10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For quarter ended September 30, 2001
o OF THE SECURITIES EXCHANGE ACT OF 1934	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	For the transition period from           to

Commission file number 1-13252

McKesson Corporation

(Exact name of Registrant as specified in its charter)

Delaware	94-3207296
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
One Post Street, San Francisco, California	94104
(Address of principal executive offices)	(Zip Code)

(415) 983-8300

(Registrant’s telephone number, including area code)

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  þ           No  o

      Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Outstanding at
Class	September 30, 2001
Common stock, $.01 par value	285,978,281 shares

McKESSON CORPORATION

TABLE OF CONTENTS

Item		Page
	PART I.  FINANCIAL INFORMATION
1.	Condensed Financial Statements
	Consolidated Balance Sheets September 30, 2001 and March 31, 2001		2
	Consolidated Statements of Operations Three and six-month periods ended September 30, 2001 and 2000		3
	Consolidated Statements of Cash Flows Six-month periods ended September 30, 2001 and 2000		4
	Financial Notes		5-13
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations Financial Review		14-19
3.	Quantitative and Qualitative Disclosures about Market Risk		20
	PART II.  OTHER INFORMATION
1.	Legal Proceedings		20
4.	Submission of Matters to a Vote of Security Holders		20
6.	Exhibits and Reports on Form 8-K		21

1

PART I.     FINANCIAL INFORMATION

McKESSON CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

			September 30,			March 31,
			2001			2001
			(In millions)
ASSETS
Current Assets
	Cash and equivalents		$	286.4		$	433.7
	Marketable securities			6.7			11.9
	Receivables			3,657.0			3,443.4
	Inventories			5,654.8			5,116.4
	Prepaid expenses			146.4			158.6
		Total		9,751.3			9,164.0
Property, Plant and Equipment, net				579.2			595.3
Capitalized Software				115.8			103.7
Notes Receivable				209.1			131.3
Goodwill				968.8			963.3
Other Intangible Assets				94.7			101.1
Other Assets				479.2			471.2
		Total Assets	$	12,198.1		$	11,529.9
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Drafts and accounts payable		$	5,961.7		$	5,361.9
	Deferred revenue			297.0			378.5
	Current portion of long-term debt			192.8			194.1
	Other liabilities			574.1			615.2
		Total		7,025.6			6,549.7
Postretirement Obligations and Other Noncurrent Liabilities				268.3			255.8
Long-Term Debt				1,024.0			1,035.6
McKesson Corporation-Obligated Mandatorily Redeemable Convertible Preferred Securities of Subsidiary Grantor Trust Whose Sole Assets are Junior Subordinated Debentures of McKesson Corporation				196.0			195.9
Other Commitments and Contingent Liabilities
Stockholders’ Equity
	Common stock (400.0 shares authorized, 287.1 issued as of September 30, 2001, and 286.3 issued as of March 31, 2001; par value $0.01)			2.9			2.9
	Additional paid-in capital			1,825.4			1,828.7
	Other capital			(102.9	)		(108.4	)
	Retained earnings			2,157.1			2,006.6
	Accumulated other comprehensive losses			(82.8	)		(75.0	)
	ESOP notes and guarantees			(80.1	)		(89.0	)
	Treasury shares, at cost			(35.4	)		(72.9	)
		Total Stockholders’ Equity		3,684.2			3,492.9
		Total Liabilities and Stockholders’ Equity	$	12,198.1		$	11,529.9

See Financial Notes.

2

McKESSON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

		Three Months Ended						Six Months Ended
		September 30,						September 30,
		2001			2000			2001			2000
		(In millions, except per share amounts)
Revenues		$	12,159.3		$	9,865.5		$	23,813.2		$	19,583.1
Cost of Sales			11,491.5			9,294.1			22,485.7			18,444.8
Gross Profit			667.8			571.4			1,327.5			1,138.3
Selling, Distribution, Research and Development and Administration Expenses			520.1			454.4			1,020.6			898.0
Operating Income			147.7			117.0			306.9			240.3
Interest Expense			(27.0	)		(28.7	)		(54.0	)		(56.1	)
Loss on Sales of Businesses, Net			—			—			(18.4	)		—
Gain (Loss) on Investments			(3.4	)		7.8			(5.7	)		7.8
Other Income, Net			9.6			9.3			19.2			20.2
Income Before Income Taxes and Dividends on Preferred Securities of Subsidiary Trust			126.9			105.4			248.0			212.2
Income Taxes			(46.3	)		(41.9	)		(60.5	)		(83.6	)
Dividends on Preferred Securities of Subsidiary Trust			(1.6	)		(1.6	)		(3.1	)		(3.1	)
Net Income		$	79.0		$	61.9		$	184.4		$	125.5
Earnings per Common Share
	Diluted	$	0.27		$	0.22		$	0.63		$	0.44
	Basic		0.28			0.22			0.65			0.44
Dividends per Common Share			0.06			0.06			0.12			0.12
Shares on which earnings per common share were based
	Diluted		299.0			292.0			297.5			290.7
	Basic		285.0			283.0			284.5			282.8

