature on March 1, 2008. Payment of the principal of and interest on the Exchange Notes will rank pari passu with all other unsecured, unsubordinated debt of the Company. The Exchange Notes due 2005 and the Exchange Notes due 2008 will be redeemable in whole or in part at any time at the option of the Company. See "--Optional Redemption." The Exchange Notes will not be entitled to the benefit of any mandatory redemption or sinking fund. The Indenture does not limit the amount of additional indebtedness the Company or any of its subsidiaries may incur. The Indenture does not limit the amount of notes, debentures or other evidences of indebtedness ("Debt Securities") that the Company may issue thereunder and provides that Debt Securities may be issued from time to time in one or more series. As of the date of this Prospectus, $525 million of Debt Securities were outstanding under the Indenture in addition to the Private Notes. The Exchange Notes will bear interest from February 24, 1998 at the respective rates per annum set forth on the cover page of this Prospectus and such interest will be payable semiannually in arrears on March 1 and September 1 of each year, commencing on September 1, 1998, to the persons in whose names the Exchange Notes are registered at the close of business on the immediately preceding February 15 and August 15, respectively. Interest on the Exchange Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. Principal of, premium, if any, and interest on the Exchange Notes will be payable, and the transfer of Exchange Notes will be registrable, at the office or agency of the Company to be maintained for such purpose in the Borough of Manhattan, The City of New York, except that, at the option of the Company, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Exchange Notes register. Exchange Notes may be presented for exchange at the corporate trust offices of the Trustee. Such services will be provided without charge, other than any tax or other governmental charge payable in connection therewith, but subject to the limitations provided in the Indenture. 24 Interest on the Exchange Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which principal, premium, if any, or interest is payable on the Exchange Notes is not a Business Day (as defined in the Indenture), then payment of the principal, premium, if any, or interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). The Exchange Notes will be issued in integral multiples of $1,000. For each Private Note accepted for exchange, the holder of such Private Note will receive a corresponding Exchange Note having a principal amount equal to that of the surrendered Private Note. BOOK ENTRY; DELIVERY AND FORM The certificates representing the Exchange Notes will be issued in fully registered form. Except as set forth below, the Exchange Notes will be deposited with, or on behalf of, DTC, and registered in the name of Cede & Co. ("Cede"), as DTC's nominee in the form of one or more global Exchange Note certificates (the "Global Securities") for each of the Exchange Notes due 2005 and the Exchange Notes due 2008, respectively. Except as set forth below, the record ownership of any Global Security may be transferred, in whole or in part, only to DTC, another nominee of DTC or to a successor of DTC or its nominee. Investors may hold their interests in any of the Global Securities directly through DTC, or indirectly through organizations which are participants in DTC ("Participants"). Transfers between Participants will be effected in the ordinary way in accordance with DTC rules and will be settled in immediately available funds. Investors who are not Participants may beneficially own interests in a Global Security held by DTC only through Participants, including certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a Participant, either directly or indirectly, and have indirect access to the DTC system ("Indirect Participants"). So long as Cede, as the nominee of DTC, is the registered owner of any Global Security, Cede for all purposes will be considered the sole holder of such Global Security. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have certificates registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form, and will not be considered the holder thereof. Neither McKesson nor the Trustee (nor any registrar or paying agent) will have any responsibility for the performance by DTC or its Participants or Indirect Participants of its obligations under the rules and procedures governing, its operations. DTC has advised McKesson that it will take any action permitted to be taken by a holder of Exchange Notes only at the direction of one or more Participants whose accounts are credited with DTC interests in a Global Security. DTC has advised McKesson as follows: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its Participants and to facilitate the clearance and settlement of securities transactions, such as transfers and pledges, among Participants in deposited securities through electronic book-entry changes to accounts of its Participants, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Certain of such Participants (or their representatives), together with other entities, own DTC. The Rules applicable to DTC and its Participants are on file with the Commission. Purchases of Exchange Notes under the DTC system must be made by or through Participants, which will receive a credit for the Exchange Notes on DTC's records. The ownership interest of each actual purchaser of each Exchange Note (a "Beneficial Owner") is in turn to be recorded on the Participants and Indirect 25 Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Participant or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Exchange Notes are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Exchange Notes, except in the event that use of the book-entry system for the Exchange Notes is discontinued. The deposit of Exchange Notes with DTC and their registration in the name of Cede effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Exchange Notes; DTC's records reflect only the identity of the Participants to whose accounts such Exchange Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in each Global Security. Conveyance of notices and other communications by DTC to Participants, by Participants to Indirect Participants and by Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Redemption notices shall be sent to Cede. If less than all of the Exchange Notes due 2005 or the Exchange Notes due 2008 are being redeemed, DTC's practice is to determine by lot the interest of each Participant in such Exchange Notes to be redeemed. Principal and interest payments on the Exchange Notes will be made to DTC by wire transfer of immediately available funds. DTC's practice is to credit Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC or McKesson, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of McKesson, disbursement of such payments to Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Participants and Indirect Participants. Neither McKesson nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Certificated Notes. DTC may discontinue providing its services as securities depositary with respect to the Exchange Notes at any time by giving reasonable notice to McKesson. In the event that DTC notifies McKesson that it is unwilling or unable to continue as depositary for any Global Security or if at any time DTC ceases to be a clearing agency registered as such under the Exchange Act when DTC is required to be so registered to act as such depositary and no successor depositary shall have been appointed within 90 days of such notification or of McKesson becoming aware of DTC's ceasing to be so registered, as the case may be, certificates for the relevant Exchange Notes will be printed and delivered in exchange for interests in such Global Security. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for relevant Exchange Notes registered in such names as DTC shall direct. It is expected that such instructions will be based upon directions received by DTC from its Participants with respect to ownership of beneficial interests in such Global Security. McKesson may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, certificates representing the Exchange Notes will be printed and delivered. 26 The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that McKesson believes to be reliable, but McKesson does not take responsibility for the accuracy thereof. OPTIONAL REDEMPTION The Exchange Notes will be redeemable as a whole or in part, at the option of the Company, at any time at a redemption price equal to the greater of (i) 100% of their principal amount and (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Treasury Yield plus 10 basis points for each series of Exchange Notes, plus in each case accrued interest to the date of redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the applicable Comparable Treasury Issue, assuming a price for the applicable Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Exchange Notes due 2005 or Exchange Notes due 2008, as applicable, that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Exchange Notes due 2005 or Exchange Notes due 2008, as applicable. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the applicable Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer. Holders of Exchange Notes to be redeemed will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. CERTAIN COVENANTS OF THE COMPANY Definitions. The term "Attributable Debt" shall mean in connection with a sale and lease-back transaction the lesser of (a) the fair value of the assets subject to such transaction or (b) the present value of the obligations of the lessee for net rental payments during the term of any lease discounted at the rate of interest set forth or implicit in the terms of such lease or, if not practicable to determine such rate, the weighted average interest rate 27 per annum borne by the Debt Securities of each series outstanding pursuant to the Indenture and subject to limitations on sale and lease-back transaction covenants, compounded semiannually in either case as determined by the principal accounting or financial officer of the Company. The term "Subsidiary" shall mean any corporation of which at least a majority of the outstanding stock having voting power under ordinary circumstances for the election of the board of directors of said corporation shall at the time be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries. The term "Consolidated Subsidiary" shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Company in accordance with generally accepted accounting principles. The term "Exempted Debt" shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Company and its Consolidated Subsidiaries incurred after the date of issuance of the Private Notes and secured by liens not permitted by the limitation on liens provisions, and (ii) Attributable Debt of the Company and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the Private Notes, other than leases permitted by the limitation on sale and lease-back provisions. The term "Indebtedness" shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Company and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles. Limitation on Liens. The Company covenants that, so long as any of the Notes remain outstanding, it will not, nor will it permit any Consolidated Subsidiary, to create or assume any Indebtedness for money borrowed which is secured by a lien (as defined) upon any assets, whether now owned or hereafter acquired, of the Company or any such Consolidated Subsidiary without equally and ratably securing the Notes by a lien ranking ratably with and equally to such secured Indebtedness, except that the foregoing restriction shall not apply to (a) liens on assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on assets existing at the time of acquisition thereof, or to secure the payment of the purchase price of such assets, or to secure indebtedness incurred or guaranteed by the Company or a Consolidated Subsidiary for the purpose of financing the purchase price of such assets or improvements or construction thereon, which indebtedness is incurred or guaranteed prior to, at the time of or within 360 days after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); (c) liens securing indebtedness owed by any Consolidated Subsidiary to the Company or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Company or a Subsidiary; (e) liens on any assets of the Company or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or in favor of any other country, or political subdivision thereof, to secure certain payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; (g) certain statutory liens or other similar liens arising in the ordinary course of business of the Company or a Consolidated Subsidiary, or certain liens arising out of government contracts; (h) certain pledges, deposits or liens made or arising under the worker's compensation or similar legislation or in certain other circumstances; (i) certain liens in connection with legal proceedings, including certain liens arising out of judgments or awards; (j) liens for certain taxes or assessments, landlord's liens and liens and charges incidental to the conduct of the business or the ownership of the assets of the Company or of a Consolidated Subsidiary, which were not incurred in connection with the borrowing of money and which do not, in the opinion of the Company, materially impair the use of such assets in the operation of the business of the Company or such Consolidated Subsidiary or the value of such assets for the purposes thereof or (k) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise 28 to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof). Notwithstanding the above, the Company or any Consolidated Subsidiary may, without securing the Notes, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that after giving effect thereto the Exempted Debt then outstanding at such time does not exceed 10% of the total assets of the Company and its Subsidiaries on a consolidated basis. Limitation on Sale and Lease-Back Transactions. Sale and lease-back transactions (except such transactions involving leases for less than three years) by the Company or any Consolidated Subsidiary of any assets are prohibited unless (a) the Company or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Exchange Notes, or (b) the proceeds of the sale of the assets to be leased are at least equal to their fair market value and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement of indebtedness. The foregoing limitation will not apply, if at the time the Company or any Consolidated Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Company and its Subsidiaries on a consolidated basis. SUCCESSOR CORPORATION The Indenture provides that the Company shall not consolidate or merge with or into, or transfer or lease its assets substantially as an entirety to any person unless the Company shall be the continuing corporation, or the successor corporation or person to which such assets are transferred or leased shall be a corporation organized under the laws of the United States, any state thereof or the District of Columbia and shall expressly assume the Company's obligations on the Debt Securities and under the Indenture, and immediately after giving effect to such transaction no Event of Default (as defined in the Indenture) shall have occurred and be continuing, and certain other conditions are met. Upon assumption of the Company's obligations by a person to whom such assets are transferred or leased, subject to certain exceptions, the Company shall be discharged from all obligations under the Notes and the Indenture. This covenant would not apply to any recapitalization transaction, a change of control of the Company or a highly leveraged transaction unless such transaction or change of control were structured to include a merger or consolidation or transfer or lease of the Company's assets substantially as an entirety. There are no covenants or other provisions in the Indenture providing for a put or increased interest or that would otherwise afford holders of Notes protection in the event of a recapitalization transaction, a change of control of the Company or a highly leveraged transaction. EVENTS OF DEFAULT An Event of Default is defined under the Indenture with respect to Debt Securities of each series as being: (a) default in payment of all or any part of the principal of, or premium, if any, on any Debt Securities of such series when due, either at maturity, upon any redemption, by declaration or otherwise; (b) default for 30 days in payment of any interest on any Debt Securities of such series; (c) default in payment of any sinking fund installment when due by the terms of the Debt Securities of such series; (d) default for 60 days after written notice as provided in the Indenture in the observance or performance of any other covenant or agreement in the Debt Securities of such series or in the Indenture, other than a covenant included in the Indenture solely for the benefit of a series of Debt Securities other than such series; or (e) certain events of bankruptcy, insolvency or reorganization. The Indenture provides that (a) if an Event of Default due to the default in payment of principal, premium, if any, or interest on any series of Debt Securities, or due to the default in the performance or breach of any other covenant or agreement of the Company applicable to the Debt Securities of such series but not applicable to all outstanding Debt Securities, shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of the Debt Securities of such series may declare the principal of all Debt 29 Securities of such series and interest accrued thereon to be due and payable immediately and (b) if an Event of Default due to a default in the performance of any other of the covenants or agreements in the Indenture applicable to all Debt Securities then outstanding or due to certain events of bankruptcy, insolvency and reorganization of the Company shall have occurred and be continuing, either the Trustee or the holders of not less than 25% in principal amount of the Debt Securities then outstanding (treated as one class) may declare the principal of all such Debt Securities and interest accrued thereon to be due and payable immediately, but upon certain conditions such declarations may be annulled and past defaults may be waived (except a continuing default in payment of principal, premium, if any, or interest on such Debt Securities) by the holders of a majority in principal amount of the Debt Securities of such series (or of all series, as the case may be) then outstanding. The Indenture contains a provision entitling the Trustee, subject to the duty of the Trustee to act with the required standard of care, to be indemnified by the holders of Debt Securities requesting the Trustee to exercise any right or power under the Indenture before proceeding to exercise any such right or power at the request of such holders. The Indenture provides that no holder of Debt Securities of any series may institute any action against the Company under the Indenture (except actions for payment of overdue principal, premium, if any, or interest) unless such holder previously shall have given to the Trustee written notice of default and continuance thereof and unless the holders of not less than 25% in principal amount of the Debt Securities of such series then outstanding shall have requested the Trustee to institute such action and shall have offered the Trustee reasonable indemnity, the Trustee shall not have instituted such action within 60 days of such request and the Trustee shall not have received direction inconsistent with such written request by the holders of a majority in principal amount of the Debt Securities of such series then outstanding. The Indenture contains a covenant that the Company will file annually with the Trustee a certificate of no default or a certificate specifying any default that exists. DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE The Company can discharge or decrease its obligations under the Indenture as set forth below. Under terms satisfactory to the Trustee, the Company may discharge certain obligations to holders of any series of Debt Securities which have not already been delivered to the Trustee for cancellation and which have either become due and payable or are by their terms due and payable within one year (or scheduled for redemption within one year) by irrevocably depositing with the Trustee cash or U.S. Government Obligations (as defined in the Indenture), as trust funds in an amount certified to be sufficient to pay when due, whether at maturity, upon redemption or otherwise, the principal of, premium, if any, and interest on such Debt Securities. The Company may also discharge any and all of its obligations to holders of any series of Debt Securities at any time ("defeasance"), but may not thereby avoid its duty to register the transfer or exchange of such series of Debt Securities, to replace any temporary, mutilated, destroyed, lost or stolen series of Debt Securities or to maintain an office or agency in respect of such series of Debt Securities. Under terms satisfactory to the Trustee, the Company may instead be released with respect to any outstanding series of Debt Securities from the obligations imposed by certain provisions of the Indenture (which contain the covenants described above limiting liens, consolidations, mergers, transfers and leases and certain dispositions) and omit to comply with such sections without creating an Event of Default ("covenant defeasance"). Defeasance or covenant defeasance may be effected only if, among other things: (i) the Company irrevocably deposits with the Trustee cash or U.S. Government Obligations, as trust funds in an amount certified to be sufficient to pay at maturity (or upon redemption) the principal, premium, if any, and interest on all outstanding Debt Securities of such series and (ii) the Company delivers to the Trustee an opinion of counsel to the effect that the holders of such series of Debt Securities will not recognize income, gain or loss for United States Federal income tax purposes as a result of such defeasance or covenant defeasance and that defeasance or covenant defeasance will not otherwise alter such holders' United States Federal income tax treatment of principal, premium and interest payments on such series 30 of Debt Securities. In the case of a defeasance, such opinion must be based on a ruling of the Internal Revenue Service or a change in United States Federal income tax law occurring after the date of the Indenture, since such a result would not occur under current tax law. MODIFICATION OF THE INDENTURE The Indenture provides that the Company and the Trustee may enter into supplemental indentures without the consent of the holders of Debt Securities to: (a) secure any Debt Securities, (b) evidence the assumption by a successor corporation of the obligations of the Company, (c) add covenants for the protection of the holders of Debt Securities, (d) cure any ambiguity or correct any inconsistency in the Indenture, provided that such cure or correction does not adversely affect the holders of Debt Securities, (e) establish the forms or terms of Debt Securities of any series and (f) evidence the acceptance of appointment by a successor trustee. The Indenture also contains provisions permitting the Company and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of Debt Securities of all series then outstanding and affected (voting as one class), to add any provisions to, or change in any manner or eliminate any of the provisions of, the Indenture or modify in any manner the rights of the holders of the Debt Securities of each series so affected; provided that the Company and the Trustee may not, without the consent of the holder of each outstanding Debt Security affected thereby, (a) extend the final maturity of any Debt Security, or reduce the principal amount thereof or premium thereon, if any, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or change the currency in which the principal thereof, premium, if any, or interest thereon is payable or reduce the amount of the principal of any Debt Security issued with original issue discount that is payable upon acceleration or provable in bankruptcy or alter certain provisions of the Indenture relating to the Debt Securities not denominated in U.S. dollars or impair the right to institute suit for the enforcement of any payment on any Debt Security when due or (b) reduce the aforesaid percentage in principal amount of Debt Securities of any series, the consent of the holders of which is required for any such modification. CONCERNING THE TRUSTEE The First National Bank of Chicago is the Trustee under the Indenture. All payments of principal of, premium, if any, and interest on and all registration, transfer, exchange, authentication and delivery (including authentication and delivery on original issuance of the Notes) of, the Notes will be effected by the Trustee at an office designated by the Trustee in New York, New York. The Indenture contains certain limitations on the right of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict or resign. In case of any conflicting interest relating to the Trustee's duties with respect to the Notes, the Trustee shall either eliminate such conflicting interest or, except as otherwise provided in the TIA, resign. The holders of a majority in principal amount of any series of Debt Securities then outstanding will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee with respect to such series of Debt Securities, provided that such direction would not conflict with any rule of law or with the Indenture, would not be unduly prejudicial to the rights of another holder of the Debt Securities, and would not involve the Trustee in personal liability. The Indenture provides that in case an Event of Default shall occur and be known to the Trustee (and not be cured), the Trustee will be required to use the degree of care of a prudent man in the conduct of his own affairs in the exercise of its power. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any of the holders of the Debt Securities, unless they shall have offered to the Trustee security and indemnity satisfactory to it. 31 The Trustee is one of a number of banks with which the Company and its subsidiaries maintain ordinary banking and trust relationships. With respect to the sale of trust convertible preferred securities issued by a subsidiary of the Company, the Trustee also serves as trustee under the indenture pursuant to which convertible subordinated debt of the Company was issued, a guarantee agreement of the Company issued with respect to such trust convertible preferred securities and a declaration of trust related to the issuance of such trust convertible preferred securities. With respect to the sale of the Company's 6.60% Notes due 2000, 6 7/8% Notes due 2002 and 7.65% Debentures due 2027, the Trustee also serves as trustee under the indenture pursuant to which such debt was issued. In addition, the Trustee also serves as trustee under an indenture pursuant to which 6.55% Senior Notes due 2002 of a subsidiary were issued. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, STOCKHOLDERS OR INCORPORATORS The Indenture provides that no past, present or future director, officer, employee, stockholder or incorporator of the Company or any successor corporation shall have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation, by reason of such person's or entity's status as such director, officer, stockholder or incorporator. REGISTRATION RIGHTS Holders of Exchange Notes are not entitled to any registration rights with respect to the Exchange Notes. Pursuant to the Registration Rights Agreement, holders of Private Notes are entitled to certain registration rights. Under the Registration Rights Agreement, the Company has agreed, for the benefit of the holders of Private Notes, that it will, at its expense (i) file a registration statement with the Commission with respect to the Exchange Offers and (ii) use its reasonable efforts to cause such registration statement to be declared effective under the Securities Act by August 23, 1998. The Registration Statement of which the Prospectus is a part constitutes the registration statement for the Exchange Offers. If, (i) because of any change in law or in currently prevailing interpretations of the Staff the Company is not permitted to effect any of the Exchange Offers, (ii) any of the Exchange Offers are not consummated by October 7, 1998, or (iii) in the case of any holder that participates in the Exchange Offers, such holder does not receive applicable Exchange Notes on the date of the exchange that may be sold without restriction under state and Federal securities laws (other than due solely to the status of such holder as an affiliate of the Company within the meaning of the Securities Act or as a broker-dealer), then in each case, the Company will (x) promptly deliver to the applicable holders written notice thereof and (y) at the Company's sole expense (a) as promptly as practicable, file a shelf registration covering resales of the applicable Private Notes (the "Shelf Registration Statement"), (b) use its reasonable efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act and (c) use its reasonable best efforts to keep effective the Shelf Registration Statement until the earlier of two years (or, if Rule 144(k) is amended to provide a shorter restrictive period, such shorter period) after the Closing Date or such time as all of the applicable Private Notes have been sold thereunder. The Company will, in the event that a Shelf Registration Statement is filed, provide to each applicable holder copies of the prospectus that is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement for the applicable Private Notes has become effective and take certain other actions as are required to permit unrestricted resales of the applicable Private Notes. A holder that sells Private Notes pursuant to the Shelf Registration Statement will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a holder (including certain indemnification rights and obligations). The Registration Rights Agreement is governed by, and construed in accordance with, the laws of the State of New York. The summary herein of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is attached as an exhibit to the Registration Statement of which this Prospectus forms a part and is available upon request to the Company. 32 CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES The following is a general discussion of certain United States Federal income tax consequences associated with the exchange of Private Notes for Exchange Notes and the acquisition and disposition of the Exchange Notes by a holder who holds the Exchange Notes as "capital assets" (generally, property held for investment). This discussion is based upon the United States Federal income tax laws, regulations, rulings and decisions now in effect, which are subject to change, possibly retroactively. This discussion does not cover all aspects of Federal income taxation that may be relevant to holders, in light of their specific circumstances, particularly holders subject to special tax treatment (such as insurance companies, financial institutions, tax exempt organizations or foreign persons, except to the extent described below). Prospective investors are urged to consult their tax advisors regarding the United States Federal tax consequences of acquiring, holding, and disposing of the Exchange Notes, as well as any tax consequences that may arise under the laws of any foreign, state, local, or other taxing jurisdiction. For purposes of this discussion, a "U.S. holder" means a holder that is a citizen or resident of the United States, a corporation, partnership, or other entity created or organized in the United States or under the laws of the United States or of any political subdivision thereof, an estate whose income is includible in gross income for United States Federal income tax purposes regardless of its source, or a trust whose administration is subject to the primary supervision of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust. A "Non-U.S. holder" means a beneficial owner of Exchange Notes who is not a U.S. holder. U.S. HOLDERS Exchange of Notes. There will be no Federal income tax consequences to a holder exchanging Private Notes for Exchange Notes pursuant to the Exchange Offers, and such a holder will have the same adjusted tax basis and holding period in the Exchange Notes as it had in the Private Notes immediately before the exchange. Disposition of Exchange Notes. In general, the holder of an Exchange Note will recognize gain or loss upon the sale, redemption, retirement or other disposition of the Exchange Note measured by the difference between the amount of cash and the fair market value of property received (except to the extent attributable to the payment of accrued interest), and the holder's adjusted tax basis in the Exchange Note. Subject to the market discount rules discussed below, the gain or loss on the sale or other disposition of an Exchange Note should be long-term capital gain or loss, provided the holder has a holding period for the Exchange Note (which would include the holding period of the Private Note) of more than one year. In the case of a U.S. holder who is an individual, any capital gain recognized on the sale or other disposition of an Exchange Note generally will be subject to a maximum U.S. Federal income tax rate of (i) 28 percent if such U.S. holder's holding period is more than one year and not more than 18 months and (ii) 20 percent if such U.S. holder's holding period exceeds 18 months. Market Discount on Resale. Holders, other than original purchasers of Private Notes in the original offering, should be aware that the resale of the Exchange Notes may be affected by the market discount provisions of the Code. These rules generally provide that if a subsequent holder of an Exchange Note purchases it at a market discount in excess of statutorily defined de minimis amount, and thereafter recognizes gain upon a disposition (including a partial redemption) of the Exchange Note, the lesser of such gain or the portion of the market discount that accrued while the Exchange Note was held by such holder will be treated as ordinary interest income at the time of the disposition. The rules also provide that a holder who acquires an Exchange Note at a market discount may be required to defer a portion of any interest expense that may otherwise be deductible on any indebtedness incurred or maintained to purchase or carry such Exchange Note until the holder disposes of such Exchange Note in a taxable transaction. If a holder of an Exchange Note elects to include market discount in income currently, both of the foregoing rules would not apply. 33 NON-U.S. HOLDERS Under present United States Federal income and estate tax law, assuming certain certification requirements are satisfied (which include identification of the beneficial owner of the instrument), and subject to the discussion of backup withholding below: (a) payments of interest on the Exchange Notes to any Non-U.S. holder will not be subject to United States Federal income or withholding tax, provided that (1) the holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of McKesson entitled to vote, (2) the holder is not (i) a bank receiving interest pursuant to a loan agreement entered into in the ordinary course of its trade or business, or (ii) a controlled foreign corporation that is related to McKesson through stock ownership, and (3) such interest payments are not effectively connected with the conduct of a United States trade or business of the holder; (b) a holder of an Exchange Note who is a Non-U.S. holder will not be subject to the United States Federal income tax on gain realized on the sale, exchange, or other disposition of an Exchange Note, unless (1) such holder is an individual who is present in the United States for 183 days or more during the taxable year and certain other requirements are met, or (2) the gain is effectively connected with the conduct of a United States trade or business of the holder; and (c) if interest on the Exchange Notes is exempt from withholding of United States Federal income tax under the rules described above, the Exchange Notes will not be included in the estate of a deceased Non-U.S. holder for United States Federal estate tax purposes. The certification referred to above may be made on an Internal Revenue Service Form W-8 or substantially similar substitute form. INFORMATION REPORTING AND BACKUP WITHHOLDING A U.S. holder may be subject to backup withholding at a rate of 31% with respect to interest paid on or proceeds derived from the sale or other disposition of an Exchange Note, unless the U.S. holder (i) is a corporation or comes within certain other exempt categories or (ii) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. Under temporary United States Treasury regulations, United States information reporting requirements and backup withholding tax will generally not apply to interest paid on the Exchange Notes to a Non-U.S. holder at an address outside the United States. Payments by a United States office of a broker of the proceeds of a sale of the Exchange Notes are subject to both backup withholding at a rate of 31% and information reporting unless the holder certifies its Non-U.S. holder status under penalties of perjury or otherwise establishes an exemption. Information reporting requirements (but not backup withholding) will also apply to payments of the proceeds of sales of the Exchange Notes by foreign offices of United States brokers, or foreign brokers with certain types of relationships to the United States, unless the broker has documentary evidence in its records that the holder is a Non-U.S. holder and certain other conditions are met, or the holder otherwise establishes an exemption. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be refunded or credited against the holder's United States Federal income tax liability, provided that the required information is furnished to the Internal Revenue Service. On October 6, 1997, the United States Treasury Department issued final Treasury regulations governing information reporting and the certification procedures regarding withholding and backup withholding on certain amounts paid to Non-U.S. holders after December 31, 1999. The new Treasury regulations would alter the procedures for claiming the benefits of an income tax treaty and may change the certification procedures relating to the receipt by intermediaries of payments on behalf of a beneficial owner of an Exchange Note. Holders of the Exchange Notes should consult their tax advisors concerning the effect, if any, of such new Treasury regulations on an investment in the Exchange Notes. 34 PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Private Notes where such Private Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, starting on the applicable Expiration Date and ending on the close of business on the 180th day following such Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker- dealer for use in connection with any such resale. In addition, until 1998, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offers may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offers and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. Each Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the applicable Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offers (including the expenses of any Special Counsel for the holders of the Private Notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Private Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. EXPERTS The consolidated financial statements of McKesson and the related financial statement schedule incorporated in this Registration Statement by reference from McKesson's Annual Report on Form 10-K for the year ended March 31, 1997 and the consolidated financial statements of FoxMeyer for the year ended March 31, 1996 incorporated in this Registration Statement by reference from McKesson's Current Report on Form 8-K/A filed with the Commission on April 28, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports incorporated herein by reference (which report dated May 16, 1997 on McKesson's consolidated financial statements expresses an unqualified opinion and which report on FoxMeyer's consolidated financial statements dated June 28, 1996 (March 18, 1997 as to paragraph seven of Note Q), expresses an unqualified opinion and includes an explanatory paragraph relating to the sale of the principal assets of FoxMeyer and its Chapter 7 bankruptcy filing). Such consolidated financial statements and financial statement schedule have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing. 35 LEGAL MATTERS The validity of the Exchange Notes offered hereby will be passed upon for McKesson by Skadden, Arps, Slate, Meagher & Flom LLP. 36 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE EXCHANGE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE EXCHANGE NOTES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. ---------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS Available Information...................................................... 3 Incorporation of Certain Documents by Reference............................ 3 Prospectus Summary......................................................... 5 Consequences of Failure to Exchange Private Notes.......................... 7 The Exchange Notes......................................................... 8 Special Note Regarding Forward-Looking Statements.......................... 9 Risk Factors............................................................... 10 The Company................................................................ 13 Use of Proceeds............................................................ 15 The Exchange Offers........................................................ 16 Description of Notes....................................................... 24 Certain United States Federal Tax Consequences............................. 33 Plan of Distribution....................................................... 35 Experts.................................................................... 35 Legal Matters.............................................................. 36
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- McKESSON CORPORATION OFFERS TO EXCHANGE $150,000,000 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 AND $150,000,000 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 ---------------- PROSPECTUS ---------------- , 1998 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VIII of the Restated By-Laws of the Company, in accordance with the provisions of Section 145 of the General Corporation Law of Delaware (the "Delaware Corporation Law"), provides that the Company shall indemnify any person in connection with any threatened, pending or completed legal proceeding (other than a legal proceeding by or in the right of the Company) by reason of the fact that he is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such legal proceeding if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. If the legal proceeding is by or in the right of the Company, the director or officer may be indemnified by the Company against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such legal proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, except that he may not be indemnified in respect of any claim, issue or matter as to which he shall have been adjudged to be liable to the Company unless a court determines otherwise. Article VIII of McKesson's Restated By-Laws allows the Company to maintain director and officer liability insurance on behalf of any person who is or was a director or officer of the Company or such person who serves or served as director, officer, employee or agent of another corporation, partnership or other enterprise at the request of the Company. Article VI of McKesson's Restated Certificate of Incorporation, in accordance with Section 102(b)(7) of the Delaware Corporation Law, provides that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for any breach of his fiduciary duty as a director; provided, however, that such clause shall not apply to any liability of a director (1) for any breach of his duty of loyalty to the Registrant or its stockholders, (2) for acts or omissions that are not in good faith or involve intentional misconduct or a knowing violation of the law, (3) under Section 174 of the Delaware Corporation Law, or (4) for any transaction from which the director derived an improper personal benefit. II-1 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. A. EXHIBITS The Exhibits listed in the following Exhibit Index are filed as part of the Registration Statement.
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.1 Indenture between the Company and The First National Bank of Chicago, dated as of March 11, 1997 (Exhibit 4.1(1)). 4.2 Officer's Certificate relating to the Private Notes. 4.3 Form of Officer's Certificate relating to the Exchange Notes. 4.4 Form of 6.30% Notes due March 1, 2005 (included in Exhibit A to Annex A to Exhibit 4.2 above). 4.5 Form of 6.40% Notes due March 1, 2008 (included in Exhibit A to Annex B to Exhibit 4.2 above). 4.6 Form of 6.30% Exchange Notes due March 1, 2005 (included in Exhibit A to Annex A to Exhibit 4.3 above). 4.7 Form of 6.40% Exchange Notes due March 1, 2008 (included in Exhibit A to Annex B to Exhibit 4.3 above). 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality of the Exchange Notes being registered hereby.* 8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to certain tax matters. 10.1 Registration Rights Agreement, dated as of February 24, 1998, among the Company and the Initial Purchasers. 23.1 Independent Auditors' Consent. 23.2 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1). 24.1 Power of Attorney. 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National Bank of Chicago, as Trustee under the Indenture. 99.1 Form of Letter of Transmittal for 6.30% Notes due March 1, 2005. 99.2 Form of Letter of Transmittal for 6.40% Notes due March 1, 2008. 99.3 Form of Notice of Guaranteed Delivery. 99.4 Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. 99.5 Form of Letter to Clients. 99.6 Form of Exchange Agent Agreement.
- -------- (1) Incorporated by reference to designated exhibit to Amendment No. 1 to the Company's Registration Statement on Form S-4 filed with Commission on July 22, 1997, File No. 333-30899. * To be filed by amendment. ITEM 22. UNDERTAKINGS. The undersigned hereby undertakes as follows: (a) That for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is II-2 against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (c) To respond to requests for information that is incorporated by reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of such request, and to send the incorporated documents by first-class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (d) To supply by means of a post-effective amendment all information concerning any transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAN FRANCISCO, STATE OF CALIFORNIA, ON THE 1ST DAY OF APRIL, 1998. McKESSON CORPORATION /s/ Richard H. Hawkins By: _________________________________ NAME: RICHARD H. HAWKINS TITLE: VICE PRESIDENT AND CHIEF FINANCIAL OFFICER PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED. SIGNATURE TITLE * President and Chief - ------------------------------------- Executive Officer and MARK A. PULIDO Director (principal executive officer) * Vice President and - ------------------------------------- Chief Financial Officer RICHARD H. HAWKINS (principal financial officer) * Controller - ------------------------------------- (principal accounting officer) HEIDI E. YODOWITZ * Director; - ------------------------------------- Chairman of the Board ALAN SEELENFREUND * Director - ------------------------------------- MARY G.F. BITTERMAN * Director - ------------------------------------- TULLY M. FRIEDMAN * Director - ------------------------------------- JOHN M. PIETRUSKI II-4 * Director - ------------------------------------- DAVID S. POTTRUCK * Director - ------------------------------------- CARL E. REICHARDT * Director - ------------------------------------- JANE E. SHAW * Director - ------------------------------------- ROBERT H. WATERMAN, JR. *By: /s/ Nancy A. Miller ---------------------------------- NANCY A. MILLER ATTORNEY-IN-FACT II-5 EX-4.2 2 OFFICER'S CERTIFICATE Exhibit 4.2 OFFICER'S CERTIFICATE --------------------- The undersigned, McKesson Corporation, a Delaware corporation (the "Corporation"), hereby certifies through Nancy A. Miller, its Vice President and Corporate Secretary, pursuant to Sections 2.3, 2.4 and 11.5 of the Indenture, dated as of March 11, 1997 (the "Indenture"), by and between the Company, as Issuer, and The First National Bank of Chicago, a national association, as Trustee, as follows: 1. Pursuant to the terms of the resolutions adopted by the Board of Directors of the Corporation (the "Board of Directors") dated January 28, 1998 and the Finance Committee of the Board of Directors dated February 9, 1998 and the actions of officers of the Corporation on February 19, 1998, the terms of the Corporation's 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (collectively, the "Notes") set forth in Annex A and Annex B, respectively, ------- ------- attached hereto have been duly adopted by the Corporation. 2. The forms and terms of the Notes have been established pursuant to Sections 2.1 and 2.3 of the Indenture and comply with the Indenture. 3. She has read Section 2.3 of the Indenture, read such other documents as she deemed necessary and made such other inquiries as she deemed necessary to make the certifications in paragraph 2, 3 and 4 hereof. 4. All conditions precedent provided for in the Indenture relating to the issuance of the Notes have been complied with. IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed by its duly authorized officer as of this 24/th/ day of February, 1998. McKESSON CORPORATION By: /s/ Nancy A. Miller ------------------------------- Nancy A. Miller Vice President and Corporate Secretary ANNEX A Pursuant to Section 2.3 of the Indenture, dated as of March 11, 1997 (the "Indenture"), between McKesson Corporation (the "Issuer") and The First National Bank of Chicago, a national banking association, as trustee (the "Trustee"), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 1. Designation. The designation of the securities is "6.30% Notes due ----------- March 1, 2005" (the "Notes due 2005"). 2. Aggregate Principal Amount. The Notes due 2005 shall be limited in -------------------------- aggregate principal amount to $150,000,000 (except for Notes due 2005 authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes due 2005 pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 3. Currency Denomination. The Notes due 2005 shall be denominated in --------------------- Dollars. 4. Maturity. The date on which the principal of the Notes due 2005 is -------- payable is March 1, 2005. 5. Rate of Interest; Interest Payment Date; Regular Record Dates. Each ------------------------------------------------------------- Note due 2005 shall bear interest from February 24, 1998 at 6.30% per annum until the principal thereof is paid. Such interest shall be payable semiannually in arrears on March 1 and September 1 of each year, commencing on September 1, 1998, to the persons in whose names the Notes due 2005 are registered at the close of business on the immediately preceding February 15 and August 15, respectively. Interest on the Notes due 2005 shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest on the Notes due 2005 shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which principal, premium, if any, or interest is payable on the Notes due 2005 is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next 1 succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). 6. Place of Payment. Principal of, premium, if any, and interest on ---------------- the Notes due 2005 shall be payable, and the transfer of Notes due 2005 shall be registrable, at the office or agency of the Issuer to be maintained for such purpose in the Borough of Manhattan, The City of New York, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Notes due 2005 register; provided, however, that while any Notes due 2005 are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the Notes due 2005 may be made by wire transfer to the account of the Depositary or its nominee. 7. Optional Redemption. The Notes due 2005 may be redeemed as a whole ------------------- or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. Holders of the Notes due 2005 to be redeemed will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes due 2005 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes due 2005. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or 2 unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. 8. Mandatory Redemption. The Notes due 2005 are not mandatorily -------------------- redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 9. Denominations. The Notes due 2005 shall be issued initially in ------------- minimum denominations of $250,000 and shall be issued in integral multiples of $1,000 in excess thereof. 10. Amount Payable Upon Acceleration. The principal of the Notes due -------------------------------- 2005 shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 3 11. Payment Currency. Principal and interest on the Notes due 2005 ---------------- shall be payable in Dollars. 12. Payment Currency - Election. The principal of and interest on the --------------------------- Notes due 2005 shall not be payable in a currency other than Dollars. 13. Payment Currency - Index. The principal of and interest on the ------------------------ Notes due 2005 shall not be determined with reference to an index based on a coin or currency. 14. Registered Securities. The Notes due 2005 shall be issuable as --------------------- Registered Securities. The Notes due 2005 may be issued as Registered Global Securities. 15. Additional Amounts. The Issuer shall not pay additional amounts ------------------ on the Notes due 2005 held by a Person that is not a U.S. Person in respect of taxes or similar charges withheld or deducted. 16. Definitive Certificates. Section 2.8 of the Indenture will govern ----------------------- the transferability of Notes due 2005 in definitive form. 17. Registrar; Paying Agent; Depositary. The Trustee shall initially ----------------------------------- serve as the registrar and the paying agent for the Notes due 2005. The Depository Trust Company shall initially serve as the Depositary for the Registered Global Security representing Notes due 2005. 18. Events of Default; Covenants. There shall be no deletions from, ---------------------------- modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the Notes due 2005. There shall be the following additions to the covenants of the Issuer set forth in Article III with respect to the Notes due 2005: Limitation on Liens. The Issuer covenants that, so long as any of the Notes due 2005 remain outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien ("liens") of or upon any assets, whether now owned or hereafter acquired, of the Issuer or 4 any such Consolidated Subsidiary without equally and ratably securing the Notes due 2005 by a lien ranking ratably with and equal to (or at the option of the Issuer, senior to) such secured Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later) which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any assets theretofore owned by the Issuer or a Consolidated Subsidiary, other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, or to secure the payment of the purchase price of such assets, or to secure indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary for the purpose of financing the purchase price of such assets or improvements or construction thereon, which indebtedness is incurred or guaranteed prior to, at the time of or within 360 days after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such corporation is merged into or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary; (e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of 5 America or any State thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets which secured the lien so extended, renewed or replaced (plus improvements and construction on such real property); (g) liens imposed by law, such as mechanics', workmen's, repairmen's, materialmen's, carriers', warehousemen's, vendors' or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker's compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated 6 Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as, but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including liens arising out of judgements or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceedings to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; or (k) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceedings thereof). Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the Notes due 2005, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any of the Notes due 2005 remain outstanding, it will not, nor shall it permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale leaseback transaction (involving a lease for a term of not more than three years), unless 7 either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Notes due 2005 pursuant to clauses (a) through (j) inclusive of the covenant with respect to "Limitation on Liens" above, or (b) the proceedings of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. The term "Attributable Debt" in connection with a sale and lease- back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction or (b) the present value (discounted at the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the Limitation on Sale and Leaseback Transactions compounded semiannually, in either case as determined by the principal accounting or financial officer of the Issuer) of the obligations of the Issuer or any Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). The term "net rental payments" under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, 8 maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges. The term "Consolidated Subsidiary" shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with generally accepted accounting principles. The term "Exempted Debt" shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after the date of issuance of the Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to "Limitation on Liens" above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the Notes, other than leases expressly permitted by the covenant with respect to "Limitation on Sale and Lease- Back Transactions" above. The term "Indebtedness" shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles. 19. Conversion and Exchange. The Notes due 2005 shall not be ----------------------- convertible into or exchangeable into any other security; provided that this provision shall not limit the Issuer's ability to consummate an exchange offer as contemplated by the Registration Rights Agreement, dated as of February 24, 1998, by and among the Issuer, Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc. 20. Other Terms. The Notes due 2005 shall have the other terms and ----------- shall be substantially in the form set forth in the form of Notes due 2005 attached hereto as Exhibit A. In case of any conflict between this Annex A and the Notes due 2005 in the form attached hereto as Exhibit A, the form of the Notes due 2005 shall control. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Indenture. 9 EXHIBIT A [FORM OF FACE OF NOTE DUE MARCH 1, 2005] [IF THE NOTE DUE 2005 IS TO BE A GLOBAL SECURITY, INSERT THE FOLLOWING - - - THIS NOTE DUE 2005 IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS NOTE DUE 2005 IS EXCHANGEABLE FOR NOTES DUE 2005 REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE DUE 2005 (OTHER THAN A TRANSFER OF THIS NOTE DUE 2005 AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES. UNLESS THIS NOTE DUE 2005 IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE DUE 2005 ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] No. __________ CUSIP NO. ________ McKESSON CORPORATION 6.30% NOTE DUE MARCH 1, 2005 [PRIOR TO THE TRANSFER RESTRICTION TERMINATION DATE, ANY CERTIFICATE EVIDENCING A NOTE DUE 2005 SHALL BEAR A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM, UNLESS OTHERWISE AGREED BY THE ISSUER (WITH WRITTEN NOTICE THEREOF TO THE TRUSTEE): THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO McKESSON CORPORATION (THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE SECURITIES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE SECURITIES. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A 2 PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR THE SECURITIES, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE ISSUER OR THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.] [ADDITIONAL LEGEND FOR REGULATION S NOTES: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAIL- ABLE.] McKesson Corporation, a Delaware corporation (the "Issuer," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, _____________________________, the principal sum of _________________________ Dollars ($______) on March 1, 2005 and to pay interest on said principal sum from February 24, 1998, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 (each such date, an "Interest Payment Date") of each year commencing on September 1, 1998, at the rate of 6.30% per annum until the principal hereof shall have become due and payable. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed, will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which the principal or interest payable on this Note due 2005 is not a Business Day, then payment of principal or interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest 3 Payment Date will, as provided in the Indenture (referred to on the reverse hereof) be paid to the person in whose name this Note due 2005 is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding February 15 and August 15 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such record date and may be paid to the person in whose name this Note due 2005 is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or on behalf of the Issuer to the registered holders of Notes due 2005 not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Note due 2005 shall be payable at the office or agency of the Issuer maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at such address as shall appear in the registry books of the Issuer; provided, further that for so long as this Note due 2005 is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this Note due 2005 may be made by wire transfer to the account of the Depositary or its nominee. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized officers, this Note due 2005 shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Capitalized terms used in this Note due 2005 which are defined in the Indenture shall have the respective meanings assigned to them in the Indenture. The provisions of this Note due 2005 are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 4 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon. McKESSON CORPORATION By: ___________________________ Nancy A. Miller Vice President and Corporate Secretary Attest: By: ____________________ Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO as Trustee By: _____________________ Authorized Officer Dated: ___________________ [FORM OF REVERSE SIDE OF NOTE] This Note due 2005 is one of a duly authorized series of securities (the "Securities") of the Issuer designated as its 6.30% Notes due March 1, 2005 (the "Notes due 2005"). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of March 11, 1997 (the "Indenture"), duly executed and delivered between the Issuer and The First National Bank of Chicago, a national banking association (the "Trustee," which term includes any successor Trustee with respect to the Securities under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the holders of the Securities and the terms upon which the Notes due 2005 are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue dates, maturity, redemption, repayment, currency of payment and otherwise. Except as set forth below, this Note due 2005 is not redeemable and is not entitled to the benefit of a sinking fund or any analogous provision. This Note due 2005 is redeemable as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of its principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. The Holder of this Note due 2005 will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Note due 2005 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Note due 2005. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) 6 the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. If an Event of Default with respect to the Notes due 2005 shall occur and be continuing, the principal of all the Notes due 2005 may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Securities of all series issued under such Indenture then outstanding and affected (voting as one class) to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Securities of each series or Coupons so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each Outstanding Note due 2005 affected thereby, (i) extend the final maturity of the principal of any Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities or Coupons or in accordance with the terms thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof or the amount thereof provable in bankruptcy or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment 7 Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate principal Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. No reference herein to the Indenture and no provision of this Note due 2005 or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note due 2005 at the time, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note due 2005 may be registered on the registry books of the Issuer, upon surrender of this Note due 2005 for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its attorney duly authorized in writing, and thereupon one or more new Notes due 2005 of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes due 2005 are issuable only in registered form in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes due 2005 are exchangeable for a like aggregate principal amount of Notes due 2005 as requested by the holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. 8 Prior to due presentment of this Note due 2005 for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the person in whose name this Note due 2005 is registered as the owner hereof for all purposes, whether or not this Note due 2005 be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THIS NOTE DUE 2005 SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. 9 ASSIGNMENT [FORM OF ASSIGNMENT FOR NOTES THAT ARE NOT GLOBAL SECURITIES] For value received _____________________ hereby sell(s), assign(s) and transfer(s) unto _____________________________________________________________ ______________________________________________________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within Note due 2005 and hereby irrevocably constitutes and appoints ________ attorney to transfer the said Note due 2005 on the books of the Issuer, with full power of substitution in the premises. In connection with any transfer of the within Note due 2005 occurring prior to the Transfer Restriction Termination Date, the undersigned confirms that such Note due 2005 is being transferred: __ To McKesson Corporation or a subsidiary thereof; or __ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or __ To an Institutional Accredited Investor pursuant to and in compliance with the Securities Act of 1933, as amended; or __ Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or __ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; or __ Pursuant to an effective registration statement. and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Issuer as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): __ The transferee is an Affiliate of the Issuer. Dated: ____________________________ ___________________________ ___________________________ Signature(s) _____________________________ Signature Guarantee/1/ NOTICE: The above signature(s) of the holder(s) hereof must correspond with the name(s) written on the face of this Note due 2005 in every particular without alteration or enlargement or any change whatsoever. - -------------------------------- /1/ (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] Schedule A Changes to Principal Amount of Global Securities
Principal Amount of Notes due 2005 by which this Global Security is to be Remaining Reduced or Increased, Principal and Reason for Amount of this Date Reduction or Increase Global Security Notation Made By - ------ --------------------- --------------- ----------------
ANNEX B Pursuant to Section 2.3 of the Indenture, dated as of March 11, 1997 (the "Indenture"), between McKesson Corporation (the "Issuer") and The First National Bank of Chicago, a national banking association, as trustee (the "Trustee"), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 1. Designation. The designation of the securities is "6.40% Notes due ----------- March 1, 2008" (the "Notes due 2008"). 2. Aggregate Principal Amount. The Notes due 2008 shall be limited in -------------------------- aggregate principal amount to $150,000,000 (except for Notes due 2008 authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes due 2008 pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 3. Currency Denomination. The Notes due 2008 shall be denominated in --------------------- Dollars. 4. Maturity. The date on which the principal of the Notes due 2008 is -------- payable is March 1, 2008. 5. Rate of Interest; Interest Payment Date; Regular Record Dates. Each ------------------------------------------------------------- Note due 2008 shall bear interest from February 24, 1998 at 6.40% per annum until the principal thereof is paid. Such interest shall be payable semiannually in arrears on March 1 and September 1 of each year, commencing on September 1, 1998, to the persons in whose names the Notes due 2008 are registered at the close of business on the immediately preceding February 15 and August 15, respectively. Interest on the Notes due 2008 shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest on the Notes due 2008 shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which principal, premium, if any, or interest is payable on the Notes due 2008 is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next 1 succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). 6. Place of Payment. Principal of, premium, if any, and interest on ---------------- the Notes due 2008 shall be payable, and the transfer of Notes due 2008 shall be registrable, at the office or agency of the Issuer to be maintained for such purpose in the Borough of Manhattan, The City of New York, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Notes due 2008 register; provided, however, that while any Notes due 2008 are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the Notes due 2008 may be made by wire transfer to the account of the Depositary or its nominee. 7. Optional Redemption. The Notes due 2008 may be redeemed as a whole ------------------- or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. Holders of the Notes due 2008 to be redeemed will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Notes due 2008 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes due 2008. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or 2 unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. 8. Mandatory Redemption. The Notes due 2008 are not mandatorily -------------------- redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 9. Denominations. The Notes due 2008 shall be issued initially in ------------- minimum denominations of $250,000 and shall be issued in integral multiples of $1,000 in excess thereof. 10. Amount Payable Upon Acceleration. The principal of the Notes due -------------------------------- 2008 shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 3 11. Payment Currency. Principal and interest on the Notes due 2008 ---------------- shall be payable in Dollars. 12. Payment Currency - Election. The principal of and interest on the --------------------------- Notes due 2008 shall not be payable in a currency other than Dollars. 13. Payment Currency - Index. The principal of and interest on the ------------------------ Notes due 2008 shall not be determined with reference to an index based on a coin or currency. 14. Registered Securities. The Notes due 2008 shall be issuable as --------------------- Registered Securities. The Notes due 2008 may be issued as Registered Global Securities. 15. Additional Amounts. The Issuer shall not pay additional amounts ------------------ on the Notes due 2008 held by a Person that is not a U.S. Person in respect of taxes or similar charges withheld or deducted. 16. Definitive Certificates. Section 2.8 of the Indenture will govern ----------------------- the transferability of Notes due 2008 in definitive form. 17. Registrar; Paying Agent; Depositary. The Trustee shall initially ----------------------------------- serve as the registrar and the paying agent for the Notes due 2008. The Depository Trust Company shall initially serve as the Depositary for the Registered Global Security representing Notes due 2008. 18. Events of Default; Covenants. There shall be no deletions from, ---------------------------- modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the Notes due 2008. There shall be the following additions to the covenants of the Issuer set forth in Article III with respect to the Notes due 2008: Limitation on Liens. The Issuer covenants that, so long as any of the Notes due 2008 remain outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien ("liens") of or upon any assets, whether now owned or hereafter acquired, of the Issuer or 4 any such Consolidated Subsidiary without equally and ratably securing the Notes due 2008 by a lien ranking ratably with and equal to (or at the option of the Issuer, senior to) such secured Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later) which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any assets theretofore owned by the Issuer or a Consolidated Subsidiary, other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, or to secure the payment of the purchase price of such assets, or to secure indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary for the purpose of financing the purchase price of such assets or improvements or construction thereon, which indebtedness is incurred or guaranteed prior to, at the time of or within 360 days after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such corporation is merged into or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary; (e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of 5 America or any State thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets which secured the lien so extended, renewed or replaced (plus improvements and construction on such real property); (g) liens imposed by law, such as mechanics', workmen's, repairmen's, materialmen's, carriers', warehousemen's, vendors' or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker's compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as, but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceedings which is being contested in good faith by appropriate proceedings, including liens arising out of judgements or awards against the Issuer or any Consolidated 6 Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceedings to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; or (k) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceedings thereof). Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the Notes due 2008, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any of the Notes due 2008 remain outstanding, it will not, nor shall it permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale leaseback transaction (involving a lease for a term of not more than three years), unless 7 either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Notes due 2008 pursuant to clauses (a) through (j) inclusive of the covenant with respect to "Limitation on Liens" above, or (b) the proceedings of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated Subsidiary enters into such sale and lease- back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. The term "Attributable Debt" in connection with a sale and lease- back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction or (b) the present value (discounted at the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the Limitation on Sale and Leaseback Transactions compounded semiannually, in either case as determined by the principal accounting or financial officer of the Issuer) of the obligations of the Issuer or any Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). The term "net rental payments" under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance 8 and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges. The term "Consolidated Subsidiary" shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with generally accepted accounting principles. The term "Exempted Debt" shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after the date of issuance of the Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to "Limitation on Liens" above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of issuance of the Notes, other than leases expressly permitted by the covenant with respect to "Limitation on Sale and Lease-Back Transactions" above. The term "Indebtedness" shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles. 19. Conversion and Exchange. The Notes due 2008 shall not be ----------------------- convertible into or exchangeable into any other security; provided that this provision shall not limit the Issuer's ability to consummate an exchange offer as contemplated by the Registration Rights Agreement, dated as of February 24, 1998, by and among the Issuer, Salomon Brothers Inc, BancAmerica Robertson Stephens and J. P. Morgan Securities Inc. 20. Other Terms. The Notes due 2008 shall have the other terms and ----------- shall be substantially in the form set forth in the form of Notes due 2008 attached hereto as Exhibit A. In case of any conflict between this Annex A and the Notes due 2008 in the form attached hereto as Exhibit A, the form of the Notes due 2008 shall control. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Indenture. 9 EXHIBIT A [FORM OF FACE OF NOTE DUE MARCH 1, 2008] [IF THE NOTE DUE 2008 IS TO BE A GLOBAL SECURITY, INSERT THE FOLLOWING - - - THIS NOTE DUE 2008 IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS NOTE DUE 2008 IS EXCHANGEABLE FOR NOTES DUE 2008 REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE DUE 2008 (OTHER THAN A TRANSFER OF THIS NOTE DUE 2008 AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES. UNLESS THIS NOTE DUE 2008 IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE DUE 2008 ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] No. __________ CUSIP NO. ________ McKESSON CORPORATION 6.40% NOTE DUE MARCH 1, 2008 [PRIOR TO THE TRANSFER RESTRICTION TERMINATION DATE, ANY CERTIFICATE EVIDENCING A NOTE DUE 2008 SHALL BEAR A LEGEND IN SUBSTANTIALLY THE FOLLOWING FORM, UNLESS OTHERWISE AGREED BY THE ISSUER (WITH WRITTEN NOTICE THEREOF TO THE TRUSTEE): THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO McKESSON CORPORATION (THE "ISSUER") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE SECURITIES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE SECURITIES. IF THE PROPOSED 2 TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE FOR THE SECURITIES, SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE ISSUER OR THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.] [ADDITIONAL LEGEND FOR REGULATION S NOTES: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE.] McKesson Corporation, a Delaware corporation (the "Issuer," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, _____________________________, the principal sum of _________________________ Dollars ($______) on March 1, 2008 and to pay interest on said principal sum from February 24, 1998, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 (each such date, an "Interest Payment Date") of each year commencing on September 1, 1998, at the rate of 6.40% per annum until the principal hereof shall have become due and payable. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed, will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which the principal or interest payable on this Note due 2008 is not a Business Day, then payment of principal or interest payable on such date will be made on the next succeeding day that is a Business 3 Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (referred to on the reverse hereof) be paid to the person in whose name this Note due 2008 is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding February 15 and August 15 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such record date and may be paid to the person in whose name this Note due 2008 is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or on behalf of the Issuer to the registered holders of Notes due 2008 not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Note due 2008 shall be payable at the office or agency of the Issuer maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at such address as shall appear in the registry books of the Issuer; provided, further that for so long as this Note due 2008 is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this Note due 2008 may be made by wire transfer to the account of the Depositary or its nominee. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized officers, this Note due 2008 shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Capitalized terms used in this Note due 2008 which are defined in the Indenture shall have the respective meanings assigned to them in the Indenture. The provisions of this Note due 2008 are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 4 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon. McKESSON CORPORATION By: ___________________________ Nancy A. Miller Vice President and Corporate Secretary Attest: By: ____________________ Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO as Trustee By: _____________________ Authorized Officer Dated: ___________________ [FORM OF REVERSE SIDE OF NOTE] This Note due 2008 is one of a duly authorized series of securities (the "Securities") of the Issuer designated as its 6.40% Notes due March 1, 2008 (the "Notes due 2008"). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of March 11, 1997 (the "Indenture"), duly executed and delivered between the Issuer and The First National Bank of Chicago, a national banking association (the "Trustee," which term includes any successor Trustee with respect to the Securities under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the holders of the Securities and the terms upon which the Notes due 2008 are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue dates, maturity, redemption, repayment, currency of payment and otherwise. Except as set forth below, this Note due 2008 is not redeemable and is not entitled to the benefit of a sinking fund or any analogous provision. This Note due 2008 is redeemable as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of its principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. The Holder of this Note due 2008 will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Note due 2008 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Note due 2008. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by 6 the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. If an Event of Default with respect to the Notes due 2008 shall occur and be continuing, the principal of all the Notes due 2008 may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Securities of all series issued under such Indenture then outstanding and affected (voting as one class) to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Securities of each series or Coupons so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each Outstanding Note due 2008 affected thereby, (i) extend the final maturity of the principal of any Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities or Coupons or in accordance with the terms thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the 7 maturity thereof or the amount thereof provable in bankruptcy or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. No reference herein to the Indenture and no provision of this Note due 2008 or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note due 2008 at the time, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note due 2008 may be registered on the registry books of the Issuer, upon surrender of this Note due 2008 for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its attorney duly authorized in writing, and thereupon one or more new Notes due 2008 of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes due 2008 are issuable only in registered form in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Notes due 2008 are exchangeable for a like aggregate principal amount of Notes due 2008 as requested by the holder surrendering the same. 8 No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Prior to due presentment of this Note due 2008 for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the person in whose name this Note due 2008 is registered as the owner hereof for all purposes, whether or not this Note due 2008 be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THIS NOTE DUE 2008 SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. 9 ASSIGNMENT [FORM OF ASSIGNMENT FOR NOTES THAT ARE NOT GLOBAL SECURITIES] For value received _____________________ hereby sell(s), assign(s) and transfer(s) unto _____________________________________________________________ ______________________________________________________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within Note due 2008 and hereby irrevocably constitutes and appoints ________ attorney to transfer the said Note due 2008 on the books of the Issuer, with full power of substitution in the premises. In connection with any transfer of the within Note due 2008 occurring prior to the Transfer Restriction Termination Date, the undersigned confirms that such Note due 2008 is being transferred: __ To McKesson Corporation or a subsidiary thereof; or __ Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or __ To an Institutional Accredited Investor pursuant to and in compliance with the Securities Act of 1933, as amended; or __ Pursuant to and in compliance with Regulation S under the Securities Act of 1933, as amended; or __ Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended; or __ Pursuant to an effective registration statement. and unless the box below is checked, the undersigned confirms that such Note is not being transferred to an "affiliate" of the Issuer as defined in Rule 144 under the Securities Act of 1933, as amended (an "Affiliate"): __ The transferee is an Affiliate of the Issuer. Dated: ____________________________ ___________________________ ___________________________ Signature(s) _____________________________ Signature Guarantee/1/ NOTICE: The above signature(s) of the holder(s) hereof must correspond with the name(s) written on the face of this Note due 2008 in every particular without alteration or enlargement or any change whatsoever. - -------------------------------- /1/ (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] Schedule A Changes to Principal Amount of Global Securities
Principal Amount of Notes due 2008 by which this Global Security is to be Remaining Reduced or Increased, Principal and Reason for Amount of this Date Reduction or Increase Global Security Notation Made By - ---- --------------------- --------------- ----------------
EX-4.3 3 FORM OF OFFICER'S CERTIFICATE Exhibit 4.3 FORM OF OFFICER'S CERTIFICATE ----------------------------- The undersigned, McKesson Corporation, a Delaware corporation (the "Corporation"), hereby certifies through Nancy A. Miller, its Vice President and Corporate Secretary, pursuant to Sections 2.3, 2.4 and 11.5 of the Indenture, dated as of March 11, 1997 (the "Indenture"), by and between the Company, as Issuer, and The First National Bank of Chicago, a national association, as Trustee, as follows: 1. Pursuant to the terms of the resolutions adopted by the Board of Directors of the Corporation (the "Board of Directors") dated January 28, 1998 and the Finance Committee of the Board of Directors dated February 9, 1998 and the actions of officers of the Corporation on February 19, 1998, the terms of the Corporation's 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange Notes due March 1, 2008 (collectively, the "Exchange Notes") set forth in Annex A and ------- Annex B, respectively, attached hereto have been duly adopted by the - ------- Corporation. 2. The forms and terms of the Exchange Notes have been established pursuant to Sections 2.1 and 2.3 of the Indenture and comply with the Indenture. 3. She has read Section 2.3 of the Indenture, read such other documents as she deemed necessary and made such other inquiries as she deemed necessary to make the certifications in paragraph 2, 3 and 4 hereof. 4. All conditions precedent provided for in the Indenture relating to the issuance of the Exchange Notes have been complied with. IN WITNESS WHEREOF, the undersigned has caused this certificate to be executed by its duly authorized officer as of this day of , 1998. McKESSON CORPORATION By: ________________________________________ Nancy A. Miller Vice President and Corporate Secretary ANNEX A Pursuant to Section 2.3 of the Indenture, dated as of March 11, 1997 (the "Indenture"), between McKesson Corporation (the "Issuer") and The First National Bank of Chicago, a national banking association, as trustee (the "Trustee"), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 1. Designation. The designation of the securities is "6.30% Exchange ----------- Notes due March 1, 2005" (the "Exchange Notes due 2005"). 2. Aggregate Principal Amount. The Exchange Notes due 2005 shall be -------------------------- limited in aggregate principal amount to $150,000,000 (except for Exchange Notes due 2005 authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Exchange Notes due 2005 pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 3. Currency Denomination. The Exchange Notes due 2005 shall be --------------------- denominated in Dollars. 4. Maturity. The date on which the principal of the Exchange Notes -------- due 2005 is payable is March 1, 2005. 5. Rate of Interest; Interest Payment Date; Regular Record Dates. Each ------------------------------------------------------------- Exchange Note due 2005 shall bear interest from February 24, 1998 at 6.30% per annum until the principal thereof is paid. Such interest shall be payable semiannually in arrears on March 1 and September 1 of each year, commencing on September 1, 1998, to the persons in whose names the Exchange Notes due 2005 are registered at the close of business on the immediately preceding February 15 and August 15, respectively. Interest on the Exchange Notes due 2005 shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest on the Exchange Notes due 2005 shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi- annual period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which principal, premium, if any, or 1 interest is payable on the Exchange Notes due 2005 is not a Business Day, then payment of the principal, premium, if any, or interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). 6. Place of Payment. Principal of, premium, if any, and interest on ---------------- the Exchange Notes due 2005 shall be payable, and the transfer of Exchange Notes due 2005 shall be registrable, at the office or agency of the Issuer to be maintained for such purpose in the Borough of Manhattan, The City of New York, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Exchange Notes due 2005 register; provided, however, that while any Exchange Notes due 2005 are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the Exchange Notes due 2005 may be made by wire transfer to the account of the Depositary or its nominee. 7. Optional Redemption. The Exchange Notes due 2005 may be redeemed ------------------- as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. Holders of the Exchange Notes due 2005 to be redeemed will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principle amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Exchange Notes due 2005 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Exchange Notes due 2005. "Independent Investment 2 Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. 8. Mandatory Redemption. The Exchange Notes due 2005 are not -------------------- mandatorily redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 9. Denominations. The Exchange Notes due 2005 shall be issued ------------- initially in minimum denominations of $250,000 and shall be issued in integral multiples of $1,000 in excess thereof. 3 10. Amount Payable Upon Acceleration. The principal of the Exchange -------------------------------- Notes due 2005 shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 11. Payment Currency. Principal and interest on the Exchange Notes ---------------- due 2005 shall be payable in Dollars. 12. Payment Currency - Election. The principal of and interest on the --------------------------- Exchange Notes due 2005 shall not be payable in a currency other than Dollars. 13. Payment Currency - Index. The principal of and interest on the ------------------------ Exchange Notes due 2005 shall not be determined with reference to an index based on a coin or currency. 14. Registered Securities. The Exchange Notes due 2005 shall be --------------------- issuable as Registered Securities. The Exchange Notes due 2005 may be issued as Registered Global Securities. 15. Additional Amounts. The Issuer shall not pay additional amounts ------------------ on the Exchange Notes due 2005 held by a Person that is not a U.S. Person in respect of taxes or similar charges withheld or deducted. 16. Definitive Certificates. Section 2.8 of the Indenture will govern ----------------------- the transferability of Exchange Notes due 2005 in definitive form. 17. Registrar; Paying Agent; Depositary. The Trustee shall initially ----------------------------------- serve as the registrar and the paying agent for the Exchange Notes due 2005. The Depository Trust Company shall initially serve as the Depositary for the Registered Global Security representing Exchange Notes due 2005. 18. Events of Default; Covenants. There shall be no deletions from, ---------------------------- modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the Exchange Notes due 2005. There shall be the following additions to the covenants of the Issuer set forth in Article III with respect to the Exchange Notes due 2005: 4 Limitation on Liens. The Issuer covenants that, so long as any of the Exchange Notes due 2005 remain outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien ("liens") of or upon any assets, whether now owned or hereafter acquired, of the Issuer or any such Consolidated Subsidiary without equally and ratably securing the Exchange Notes due 2005 by a lien ranking ratably with and equal to (or at the option of the Issuer, senior to) such secured Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any assets theretofore owned by the Issuer or a Consolidated Subsidiary, other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, or to secure the payment of the purchase price of such assets, or to secure indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary for the purpose of financing the purchase price of such assets or improvements or construction thereon, which indebtedness is incurred or guaranteed prior to, at the time of or within 360 days after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such corporation is merged into 5 or consolidated with the Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary; (e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets which secured the lien so extended, renewed or replaced (plus improvements and construction on such real property); (g) liens imposed by law, such as mechanics', workmen's, repairmen's, materialmen's, carriers', warehousemen's, vendors' or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker's compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated 6 Subsidiary is a party, or in litigation or other proceedings such as, but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including liens arising out of judgements or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; or (k) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof). Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the Exchange Notes due 2005, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, deter- 7 mined in accordance with generally accepted accounting principles. Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any of the Exchange Notes due 2005 remain outstanding, it will not, nor shall it permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale lease-back transactions (involving a lease for a term of not more than three years), unless either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Exchange Notes due 2005 pursuant to clauses (a) through (k) inclusive of the covenant with respect to "Limitation on Liens" above, or (b) the proceeds of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. The term "Attributable Debt" in connection with a sale and lease- back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction or (b) the present value (discounted at the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the Limitation on Sale and Lease-Back Transactions compounded semiannually, in either case as determined by the principal accounting or financial officer of the Issuer) of the obligations of the Issuer or any Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or 8 may, at the option of the lessor, be extended). The term "net rental pay- ments" under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges. The term "Consolidated Subsidiary" shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with generally accepted accounting principles. The term "Exempted Debt" shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after February 24, 1998 and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to "Limitation on Liens" above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after February 24, 1998, other than leases expressly permitted by the covenant with respect to "Limitation on Sale and Lease-Back Transactions" above. The term "Indebtedness" shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles. 19. Conversion and Exchange. The Exchange Notes due 2005 shall not ----------------------- be convertible into or exchangeable into any other security. 20. Other Terms. The Exchange Notes due 2005 shall have the other ----------- terms and shall be substantially in the form set forth in the form of Exchange Notes due 2005 attached hereto as Exhibit A. In case of any conflict between this Annex A and the Exchange Notes due 2005 in the form attached hereto as Exhibit A, the form of the Exchange Notes due 2005 shall control. 9 Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Indenture. 10 EXHIBIT A [FORM OF FACE OF EXCHANGE NOTE DUE MARCH 1, 2005] [IF THE EXCHANGE NOTE DUE 2005 IS TO BE A GLOBAL SECURITY, INSERT THE FOLLOWING - - THIS EXCHANGE NOTE DUE 2005 IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS EXCHANGE NOTE DUE 2005 IS EXCHANGEABLE FOR EXCHANGE NOTES DUE 2005 REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS EXCHANGE NOTE DUE 2005 (OTHER THAN A TRANSFER OF THIS EXCHANGE NOTE DUE 2005 AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES. UNLESS THIS EXCHANGE NOTE DUE 2005 IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY EXCHANGE NOTE DUE 2005 ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] No. __________ CUSIP NO. ________ McKESSON CORPORATION 6.30% EXCHANGE NOTE DUE MARCH 1, 2005 McKesson Corporation, a Delaware corporation (the "Issuer," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, _____________________________, the principal sum of _________________________ Dollars ($______) on March 1, 2005 and to pay interest on said principal sum from February 24, 1998, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 (each such date, an "Interest Payment Date") of each year commencing on September 1, 1998, at the rate of 6.30% per annum until the principal hereof shall have become due and payable. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed, will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which the principal or interest payable on this Exchange Note due 2005 is not a Business Day, then payment of principal or interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (referred to on the reverse hereof) be paid to the person in whose name this Exchange Note due 2005 is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding February 15 and August 15 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such record date and may be paid to the person in whose name this Exchange Note due 2005 is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or on behalf of the Issuer to the registered holders of Exchange Notes due 2005 not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Exchange Note due 2005 shall be payable at the office or agency of the Issuer maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at such address as shall appear in the registry books of the Issuer; provided, further that for so long as this Exchange Note due 2005 is represented by a Registered Global Security, payment of principal, premium, 2 if any, or interest on this Exchange Note due 2005 may be made by wire transfer to the account of the Depositary or its nominee. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized officers, this Exchange Note due 2005 shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Capitalized terms used in this Exchange Note due 2005 which are defined in the Indenture shall have the respective meanings assigned to them in the Indenture. The provisions of this Exchange Note due 2005 are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 3 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon. McKESSON CORPORATION By: ___________________________ Nancy A. Miller Vice President and Corporate Secretary Attest: By: ____________________ Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO as Trustee By: _____________________ Authorized Officer Dated: ___________________ [FORM OF REVERSE SIDE OF EXCHANGE NOTE] This Exchange Note due 2005 is one of a duly authorized series of securities (the "Securities") of the Issuer designated as its 6.30% Exchange Notes due March 1, 2005 (the "Exchange Notes due 2005"). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of March 11, 1997 (the "Indenture"), duly executed and delivered between the Issuer and The First National Bank of Chicago, a national banking association (the "Trustee," which term includes any successor Trustee with respect to the Securities under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the holders of the Securities and the terms upon which the Exchange Notes due 2005 are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue dates, maturity, redemption, repayment, currency of payment and otherwise. Except as set forth below, this Exchange Note due 2005 is not redeemable and is not entitled to the benefit of a sinking fund or any analogous provision. This Exchange Note due 2005 is redeemable as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of its principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. The Holder of this Exchange Note due 2005 will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Exchange Note due 2005 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Exchange Note due 2005. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable 5 Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. If an Event of Default with respect to the Exchange Notes due 2005 shall occur and be continuing, the principal of all the Exchange Notes due 2005 may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Securities of all series issued under such Indenture then outstanding and affected (voting as one class) to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Securities of each series or Coupons so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each Outstanding Exchange Note due 2005 affected thereby, (i) extend the final maturity of the principal of any Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities or 6 Coupons or in accordance with the terms thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof or the amount thereof provable in bankruptcy or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. No reference herein to the Indenture and no provision of this Exchange Note due 2005 or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Exchange Note due 2005 at the time, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Exchange Note due 2005 may be registered on the registry books of the Issuer, upon surrender of this Exchange Note due 2005 for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its attorney duly authorized in writing, and thereupon one or more new Exchange Notes due 2005 of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Exchange Notes due 2005 are issuable only in registered form in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof. 7 As provided in the Indenture and subject to certain limitations therein set forth, the Exchange Notes due 2005 are exchangeable for a like aggregate principal amount of Exchange Notes due 2005 as requested by the holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Prior to due presentment of this Exchange Note due 2005 for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the person in whose name this Exchange Note due 2005 is registered as the owner hereof for all purposes, whether or not this Exchange Note due 2005 be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THIS EXCHANGE NOTE DUE 2005 SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. 8 ASSIGNMENT [FORM OF ASSIGNMENT FOR EXCHANGE NOTES THAT ARE NOT GLOBAL SECURITIES] For value received _____________________ hereby sell(s), assign(s) and transfer(s) unto _____________________________________________________________ _________________________________________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within Exchange Note due 2005 and hereby irrevocably constitutes and appoints ________ attorney to transfer the said Exchange Note due 2005 on the books of the Issuer, with full power of substitution in the premises. Dated: ____________________________ ___________________________ ___________________________ Signature(s) _____________________________ Signature Guarantee/1/ NOTICE: The above signature(s) of the holder(s) hereof must correspond with the name(s) written on the face of this Exchange Note due 2005 in every particular without alteration or enlargement or any change whatsoever. - --------------------- /1/ (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] Schedule A Changes to Principal Amount of Global Securities
Principal Amount of Exchange Notes due 2005 by which this Global Security is to be Remaining Reduced or Increased, Principal and Reason for Amount of this Date Reduction or Increase Global Security Notation Made By - ------ -------------------------- --------------- ----------------
ANNEX B Pursuant to Section 2.3 of the Indenture, dated as of March 11, 1997 (the "Indenture"), between McKesson Corporation (the "Issuer") and The First National Bank of Chicago, a national banking association, as trustee (the "Trustee"), the terms of a series of securities to be issued pursuant to the Indenture are as follows: 1. Designation. The designation of the securities is "6.40% Exchange ----------- Notes due March 1, 2008" (the "Exchange Notes due 2008"). 2. Aggregate Principal Amount. The Exchange Notes due 2008 shall be -------------------------- limited in aggregate principal amount to $150,000,000 (except for Exchange Notes due 2008 authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Exchange Notes due 2008 pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3 of the Indenture). 3. Currency Denomination. The Exchange Notes due 2008 shall be --------------------- denominated in Dollars. 4. Maturity. The date on which the principal of the Exchange Notes -------- due 2008 is payable is March 1, 2008. 5. Rate of Interest; Interest Payment Date; Regular Record Dates. Each ------------------------------------------------------------- Exchange Note due 2008 shall bear interest from February 24, 1998 at 6.40% per annum until the principal thereof is paid. Such interest shall be payable semiannually in arrears on March 1 and September 1 of each year, commencing on September 1, 1998, to the persons in whose names the Exchange Notes due 2008 are registered at the close of business on the immediately preceding February 15 and August 15, respectively. Interest on the Exchange Notes due 2008 shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest on the Exchange Notes due 2008 shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi- annual period for which interest is computed will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which principal, premium, if any, or interest is payable on the Exchange Notes due 2008 is not a Business Day, then payment of the principal, premium, if any, or 1 interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay). 6. Place of Payment. Principal of, premium, if any, and interest on ---------------- the Exchange Notes due 2008 shall be payable, and the transfer of Exchange Notes due 2008 shall be registrable, at the office or agency of the Issuer to be maintained for such purpose in the Borough of Manhattan, The City of New York, except that, at the option of the Issuer, interest may be paid by mailing a check to the address of the person entitled thereto as it appears on the Exchange Notes due 2008 register; provided, however, that while any Exchange Notes due 2008 are represented by a Registered Global Security, payment of principal of, premium, if any, or interest on the Exchange Notes due 2008 may be made by wire transfer to the account of the Depositary or its nominee. 7. Optional Redemption. The Exchange Notes due 2008 may be redeemed ------------------- as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of their principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. Holders of the Exchange Notes due 2008 to be redeemed will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Exchange Notes due 2008 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Exchange Notes due 2008. "Independent Investment 2 Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. 8. Mandatory Redemption. The Exchange Notes due 2008 are not -------------------- mandatorily redeemable and are not entitled to the benefit of a sinking fund or any analogous provisions. 9. Denominations. The Exchange Notes due 2008 shall be issued ------------- initially in minimum denominations of $250,000 and shall be issued in integral multiples of $1,000 in excess thereof. 3 10. Amount Payable Upon Acceleration. The principal of the Exchange -------------------------------- Notes due 2008 shall be payable upon declaration of acceleration pursuant to Section 5.1 of the Indenture. 11. Payment Currency. Principal and interest on the Exchange Notes ---------------- due 2008 shall be payable in Dollars. 12. Payment Currency - Election. The principal of and interest on the --------------------------- Exchange Notes due 2008 shall not be payable in a currency other than Dollars. 13. Payment Currency - Index. The principal of and interest on the ------------------------ Exchange Notes due 2008 shall not be determined with reference to an index based on a coin or currency. 14. Registered Securities. The Exchange Notes due 2008 shall be --------------------- issuable as Registered Securities. The Exchange Notes due 2008 may be issued as Registered Global Securities. 15. Additional Amounts. The Issuer shall not pay additional amounts ------------------ on the Exchange Notes due 2008 held by a Person that is not a U.S. Person in respect of taxes or similar charges withheld or deducted. 16. Definitive Certificates. Section 2.8 of the Indenture will govern ----------------------- the transferability of Exchange Notes due 2008 in definitive form. 17. Registrar; Paying Agent; Depositary. The Trustee shall initially ----------------------------------- serve as the registrar and the paying agent for the Exchange Notes due 2008. The Depository Trust Company shall initially serve as the Depositary for the Registered Global Security representing Exchange Notes due 2008. 18. Events of Default; Covenants. There shall be no deletions from, ---------------------------- modifications or additions to the Events of Default set forth in Section 5.1 of the Indenture with respect to the Exchange Notes due 2008. There shall be the following additions to the covenants of the Issuer set forth in Article III with respect to the Exchange Notes due 2008: 4 Limitation on Liens. The Issuer covenants that, so long as any of the Exchange Notes due 2008 remain outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a mortgage, pledge, security interest or lien ("liens") of or upon any assets, whether now owned or hereafter acquired, of the Issuer or any such Consolidated Subsidiary without equally and ratably securing the Exchange Notes due 2008 by a lien ranking ratably with and equal to (or at the option of the Issuer, senior to) such secured Indebtedness, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation existing at the time such corporation becomes a Consolidated Subsidiary; (b) liens on any assets existing at the time of acquisition of such assets by the Issuer or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Issuer or a Consolidated Subsidiary or to secure any indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such asset, whichever is later) which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any assets theretofore owned by the Issuer or a Consolidated Subsidiary, other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located, or to secure the payment of the purchase price of such assets, or to secure indebtedness incurred or guaranteed by the Issuer or a Consolidated Subsidiary for the purpose of financing the purchase price of such assets or improvements or construction thereon, which indebtedness is incurred or guaranteed prior to, at the time of or within 360 days after such acquisition (or in the case of real property, completion of such improvement or construction or commencement of full operation of such property, whichever is later); (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Issuer or another wholly owned Subsidiary; (d) liens on any assets of a corporation existing at the time such corporation is merged into or consolidated with the 5 Issuer or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of a corporation or firm as an entirety or substantially as an entirety by the Issuer or a Subsidiary; (e) liens on any assets of the Issuer or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (f) any extension, renewal or replacement (or successive extensions, renewals or replacements), in whole or in part, of any lien referred to in the foregoing clauses (a) to (e), inclusive; provided, however, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or replacement, and that such extension, renewal or replacement shall be limited to all or a part of the assets which secured the lien so extended, renewed or replaced (plus improvements and construction on such real property); (g) liens imposed by law, such as mechanics', workmen's, repairmen's, materialmen's, carriers', warehousemen's, vendors' or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens arising out of contracts for the sale of products or services by the Issuer or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (h) pledges, liens or deposits under worker's compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Issuer or any Consolidated Subsidiary is a party, or to secure public or statutory obligations of the Issuer or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, appeal or customs bonds to which the Issuer or any Consolidated Subsidiary is a party, or in litigation or other 6 proceedings such as, but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (i) liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including liens arising out of judgements or awards against the Issuer or any Consolidated Subsidiary with respect to which the Issuer or such Consolidated Subsidiary is in good faith prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Issuer or any Consolidated Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Issuer or such Consolidated Subsidiary is a party; (j) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord's liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Issuer or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the Issuer, materially impair the use of such assets in the operation of the business of the Issuer or such Consolidated Subsidiary or the value of such assets for the purposes thereof; or (k) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof). Notwithstanding the above, the Issuer or any Consolidated Subsidiary may, without securing the Exchange Notes due 2008, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. 7 Limitation on Sale and Lease-Back Transactions. The Issuer covenants that, so long as any of the Exchange Notes due 2008 remain outstanding, it will not, nor shall it permit any Consolidated Subsidiary to, enter into any sale and lease-Back transaction with respect to any assets, other than any sale lease-back transaction (involving a lease for a term of not more than three years), unless either (a) the Issuer or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Exchange Notes due 2008 pursuant to clauses (a) through (k) inclusive of the covenant with respect to "Limitation on Liens" above, or (b) the proceeds of the sale of the assets to be leased are at least equal to their fair market value (as determined by the Board of Directors of the Issuer) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of indebtedness. The foregoing limitation shall not apply, if at the time the Issuer or any Consolidated Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 10% of the total assets of the Issuer and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles. The term "Attributable Debt" in connection with a sale and lease- back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction or (b) the present value (discounted at the rate of interest set forth in or implicit in the terms of such lease or, if it is not practicable to determine such rate, the weighted average interest rate per annum borne by all series of Securities then Outstanding and subject to the Limitation on Sale and Lease-Back Transactions compounded semiannually, in either case as determined by the principal accounting or financial officer of the Issuer) of the obligations of the Issuer or any Consolidated Subsidiary for net rental payments during the remaining term of all leases (including any period for which such lease has been extended or may, at the option of the lessor, be extended). The term "net rental payments" under any lease of any period shall mean the sum of the rental and other payments required to be paid in such 8 period by the lessee thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges. The term "Consolidated Subsidiary" shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Issuer in accordance with generally accepted accounting principles. The term "Exempted Debt" shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Issuer and its Consolidated Subsidiaries incurred after February 24, 1998 and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to "Limitation on Liens" above, and (ii) Attributable Debt of the Issuer and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after February 24, 1998, other than leases expressly permitted by the covenant with respect to "Limitation on Sale and Lease-Back Transactions" above. The term "Indebtedness" shall mean all items classified as indebtedness on the most recently available consolidated balance sheet of the Issuer and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles. 19. Conversion and Exchange. The Exchange Notes due 2008 shall not ----------------------- be convertible into or exchangeable into any other security. 20. Other Terms. The Exchange Notes due 2008 shall have the other ----------- terms and shall be substantially in the form set forth in the form of Exchange Notes due 2008 attached hereto as Exhibit A. In case of any conflict between this Annex A and the Exchange Notes due 2008 in the form attached hereto as Exhibit A, the form of the Exchange Notes due 2008 shall control. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Indenture. 9 EXHIBIT A [FORM OF FACE OF EXCHANGE NOTE DUE MARCH 1, 2008] [IF THE EXCHANGE NOTE DUE 2008 IS TO BE A GLOBAL SECURITY, INSERT THE FOLLOWING - - THIS EXCHANGE NOTE DUE 2008 IS A BOOK-ENTRY SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS EXCHANGE NOTE DUE 2008 IS EXCHANGEABLE FOR EXCHANGE NOTES DUE 2008 REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS EXCHANGE NOTE DUE 2008 (OTHER THAN A TRANSFER OF THIS EXCHANGE NOTE DUE 2008 AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED CIRCUMSTANCES. UNLESS THIS EXCHANGE NOTE DUE 2008 IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY EXCHANGE NOTE DUE 2008 ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] No. __________ CUSIP NO. ________ McKESSON CORPORATION 6.40% EXCHANGE NOTE DUE MARCH 1, 2008 McKesson Corporation, a Delaware corporation (the "Issuer," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to, _____________________________, the principal sum of _________________________ Dollars ($______) on March 1, 2008 and to pay interest on said principal sum from February 24, 1998, or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually in arrears on March 1 and September 1 (each such date, an "Interest Payment Date") of each year commencing on September 1, 1998, at the rate of 6.40% per annum until the principal hereof shall have become due and payable. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year comprised of twelve 30-day months. The amount of interest payable for any period shorter than a full semi-annual period for which interest is computed, will be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which the principal or interest payable on this Exchange Note due 2008 is not a Business Day, then payment of principal or interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of such delay). The interest installment so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture (referred to on the reverse hereof) be paid to the person in whose name this Exchange Note due 2008 is registered at the close of business on the record date for such interest installment, which shall be the close of business on the immediately preceding February 15 and August 15 prior to such Interest Payment Date, as applicable. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such record date and may be paid to the person in whose name this Exchange Note due 2008 is registered at the close of business on a subsequent record date (which shall be not less than five Business Days prior to the date of payment of such defaulted interest), notice whereof shall be given by mail by or on behalf of the Issuer to the registered holders of Exchange Notes due 2008 not less than 15 days preceding such subsequent record date, all as more fully provided in the Indenture. The principal of and the interest on this Exchange Note due 2008 shall be payable at the office or agency of the Issuer maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Issuer by check mailed to the person entitled thereto at such address as shall appear in the registry books of the Issuer; provided, further that for so long as this Exchange Note due 2008 is represented by a Registered Global Security, payment of principal, premium, if any, or interest on this Exchange Note due 2008 may be made by wire transfer to the account of the Depositary or its nominee. 2 Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee (as defined below) under the Indenture (as defined below), by the manual signature of one of its authorized officers, this Exchange Note due 2008 shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. Capitalized terms used in this Exchange Note due 2008 which are defined in the Indenture shall have the respective meanings assigned to them in the Indenture. The provisions of this Exchange Note due 2008 are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. 3 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in facsimile, and an imprint or facsimile of its corporate seal to be imprinted hereon. McKESSON CORPORATION By: ___________________________ Nancy A. Miller Vice President and Corporate Secretary Attest: By: ____________________ Name: Title: CERTIFICATE OF AUTHENTICATION This is one of the Securities referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO as Trustee By: _____________________ Authorized Officer Dated: ___________________ [FORM OF REVERSE SIDE OF EXCHANGE NOTE] This Exchange Note due 2008 is one of a duly authorized series of securities (the "Securities") of the Issuer designated as its 6.40% Exchange Notes due March 1, 2008 (the "Exchange Notes due 2008"). The Securities are all issued or to be issued under and pursuant to an Indenture, dated as of March 11, 1997 (the "Indenture"), duly executed and delivered between the Issuer and The First National Bank of Chicago, a national banking association (the "Trustee," which term includes any successor Trustee with respect to the Securities under the Indenture), to which the Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights thereunder of the Issuer, the Trustee and the holders of the Securities and the terms upon which the Exchange Notes due 2008 are to be authenticated and delivered. The terms of individual series of Securities may vary with respect to interest rate or interest rate formulas, issue dates, maturity, redemption, repayment, currency of payment and otherwise. Except as set forth below, this Exchange Note due 2008 is not redeemable and is not entitled to the benefit of a sinking fund or any analogous provision. This Exchange Note due 2008 is redeemable as a whole or in part, at the option of the Issuer, at any time at a redemption price equal to the greater of (i) 100% of its principal amount or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Yield plus 10 basis points, plus accrued interest to the date of redemption. The Holder of this Exchange Note due 2008 will receive notice thereof by first-class mail at least 10 and not more than 60 days prior to the date fixed for redemption. "Treasury Yield" means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Exchange Note due 2008 that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Exchange Note due 2008. "Independent Investment Banker" means Salomon Brothers Inc and its successor or, if such firm is unwilling or unable to select the Comparable 5 Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such business day, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day preceding such redemption date. "Reference Treasury Dealer" means each of Salomon Brothers Inc, BancAmerica Robertson Stephens and J.P. Morgan Securities Inc., and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government Securities dealer in New York City (a "Primary Treasury Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer. If an Event of Default with respect to the Exchange Notes due 2008 shall occur and be continuing, the principal of all the Exchange Notes due 2008 may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture contains provisions permitting the Issuer and the Trustee, with the consent of the holders of not less than a majority in aggregate principal amount of the Securities of all series issued under such Indenture then outstanding and affected (voting as one class) to add any provisions to, or change in any manner or eliminate any of the provisions of, such Indenture or modify in any manner the rights of the holders of the Securities of each series or Coupons so affected; provided that the Issuer and the Trustee may not, without the consent of the holder of each Outstanding Exchange Note due 2008 affected thereby, (i) extend the final maturity of the principal of any Security or reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof (including any amount in respect of original issue discount), or interest thereon payable in any coin or currency other than that provided in the Securities or 6 Coupons or in accordance with the terms thereof, or reduce the amount of principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof or the amount thereof provable in bankruptcy or alter certain provisions of the Indenture relating to Securities not denominated in Dollars or the Judgment Currency of such Securities or impair or affect the right of any Securityholder to institute suit for the enforcement of any payment thereof when due or, if the Securities provide therefor, any right of repayment at the option of the Securityholder or (ii) reduce the aforesaid percentage in principal amount of Securities of any series issued under such Indenture, the consent of the holders of which is required for any such modification. It is also provided in the Indenture that, with respect to certain defaults or Events of Default regarding the Securities of any series, the holders of a majority in aggregate principal amount Outstanding of the Securities of each such series, each such series voting as a separate class (or, of all Securities, as the case may be voting as a single class) may under certain circumstances waive all defaults with respect to each such series (or with respect to all the Securities, as the case may be) and rescind and annul a declaration of default and its consequences, but no such waiver or rescission and annulment shall extend to or affect any subsequent default or shall impair any right consequent thereto. The preceding sentence shall not, however, apply to a default in the payment of the principal of or interest on any of the Securities. No reference herein to the Indenture and no provision of this Exchange Note due 2008 or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Exchange Note due 2008 at the time, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Exchange Note due 2008 may be registered on the registry books of the Issuer, upon surrender of this Exchange Note due 2008 for registration of transfer at the office or agency of the Issuer maintained by the Issuer for such purpose in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the holder hereof or by its attorney duly authorized in writing, and thereupon one or more new Exchange Notes due 2008 of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Exchange Notes due 2008 are issuable only in registered form in minimum denominations of $250,000 and integral multiples of $1,000 in excess thereof. 7 As provided in the Indenture and subject to certain limitations therein set forth, the Exchange Notes due 2008 are exchangeable for a like aggregate principal amount of Exchange Notes due 2008 as requested by the holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Prior to due presentment of this Exchange Note due 2008 for registration of transfer, the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the person in whose name this Exchange Note due 2008 is registered as the owner hereof for all purposes, whether or not this Exchange Note due 2008 be overdue, and neither the Issuer, the Trustee nor any such agent shall be affected by notice to the contrary. THE INDENTURE AND THIS EXCHANGE NOTE DUE 2008 SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. 8 ASSIGNMENT [FORM OF ASSIGNMENT FOR EXCHANGE NOTES THAT ARE NOT GLOBAL SECURITIES] For value received _____________________ hereby sell(s), assign(s) and transfer(s) unto _____________________________________________________________ _________________________________________________________________ (Please insert social security or other taxpayer identification number of assignee.) the within Exchange Note due 2008 and hereby irrevocably constitutes and appoints ________ attorney to transfer the said Exchange Note due 2008 on the books of the Issuer, with full power of substitution in the premises. Dated: ____________________________ ___________________________ ___________________________ Signature(s) _____________________________ Signature Guarantee/1/ NOTICE: The above signature(s) of the holder(s) hereof must correspond with the name(s) written on the face of this Exchange Note due 2008 in every particular without alteration or enlargement or any change whatsoever. - ------------------------ /1/ (Signature must be guaranteed by an "eligible guarantor institution," that is, a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.) [FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES TO REFLECT CHANGES IN PRINCIPAL AMOUNT] Schedule A Changes to Principal Amount of Global Securities
Principal Amount of Exchange Notes due 2008 by which this Global Security is to be Remaining Reduced or Increased, Principal and Reason for Amount of this Date Reduction or Increase Global Security Notation Made By - ------ ------------------------- --------------- ----------------
EX-8.1 4 OPINION OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Exhibit 8.1 [NYO LETTERHEAD OF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP] April 1, 1998 McKesson Corporation McKesson Plaza One Post Street San Francisco, California 94104 Ladies and Gentlemen: We have acted as special counsel to McKesson Corporation, a Delaware corporation (the "Company"), in connection with the preparation of the Registration Statement on Form S-4 (such Registration Statement being hereinafter referred to as the "Registration Statement"), to be filed by the Company with the Securities and Exchange Commission (the "Commission") on the date hereof, with respect to the registration under the Securities Act of 1933, as amended (the "Securities Act"), by the Company of its offers to exchange (the "Exchange Offers") an aggregate principal amount of up to $300,000,000 of its 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange Notes due March 1, 2008 (together the "Exchange Notes") for a like principal amount of 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (together the "Private Notes"). The Private Notes have been and the Exchange Notes will be issued pursuant to an indenture dated as of March 11, 1997 (the "Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). We hereby confirm that, although the discussion set forth in the Registration Statement under the heading "CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES" does not purport to discuss all possible United States federal income tax consequences of the acquisition, ownership, and disposition of the Exchange Notes, in our opinion such discussion constitutes, in all material respects, a fair and accurate summary of the United States federal income tax consequences of the acquisition, ownership, and disposition of the Exchange Notes, based upon current law. There can be no assurances McKesson Corporation April 1, 1998 Page 2 that any of the opinions expressed herein will be accepted by the Internal Revenue Service, or if challenged, by a court. We hereby consent to the filing of this opinion with the Commission as Exhibit 8.1 to the Registration Statement. We also consent to the use of our name under the heading "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated and we disclaim any undertaking to advise you of any subsequent changes of the facts stated or assumed herein or any subsequent changes in applicable law. Very truly yours, /s/ Skadden, Arps, Slate, Meagher & Flom LLP EX-10.1 5 REGISTRATION RIGHTS AGREEMENT Exhibit 10.1 McKESSON CORPORATION $150,000,000 6.30% Notes due March 1, 2005 $150,000,000 6.40% Notes due March 1, 2008 REGISTRATION RIGHTS AGREEMENT New York, New York February 24, 1998 Salomon Brothers Inc BancAmerica Robertson Stephens J.P. Morgan Securities Inc. c/o Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Dear Sirs and Mesdames: McKesson Corporation, a Delaware corporation (the "Company"), proposes to issue and sell (the "Initial Placement") to Salomon Brothers Inc ("Salomon Brothers"), BancAmerica Robertson Stephens and J.P. Morgan Securities Inc. (collectively, the "Purchasers"), upon the terms set forth in a purchase agreement, dated as of February 19, 1998 (the "Purchase Agreement"), $150,000,000 of the Company's 6.30% Notes due March 1, 2005 and $150,000,000 of the Company's 6.40% Notes due March 1, 2008 (each, a "Series of Notes" and, collectively, the "Notes"). The Notes will be issued under an Indenture dated as of March 11, 1997 (the "Indenture") between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). As an inducement to the Purchasers to enter into the Purchase Agreement and in satisfaction of a condition to your obligations thereunder, the Company agrees with you, (i) for your benefit and (ii) for the benefit of the holders from time to time (each of the foregoing a "Holder" and together the "Holders") of the Notes or the Exchange Notes (as defined herein), as follows: 1. Definitions. Capitalized terms used herein without definition ----------- shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" means the Securities Act of 1933, as amended, and the rules and --- regulations of the Commission promulgated thereunder. "Affiliate" shall have the same meaning given to that term in Rule 405 --------- of the Act of any successor rule thereunder. "Closing Date" has the meaning set forth in the Purchase Agreement. ------------ "Commission" means the Securities and Exchange Commission. ---------- "Exchange Act" means the Securities Exchange Act of 1934, as amended, ------------ and the rules and regulations of the Commission promulgated thereunder. "Exchange Notes" means the two Series of Exchange Notes, collectively. -------------- "Exchange Offer Registration Period" means the 180-day period ---------------------------------- following the issuance of the Exchange Notes, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. "Exchange Offer Registration Statement" means a registration statement ------------------------------------- of the Company on an appropriate form under the Act with respect to the Registered Exchange Offer, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Exchanging Dealer" means any Holder (which may include any Purchaser) ----------------- which is a broker-dealer electing to exchange Notes acquired for its own account as a result of market-making activities or other trading activities for Exchange Notes. "Final Memorandum" has the meaning set forth in the Purchase ---------------- Agreement. "Holder" has the meaning set forth in the preamble hereto. ------ "Indenture" has the meaning set forth in the preamble hereto. --------- "Initial Placement" has the meaning set forth in the preamble hereto. ----------------- "Liquidated Damages" has the meaning set forth in Section 7(a) hereof. ------------------ "Majority Holders" means the Holders of a majority of the aggregate ---------------- principal amount of securities registered under a Registration Statement. "Managing Underwriters" means the investment banker or investment --------------------- bankers and manager or managers that shall administer an underwritten offering. "Notes" has the meaning set forth in the preamble hereto. ----- "Prospectus" means the prospectus included in any Registration ---------- Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Notes or the Exchange Notes, covered by such Registration 2 Statement, and all amendments and supplements to the Prospectus, including post- effective amendments. "Registered Exchange Offer" means the proposed offer to the Holders to ------------------------- issue and deliver to such Holders, with respect to each Series of Notes, a like principal amount of the corresponding Series of Exchange Notes, in exchange for the Notes. "Registration Statement" means any Exchange Offer Registration ---------------------- Statement or Shelf Registration Statement that covers any of the Notes or the Exchange Notes pursuant to the provisions of this Agreement, and amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Series of Exchange Notes" means, in respect of each Series of Notes, ------------------------ a like principal amount of debt securities of the Company identical in all material respects to, and entitled to substantially the same benefits of such Series of Notes. "Series of Notes" has the meaning set forth in the preamble hereto. --------------- "Shelf Registration" means a registration effected pursuant to Section ------------------ 3 hereof. "Shelf Registration Event" has the meaning set forth in Section 3 ------------------------ hereof. "Shelf Registration Period" has the meaning set forth in Section 3(b) ------------------------- hereof. "Shelf Registration Statement" means a "shelf" registration statement ---------------------------- of the Company pursuant to the provisions of Section 3 hereof which covers some or all of the Notes or the Exchange Notes, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, and amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Special Counsel" means Mayer, Brown & Plan or such other counsel as --------------- shall be specified by the Majority Holders of securities included in the relevant Registration Statement, the fees and expenses of which will be paid by the Company pursuant to Section 5 hereof. "Trustee" has the meaning set forth in the preamble hereto. ------- "Underwriter" means any underwriter of Notes in connection with an ----------- offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offers: Resales of Exchange Notes By -------------------------------------------------------- Exchanging Dealers. (a) The Company shall prepare and file with the Commission - ------------------ the Exchange Offer 3 Registration Statement. The Company shall use its reasonable efforts to cause the Exchange Offer Registration Statement to become effective under the Act within 180 days of the Closing Date. (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offers, it being the objective of such Registered Exchange Offers to enable each Holder electing to exchange Notes for Exchange Notes (assuming that such Holder is not an affiliate of the Company within the meaning of the Act, acquires the Exchange Notes in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution (within the meaning of the Act) of the Exchange Notes) to transfer such Exchange Notes from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offers, the Company shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offers open for not less than 30 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law); (iii) utilize the services of a depositary for the Registered Exchange Offers with an address in the Borough of Manhattan, The City of New York; and (iv) comply in all material respects with all applicable laws. (d) As soon as practicable after the close of each of the Registered Exchange Offers, the Company shall: (i) accept for exchange all Notes validly tendered and not withdrawn pursuant to the applicable Registered Exchange Offer; (ii) deliver to the Trustee for cancellation all Notes so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver to each Holder of tendered Notes, Exchange Notes of the appropriate series equal in principal amount to the Notes of such Holder so accepted for exchange therefor. (e) The Purchasers and the Company acknowledge that, pursuant to interpretations by the Commission's staff of Section 5 of the Act, and in the absence of an 4 applicable exemption therefrom, each Exchanging Dealer is required to deliver a Prospectus in connection with a sale of any Exchange Notes received by such Exchanging Dealer pursuant to the Registered Exchange Offers in exchange for Notes acquired for its own account as a result of market-making activities or other trading activities. Accordingly, the Company shall: (i) include the information set forth in Annex A hereto on the cover of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Registered Exchange Offers, and in Annex C hereto in the underwriting or plan of distribution section of the Prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in each Letter of Transmittal delivered pursuant to each Registered Exchange Offer; and (ii) use its reasonable efforts to keep the Exchange Offer Registration Statement continuously effective under the Act during the Exchange Offer Registration Period for delivery of the Prospectus forming a part thereof by Exchanging Dealers in connection with sales of Exchange Securities received pursuant to the Registered Exchange Offers, as contemplated by Section 4(h) below. (f) In the event that the Purchasers determine that they are not eligible to participate in the Registered Exchange Offers with respect to the exchange of Notes constituting any portion of their initial unsold allotment, at the request of the Purchasers, the Company shall issue and deliver to the Purchasers, in exchange for such Notes, a like principal amount of Exchange Notes (provided that such Exchange Notes shall include legends with respect to restrictions on transfer), and the Company shall, starting on the date of effectiveness of the Exchange Offer Registration Statement and ending on the close of business on the 180th day following such date, make available as many copies of the Exchange Offer Registration Statement prospectus, as amended or supplemented, as reasonably requested by the Purchasers. The Company shall seek to cause the CUSIP Service Bureau to issue the same CUSIP number(s) for such securities as for the corresponding Series of Exchange Notes issued pursuant to the Registered Exchange Offers. The Purchasers agree to promptly notify the Company in writing following the resale of their initial allotment of Notes. 3. Shelf Registration. If, (i) because of any change in law or in ------------------ currently prevailing interpretations thereof by the Commission's staff, the Company determines upon advice of its outside counsel that it is not permitted to effect either of the Registered Exchange Offers as contemplated by Section 2 hereof, or (ii) for any other reason either of the Registered Exchange Offers are not consummated within 225 days of the Closing Date, or (iii) in the case of any Holder that participates in either of the' Registered Exchange Offers, such Holder does not receive applicable freely tradeable Exchange Notes on the date of the exchange (other than due solely to the status of such Holder as an affiliate of the Company within the meaning of the Act or as a broker-dealer) (it being understood that, for purposes of this Section 3, (x) the requirement that the Purchasers deliver a Prospectus containing the information required by Items 507 and/or 508 of Regulation S-K under the Act in connection with sales of Exchange 5 Notes acquired in exchange for such Notes shall result in such Exchange Notes being not "freely tradeable" but (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of Exchange Notes acquired in the Registered Exchange Offers in exchange for Notes acquired as a result of market- making activities or other trading activities shall not result in such Exchange Notes being not "freely tradeable") (the events described in clauses (i), (ii) and (iii) of this paragraph are each referred to herein as a "Shelf Registration Event"), the following provisions shall apply: (a) The Company shall promptly deliver to the applicable Holders written notice of a Shelf Registration Event and, as promptly as practicable, file with the Commission and thereafter use its reasonable efforts to cause to be declared effective under the Act, a Shelf Registration Statement relating to the offer and sale of the applicable Notes or the applicable Exchange Notes, as the case may be, by the applicable Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, however, that with respect to Exchange Notes -------- ------- received by the Purchasers in exchange for Notes constituting any portion of an unsold allotment, the Company may, if permitted by current interpretations by the Commission's staff; file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Regulation S-K Items 507 and/or 508, as applicable, in satisfaction of their obligations under this paragraph (a) with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (b) The Company shall use its reasonable efforts to keep such Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by such Holders for a period of two years (or, if Rule l44(k) is amended to provide a shorter restrictive period, such shorter period) or such shorter period that will terminate when all the Notes or Exchange Notes, as applicable, covered by such Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). 4. Registration Procedures. In connection with any Shelf ----------------------- Registration Statement and, to the extent specified, any Exchange Offer Registration Statement, the following provisions shall apply: (a) The Company shall furnish to each Purchaser, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement and any Exchange Offer Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and the Company shall, if reasonably requested, promptly incorporate in such Registration Statement, such information and comments as the Purchasers reasonably agree with the Company and its counsel should be included therein provided that the Company shall not be required to take any action under this Section 4(a) that is not in the reasonable opinion of counsel for the Company in compliance with applicable law. 6 (b) The Company shall ensure that subject to Section 4(k), (i) any Registration Statement and any amendment thereto and any Prospectus forming a part thereof and any amendment or supplement thereto complies in all material respects with the Act, (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Registration Statement, and any amendment or supplement to such Prospectus, does not, during the period when delivery thereof is required, include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (c) (1) The Company shall advise the Purchasers and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby and, if requested by you or any such Holder, confirm such advice in writing: (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when a Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to a Registration Statement or the Prospectus included therein or for additional information. (2) The Company shall advise the Purchasers and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby, and, in the case of an Exchange Offer Registration Statement, any Exchanging Dealer which has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by you or any such Holder or Exchanging Dealer, confirm such advice in writing: (i) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (ii) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iii) of the suspension of the use of a Prospectus. 7 (d) Subject to Section 4(k), the Company shall use its reasonable efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness or use of any Registration Statement at the earliest possible time. (e) The Company shall furnish to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those incorporated by reference). (f) Subject to Section 4(k), the Company shall, during the Shelf Registration Period, as promptly as is reasonably practicable deliver to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and subject to Section 4(k), the Company consents to the use of the Prospectus or any amendment or supplement thereto as to which no notice has been given pursuant to paragraph 4(c)(2) by each of the selling Holders of securities in connection with the offering and sale of the securities covered by the Prospectus or any amendment or supplement thereto. (g) The Company shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, any documents incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits (including those incorporated by reference). (h) Subject to Section 4(k), the Company shall, during the Exchange Offer Registration Period, promptly deliver to each Exchanging Dealer, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as such Exchanging Dealer may reasonably request for delivery by such Exchanging Dealer in connection with a sale of Exchange Notes received by it pursuant to the Registered Exchange Offer; and subject to Section 4(k), the Company consents to the use of the Prospectus or any amendment or supplement thereto as to which no notice has been given pursuant to paragraph 4(c)(2) by any such Exchanging Dealer, as aforesaid. (i) Prior to the Registered Exchange Offers or the effectiveness of a Registration Statement, the Company shall, if required by applicable law, register or qualify or cooperate with the Holders of securities included therein and their respective counsel in connection with the registration or qualification of such securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such United States jurisdictions of the securities 8 covered by such Registration Statement; provided, however, that the Company -------- ------- will not be required to (i) qualify generally to do business or as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Section 4(i), (ii) file any general consent to service of process in any jurisdiction where it is not as of the date hereof so subject or (iii) subject itself to taxation in any jurisdiction where it is not otherwise subject. (j) Unless the applicable securities shall be in book-entry only form, the Company shall cooperate with the Holders of Notes to facilitate the timely preparation and delivery of certificates representing Notes to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request prior to sales of Notes pursuant to such Registration Statement. (k) Upon the occurrence of any event contemplated by paragraphs (c)(l)(ii), (c)(2)(i) or (c)(2)(iii) above, the Company agrees to notify the Purchasers, and in the case of a Shelf Registration Statement, the Holders of securities covered thereby, to suspend use of the Prospectus and the Company shall prepare, using its reasonable efforts to do so as soon as possible, a post-effective amendment to any Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and the Purchasers, and in the case of a Shelf Registration Statement, the Holders of securities covered thereby, shall suspend use of such Prospectus until the Company has amended or supplemented such Prospectus so that such Prospectus does not contain any such untrue statement or omission. (l) The Company shall use its reasonable efforts to cause The Depository Trust Company ("DTC") on the first business day following the effective date of any Shelf Registration Statement hereunder or as soon as possible thereafter to remove (i) from any existing CUSIP number assigned to any Series of Notes, any designation indicating that such Notes are "restricted securities," which efforts shall include delivery to DTC of a letter executed by the Company substantially in the form of Annex E hereto and (ii) any other stop or restriction on DTC's system with respect to such Notes. In the event the Company is unable to cause DTC to take the actions described in the immediately preceding sentence, the Company shall take such actions as Salomon Brothers may reasonably request to provide, as soon as practicable, a CUSIP number for each Series of Notes registered under such Registration Statement and to cause such CUSIP numbers to be assigned to such Notes (or to the maximum aggregate principal amount of such Notes to which such number(s) may be assigned). Upon compliance with the foregoing requirements of this Section 4(1), the Company shall provide the Trustee with printed certificates for each Series of Notes, in a form eligible for deposit with DTC. 9 (m) The Company shall use its reasonable efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to its security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Act. (n) The Company may require each Holder of securities to be sold pursuant to any Shelf Registration Statement to furnish to the Company such information regarding such Holder and the distribution of such securities by such Holder as the Company may from time to time reasonably require for inclusion in such Registration Statement and securities of a Holder which does not provide information necessary for inclusion in such Registration Statement may be omitted from any Shelf Registration Statement. (o) The Company shall, if reasonably requested, and in no event more than three times, promptly incorporate in a Prospectus supplement or post- effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters and Holders of a majority in aggregate principal amount of each Series of Notes reasonably agree with the Company and its counsel should be included therein and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment provided that the Company shall not be required to take any action under this Section 4(o) that is not in the reasonable opinion of counsel for the Company in compliance with applicable law. (p) In the case of any Shelf Registration Statement, the Company shall enter into such customary agreements (including underwriting agreements) and take all other appropriate and reasonably required actions in connection therewith in order to expedite or facilitate the registration or the disposition of the applicable Notes or the applicable Exchange Notes, as the case may be, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 6 (or such other provisions and procedures acceptable to the Holders of a majority in aggregate principal amount of each applicable Series of Notes and the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 6. (q) In the case of any Shelf Registration Statement, the Company shall (i) make reasonably available for inspection by the Holders of securities to be registered thereunder, subject to their acceptance of the provisions of this Section 4(q), any underwriter participating in any distribution pursuant to such Registration Statement, and any Special Counsel, accountant or other agent retained by such Holders or any such underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries as shall reasonably be required in connection with the discharge of their due diligence obligations; (ii) cause the Company's officers, directors and employees and any relevant trustee to supply all relevant information reasonably requested by such Holders or any such underwriter, Special 10 Counsel, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, -------- however, that, in the case of clause (i) and (ii) above, any information - ------- that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Holders and any such underwriter, Special Counsel, accountant or agent, unless such disclosure is made in connection with a court proceeding or as required by law after notice has been given to the Company of such pending disclosure and a reasonable opportunity has been provided, whenever reasonably possible, for the Company to obtain an appropriate protective order for the information to be disclosed, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further, however, that the foregoing inspection and information -------- ------- ------- gathering shall be coordinated on behalf of such Holders and the other parties entitled thereto by the Special Counsel and other parties; (iii) make such representations and warranties to the Holders of securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in secondary offerings and covering such matters as are customarily covered in representations and warranties requested in secondary offerings; (iv) obtain opinions of counsel to the Company and updates thereof addressed to each selling Holder and the underwriters, if any, covering such matters and with such exceptions as are customarily covered or taken in opinions requested in secondary offerings; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with secondary offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, or their counsel including those to evidence compliance with Section 4(k) and with conditions customarily contained in the underwriting agreement or other agreement entered into by the Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 4(q) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (r) In the case of any Exchange Offer Registration Statement, if requested by the Purchasers, the Company shall (i) make reasonably available for inspection by the Purchasers, subject to their acceptance of the provisions of this Section 4(r), and any Special Counsel, accountant or other agent retained by the Purchasers, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries as shall reasonably be required in connection with the discharge of their due diligence obligations; (ii) cause the Company's officers, directors and employees and any relevant trustee to supply all relevant information reasonably 11 requested by the Purchasers or any such Special Counsel, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided however, that, in the case ---------------- of clause (i) and (ii) above, any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Purchasers and any such Special Counsel, accountant or agent, unless such disclosure is made in connection with a court proceeding or as required by law after notice has been given to the Company of such pending disclosure and a reasonable opportunity has been provided, whenever reasonably possible, for the Company to obtain an appropriate protective order for the information to be disclosed, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further, however, ---------------- ------- that the foregoing inspection and information gathering shall be coordinated on behalf of the Purchasers and other parties entitled thereto by the Special Counsel and other parties; (iii) make such representations and warranties to the Purchasers, in form, substance and scope as are customarily made by issuers to underwriters in secondary offerings and covering such matters as are customarily covered in representations and warranties requested in secondary offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the Purchasers or their counsel, including those to evidence compliance with Section 4(k) and with conditions customarily contained in underwriting agreements. The foregoing actions set forth in clauses (iii) and (iv) of this Section 4(r) shall be performed, if requested by the Purchasers, at the closing of each of the Registered Exchange Offers and the effective date of any post- effective amendment to the Exchange Offer Registration Statement. 5. Registration Expenses. The Company shall bear all expenses --------------------- incurred in connection with the performance of their obligations under Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration Statement, will reimburse the applicable Holders for the reasonable fees and disbursements of the Special Counsel designated in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Purchasers for the reasonable fees and disbursements of the Special Counsel acting in connection therewith. 6. Indemnification; Contribution. ----------------------------- (a) The Company agrees to indemnify and hold harmless each Holder and each person, if any, who controls any Holder within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any amendment thereof, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus or any Prospectus (or 12 amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Holder furnished to the Company in writing by such Holder expressly for use therein. The Company shall also indemnify each Exchanging Dealer participating in the offering and sale of the Notes and each person who controls any such Exchanging Dealer (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) to the same extent and with the same limitations as provided above with respect to the indemnification of the Holders of the Notes. The foregoing notwithstanding, the Company shall not be liable to the extent that such losses, claims, damages or liabilities arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Prospectus that is a preliminary Prospectus if (i) such indemnified person failed to send or deliver a copy of the Prospectus with or prior to the delivery or written confirmation of the sale of the Notes giving rise to such losses, claims, damages or liabilities and (ii) the Prospectus would have corrected such untrue statement or omission. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Company's directors, the Company's officers who sign a Registration Statement, and each person, if any, who controls the Company within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any amendment thereof, any preliminary Prospectus or any Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only the reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in such Registration Statement, preliminary Prospectus, Prospectus or any amendments or supplements thereto. In no event shall the liability of any Holder of the Notes hereunder be greater in amount than the net dollar amount of the proceeds received by such Holder from the sale of the Notes giving rise to such indemnification obligation. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two proceeding paragraphs, such person (the "indemnified party") shall promptly notify the person against ----------------- whom such indemnity may be sought (the "indemnifying party") in writing and ------------------ the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable 13 fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and, the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all persons, if any, who control any Holders within the meaning of either Section 15 of the Act or Section 20 of the Exchange Act, and (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company and each person, if any, who controls the Company within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Company and any such control persons of the Company, such firm shall be designated in writing by the Company. In the case of any such separate firm for the Holders or any such control persons of any Holders, such firm shall be designated in writing on behalf of the Majority Holders. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability or reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) To the extent the indemnification provided for in paragraph (a) or (b) of this Section 6 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to herein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other 14 things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute pursuant to this paragraph are several in proportion to the respective number of the Notes they have sold pursuant to a Registration Statement, and not joint. (e) The Company and the Holders agree that it would not be just or equitable if contribution pursuant to Section 6(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) of this Section 6. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities referred to in paragraph (d) of this Section 6 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, a Holder of the Notes shall not be required to contribute any amount in excess of the amount by which the total price at which the Notes sold by such indemnifying party and distributed to the public were offered to the public pursuant to any Registration Statement exceeds the amount of any damages which such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder or any person controlling any Holder, or the Company or any person controlling the Company and (iii) the sale of any Notes by any Holder. 7. Liquidated Damages Under Certain Circumstances. (a) Liquidated ---------------------------------------------- damages ("Liquidated Damages") shall become payable in respect of the Notes as follows if any of the following events occur (each such event in clauses (i) through (iii) below, a "Registration Default"): (i) in the event that the Company is permitted under the law and currently prevailing interpretations of the Commission's staff to effect the Registered Exchange Offers and the Exchange Offer Registration Statement is not declared effective on or prior to the 180th day following the Closing Date; (ii) either of the Registered Exchange Offers are not consummated and the applicable Shelf Registration Statement is not declared effective on or prior to the 225th day following the Closing Date; or 15 (iii) after a Shelf Registration Statement is declared effective, (A) such Shelf Registration Statement ceases to be effective prior to the end of the Shelf Registration Period (except as permitted in paragraph (b) of this Section 7); (B) such Shelf Registration Statement or the related Prospectus ceases to be useable in connection with resales of Notes or Exchange Notes, as the case may be, covered by such Shelf Registration Statement prior to the end of the Shelf Registration Period (except as permitted in paragraph (b) of this Section 7) because (1) the Company determines that any event occurs as a result of which the related Prospectus forming part of such Shelf Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) the Company determines that it shall be necessary to amend such Shelf Registration Statement, or supplement the related Prospectus, to comply with the Act or the Exchange Act or the rules thereunder, or (3) the Company determines that it is advisable to suspend use of the Prospectus for a discrete period of time due to pending material corporate developments or similar material events that have not yet been publicly disclosed and as to which the Company believes public disclosure will be prejudicial to the Company. Liquidated Damages shall accrue on the applicable Notes or the applicable Exchange Notes, as the case may be, over and above the interest rate set forth in the title to the applicable Notes or the applicable Exchange Notes, as the case may be, following the occurrence of each Registration Default set forth in clauses (i) and (ii) above from and including the next day following each such Registration Default, in each case at a rate equal to 0.25% per annum; provided, however, that in any case, if one or more Registration Defaults - -------- ------- referred to in Section 7(a)(iii) occurs and continues for more than 60 days (whether or not consecutive) in any twelve month period (the 61st day being referred to as the "Default Day") then from the Default Day until the earlier of (i) the date such Shelf Registration Statement is again deemed effective or is useable, (ii) the date that is the second anniversary of the Closing Date (or, if Rule 144(k) of the Act is amended to provide a shorter restrictive period, such shorter period) or (iii) the date of which all the Notes are sold pursuant to such Shelf Registration Statement, Liquidated Damages shall accrue at a rate of 0.25% per annum; provided, further, that the aggregate amount of Liquidated -------- ------- Damages payable pursuant to this Section 7 will in no event exceed 0.25% per annum. The Liquidated Damages attributable to each Registration Default shall cease to accrue from the date such Registration Default is cured. (b) A Registration Default referred to in Section 7(a)(iii) shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related Prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related Prospectus or 16 (y) the occurrence of other material events or developments with respect to the Company that would need to be described in such Registration Statement or the related Prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Registration Statement and related Prospectus to describe such events. (c) Any amounts of Liquidated Damages due pursuant to the foregoing paragraphs will be payable in cash on March 1 and September 1 of each year to the holders of record on the preceding February 15 and August 15, respectively. 8. Miscellaneous. ------------- (a) No Inconsistent Agreements. The Company has not, as of the date -------------------------- hereof, entered into, nor shall it, on or after the date hereof, enter into, any agreement with respect to the Notes that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, ---------------------- including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Holders of at least a majority of the then outstanding aggregate principal amount of each Series of Notes (or, after the consummation of any Exchange Offer in accordance with Section 2 hereof, of each Series of Exchange Notes); provided, however, that, with respect to any matter that affects the -------- ------- rights of any Purchaser hereunder, the Company shall obtain the written consent of the Purchasers. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Notes are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Holders of a majority of each Series of Notes, determined on the basis of Notes being sold rather than registered under such Registration Statement. (c) Notices. All notices and other communications provided for or ------- permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the most current address given by such Holder to the Company in accordance with the provisions of this Section 8(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Salomon Brothers; (2) if to you, initially at the address set forth in the Purchase Agreement; and (3) if to the Company, initially at the address set forth in the Purchase Agreement. 17 All such notices and communications shall be deemed to have been duly given when received. The Purchasers or the Company by notice to the other may designate additional or different addresses for subsequent notices or communications. (d) Successors and Assigns. This Agreement shall inure to the benefit ---------------------- of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders of Notes and/or Exchange Notes. The Company hereby agrees to extend the benefits of this Agreement to any Holders of Notes and/or Exchange Notes and any such Holder may enforce the provisions of this Agreement as if an original party hereto. (e) Counterparts. This Agreement may be executed in any number of ------------ counterparts and by the parties hereto in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of -------- reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED ------------- IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. (h) Severability. In the event that any one or more of the provisions ------------ contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (i) Securities Held By the Company, etc. Whenever the consent or ----------------------------------- approval of Holders of a specified percentage of principal amount of Notes or Exchange Notes is required hereunder, Notes or Exchange Notes, as applicable, held by the Company or their respective Affiliates (other than subsequent Holders of Notes or Exchange Notes if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Notes or Exchange Notes) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 18 Please confirm that the foregoing correctly sets forth the agreement among the Company and you. Very truly yours, McKESSON CORPORATION By: /s/ Nicholas A. Loiacono ------------------------------- Name: Nicholas A. Loiacono Title: Vice President, Finance Accepted, February 24, 1998 SALOMON BROTHERS INC BANCAMERICA ROBERTSON STEPHENS J.P. MORGAN SECURITIES INC. By: SALOMON BROTHERS INC By: /s/ Anne Clarke Wolff --------------------------------- Name: Title: ANNEX A Annex A ------- Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. Each Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Notes acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, ending on the close of business on the 180th day following the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Annex B ------- Each broker-dealer that receives Exchange Notes for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. See "Plan of Distribution." ANNEX C Plan of Distribution -------------------- Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offers must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Notes where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, starting on the applicable Expiration Date and ending on the close of business on the 180th day following such Expiration Date, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until 199 , all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Exchange Offers may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker- dealer that resells Exchange Notes that were received by it for its own account pursuant to the Exchange Offers and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Act and any profit of any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. Each Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the Expiration Date, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the applicable Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offers (including the expenses of any Special Counsel for the holders of the Notes) other than commissions or concessions of any brokers or dealers and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. [If applicable, add information required by Regulation S-K Items 507 and/or 508.] ANNEX D Rider A ------- CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:________________________________________________________________________ Address:______________________________________________________________________ ______________________________________________________________________ Rider B ------- If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Notes, it represents that the Notes to be exchanged for Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Act. ANNEX E FORM OF LETTER TO BE PROVIDED BY ISSUER TO THE DEPOSITORY TRUST COMPANY McKesson Corporation McKesson Plaza One Post Street San Francisco, CA 94104 ___________________, 1998 The Depository Trust Company 55 Water Street, 49th Floor New York, NY 10041 Attn: General Counsel's Office Ladies and Gentlemen: We refer to the Letter of Representations, dated , 1998 (the "Letter of Representations"), from McKesson Corporation (the "Issuer") and The First National Bank of Chicago, as trustee (the "Trustee") to the Depository Trust Company ("DTC") regarding the Issuer's 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (the "Old Securities"). The CUSIP numbers of the Old Securities are and , respectively, for qualified institutional buyers, and , respectively, for buyers who were sold Old Securities in compliance with Regulation S under the Securities Act of 1933, as amended and and , respectively, for institutional accredited investors. The Issuer and the Trustee hereby agree and notify DTC that as of , 1998, the Securities and Exchange Commission declared effective a Registration Statement (File No. ) with respect to an offering of the Issuer's % Exchange Notes due , 2005 and % Exchange Notes due , 2008 (the "New Securities") (CUSIP Nos. and , respectively) in exchange for the Old Securities. Following the consummation of the exchange offer and the cancellation of the global securities representing the Old Securities, the Issuer and the Trustee agree that, with the exception of the Representations for Rule 144A Securities attached thereto, the Letter of Representations and any applicable riders thereto shall remain in full force and effect with respect to the New Securities. Very Truly yours. McKESSON CORPORATION By: __________________________________ Name: Title: THE FIRST NATIONAL BANK OF CHICAGO By: __________________________________ Name: Title: Received and Accepted: THE DEPOSITORY TRUST COMPANY By: __________________________________ Name: Title: EX-23.1 6 INDEPENDENT AUDITORS' CONSENT Exhibit 23.1 [LETTERHEAD OF DELOITTE & TOUCHE LLP] INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in this Registration Statement of McKesson Corporation ("McKesson") on Form S-4 of our report dated May 16, 1997 on McKesson's consolidated financial statements and consolidated supplementary financial schedule, both such reports appearing in the Annual Report on Form 10-K of McKesson Corporation for the year ended March 31, 1997, and our report on FoxMeyer Corporation's consolidated financial statements dated June 28, 1996 (March 18, 1997 as to paragraph seven of Note Q), which report expresses an unqualified opinion and includes an explanatory paragraph relating to the sale of the principal assets of FoxMeyer corporation and its Chapter 7 bankruptcy filing, appearing in the Current Report on Form 8-K/A of McKesson Corporation filed with the Securities and Exchange Commission on April 28, 1997. We also consent to the reference to us under the heading "Experts" in such Registration Statement. /s/ DELOITTE & TOUCHE LLP San Francisco, California Dallas, Texas March 31, 1998 EX-24.1 7 POWER OF ATTORNEY Exhibit 24.1 POWER OF ATTORNEY Each of the undersigned directors and each of the undersigned officers of McKesson Corporation, a Delaware corporation (the "Company"), does hereby constitute and appoint Ivan D. Meyerson and Nancy A. Miller, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead in any and all capacities, to execute and deliver in his or her name and on his or her behalf: (a) one or more Registration Statements (with all exhibits thereto) of the Company on Form S-4 or any other appropriate form proposed to be filed by the Company with the Securities and Exchange Commission (the "SEC") (including, without limitation, Registration Statements filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, or any successor thereto (the "Securities Act")) for the purpose of registering under the Securities Act, issues of notes substantially similar to the Company's 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (collectively, the "Notes"); (b) any and all supplements and amendments (including, without limitation, post-effective amendments) to such Registration Statements; and (c) any and all other documents and instruments in connection with the registration of the Notes which such attorneys-in-fact and agents, or any one of them, deem necessary or advisable to enable the Company to comply with (i) the Securities Act, the Securities Exchange Act of 1934, as amended, and the other federal securities laws of the United States of America and the rules, regulations and requirements of the SEC in respect of any thereof; (ii) the securities or Blue Sky laws of any state or other governmental subdivision of the United States of America; and (iii) the securities or similar applicable laws of any foreign jurisdiction; and each of the undersigned hereby grants unto such attorneys-in-fact and agents, and each of them, or his or her substitute or substitutes, each and every act and thing requisite and necessary to be done in and about the premises as fully as to all intents and purposes as he or she might or could do in person, and does hereby ratify and confirm as his or her own acts and deeds all that such attorneys-in- fact and agents, and each of them, or his or her substitute or substitutes, shall lawfully do or cause to be done by virtue hereof. Each one of such attorneys-in-fact and agents shall have, and may exercise, all of the powers hereby conferred. IN WITNESS WHEREOF, the undersigned has hereunto subscribed this power of attorney this 25th day of March, 1998. /s/ Mark A. Pulido /s/ John M. Pietruski - -------------------------- -------------------------- Mark A. Pulido John M. Pietruski /s/ Richard H. Hawkins /s/ David S. Pottruck - -------------------------- -------------------------- Richard H. Hawkins David S. Pottruck /s/ Heidi E. Yodowitz /s/ Carl E. Reichardt - -------------------------- -------------------------- Heidi E. Yodowitz Carl E. Reichardt /s/ Alan Seelenfreund /s/ Jane E. Shaw - -------------------------- -------------------------- Alan Seelenfreund Jane E. Shaw /s/ Mary G. F. Bitterman /s/ Robert H. Waterman, Jr. - -------------------------- -------------------------- Mary G. F. Bitterman Robert H. Waterman, Jr. /s/ Tully M. Friedman - -------------------------- Tully M. Friedman 2 EX-25.1 8 FORM T-1 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) _____ _____________________ THE FIRST NATIONAL BANK OF CHICAGO (Exact name of trustee as specified in its charter) A National Banking Association 36-0899825 (I.R.S. employer identification number) One First National Plaza, Chicago, Illinois 60670-0126 (Address of principal executive offices) (Zip Code) The First National Bank of Chicago One First National Plaza, Suite 0286 Chicago, Illinois 60670-0286 Attn: Lynn A. Goldstein, Law Department (312) 732-6919 (Name, address and telephone number of agent for service) _____________________ McKESSON CORPORATION (Exact name of obligor as specified in its charter) DELAWARE 94-3207296 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) McKESSON PLAZA ONE POST STREET San Francisco, CA 94104 (Address of principal executive offices) (Zip Code) 6.30% Exchange Notes due March 1, 2005 6.40% Exchange Notes due March 1, 2008 (Title of Indenture Securities) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING -------------------- INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of the Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR ------------------------------ IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A ----------------- PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 26th day of March, 1998. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /s/ Steven M. Wagner ------------------------------------------ STEVEN M. WAGNER VICE PRESIDENT * EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 2, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT March 26, 1998 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between McKesson Corporation and The First National Bank of Chicago, as Trustee, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /s/ Steven M. Wagner ----------------------------------------- STEVEN M. WAGNER VICE PRESIDENT 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 12/31/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
Consolidated Report of Condition for Insured Commercial and State-Chartered Savings Banks for December 31,1997 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC--Balance Sheet
C400 Dollar Amounts in ---- Thousands RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1)............................................... 0081 4,267,336 1.a. b. Interest-bearing balances(2).......................... 0071 6,893,837 1.b. 2. Securities a. Held-to-maturity securities (from Schedule RC-B, column A)............................................. 1754 0 2.a b. Available-for-sale securities (from Schedule RC-B, column D)............................................. 1773 5,691,722 2.b. 3. Federal funds sold and securities purchased under agreements to resell..................................... 1350 6,339,940 3. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C)........................................ RCFD 2122 25,202,984 4.a. b. LESS: Allowance for loan and lease losses............. RCFD 3123 419,121 4.b. c. LESS: Allocated transfer risk reserve................. RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c)................ 2125 24,783,863 4.d. 5. Trading assets (from Schedule RD-D)...................... 3545 6,703,332 5. 6. Premises and fixed assets (including capitalized leases).................................................. 2145 743,426 6. 7. Other real estate owned (from Schedule RC-M)............. 2150 7,727 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M)................ 2130 134,959 8. 9. Customers' liability to this bank on acceptances outstanding.............................................. 2155 644,340 9. 10. Intangible assets (from Schedule RC-M)................... 2143 268,501 10. 11. Other assets (from Schedule RC-F)........................ 2160 2,004,432 11. 12. Total assets (sum of items 1 through 11)................. 2170 58,483,415 12.
__________________ (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: The First National Bank of Chicago Call Date: 09/30/97 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0303 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
Schedule RC-Continued
Dollar Amounts in Thousands Bil Mil Thou ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1).................................. RCON 2200 21,756,846 13.a (1) Noninterest-bearing(1).................................... RCON 6631 9,197,227 13.a.1 (2) Interest-bearing.......................................... RCON 6636 559,619 13.a.2 b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)............................ RCFN 2200 14,811,410 13.b. (1) Noninterest bearing....................................... RCFN 6631 332,801 13.b.1 (2) Interest-bearing.......................................... RCFN 6636 14,478,609 13.b.2 14. Federal funds purchased and securities sold under agreements to repurchase: RCFD 2800 4,535,422 14 15. a. Demand notes issued to the U.S. Treasury RCON 2840 43,763 15.a b. Trading liabilities (from Schedule RC-D)...................... RCFD 3548 6,523,239 15.b 16. Other borrowed money: a. With a remaining maturity of one year or less................ RCFD 2332 1,360,165 16.a b. With a remaining maturity of one year through three years A547 576,492 16.b c. With a remaining maturity of more than three years............ A548 703,981 16.c 17. Not applicable 18. Bank's liability on acceptance executed and outstanding RCFD 2920 644,341 18 19. Subordinated notes and debentures (2)............................ RCFD 3200 1,700,000 19 20. Other liabilities (from Schedule RC-G)........................... RCFD 2930 1,322,077 20 21. Total liabilities (sum of items 13 through 20)................... RCFD 2948 53,987,736 21 22. Not applicable EQUITY CAPITAL 23. Perpetual preferred stock and related surplus.................... RCFD 3838 0 23 24. Common stock..................................................... RCFD 3230 200,858 24 25. Surplus (exclude all surplus related to preferred stock)......... RCFD 3839 2,999,001 25 26. a. Undivided profits and capital reserves........................ RCFD 3632 1,273,239 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities................................................... RCFD 8434 24,096 26.b. 27. Cumulative foreign currency translation adjustments.............. RCFD 3284 (1,515) 27 28. Total equity capital (sum of items 23 through 27)................ RCFD 3210 4,495,679 28 29. Total liabilities and equity capital (sum of items 21 and 28).... RCFD 3300 58,483,415 29
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that Number best describes the most comprehensive level of auditing work performed --------------- for the bank by independent external auditors as of any date during 1996............. RCFD 6724.. N/A M.1 ---------------
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other with generally accepted auditing standards by a certified external auditors (may be required by state chartering public accounting firm which submits a report on the bank authority) 2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external conducted in accordance with generally accepted auditing auditors standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external submits a report on the consolidated holding company auditors (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work) 3 = Directors' examination of the bank conducted in 8 = No external audit work accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority)
- ------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. (2) Includes limited-life preferred stock and related surplus. 6 EX-99.1 9 FORM OF LETTER OF TRANSMITTAL FOR 6.30% EXHIBIT 99.1 LETTER OF TRANSMITTAL McKESSON CORPORATION OFFER TO EXCHANGE ITS 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING 6.30% NOTES DUE MARCH 1, 2005 PURSUANT TO THE PROSPECTUS DATED , 1998 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. TENDERED SECURITIES MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER Delivery To: The First National Bank of Chicago (the "Exchange Agent") By Mail: By Hand or Overnight Delivery: (Registered or Certified Mail recommended) The First National Bank of Chicago The First National Bank of Chicago c/o First Chicago Trust c/o First Chicago Trust Company of New York Company of New York 14 Wall Street 14 Wall Street 8th Floor, Window 2 8th Floor, Window 2 New York, New York 10005 New York, New York 10005 Facsimile Transmissions: (Eligible Institutions Only) (212) 240-8938 To Confirm by Telephone or for Information Call: (212) 240-8801 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned acknowledges that he or she has received and reviewed the Prospectus dated , 1998 (the "Prospectus") of McKesson Corporation (the "Company") and this Letter of Transmittal (the "Letter of Transmittal"), which together constitute the Company's offer (the "Exchange Offer") to exchange an aggregate principal amount of up to $150,000,000 6.30% Exchange Notes due March 1, 2005 (the "Exchange Notes due 2005") for a like principal amount of the Company's outstanding 6.30% Notes due March 1, 2005 (the "Private Notes due 2005"). The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1998, unless the Company in its sole discretion, extends the Exchange Offer. The Company reserves the right to extend the Exchange Offer at its discretion, in which event the term "Expiration Date" shall mean the time and date when the Exchange Offer as so extended shall expire. The Company shall notify the holders of the Private Notes due 2005 of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Exchange Notes due 2005 will bear interest from the most recent date to which interest has been paid on the Private Notes due 2005 or, if no interest has been paid, from February 24, 1998. Accordingly, if the relevant record date for interest payment occurs after the consummation of the Exchange Offer, registered holders of Exchange Notes due 2005 on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. If, however, the relevant record date for interest payments occurs prior to the consummation of the Exchange Offer, registered holders of Private Notes due 2005 on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. Holders of Private Notes due 2005 whose Private Notes due 2005 are accepted for exchange will not receive any payment in respect of accrued interest on such Private Notes due 2005 otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Private Notes due 2005 being tendered for exchange. However, the Exchange Offer is subject to certain conditions. Please see the Prospectus under the section entitled "The Exchange Offers--Certain Conditions to the Exchange Offers." The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Private Notes due 2005 in any jurisdiction in which the making or acceptance of the Exchange Offer would not be in compliance with the laws of such jurisdiction. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. As used herein, the term "Holder" means a holder of Private Notes due 2005, including any participant ("DTC Participant") in the book-entry transfer facility system of The Depository Trust Company ("DTC") whose name appears on a security position listing as the owner of the Private Notes due 2005. As used herein, the term "Certificates" means physical certificates representing Private Notes due 2005. To participate in the Exchange Offer, Holders must tender by (a) book-entry transfer pursuant to the procedures set forth in the Prospectus under "The Exchange Offers--Procedures for Tendering Private Notes," or (b) forwarding Certificates herewith. Holders who are DTC Participants tendering by book- entry transfer must execute such tender through the Automated Tender Offer Program ("ATOP") of DTC. A Holder using ATOP should transmit its acceptance to DTC on or prior to the Expiration Date. DTC will verify such acceptance, execute a book-entry transfer of the tendered Private Notes due 2005 into the Exchange Agent's account at DTC and then send to the Exchange Agent confirmation of such book-entry transfer (a "Book-Entry Confirmation"), including an agent's message ("Agent's Message") confirming that DTC has received an express acknowledgement from such Holder that such Holder has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such Holder. The Book- Entry Confirmation must be received by the Exchange Agent in order for the tender relating thereto to be effective. Book-entry transfer to DTC in accordance with DTC's procedures does not constitute delivery of the Book- Entry Confirmation to the Exchange Agent. If the tender is not made through ATOP, Certificates, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date in order for such tender to be effective. Holders of Private Notes due 2005 who cannot complete the procedures for delivery by book-entry transfer of such Private Notes due 2005 on a timely basis or who cannot deliver their Certificates for such Private Notes due 2005 and all other required documents to the Exchange Agent on or prior to the Expiration Date, must, in order to participate in the Exchange Offer, tender their Private Notes due 2005 according to the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offers--Procedures for Tendering Private Notes due 2005." PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE FOLLOWING BOX 2 List below the Private Notes due 2005 to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of Private Notes due 2005 should be listed on a separate signed schedule affixed hereto. DESCRIPTION OF PRIVATE NOTES DUE 2005 (SEE INSTRUCTIONS 2, 3, AND 8)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) - ------------------------------------------------------------------------------------------------------- 1 2 3 - ------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT OF PRIVATE NOTES DUE 2005 AGGREGATE PRINCIPAL TENDERED(2) (MUST BE IN TITLE OF SECURITIES AND AMOUNT OF PRIVATE DENOMINATIONS OF $1,000 OR CERTIFICATE NUMBER(S)(1) NOTES DUE 2005 INTEGRAL MULTIPLES THEREOF) -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total
(1) Certificate numbers not required if Private Notes due 2005 are being tendered by book-entry transfer. (2) Unless otherwise indicated, a holder will be deemed to have tendered ALL of the Private Notes due 2005 represented in column 2. [_]CHECK HERE IF TENDERED PRIVATE NOTES DUE 2005 ARE BEING DELIVERED BY BOOK- ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution:_________________________________________________ Account Number:________________________________________________________________ Transaction Code Number:_______________________________________________________ 3 [_]CHECK HERE IF TENDERED PRIVATE NOTES DUE 2005 ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s):_______________________________________________ Window Ticket Number (if any):_________________________________________________ Date of Execution of Notice of Guaranteed Delivery:____________________________ If delivered by book-entry transfer, complete the following: Account Number:________________________________________________________________ Transaction Code Number:_______________________________________________________ [_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:__________________________________________________________________________ Address:_______________________________________________________________________ 4 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Private Notes due 2005 indicated above. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Subject to, and effective upon, the acceptance for exchange of the Private Notes due 2005 tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Private Notes due 2005 as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company) with respect to the tendered Private Notes due 2005 with full power of substitution to (i) deliver certificates for such Private Notes due 2005 to the Company and deliver all accompanying evidences of transfer and authenticity to, or upon the order of, the Company (ii) present such Private Notes due 2005 for transfer on the books of the Company and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of the beneficial ownership of such Private Notes due 2005, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Private Notes due 2005 tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned hereby further represents that (i) any Exchange Notes due 2005 acquired in exchange for Private Notes due 2005 tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes due 2005, whether or not such person is the undersigned, (ii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the "distribution" of such Exchange Notes due 2005 within the meaning of the Securities Act of 1933, as amended (the "Securities Act") and (iii) neither the holder nor any such other person is an "affiliate" of the Company as described in Rule 405 under the Securities Act. The undersigned also acknowledges that this Exchange Offer is being made in reliance on an interpretation by the staff of the Securities and Exchange Commission (the "Commission"), as set forth in no-action letters issued to third parties, that the Exchange Notes due 2005 issued in exchange for the Private Notes due 2005 pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than holders who are broker-dealers) without further compliance with the registration and prospectus delivery provisions of the Securities Act. However, the undersigned acknowledges that any purchaser of Private Notes due 2005 who is an affiliate of the Company within the meaning of Rule 405 under the Securities Act or who intends to participate in the Exchange Offer for the purpose of distributing the Exchange Notes, or any broker-dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act (i) will not be able to rely on the interpretations of the staff of the Commission set forth in the above-mentioned no-action letters, (ii) will not be entitled to tender its Private Notes due 2005 in the Exchange Offer and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes due 2005 unless such sale or transfer is made pursuant to an exemption from such requirements. The undersigned also acknowledges that the Company has not sought its own no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes due 2005. If the undersigned is a broker-dealer that 5 will receive Exchange Notes due 2005 for its own account in exchange for Private Notes due 2005, it represents that the Private Notes due 2005 to be exchanged for Exchange Notes due 2005 were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes due 2005; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment, transfer and sale of the Private Notes due 2005 tendered hereby. All authority conferred or agreed to be conferred in this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the instructions contained in this Letter of Transmittal. For the purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Private Notes due 2005 when, as and if the Company has given oral and written notice thereof to the Exchange Agent. If any tendered Private Notes due 2005 are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Private Notes due 2005 will be returned (or, in the case of Private Notes due 2005 tendered by book-entry transfer through DTC, will be promptly credited to an account maintained at DTC), without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under the "Special Delivery Instructions" as promptly as practicable after the Expiration Date. The undersigned understands that tenders of Private Notes due 2005 pursuant to the procedures described under the section entitled "The Exchange Offers-- Procedures for Tendering Private Notes" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the Exchange Notes due 2005 (and, if applicable, substitute certificates representing Private Notes due 2005 for any Private Notes due 2005 not exchanged) in the name(s) of the undersigned or, in the case of a book-entry delivery of Private Notes due 2005, please credit the account indicated above maintained at DTC. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, please send the Exchange Notes due 2005 (and, if applicable, substitute certificates representing Private Notes due 2005 for any Private Notes due 2005 not exchanged) to the undersigned at the address shown above in the box entitled "Description of Private Notes due 2005." In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes due 2005 issued in exchange for the Private Notes due 2005 accepted for exchange in the name(s) of, and return any certificates for Private Notes due 2005 not tendered or not exchanged to, the person(s) so indicated. The undersigned understands that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Private Notes due 2005 from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Private Notes due 2005 so tendered. THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF PRIVATE NOTES DUE 2005" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE PRIVATE NOTES DUE 2005 AS SET FORTH IN SUCH BOX ABOVE. 6 PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9) I hereby TENDER the Private Notes due 2005 described above in the box entitled "Description of Private Notes due 2005" pursuant to the terms of the Exchange Offer. X___________________________________ __________________________________, 1998 X___________________________________ __________________________________, 1998 X___________________________________ __________________________________, 1998 Signature(s) of Owner(s) Date If a holder is tendering any Private Notes due 2005, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Private Notes due 2005 or on a security position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 4. Name(s):________________________________________________________________________ (Please Type or Print) ________________________________________________________________________________ Capacity:_______________________________________________________________________ Address:________________________________________________________________________ ________________________________________________________________________________ (Include Zip Code) SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 4) Signature(s) Guaranteed by an Eligible Institution:_____________________________ (Authorized Signature) ________________________________________________________________________________ (Title) ________________________________________________________________________________ (Name of Firm) ________________________________________________________________________________ (Area Code and Telephone Number) Dated: _______________________, 1998 7 SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4 AND 5) (SEE INSTRUCTIONS 4 AND 5) To be completed ONLY if To be completed ONLY if certificates for Private Notes due certificates for Private Notes due 2005 not exchanged and/or Exchange 2005 not exchanged and/or Exchange Notes due 2005 are to be issued in Notes due 2005 are to be sent to the name of and sent to someone someone other than the person or other than the person or person(s) persons whose signature(s) whose signature(s) appear(s) on appear(s) on this Letter of this Letter of Transmittal above, Transmittal above or to such or if Private Notes due 2005 person or persons at an address delivered by book-entry transfer other than shown in the box which are not accepted for entitled "Description of Private exchange are to be returned by Notes due 2005" on this Letter of credit to an account maintained at Transmittal above. DTC other than the account indicated above. Issue Exchange Notes due 2005 Mail Exchange Notes due 2005 and/or Private Notes due 2005 to: and/or Private Notes due 2005 to: Name_______________________________ Name_______________________________ (Please Type or Print) (Please Type or Print) _______________________________ _______________________________ (Please Type or Print) (Please Type or Print) Address____________________________ Address____________________________ ____________________________ ____________________________ (Zip Code) (Zip Code) ___________________________________ Employer Identification or Social Security Number (Complete Substitute Form W-9) [_]Credit unexchanged Private Notes due 2005 delivered by book-entry transfer to the DTC account set forth below. ___________________________________ (DTC Account Number, if applicable) 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter to Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offers--Procedures for Tendering Private Notes" in the Prospectus and an Agent's Message is not delivered. Holders who are DTC Participants tendering by book-entry transfer must execute such tender through DTC's ATOP system. A holder using ATOP should transmit its acceptance to DTC on or prior to the Expiration Date. DTC will verify such acceptance, execute a book-entry transfer of the tendered Private Notes due 2005 into the Exchange Agent's account at DTC and then send to the Exchange Agent a Book-Entry Confirmation, including an Agent's Message confirming that DTC has received an express acknowledgement from such holder that such holder has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such holder. The Book-Entry Confirmation must be received by the Exchange Agent in order for the tender relating thereto to be effective. Book-entry transfer to DTC in accordance with DTC's procedure does not constitute delivery of the Book-Entry Confirmation to the Exchange Agent. Private Notes due 2005 tendered hereby must be in denominations of $1,000 and integral multiples thereof. If the tender is not made through ATOP, certificates representing Private Notes due 2005, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by the Prospectus and this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date in order for such tender to be effective. Holders who wish to tender their Private Notes due 2005 and (i) whose Private Notes due 2005 are not immediately available, or (ii) cannot deliver their Private Notes due 2005, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (iii) who cannot comply with the procedures for book-entry transfer on a timely basis must tender their Private Notes due 2005 according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made through an Eligible Institution (as defined below); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Company (by fax transmission, mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Private Notes due 2005 (except in the case of book-entry tenders) and the principal amount of Private Notes due 2005 tendered, stating that the tender is being made thereby and guaranteeing that, within three NYSE trading days after the Expiration Date, this Letter of Transmittal (or a copy hereof) together with the certificate(s) representing the Private Notes due 2005 (except in the case of book-entry tenders) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or a copy hereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Private Notes due 2005 in proper form for transfer or a Book-Entry Confirmation with respect to such Private Notes due 2005, must be received by the Exchange Agent within three NYSE trading days after the Expiration Date, all as provided in the Prospectus under the section entitled "The Exchange Offers--Guaranteed Delivery Procedures." Any holder who wishes to tender his Private Notes due 2005 pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to the Expiration Date. As used in this Letter of Transmittal, "Eligible Institution" shall mean a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States. All questions as to the validity, eligibility (including time of receipt), acceptance and withdrawal of tendered Private Notes due 2005 will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Private Notes due 2005 not 9 properly tendered or any Private Notes due 2005 the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Private Notes due 2005. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Private Notes due 2005 must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Private Notes due 2005, nor shall any of them incur any liability for failure to give such notification. Tenders of Private Notes due 2005 will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Private Notes due 2005 received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. See "The Exchange Offers" in the Prospectus. 2. TENDER BY HOLDER. Only a holder of Private Notes due 2005 may tender such Private Notes due 2005 in the Exchange Offer. Any beneficial owner whose Private Notes due 2005 are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on behalf of such beneficial owner. If such beneficial owner wishes to tender on such owner's own behalf; such owner must, prior to completing and executing this Letter of Transmittal and delivering such owner's Private Notes due 2005, either make appropriate arrangements to register ownership of the Private Notes due 2005 in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. 3. PARTIAL TENDERS AND WITHDRAWALS. Tenders of Private Notes due 2005 will be accepted only in denominations of $1,000 and integral multiples thereof. If less than all the Private Notes due 2005 are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Private Notes due 2005 to be tendered in the box above entitled "Description of Private Notes due 2005--Principal Amount of Private Notes due 2005 Tendered." A reissued certificate representing the balance of nontendered Private Notes due 2005 will be sent to such tendering holder (except in the case of book-entry tenders), unless otherwise provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. ALL OF THE PRIVATE NOTES DUE 2005 DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. Any holder who has tendered Private Notes due 2005 may withdraw the tender by delivering written notice of withdrawal to the Exchange Agent prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by telegram, facsimile transaction (receipt confirmed by telephone) or letter to the Exchange Agent at its address as set forth on the first page of this Letter of Transmittal on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person having tendered the Private Notes due 2005 to be withdrawn, identify the Private Notes due 2005 to be withdrawn (including the principal amount of such Private Notes due 2005), and (where certificates for Private Notes due 2005 have been transmitted) specify the name in which such Private Notes due 2005 are registered, if different from that of the withdrawing holder. If certificates for Private Notes due 2005 have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the certificate numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Private Notes due 2005 have been tendered pursuant to the procedure for book entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Private Notes due 2005 and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility 10 (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Private Notes due 2005 so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the Exchange Offer. Any Private Notes due 2005 which have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Private Notes due 2005 tendered by book-entry transfer into the Exchange Agent's account at DTC pursuant to the book-entry transfer procedures described above, such Private Notes due 2005 will be credited to an account maintained with DTC for the Private Notes due 2005) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Private Notes due 2005 may be retendered by following one of the procedures described herein at any time on or prior to the Expiration Date. See "The Exchange Offers--Withdrawal Rights" in the Prospectus. 4. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURE. If this Letter of Transmittal is signed by the registered holder of the Private Notes due 2005 tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates (if applicable) without any change whatsoever. If any tendered Private Notes due 2005 are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Private Notes due 2005 are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates. When this Letter of Transmittal is signed by the registered holder or holders of the Private Notes due 2005 specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Notes due 2005 to be issued, or any untendered Private Notes due 2005 are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. If this Letter of Transmittal is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder(s) appear(s) on the certificate(s). If this Letter of Transmittal or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. Endorsements on certificates for Private Notes due 2005 or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution which is a member of (a) the Securities Transfer Agents Medallion Program, (b) the New York Stock Exchange Medallion Signature Program or (c) the Stock Exchange Medallion Program. Signatures on this Letter of Transmittal need not be guaranteed by an Eligible Institution, provided the Private Notes due 2005 are tendered: (i) by a registered holder of such Private Notes due 2005 (which term, for purposes of the Exchange Offer, includes any participant in the DTC system whose name appears on a security position listing as the holder of such Private Notes due 2005) who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on this Letter of Transmittal; or (ii) for the account of an Eligible Institution. 11 5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Private Notes due 2005 should indicate in the applicable box the name and address in or to which Exchange Notes due 2005 issued pursuant to the Exchange Offer and/or substitute certificates evidencing Private Notes due 2005 not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Holders tendering Private Notes due 2005 by book-entry transfer may request that Private Notes due 2005 not exchanged be credited to such account maintained at the DTC as such holder may designate hereon. If no such instructions are given, such Private Notes due 2005 not exchanged will be returned to the name or address of the person signing this Letter of Transmittal. 6. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the transfer of Private Notes due 2005 to them or their order pursuant to the Exchange Offer. If however, Exchange Notes due 2005 and/or substitute Private Notes due 2005 not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Private Notes due 2005 tendered hereby, or if tendered Private Notes due 2005 are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer of Private Notes due 2005 to the Company or their order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence or payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Private Notes due 2005 specified in this Letter of Transmittal. 7. WAIVER OF CONDITION. Subject to the terms and conditions set forth in the Prospectus, the Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus. 8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Private Notes due 2005, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Private Notes due 2005 for exchange. Neither the Company nor any other person is obligated to give notice of defects or irregularities in any tender, nor shall any of them incur any liability for failure to give any such notice. 9. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES DUE 2005. Any holder whose Private Notes due 2005 have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING, AS WELL AS REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, MAY BE DIRECTED TO THE EXCHANGE AGENT, AT THE ADDRESS INDICATED ON THE FIRST PAGE OF THIS LETTER OF TRANSMITTAL OR BY TELEPHONE AT (212) 240-8801. 12 IMPORTANT TAX INFORMATION Under U.S. federal income tax laws, a registered holder of Private Notes due 2005 or Exchange Notes due 2005 is required to provide the Trustee (as payor) with such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such holder is an individual, the TIN is his social security number. If the Trustee is not provided with the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments made to such holder with respect to Private Notes due 2005 or Exchange Notes due 2005 may be subject to backup withholding. Certain holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Trustee a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. A Form W-8 can be obtained from the Trustee. If backup withholding applies, the Trustee is required to withhold 31% of any payments made to the holder or other payee. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made with respect to Private Notes due 2005 or Exchange Notes due 2005, the holder is required to provide the Trustee with: (i) the holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that (A) such holder is exempt from backup withholding, (B) the holder has not been notified by the Internal Revenue Service that the holder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the Internal Revenue Service has notified the holder that the holder is no longer subject to backup withholding; and (ii) if applicable, an adequate basis for exemption. 13 TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE "IMPORTANT TAX INFORMATION" ABOVE) PAYER'S NAME: THE FIRST NATIONAL BANK OF CHICAGO PART 1--PLEASE PROVIDE YOUR TIN:__________________ TIN IN THE BOX AT RIGHT AND Social Security CERTIFY BY SIGNING AND Number or SUBSTITUTE DATING BELOW. Employee Identification Number -------------------------------------------------------- FORM W-9 PART 2--CERTIFICATION--Under PART 3 penalties of perjury, I certify that: DEPARTMENT OF THE (1) The number shown on this form Awaiting TIN [_] TREASURY is my correct Taxpayer INTERNAL REVENUE Identification Number (or I am SERVICE waiting for a number to be issued to me) and PAYER'S REQUEST FOR (2) I am not subject to backup TAXPAYER withholding because (i) I am IDENTIFICATION exempt from backup NUMBER (TIN) withholding, (ii) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. -------------------------------------------------------- Certificate Instructions--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out such item (2). SIGNATURE ___________________________________________ DATE_________________________________________________ NAME_________________________________________________ (Please Print) NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 14 YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the Notes due 2005 shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number. ----------------------------------- ----------------------------------- Signature(s) Date IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF (TOGETHER WITH THE CERTIFICATES FOR PRIVATE NOTES DUE 2005 (IF APPLICABLE) AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. 15 EX-99.2 10 FORM OF LETTER OF TRANSMITTAL FOR 6.40% EXHIBIT 99.2 LETTER OF TRANSMITTAL McKESSON CORPORATION OFFER TO EXCHANGE ITS 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OF ITS OUTSTANDING 6.40% NOTES DUE MARCH 1, 2008 PURSUANT TO THE PROSPECTUS DATED , 1998 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. TENDERED SECURITIES MAY BE WITHDRAWN AT ANY TIME ON OR PRIOR TO THE EXPIRATION DATE OF THE EXCHANGE OFFER Delivery To: The First National Bank of Chicago (the "Exchange Agent") By Mail: By Hand or Overnight Delivery: (Registered or Certified Mail recommended) The First National Bank of Chicago The First National Bank of Chicago c/o First Chicago Trust c/o First Chicago Trust Company of New York Company of New York 14 Wall Street 14 Wall Street 8th Floor, Window 2 8th Floor, Window 2 New York, New York 10005 New York, New York 10005 Facsimile Transmissions: (Eligible Institutions Only) (212) 240-8938 To Confirm by Telephone or for Information Call: (212) 240-8801 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned acknowledges that he or she has received and reviewed the Prospectus dated , 1998 (the "Prospectus") of McKesson Corporation (the "Company") and this Letter of Transmittal (the "Letter of Transmittal"), which together constitute the Company's offer (the "Exchange Offer") to exchange an aggregate principal amount of up to $150,000,000 6.40% Exchange Notes due March 1, 2008 (the "Exchange Notes due 2008") for a like principal amount of the Company's outstanding 6.40% Notes due March 1, 2008 (the "Private Notes due 2008"). The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1998, unless the Company in its sole discretion, extends the Exchange Offer. The Company reserves the right to extend the Exchange Offer at its discretion, in which event the term "Expiration Date" shall mean the time and date when the Exchange Offer as so extended shall expire. The Company shall notify the holders of the Private Notes due 2008 of any extension by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. The Exchange Notes due 2008 will bear interest from the most recent date to which interest has been paid on the Private Notes due 2008 or, if no interest has been paid, from February 24, 1998. Accordingly, if the relevant record date for interest payment occurs after the consummation of the Exchange Offer, registered holders of Exchange Notes due 2008 on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. If, however, the relevant record date for interest payments occurs prior to the consummation of the Exchange Offer, registered holders of Private Notes due 2008 on such record date will receive interest accruing from the most recent date to which interest has been paid or, if no interest has been paid, from February 24, 1998. Holders of Private Notes due 2008 whose Private Notes due 2008 are accepted for exchange will not receive any payment in respect of accrued interest on such Private Notes due 2008 otherwise payable on any interest payment date the record date for which occurs on or after consummation of the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Private Notes due 2008 being tendered for exchange. However, the Exchange Offer is subject to certain conditions. Please see the Prospectus under the section entitled "The Exchange Offers--Certain Conditions to the Exchange Offers." The Exchange Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Private Notes due 2008 in any jurisdiction in which the making or acceptance of the Exchange Offer would not be in compliance with the laws of such jurisdiction. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. As used herein, the term "Holder" means a holder of Private Notes due 2008, including any participant ("DTC Participant") in the book-entry transfer facility system of The Depository Trust Company ("DTC") whose name appears on a security position listing as the owner of the Private Notes due 2008. As used herein, the term "Certificates" means physical certificates representing Private Notes due 2008. To participate in the Exchange Offer, Holders must tender by (a) book-entry transfer pursuant to the procedures set forth in the Prospectus under "The Exchange Offers--Procedures for Tendering Private Notes," or (b) forwarding Certificates herewith. Holders who are DTC Participants tendering by book- entry transfer must execute such tender through the Automated Tender Offer Program ("ATOP") of DTC. A Holder using ATOP should transmit its acceptance to DTC on or prior to the Expiration Date. DTC will verify such acceptance, execute a book-entry transfer of the tendered Private Notes due 2008 into the Exchange Agent's account at DTC and then send to the Exchange Agent confirmation of such book-entry transfer (a "Book-Entry Confirmation"), including an agent's message ("Agent's Message") confirming that DTC has received an express acknowledgement from such Holder that such Holder has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such Holder. The Book- Entry Confirmation must be received by the Exchange Agent in order for the tender relating thereto to be effective. Book-entry transfer to DTC in accordance with DTC's procedures does not constitute delivery of the Book- Entry Confirmation to the Exchange Agent. If the tender is not made through ATOP, Certificates, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date in order for such tender to be effective. Holders of Private Notes due 2008 who cannot complete the procedures for delivery by book-entry transfer of such Private Notes due 2008 on a timely basis or who cannot deliver their Certificates for such Private Notes due 2008 and all other required documents to the Exchange Agent on or prior to the Expiration Date, must, in order to participate in the Exchange Offer, tender their Private Notes due 2008 according to the guaranteed delivery procedures set forth in the Prospectus under "The Exchange Offers--Procedures for Tendering Private Notes due 2008." PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING THE FOLLOWING BOX 2 List below the Private Notes due 2008 to which this Letter of Transmittal relates. If the space provided below is inadequate, the certificate numbers and principal amount of Private Notes due 2008 should be listed on a separate signed schedule affixed hereto. DESCRIPTION OF PRIVATE NOTES DUE 2008 (SEE INSTRUCTIONS 2, 3, AND 8)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY) - ------------------------------------------------------------------------------------------------------- 1 2 3 - ------------------------------------------------------------------------------------------------------- PRINCIPAL AMOUNT OF PRIVATE NOTES DUE 2008 AGGREGATE PRINCIPAL TENDERED(2) (MUST BE IN TITLE OF SECURITIES AND AMOUNT OF PRIVATE DENOMINATIONS OF $1,000 OR CERTIFICATE NUMBER(S)(1) NOTES DUE 2008 INTEGRAL MULTIPLES THEREOF) -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- -------------------------------------------------------------------------- Total
(1) Certificate numbers not required if Private Notes due 2008 are being tendered by book-entry transfer. (2) Unless otherwise indicated, a holder will be deemed to have tendered ALL of the Private Notes due 2008 represented in column 2. [_]CHECK HERE IF TENDERED PRIVATE NOTES DUE 2008 ARE BEING DELIVERED BY BOOK- ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution:_________________________________________________ Account Number:________________________________________________________________ Transaction Code Number:_______________________________________________________ 3 [_]CHECK HERE IF TENDERED PRIVATE NOTES DUE 2008 ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s):_______________________________________________ Window Ticket Number (if any):_________________________________________________ Date of Execution of Notice of Guaranteed Delivery:____________________________ If delivered by book-entry transfer, complete the following: Account Number:________________________________________________________________ Transaction Code Number:_______________________________________________________ [_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:__________________________________________________________________________ Address:_______________________________________________________________________ 4 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY LADIES AND GENTLEMEN: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the aggregate principal amount of Private Notes due 2008 indicated above. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Subject to, and effective upon, the acceptance for exchange of the Private Notes due 2008 tendered hereby, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Private Notes due 2008 as are being tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent its agent and attorney-in-fact (with full knowledge that the Exchange Agent also acts as the agent of the Company) with respect to the tendered Private Notes due 2008 with full power of substitution to (i) deliver certificates for such Private Notes due 2008 to the Company and deliver all accompanying evidences of transfer and authenticity to, or upon the order of, the Company (ii) present such Private Notes due 2008 for transfer on the books of the Company and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of the beneficial ownership of such Private Notes due 2008, all in accordance with the terms of the Exchange Offer. The power of attorney granted in this paragraph shall be deemed to be irrevocable and coupled with an interest. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Private Notes due 2008 tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim when the same are accepted by the Company. The undersigned hereby further represents that (i) any Exchange Notes due 2008 acquired in exchange for Private Notes due 2008 tendered hereby will have been acquired in the ordinary course of business of the person receiving such Exchange Notes due 2008, whether or not such person is the undersigned, (ii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the "distribution" of such Exchange Notes due 2008 within the meaning of the Securities Act of 1933, as amended (the "Securities Act") and (iii) neither the holder nor any such other person is an "affiliate" of the Company as described in Rule 405 under the Securities Act. The undersigned also acknowledges that this Exchange Offer is being made in reliance on an interpretation by the staff of the Securities and Exchange Commission (the "Commission"), as set forth in no-action letters issued to third parties, that the Exchange Notes due 2008 issued in exchange for the Private Notes due 2008 pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than holders who are broker-dealers) without further compliance with the registration and prospectus delivery provisions of the Securities Act. However, the undersigned acknowledges that any purchaser of Private Notes due 2008 who is an affiliate of the Company within the meaning of Rule 405 under the Securities Act or who intends to participate in the Exchange Offer for the purpose of distributing the Exchange Notes, or any broker-dealer who purchased the Private Notes from the Company to resell pursuant to Rule 144A under the Securities Act or any other available exemption under the Securities Act (i) will not be able to rely on the interpretations of the staff of the Commission set forth in the above-mentioned no-action letters, (ii) will not be entitled to tender its Private Notes due 2008 in the Exchange Offer and (iii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or transfer of the Private Notes due 2008 unless such sale or transfer is made pursuant to an exemption from such requirements. The undersigned also acknowledges that the Company has not sought its own no-action letter and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of the Exchange Notes due 2008. If the undersigned is a broker-dealer that 5 will receive Exchange Notes due 2008 for its own account in exchange for Private Notes due 2008, it represents that the Private Notes due 2008 to be exchanged for Exchange Notes due 2008 were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes due 2008; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the assignment, transfer and sale of the Private Notes due 2008 tendered hereby. All authority conferred or agreed to be conferred in this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. This tender may be withdrawn only in accordance with the procedures set forth in the instructions contained in this Letter of Transmittal. For the purposes of the Exchange Offer, the Company shall be deemed to have accepted validly tendered Private Notes due 2008 when, as and if the Company has given oral and written notice thereof to the Exchange Agent. If any tendered Private Notes due 2008 are not accepted for exchange pursuant to the Exchange Offer for any reason, certificates for any such unaccepted Private Notes due 2008 will be returned (or, in the case of Private Notes due 2008 tendered by book-entry transfer through DTC, will be promptly credited to an account maintained at DTC), without expense, to the undersigned at the address shown below or at a different address as may be indicated herein under the "Special Delivery Instructions" as promptly as practicable after the Expiration Date. The undersigned understands that tenders of Private Notes due 2008 pursuant to the procedures described under the section entitled "The Exchange Offers-- Procedures for Tendering Private Notes" in the Prospectus and in the instructions hereto will constitute a binding agreement between the undersigned and the Company upon the terms and subject to the conditions of the Exchange Offer. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions" below, please deliver the Exchange Notes due 2008 (and, if applicable, substitute certificates representing Private Notes due 2008 for any Private Notes due 2008 not exchanged) in the name(s) of the undersigned or, in the case of a book-entry delivery of Private Notes due 2008, please credit the account indicated above maintained at DTC. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, please send the Exchange Notes due 2008 (and, if applicable, substitute certificates representing Private Notes due 2008 for any Private Notes due 2008 not exchanged) to the undersigned at the address shown above in the box entitled "Description of Private Notes due 2008." In the event that both "Special Issuance Instructions" and "Special Delivery Instructions" are completed, please issue the certificates representing the Exchange Notes due 2008 issued in exchange for the Private Notes due 2008 accepted for exchange in the name(s) of, and return any certificates for Private Notes due 2008 not tendered or not exchanged to, the person(s) so indicated. The undersigned understands that the Company has no obligation pursuant to the "Special Issuance Instructions" and "Special Delivery Instructions" to transfer any Private Notes due 2008 from the name of the registered holder(s) thereof if the Company does not accept for exchange any of the Private Notes due 2008 so tendered. THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF PRIVATE NOTES DUE 2008" ABOVE AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE PRIVATE NOTES DUE 2008 AS SET FORTH IN SUCH BOX ABOVE. 6 PLEASE SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) (COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9) I hereby TENDER the Private Notes due 2008 described above in the box entitled "Description of Private Notes due 2008" pursuant to the terms of the Exchange Offer. X___________________________________ __________________________________, 1998 X___________________________________ __________________________________, 1998 X___________________________________ __________________________________, 1998 Signature(s) of Owner(s) Date If a holder is tendering any Private Notes due 2008, this Letter of Transmittal must be signed by the registered holder(s) as the name(s) appear(s) on the certificate(s) for the Private Notes due 2008 or on a security position listing or by any person(s) authorized to become registered holder(s) by endorsements and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, officer or other person acting in a fiduciary or representative capacity, please set forth full title. See Instruction 4. Name(s):________________________________________________________________________ (Please Type or Print) ________________________________________________________________________________ Capacity:_______________________________________________________________________ Address:________________________________________________________________________ ________________________________________________________________________________ (Include Zip Code) SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 4) Signature(s) Guaranteed by an Eligible Institution:_____________________________ (Authorized Signature) ________________________________________________________________________________ (Title) ________________________________________________________________________________ (Name of Firm) ________________________________________________________________________________ (Area Code and Telephone Number) Dated: _______________________, 1998 7 SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 4 AND 5) (SEE INSTRUCTIONS 4 AND 5) To be completed ONLY if To be completed ONLY if certificates for Private Notes due certificates for Private Notes due 2008 not exchanged and/or Exchange 2008 not exchanged and/or Exchange Notes due 2008 are to be issued in Notes due 2008 are to be sent to the name of and sent to someone someone other than the person or other than the person or person(s) persons whose signature(s) whose signature(s) appear(s) on appear(s) on this Letter of this Letter of Transmittal above, Transmittal above or to such or if Private Notes due 2008 person or persons at an address delivered by book-entry transfer other than shown in the box which are not accepted for entitled "Description of Private exchange are to be returned by Notes due 2008" on this Letter of credit to an account maintained at Transmittal above. DTC other than the account indicated above. Issue Exchange Notes due 2008 Mail Exchange Notes due 2008 and/or Private Notes due 2008 to: and/or Private Notes due 2008 to: Name_______________________________ Name_______________________________ (Please Type or Print) (Please Type or Print) _______________________________ _______________________________ (Please Type or Print) (Please Type or Print) Address____________________________ Address____________________________ ____________________________ ____________________________ (Zip Code) (Zip Code) ___________________________________ Employer Identification or Social Security Number (Complete Substitute Form W-9) [_]Credit unexchanged Private Notes due 2008 delivered by book-entry transfer to the DTC account set forth below. ___________________________________ (DTC Account Number, if applicable) 8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter to Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offers--Procedures for Tendering Private Notes" in the Prospectus and an Agent's Message is not delivered. Holders who are DTC Participants tendering by book-entry transfer must execute such tender through DTC's ATOP system. A holder using ATOP should transmit its acceptance to DTC on or prior to the Expiration Date. DTC will verify such acceptance, execute a book-entry transfer of the tendered Private Notes due 2008 into the Exchange Agent's account at DTC and then send to the Exchange Agent a Book-Entry Confirmation, including an Agent's Message confirming that DTC has received an express acknowledgement from such holder that such holder has received and agrees to be bound by this Letter of Transmittal and that the Company may enforce this Letter of Transmittal against such holder. The Book-Entry Confirmation must be received by the Exchange Agent in order for the tender relating thereto to be effective. Book-entry transfer to DTC in accordance with DTC's procedure does not constitute delivery of the Book-Entry Confirmation to the Exchange Agent. Private Notes due 2008 tendered hereby must be in denominations of $1,000 and integral multiples thereof. If the tender is not made through ATOP, certificates representing Private Notes due 2008, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by the Prospectus and this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein on or prior to the Expiration Date in order for such tender to be effective. Holders who wish to tender their Private Notes due 2008 and (i) whose Private Notes due 2008 are not immediately available, or (ii) cannot deliver their Private Notes due 2008, this Letter of Transmittal or any other documents required hereby to the Exchange Agent prior to the Expiration Date or (iii) who cannot comply with the procedures for book-entry transfer on a timely basis must tender their Private Notes due 2008 according to the guaranteed delivery procedures set forth in the Prospectus. Pursuant to such procedures: (i) such tender must be made through an Eligible Institution (as defined below); (ii) prior to the Expiration Date, the Exchange Agent must have received from the Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Company (by fax transmission, mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Private Notes due 2008 (except in the case of book-entry tenders) and the principal amount of Private Notes due 2008 tendered, stating that the tender is being made thereby and guaranteeing that, within three NYSE trading days after the Expiration Date, this Letter of Transmittal (or a copy hereof) together with the certificate(s) representing the Private Notes due 2008 (except in the case of book-entry tenders) and any other required documents will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or a copy hereof), as well as all other documents required by this Letter of Transmittal and the certificate(s) representing all tendered Private Notes due 2008 in proper form for transfer or a Book-Entry Confirmation with respect to such Private Notes due 2008, must be received by the Exchange Agent within three NYSE trading days after the Expiration Date, all as provided in the Prospectus under the section entitled "The Exchange Offers--Guaranteed Delivery Procedures." Any holder who wishes to tender his Private Notes due 2008 pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery prior to the Expiration Date. As used in this Letter of Transmittal, "Eligible Institution" shall mean a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States. All questions as to the validity, eligibility (including time of receipt), acceptance and withdrawal of tendered Private Notes due 2008 will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Private Notes due 2008 not 9 properly tendered or any Private Notes due 2008 the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Private Notes due 2008. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) shall be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Private Notes due 2008 must be cured within such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Private Notes due 2008, nor shall any of them incur any liability for failure to give such notification. Tenders of Private Notes due 2008 will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Private Notes due 2008 received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. See "The Exchange Offers" in the Prospectus. 2. TENDER BY HOLDER. Only a holder of Private Notes due 2008 may tender such Private Notes due 2008 in the Exchange Offer. Any beneficial owner whose Private Notes due 2008 are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on behalf of such beneficial owner. If such beneficial owner wishes to tender on such owner's own behalf; such owner must, prior to completing and executing this Letter of Transmittal and delivering such owner's Private Notes due 2008, either make appropriate arrangements to register ownership of the Private Notes due 2008 in such owner's name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time. 3. PARTIAL TENDERS AND WITHDRAWALS. Tenders of Private Notes due 2008 will be accepted only in denominations of $1,000 and integral multiples thereof. If less than all the Private Notes due 2008 are to be tendered, the tendering holder(s) should fill in the aggregate principal amount of Private Notes due 2008 to be tendered in the box above entitled "Description of Private Notes due 2008--Principal Amount of Private Notes due 2008 Tendered." A reissued certificate representing the balance of nontendered Private Notes due 2008 will be sent to such tendering holder (except in the case of book-entry tenders), unless otherwise provided in the appropriate box on this Letter of Transmittal, promptly after the Expiration Date. ALL OF THE PRIVATE NOTES DUE 2008 DELIVERED TO THE EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED. Any holder who has tendered Private Notes due 2008 may withdraw the tender by delivering written notice of withdrawal to the Exchange Agent prior to the Expiration Date. For a withdrawal to be effective, a written notice of withdrawal must be received by telegram, facsimile transaction (receipt confirmed by telephone) or letter to the Exchange Agent at its address as set forth on the first page of this Letter of Transmittal on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person having tendered the Private Notes due 2008 to be withdrawn, identify the Private Notes due 2008 to be withdrawn (including the principal amount of such Private Notes due 2008), and (where certificates for Private Notes due 2008 have been transmitted) specify the name in which such Private Notes due 2008 are registered, if different from that of the withdrawing holder. If certificates for Private Notes due 2008 have been delivered or otherwise identified to the Exchange Agent, then, prior to the release of such certificates the withdrawing holder must also submit the certificate numbers of the particular certificates to be withdrawn and signed notice of withdrawal with signatures guaranteed by an Eligible Institution unless such holder is an Eligible Institution. If Private Notes due 2008 have been tendered pursuant to the procedure for book entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn Private Notes due 2008 and otherwise comply with the procedures of such facility. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Private Notes due 2008 so withdrawn will be deemed not to have been 10 validly tendered for exchange for purposes of the Exchange Offer. Any Private Notes due 2008 which have been tendered for exchange but which are not exchanged for any reason will be returned to the Holder thereof without cost to such Holder (or, in the case of Private Notes due 2008 tendered by book- entry transfer into the Exchange Agent's account at DTC pursuant to the book- entry transfer procedures described above, such Private Notes due 2008 will be credited to an account maintained with DTC for the Private Notes due 2008) as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Private Notes due 2008 may be retendered by following one of the procedures describe herein at any time on or prior to the Expiration Date. See "The Exchange Offers--Withdrawal Rights" in the Prospectus. 4. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURE. If this Letter of Transmittal is signed by the registered holder of the Private Notes due 2008 tendered hereby, the signature must correspond exactly with the name as written on the face of the certificates (if applicable) without any change whatsoever. If any tendered Private Notes due 2008 are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Private Notes due 2008 are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates. When this Letter of Transmittal is signed by the registered holder or holders of the Private Notes due 2008 specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required. If, however, the Exchange Notes due 2008 to be issued, or any untendered Private Notes due 2008 are to be reissued, to a person other than the registered holder, then endorsements of any certificates transmitted hereby or separate bond powers are required. If this Letter of Transmittal is signed by a person other than the registered holder or holders of any certificate(s) specified herein, such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name or names of the registered holder(s) appear(s) on the certificate(s). If this Letter of Transmittal or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority to so act must be submitted. Endorsements on certificates for Private Notes due 2008 or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution which is a member of (a) the Securities Transfer Agents Medallion Program, (b) the New York Stock Exchange Medallion Signature Program or (c) the Stock Exchange Medallion Program. Signatures on this Letter of Transmittal need not be guaranteed by an Eligible Institution, provided the Private Notes due 2008 are tendered: (i) by a registered holder of such Private Notes due 2008 (which term, for purposes of the Exchange Offer, includes any participant in the DTC system whose name appears on a security position listing as the holder of such Private Notes due 2008) who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on this Letter of Transmittal; or (ii) for the account of an Eligible Institution. 5. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders of Private Notes due 2008 should indicate in the applicable box the name and address in or to which Exchange Notes due 2008 issued pursuant to the Exchange Offer and/or substitute certificates 11 evidencing Private Notes due 2008 not exchanged are to be issued or sent, if different from the name or address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. Holders tendering Private Notes due 2008 by book-entry transfer may request that Private Notes due 2008 not exchanged be credited to such account maintained at the DTC as such holder may designate hereon. If no such instructions are given, such Private Notes due 2008 not exchanged will be returned to the name or address of the person signing this Letter of Transmittal. 6. TRANSFER TAXES. The Company will pay all transfer taxes, if any, applicable to the transfer of Private Notes due 2008 to them or their order pursuant to the Exchange Offer. If however, Exchange Notes due 2008 and/or substitute Private Notes due 2008 not exchanged are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Private Notes due 2008 tendered hereby, or if tendered Private Notes due 2008 are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the transfer of Private Notes due 2008 to the Company or their order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence or payment of such taxes or exemption therefrom is not submitted herewith, the amount of such transfer taxes will be billed directly to such tendering holder. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Private Notes due 2008 specified in this Letter of Transmittal. 7. WAIVER OF CONDITION. Subject to the terms and conditions set forth in the Prospectus, the Company reserves the absolute right to waive satisfaction of any or all conditions enumerated in the Prospectus. 8. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Private Notes due 2008, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of their Private Notes due 2008 for exchange. Neither the Company nor any other person is obligated to give notice of defects or irregularities in any tender, nor shall any of them incur any liability for failure to give any such notice. 9. MUTILATED, LOST, STOLEN OR DESTROYED PRIVATE NOTES DUE 2008. Any holder whose Private Notes due 2008 have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING, AS WELL AS REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL, MAY BE DIRECTED TO THE EXCHANGE AGENT, AT THE ADDRESS INDICATED ON THE FIRST PAGE OF THIS LETTER OF TRANSMITTAL OR BY TELEPHONE AT (212) 240-8801. 12 IMPORTANT TAX INFORMATION Under U.S. federal income tax laws, a registered holder of Private Notes due 2008 or Exchange Notes due 2008 is required to provide the Trustee (as payor) with such holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9 below or otherwise establish a basis for exemption from backup withholding. If such holder is an individual, the TIN is his social security number. If the Trustee is not provided with the correct TIN, a $50 penalty may be imposed by the Internal Revenue Service, and payments made to such holder with respect to Private Notes due 2008 or Exchange Notes due 2008 may be subject to backup withholding. Certain holders (including, among others, all corporations and certain foreign persons) are not subject to these backup withholding and reporting requirements. Exempt holders should indicate their exempt status on Substitute Form W-9. A foreign person may qualify as an exempt recipient by submitting to the Trustee a properly completed Internal Revenue Service Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. A Form W-8 may be obtained from the Trustee. If backup withholding applies, the Trustee is required to withhold 31% of any payments made to the holder or other payee. Backup withholding is not an additional U.S. federal income tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments made with respect to Private Notes due 2008 or Exchange Notes due 2008, the holder is required to provide the Trustee with: (i) the holder's correct TIN by completing the form below, certifying that the TIN provided on Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that (A) such holder is exempt from backup withholding, (B) the holder has not been notified by the Internal Revenue Service that the holder is subject to backup withholding as a result of failure to report all interest or dividends or (C) the Internal Revenue Service has notified the holder that the holder is no longer subject to backup withholding; and (ii) if applicable, an adequate basis for exemption. 13 TO BE COMPLETED BY ALL TENDERING HOLDERS (SEE "IMPORTANT TAX INFORMATION" ABOVE) PAYER'S NAME: THE FIRST NATIONAL BANK OF CHICAGO PART 1--PLEASE PROVIDE YOUR TIN:__________________ TIN IN THE BOX AT RIGHT AND Social Security CERTIFY BY SIGNING AND Number or SUBSTITUTE DATING BELOW. Employee Identification Number -------------------------------------------------------- FORM W-9 PART 2--CERTIFICATION--Under PART 3 penalties of perjury, I certify that: DEPARTMENT OF THE (1) The number shown on this form Awaiting TIN [_] TREASURY is my correct Taxpayer INTERNAL REVENUE Identification Number (or I am SERVICE waiting for a number to be issued to me) and PAYER'S REQUEST FOR (2) I am not subject to backup TAXPAYER withholding because (i) I am IDENTIFICATION exempt from backup NUMBER (TIN) withholding, (ii) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. -------------------------------------------------------- Certificate Instructions--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS stating that you are no longer subject to backup withholding, do not cross out such item (2). SIGNATURE ___________________________________________ DATE_________________________________________________ NAME_________________________________________________ (Please Print) NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 14 YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the Notes due 2008 shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number. ----------------------------------- ----------------------------------- Signature(s) Date IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF (TOGETHER WITH THE CERTIFICATES FOR PRIVATE NOTES DUE 2008 (IF APPLICABLE) AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. 15 EX-99.3 11 FORM OF NOTICE OF GUARANTEED DELIVERY Exhibit 99.3 NOTICE OF GUARANTEED DELIVERY FOR McKESSON CORPORATION This form or one substantially equivalent hereto must be used to accept the Exchange Offers of McKesson Corporation (the "Company") made pursuant to the Prospectus, dated , 1998 (the "Prospectus"), if certificates for the outstanding 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 of the Company (the "Private Notes") are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach The First National Bank of Chicago (the "Exchange Agent") prior to 5:00 p.m., New York City time, on the Expiration Date of the applicable Exchange Offer. Such form may be delivered or transmitted by telegram, telex, facsimile transmission, mail or hand delivery to the Exchange Agent as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender Private Notes pursuant to the Exchange Offers, completed, signed and dated applicable Letters of Transmittal (or facsimiles thereof) must also be received by the Exchange Agent prior to 5:00 p.m., New York City time, on the applicable Expiration Date. Capitalized terms not defined herein are used as defined in the Prospectus. Delivery To: The First National Bank of Chicago, Exchange Agent By Mail: By Hand or Overnight Delivery: (Registered or Certified Mail recommended) The First National Bank of Chicago The First National Bank of Chicago c/o First Chicago Trust c/o First Chicago Trust Company of New York Company of New York 14 Wall Street 14 Wall Street 8th Floor, Window 2 8th Floor, Window 2 New York, New York 10005 New York, New York 10005 Facsimile Transmissions: (Eligible Institutions Only) (212) 240-8938 To Confirm by Telephone or for Information Call: (212) 240-8801 DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON SUCH LETTER OF TRANSMITTAL. Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus and the accompanying Letters of Transmittal, the undersigned hereby tenders to the Company the principal amount of Private Notes set forth below, pursuant to the guaranteed delivery procedure described in "The Exchange Offers--Guaranteed Delivery Procedures" section of the Prospectus. Principal Amount of 6.30% Notes due March 1, 2005 Tendered:* $ ___________________________________ If 6.30% Notes due March 1, 2005 _____________________________________ will be delivered by book-entry Certificate Nos. (if available) transfer to The Depository Trust Company, provide account number. Total Principal Amount Represented by Certificate(s) for 6.30% Notes due March 1, 2005 : Account Number: _____________________ If 6.40% Notes due March 1, 2008 $ ___________________________________ will be delivered by book-entry transfer to The Depository Trust Company, provide account number Principal Amount of 6.40% Notes due March 1, 2008 Tendered: Account Number: _____________________ $ ___________________________________ _____________________________________ Certificate Nos. (if available) Total Principal Amount Represented by Certificate(s) for 6.40% Notes due March 1, 2008: - -------- * Must be denominations of principal amount of $1,000 and any integral multiple thereof. - ------------------------------------------------------------------------------- ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED. - ------------------------------------------------------------------------------- PLEASE SIGN HERE X ___________________________________ ____________ X ___________________________________ ____________ Signature(s) of Owner(s) Date or Authorized Signatory Area Code and Telephone Number: ______________ This Notice of Guaranteed Delivery must be signed by the holder(s) of Private Notes as their name(s) appear(s) on certificates for Private Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ Capacity: __________________________________________________________________ Address(es): __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a registered national securities exchange, or a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office or correspondent in the United States, hereby guarantees that the certificates representing the principal amount of Private Notes tendered hereby in proper form for transfer, or timely confirmation of the book-entry transfer of such Private Notes into the Exchange Agent's account at The Depository Trust Company pursuant to the procedures set forth in "The Exchange Offers--Guaranteed Delivery Procedures" section of the Prospectus, together with properly completed and duly executed Letters of Transmittal (or a manually signed facsimile thereof) with any required signature guarantee and any other documents required by the Letters of Transmittal, will be received by the Exchange Agent at the address set forth above, no later than three New York Stock Exchange trading days after the date of execution hereof. _____________________________________ ___________________________________ Name of Firm Authorized Signature _____________________________________ ___________________________________ Address Title _____________________________________ Name: _____________________________ Zip Code (Please Type or Print) Area Code and Tel. No. ______________ Dated: ____________________________ NOTE: DO NOT SEND CERTIFICATES FOR PRIVATE NOTES WITH THIS FORM. CERTIFICATES FOR PRIVATE NOTES SHOULD ONLY BE SENT WITH YOUR LETTERS OF TRANSMITTAL. EX-99.4 12 FORM OF LETTER TO BROKERS, DEALERS EXHIBIT 99.4 McKESSON CORPORATION OFFERS FOR ALL OUTSTANDING 6.30% NOTES DUE MARCH 1, 2005 AND 6.40% NOTES DUE MARCH 1, 2008 IN EXCHANGE FOR 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 AND 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 TO:BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES AND OTHER NOMINEES: McKesson Corporation (the "Company") is offering, upon and subject to the terms and conditions set forth in the Prospectus, dated , 1998 (the "Prospectus"), and the enclosed Letters of Transmittal (the "Letters of Transmittal"), to exchange (the "Exchange Offers") its 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange Notes due March 1, 2008, which have been registered under the Securities Act of 1933, as amended (the "Exchange Notes"), for its outstanding 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (the "Private Notes"), respectively. The Exchange Offers are being made in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement dated February 24, 1998, by and among the Company and the initial purchasers referred to therein. We are requesting that you contact your clients for whom you hold Private Notes regarding the Exchange Offers. For your information and for forwarding to your clients for whom you hold Private Notes registered in your name or in the name of your nominee, or who hold Private Notes registered in their own names, we are enclosing the following documents: 1. Prospectus dated , 1998; 2. Each of the three Letters of Transmittal for your use and for the information of your clients; 3. A Notice of Guaranteed Delivery to be used to accept the Exchange Offers if certificates for Private Notes are not immediately available or time will not permit all required documents to reach the Exchange Agent prior to the applicable Expiration Date (as defined below) or if the procedure for book-entry transfer cannot be completed on a timely basis; 4. A form of letter which may be sent to your clients for whose account you hold Private Notes registered in your name or the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Exchange Offers; 5. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelopes addressed to The First National Bank of Chicago, the Exchange Agent for the Private Notes. YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFERS WILL EXPIRE AT 5:00 P.M, NEW YORK CITY TIME, ON , 1998, UNLESS ANY OF THE EXCHANGE OFFERS ARE EXTENDED BY THE COMPANY (THE "EXPIRATION DATES"). PRIVATE NOTES TENDERED PURSUANT TO THE EXCHANGE OFFERS MAY BE WITHDRAWN AT ANY TIME BEFORE THE APPLICABLE EXPIRATION DATE. To participate in the Exchange Offers, your clients must tender by having you execute for them a book-entry transfer of tendered Private Notes into the account of The First National Bank of Chicago, as Exchange Agent, at The Depository Trust Company ("DTC") using DTC's Automated Tender Offer Program. (Your clients may also tender by having certificates representing the Private Notes, duly executed and properly completed applicable Letters of Transmittal (or facsimile thereof), with any required signature guarantees, and any other required documents delivered to such Exchange Agent.) The Letters of Transmittal and the Prospectus should be consulted for complete instructions and information about participation in the Exchange Offers. If holders of Private Notes wish to tender, but it is impracticable for them to forward their certificates for Private Notes prior to the expiration of the applicable Exchange Offer or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures described in the Prospectus under "The Exchange Offers-- Guaranteed Delivery Procedures." The Company will, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding the Prospectus and the related documents to the beneficial owners of Private Notes held by them as nominee or in a fiduciary capacity. The Company will pay or cause to be paid all stock transfer taxes applicable to the exchange of Private Notes pursuant to the Exchange Offers, except as set forth in Instruction 6 of the applicable Letters of Transmittal. Any inquiries you may have with respect to the Exchange Offers, or requests for additional copies of the enclosed materials, should be directed to The First National Bank of Chicago, the Exchange Agent for the Private Notes, at its address and telephone number set forth on the front of the Letters of Transmittal. Very truly yours, McKESSON CORPORATION NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO THE EXCHANGE OFFERS, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS OR THE APPLICABLE LETTERS OF TRANSMITTAL. Enclosures 2 EX-99.5 13 FORM OF LETTER TO CLIENTS EXHIBIT 99.5 McKESSON CORPORATION OFFERS FOR ALL OUTSTANDING 6.30% NOTES DUE MARCH 1, 2005 AND 6.40% NOTES DUE MARCH 1, 2008 IN EXCHANGE FOR 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 AND 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 TO OUR CLIENTS: Enclosed for your consideration is a Prospectus, dated , 1998 (the "Prospectus"), and the related Letters of Transmittal (the "Letters of Transmittal"), relating to the offers (the "Exchange Offers") of McKesson Corporation (the "Company") to exchange its 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange Notes due March 1, 2008, which have been registered under the Securities Act of 1933, as amended (the "Exchange Notes"), for its outstanding 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (the "Private Notes"), respectively, upon the terms and subject to the conditions described in the Prospectus and the applicable Letters of Transmittal. The Exchange Offers are being made in order to satisfy certain obligations of the Company contained in the Registration Rights Agreement dated February 24, 1998, by and among the Company and the initial purchasers referred to therein. This material is being forwarded to you as the beneficial owner of the Private Notes carried by us in your account but not registered in your name. A TENDER OF SUCH PRIVATE NOTES MAY ONLY BE MADE BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish us to tender on your behalf any or all of the Private Notes held by us for your account, pursuant to the terms and conditions set forth in the enclosed Prospectus and applicable Letters of Transmittal. Your instructions should be forwarded to us as promptly as possible in order to permit us to tender your Private Notes on your behalf in accordance with the provisions of the Exchange Offers. The Exchange Offers will expire at 5:00 p.m., New York City time, on , 1998, unless any of the Exchange Offers are extended by the Company (the "Expiration Dates"). Any Private Notes tendered pursuant to the Exchange Offers may be withdrawn at any time before the applicable Expiration Date. Your attention is directed to the following: 1. The Exchange Offers are for any and all Private Notes. 2. The Exchange Offers are subject to certain conditions set forth in the Prospectus in the section captioned "The Exchange Offers--Certain Conditions to the Exchange Offers." 3. Any transfer taxes incident to the transfer of Private Notes from the holder to the Company will be paid by the Company, except as otherwise provided in the Instructions in the applicable Letters of Transmittal. 4. The Exchange Offers expire at 5:00 p.m., New York City time, on , 1998, unless any of the Exchange Offers are extended by the Company. If you wish to have us tender any or all of your Private Notes, please so instruct us by completing, executing and returning to us the instruction form on the back of this letter. THE LETTERS OF TRANSMITTAL ARE FURNISHED TO YOU FOR INFORMATION ONLY AND MAY NOT BE USED DIRECTLY BY YOU TO TENDER YOUR PRIVATE NOTES. INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFERS The undersigned acknowledge(s) receipt of your letter and the enclosed material referred to therein relating to the Exchange Offers made by McKesson Corporation with respect to its Private Notes. This will instruct you to tender the Private Notes held by you for the account of the undersigned, upon and subject to the terms and conditions set forth in the Prospectus and the related applicable Letters of Transmittal. Please tender the Private Notes held by you for my account as indicated below: Aggregate Principal Amount of Private Notes 6.30% Notes due March 1, 2005 ------------------------------- 6.40% Notes due March 1, 2008 ------------------------------- [_] Please do not tender any Private Notes held by you for my account Dated: , 1998 --------------------------------- ------------------------------- Signature(s) ------------------------------- ------------------------------- ------------------------------- Please print name(s) here ------------------------------- ------------------------------- Address(es) ------------------------------- Area Code and Telephone Number ------------------------------- Tax Identification or Social Security No(s). None of the Private Notes held by us for your account will be tendered unless we receive written instructions from you to do so. Unless a specific contrary instruction is given in the space provided, your signature(s) hereon shall constitute an instruction to us to tender all the Private Notes held by us for your account. EX-99.6 14 FORM OF EXCHANGE AGENT AGREEMENT Exhibit 99.6 ___________ ___, 1998 The First National Bank of Chicago One North State Street 9th Floor Chicago, IL 60602 Attention: Corporate Trust Services Division Ladies and Gentlemen: McKesson Corporation, a Delaware corporation (the "Company"), proposes to make offers (the "Exchange Offers") to exchange any and all of its outstanding 6.30% Notes due March 1, 2005 and 6.40% Notes due March 1, 2008 (together, the "Private Notes") for its 6.30% Exchange Notes due March 1, 2005 and 6.40% Exchange Notes due March 1, 2008 (together, the "Exchange Notes"), respectively. The terms and conditions of the Exchange Offers as currently contemplated are set forth in a prospectus, dated __________ ____, 1998 (the "Prospectus"), to be distributed to all record holders of the Private Notes. A copy of the Prospectus is attached hereto as Exhibit A. The Private Notes and the Exchange Notes are collectively referred to herein as the "Notes." Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus. A copy of each of the forms of the Letters of Transmittal, the form of the Notice of Guaranteed Delivery, the form of Letter to Brokers, Dealers and the form of Letter to Clients are attached hereto as Exhibit B. The Company hereby appoints The First National Bank of Chicago to act as exchange agent (the "Exchange Agent") in connection with the Exchange Offers. References hereinafter to "you" shall refer to The First National Bank of Chicago. The Exchange Offers are expected to be commenced by the Company on or about _____________ ___, 1998. The Letters of Transmittal accompanying the Prospectus (or in the case of book entry securities, the ATOP system) are to be used by the holders of the Private Notes to accept the Exchange Offers and contain instructions with respect to (i) the delivery of certificates for Private Notes tendered in connection therewith and (ii) the book entry transfer of Notes to the Exchange Agent's account. The Exchange Offers shall expire at 5:00 P.M., New York City time, on ___________ ___, 1998 or on such later date or time to which the Company may extend any of the Exchange Offers (the "Expiration Dates"). Subject to the terms and conditions set forth in the Prospectus, the Company expressly reserves the right to extend any of the Exchange Offers from time to time by giving oral (to be confirmed in writing) or written notice to you before 9:00 A.M., New York City time, on the Business Day following the previously scheduled applicable Expiration Date. The Company expressly reserves the right (i) to terminate any of the Exchange Offers, and not to accept for exchange any Private Notes not theretofore accepted for exchange, upon the occurrence of any of the conditions of the Exchange Offers specified in the Prospectus under the caption "The Exchange Offers -- Certain Conditions to the Exchange Offers" and (ii) to amend any or all of the Exchange Offers. The Company will give you prompt oral (confirmed in writing) or written notice of any amendment, termination or nonacceptance of Private Notes. In carrying out your duties as Exchange Agent, you are to act in accordance with the following instructions: 1. You will perform such duties and only such duties as are specifically set forth in the section of the Prospectus captioned "The Exchange Offers" or as specifically set forth herein; provided, however, that in no way will your general duty to act in good faith be discharged by the foregoing. 2. You will establish an account with respect to the Private Notes at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Exchange Offers within two Business Days after the date of the Prospectus, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of the Private Notes by causing the Book-Entry Transfer Facility to transfer such Private Notes into your account in accordance with the Book-Entry Transfer Facility's Automated Tender Offer Program ("ATOP"). 3. You are to examine each of the Letters of Transmittal and certificates for Private Notes (or confirmation of book-entry transfer into your account at the Book-Entry Transfer Facility) and any other documents delivered or mailed to you by or for holders of the Private Notes to ascertain whether: (i) the Letters of Transmittal and any such other documents are duly executed and properly completed in accordance with instructions set forth therein and (ii) the Private Notes have otherwise been properly tendered. In each case where the Letters of Transmittal or any other document has been improperly completed or executed or any of the certificates for Private Notes are not in proper form for transfer or some other irregularity in connection with the acceptance of the Exchange Offers exists, you will endeavor to inform such holders of the need for fulfillment of all requirements and to take any other action as may be necessary or advisable to cause such irregularity to be corrected. 4. With the approval of any Vice President of the Company (a "Designated Officer") (such approval, if given orally, to be confirmed in writing) or any other party designated by any such Designated Officer in writing, you are authorized to waive any irregularities in connection with any tender of Private Notes pursuant to the Exchange Offers. 5. Tenders of Private Notes may be made only as set forth in the Letters of Transmittal and in the section of the Prospectus captioned "The Exchange Offers--Procedures for Tendering Private Notes," and Private Notes shall be considered properly tendered to you only when tendered in accordance with the procedures set forth therein. Notwithstanding the provisions of this paragraph 5, Private Notes which any Designated Officer of the Company shall approve as having been properly tendered shall be considered to be properly tendered. Such approval, if given orally, shall be confirmed in writing. 2 6. You shall advise the Company with respect to any Private Notes received subsequent to the Expiration Dates and accept its instructions with respect to disposition of such Private Notes. 7. You shall accept tenders: (a) in cases where the Private Notes are registered in two or more names only if signed by all named holders; (b) in cases where the signing person (as indicated on the Letters of Transmittal) is acting in a fiduciary or a representative capacity only when proper evidence of such person's authority so to act is submitted; and (c) from persons other than the registered holder of Private Notes provided that customary transfer requirements, including satisfaction of any applicable transfer taxes, are fulfilled. You shall accept partial tenders of Private Notes where so indicated and as permitted in the Letters of Transmittal and deliver certificates for Private Notes to the transfer agent for division and return any untendered Private Notes to the holder (or such other person as may be designated in the Letters of Transmittal) as promptly as practicable after expiration or termination of the applicable Exchange Offer. 8. Upon satisfaction or waiver of all of the conditions to any of the Exchange Offers, the Company will notify you (such notice, if given orally, to be confirmed in writing) of its acceptance, promptly after the applicable Expiration Date, of all Private Notes properly tendered and you, on behalf of the Company, will exchange such Private Notes for the corresponding Exchange Notes and cause such Private Notes to be canceled by the Private Notes Trustee. Delivery of Exchange Notes will be made on behalf of the Company by you at the rate of $1,000 principal amount of Exchange Notes for each $1,000 principal amount of the corresponding series of Private Notes tendered promptly after notice (such notice, if given orally, to be confirmed in writing) of acceptance of said Private Notes by the Company; provided, however, that in all cases, Private Notes tendered pursuant to any of the Exchange Offers will be exchanged only after timely receipt by you of (i) a Book-Entry Confirmation (as defined in the Prospectus) with respect to such Private Notes or (ii) certificates for such Private Notes and a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and all other required documents. You shall issue Exchange Notes only in denominations of $1,000 or any integral multiple thereof. Private Notes may be tendered in denominations of $1,000 or any integral multiple thereof. 9. Tenders pursuant to the Exchange Offers are irrevocable, except that, subject to the terms and upon the conditions set forth in the Prospectus and the Letters of Transmittal, Private Notes tendered pursuant to the Exchange Offers may be withdrawn at any time on or prior to the applicable Expiration Date. 10. The Company shall not be required to exchange any Private Notes tendered if any of the conditions set forth in the Exchange Offers are not met. Notice of any decision by the Company not to exchange any Private Notes tendered shall be given orally (and confirmed in writing) by the Company to you. 3 11. If, pursuant to the Exchange Offers, the Company does not accept for exchange all or part of the Private Notes tendered because of an invalid tender, the occurrence of certain other events set forth in the Prospectus under the caption "The Exchange Offers -- Certain Conditions to the Exchange Offers" or otherwise, you shall promptly after the expiration or termination of the applicable Exchange Offer return those certificates for unaccepted Private Notes (or effect appropriate book-entry transfer), together with any related required documents and the Letters of Transmittal relating thereto that are in your possession, to the persons who deposited them. 12. All certificates for reissued Private Notes, unaccepted Private Notes or for Exchange Notes shall be forwarded (a) by first-class certified mail, return receipt requested, under a blanket surety bond protecting you and the Company from loss or liability arising out of the non-receipt or non-delivery of such certificates; (b) by registered mail insured separately for the replacement value of each of such certificates or (c) by effectuating appropriate book-entry transfer. 13. You are not authorized to pay or offer to pay any concessions, commissions or solicitation fees to any broker, dealer, bank or other persons or to engage or utilize any person to solicit tenders. 14. As Exchange Agent hereunder you: (a) shall have no duties or obligations other than those specifically set forth in the section of the Prospectus captioned "The Exchange Offers," the Letters of Transmittal or herein or as may be subsequently agreed to in writing by you and the Company; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any of the certificates or the Private Notes represented thereby deposited with you pursuant to the Exchange Offers, and will not be required to and will make no representation as to the validity, value or genuineness of the Exchange Offers or the Letters of Transmittal or any other disclosure materials delivered in connection therewith; (c) shall not be obligated to take any legal action hereunder which might in your reasonable judgment involve any expense or liability, unless you shall have been furnished with indemnity reasonably satisfactory to you; (d) may reasonably rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and reasonably believed by you to be genuine and to have been signed by the proper party or parties; (e) may reasonably act upon any tender, statement, request, agreement or other instrument whatsoever not only as to its due execution and validity and effectiveness of its provisions, but also as to the truth and accuracy of any information contained therein, which you shall in good faith believe to be genuine or to have been signed or represented by a proper person or persons; (f) may rely on and shall be protected in acting upon written or oral instructions from any Designated Officer of the Company; 4 (g) may consult with counsel satisfactory to you, including counsel for the Company, with respect to any questions relating to your duties and responsibilities and the advice or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by you hereunder in good faith and in accordance with the advice or opinion of such counsel, provided that you shall promptly notify the Company of any action taken or omitted by you in reliance upon such advice or opinion; and (h) shall not advise any person tendering Private Notes pursuant to the Exchange Offers as to the wisdom of making such tender or as to the market value or decline or appreciation in market value of any Private Notes. 15. You shall take such action as may from time to time be requested by the Company or its counsel (and such other action as you may reasonably deem appropriate) to furnish copies of the Prospectus, Letters of Transmittal and the Notice of Guaranteed Delivery or such other forms as may be approved from time to time by the Company, to all persons requesting such documents and to accept and comply with telephone requests for information relating to the Exchange Offers, provided that such information shall relate only to the procedures for accepting (or withdrawing from) the Exchange Offers. The Company will furnish you with copies of such documents at your request. All other requests for information relating to the Exchange Offers shall be directed to the Company, Attention: Nancy A. Miller, Vice President and Corporate Secretary. 16. You shall advise by facsimile transmission or telephone, and promptly thereafter confirm in writing to Nancy A. Miller, Vice President and Corporate Secretary of the Company, and such other person or persons as the Company may request, daily (and more frequently during the weeks immediately preceding the Expiration Dates) and as otherwise requested, as to the number of Private Notes which have been tendered pursuant to the Exchange Offers and the items received by you pursuant to this Agreement, separately reporting and giving cumulative totals as to items properly received and items improperly received. In addition, you will also inform, and cooperate in making available to, the Company or any such other person or persons, upon oral request made from time to time, such other information as it or such person reasonably requests. Such cooperation shall include, without limitation, the granting by you to the Company and such person as the Company may request, of access to those persons on your staff who are responsible for receiving tenders, in order to ensure that immediately prior to any of the Expiration Dates the Company shall have received information in sufficient detail to enable it to decide whether to extend any of the Exchange Offers. You shall prepare a final list of all persons whose tenders were accepted, the aggregate principal amount of Private Notes tendered, the aggregate principal amount of Private Notes accepted and deliver said list to the Company promptly after the applicable Expiration Date. 17. Letters of Transmittal and Notices of Guaranteed Delivery shall be stamped by you as to the date and the time of receipt thereof and shall be preserved by you for a period of time at least equal to the period of time you preserve other records pertaining to the transfer of securities. 18. You hereby expressly waive any lien, encumbrance or right of set-off whatsoever that you may have with respect to funds deposited with you for the payment of transfer taxes by reasons of amounts, if any, borrowed by the Company, or any of its subsidiaries or affiliates pursuant to any loan or credit agreement with you or for compensation owed to you hereunder. 5 19. For services rendered as Exchange Agent hereunder, you shall be entitled to compensation as set forth on Schedules I, II and III attached hereto, plus reasonable out-of-pocket expenses and reasonable attorneys' fees, incurred in connection with your services hereunder, within thirty days following receipt by the Company of an itemized statement of such expenses and fees in reasonable detail. 20. (a) The Company covenants and agrees to indemnify and hold you (which for purposes of this paragraph shall include your directors, officers and employees) harmless in your capacity as Exchange Agent hereunder from and against any and all loss, liability, cost, damage, expense and claim, including but not limited to reasonable attorneys' fees and reasonable expenses, incurred by you as a result of, arising out of or in connection with the performance by you of your duties under this Agreement or the compliance by you with the instructions set forth herein or delivered hereunder; provided, however, that the Company shall not be liable for indemnification or otherwise for any loss, liability, cost, damage, expense or claim arising out of your gross negligence or willful misconduct. In no case shall the Company be liable under this indemnity with respect to any claim against you unless the Company shall be notified by you, by letter or by facsimile confirmed by letter, of the written assertion of a claim against you or of any other action commenced against you, promptly after you shall have received any such written assertion or notice of commencement of action. The Company shall be entitled to participate at its own expense in the defense of any such claim or other action, and, if the Company so elects, the Company may assume the defense of any suit brought to enforce any such claim; provided that the Company shall not be entitled to assume the defense of any such action if the named parties to such action include both the Company and you and representation of both parties by the same legal counsel would, in the written opinion of counsel to you, be inappropriate due to actual or potential conflicting interests between them. In the event that the Company shall assume the defense of any such suit or threatened action in respect of which indemnification may be sought hereunder, the Company shall not be liable for the fees and expenses of any counsel thereafter retained by you. The Company shall not be liable under this paragraph for the reasonable fees and reasonable expenses of more than one legal counsel for you. (b) You agree that, without the prior written consent of the Company (which consent shall not be unreasonably withheld), you will not settle, compromise or consent to the entry of any pending or threatened claim, action, or proceeding in respect of which indemnification could be sought in accordance with the indemnification provisions of this Agreement (whether or not you or the Company or any of its controlling persons is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of the Company and controlling persons from all liability arising out of such claim, action or proceeding. 21. You shall arrange to comply with all requirements under the tax laws of the United States, including those relating to missing Tax Identification Numbers, and shall file any appropriate reports with the Internal Revenue Service. The Company understands that you are required in certain instances to withhold an amount equal to 31% of the payments made with respect to (i) interest on the Exchange Notes and (ii) proceeds from the sale, exchange, redemption or retirement of the Exchange Notes from holders who have not supplied their correct Taxpayer Identification Number or required certification, or holders from whom you have been instructed by the Internal Revenue Service to withhold. Such funds will be turned over to the Internal Revenue Service in accordance with applicable regulations. 6 22. You shall notify the Company of the amount of any transfer taxes payable in respect of the exchange of Private Notes and, upon receipt of written approval from the Company, you shall deliver or cause to be delivered, in a timely manner to each governmental authority to which any transfer taxes are payable in respect of the exchange of Private Notes, your check in the amount of all transfer taxes so payable, and the Company shall reimburse you for the amount of any and all transfer taxes payable in respect of the exchange of Private Notes; provided, however, that you shall reimburse the Company for amounts refunded to you in respect of your payment of any such transfer taxes, at such time as such refund is received by you. 23. THIS AGREEMENT AND YOUR APPOINTMENT AS EXCHANGE AGENT HEREUNDER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, AND WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES, AND SHALL INURE TO THE BENEFIT OF, AND THE OBLIGATIONS CREATED HEREBY SHALL BE BINDING UPON, THE SUCCESSORS AND ASSIGNS OF EACH OF THE PARTIES HERETO, AND NO OTHER PERSON SHALL HAVE ANY RIGHTS HEREUNDER. 24. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 25. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 26. This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged. This Agreement may not be modified orally. 27. Unless otherwise provided herein, all notices, requests and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party, addressed to it, at its address or facsimile number set forth below: If to the Company: McKesson Corporation McKesson Plaza One Post Street San Francisco, CA 94104 Facsimile: (415) 983-8826 Attention: Nancy A. Miller Vice President and Corporate Secretary If to the Exchange Agent: The First National Bank of Chicago c/o First Chicago Trust Company of New York 14 Wall Street 7 8th Floor, Window 2 New York, New York 10005 Facsimile: (212) 240-8938 Attention: Corporate Trust Administration With a copy to: The First National Bank of Chicago One North State Street 9th Floor Chicago, IL 60602 Facsimile: (312) 407-1708 Attention: Janice Ott Rotunno 28. Unless terminated earlier by the parties hereto, this Agreement shall terminate 180 days following the last Expiration Date. Notwithstanding the foregoing, Paragraphs 19, 20 and 22 shall survive the termination of this Agreement. Upon any termination of this Agreement, you shall promptly deliver to the Company any certificates for Notes, funds or property then held by you as Exchange Agent under this Agreement. 29. This Agreement shall be binding and effective as of the date hereof. 8 Please acknowledge receipt of this Agreement and confirm the arrangements herein provided by signing and returning the enclosed copy. McKESSON CORPORATION By: _____________________________ Name: Nancy A. Miller Title: Vice President and Corporate Secretary Accepted as the date first above written: THE FIRST NATIONAL BANK OF CHICAGO, as Exchange Agent By: _________________________________ Name: Steve Wagner Title: Vice President 9 SCHEDULE I THE FIRST NATIONAL BANK OF CHICAGO FEE SCHEDULE EXCHANGE AGENT SERVICES McKESSON CORPORATION - 6.30% EXCHANGE NOTES DUE MARCH 1, 2005 I. Exchange Agency A fee for the receipt of exchanged 6.30% Exchange Notes of McKesson Corporation will be charged at $6.50 per letter of transmittal. The total charge will be subject to a minimum of $2,000 and maximum of $5,000. This fee covers examination and execution of all required documentation, receipt of transmittal letters, reporting as required to the Company and communication with DTC. II. Miscellaneous Fees for services not specifically covered in this schedule will be assessed in amounts commensurate with the services rendered. 10 SCHEDULE II THE FIRST NATIONAL BANK OF CHICAGO FEE SCHEDULE EXCHANGE AGENT SERVICES McKESSON CORPORATION - 6.40% EXCHANGE NOTES DUE MARCH 1, 2008 I. Exchange Agency A fee for the receipt of exchanged 6.40% Exchange Notes of McKesson Corporation will be charged at $6.50 per letter of transmittal. The total charge will be subject to a minimum of $2,000 and maximum of $5,000. This fee covers examination and execution of all required documentation, receipt of transmittal letters, reporting as required to the Company and communication with DTC. II. Miscellaneous Fees for services not specifically covered in this schedule will be assessed in amounts commensurate with the services rendered. 11 -----END PRIVACY-ENHANCED MESSAGE-----