See Financial Notes.

3

McKESSON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

				Six Months Ended
				September 30,
				2001			2000
				(In millions)
Operating Activities
	Net income			$	184.4		$	125.5
	Adjustments to reconcile to net cash provided (used) by operating activities
		Depreciation			58.8			56.1
		Amortization			44.5			60.4
		Provision for bad debts			28.3			22.7
		Deferred taxes on income			24.7			9.3
		Loss on sale of businesses			18.4			—
		Other non-cash items			37.6			(3.3	)
			Total		396.7			270.7
	Effects of changes in:
		Receivables			(376.9	)		(236.1	)
		Inventories			(543.0	)		(325.4	)
		Drafts and accounts payable			599.9			470.0
		Deferred revenue			(77.5	)		(71.8	)
		Taxes			29.1			(233.6	)
		Other			(24.4	)		(33.2	)
			Total		(392.8	)		(430.1	)
			Net cash provided (used) by continuing operations		3.9			(159.4	)
	Discontinued operations				(0.3	)		(1.1	)
			Net cash provided (used) by operating activities		3.6			(160.5	)
Investing Activities
	Maturities of marketable securities, net				4.8			—
	Property acquisitions				(43.1	)		(59.6	)
	Acquisitions of businesses, less cash and short-term investments acquired				(7.4	)		(39.8	)
	Notes receivable issuances, net				(30.0	)		(10.3	)
	Other				(58.3	)		(43.9	)
			Net cash used by investing activities		(134.0	)		(153.6	)
Financing Activities
	Proceeds from issuance of debt				4.2			2.0
	Repayment of debt				(17.0	)		(20.6	)
	Dividends paid on preferred securities of subsidiary trust				(5.0	)		(5.0	)
	Capital stock transactions
		Issuances			41.4			20.0
		Share repurchases			(15.1	)		(25.5	)
		Dividends paid			(34.3	)		(34.2	)
		ESOP notes and guarantees			8.9			3.2
		Other			—			1.7
			Net cash used by financing activities		(16.9	)		(58.4	)
Net decrease in Cash and Equivalents					(147.3	)		(372.5	)
Cash and Equivalents at beginning of period					433.7			548.9
Cash and Equivalents at end of period				$	286.4		$	176.4

See Financial Notes.

4

McKESSON CORPORATION

FINANCIAL NOTES

(Unaudited)

1.     Interim Financial Statements

      In our opinion, these unaudited condensed consolidated financial statements include all adjustments necessary for a fair presentation of the Company’s financial position as of September 30, 2001, the results of operations for the three and six months ended September 30, 2001 and 2000 and cash flows for the six months ended September 30, 2001 and 2000.

      The results of operations for the three and six months ended September 30, 2001 and 2000 are not necessarily indicative of the results for the full years.

      These interim financial statements should be read in conjunction with the annual audited financial statements, accounting policies and financial notes included in our fiscal 2001 consolidated financial statements previously filed with the Securities and Exchange Commission (the “SEC”). Certain prior year amounts have been reclassified to conform to the current year presentation.

2.     New Accounting Pronouncements

      On April 1, 2001, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended in June 2000 by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities,” which established accounting and reporting standards for derivative instruments and for hedging activities. These statements require that we recognize all derivatives as either assets or liabilities in the statement of financial position and measure these instruments at fair value.

      We have identified a cross-currency interest rate swap related to U.S. dollar-denominated debt securities issued by a Canadian subsidiary as a derivative instrument. The swap, which has been designated as a cash flow hedge in accordance with criteria established by SFAS No. 133, has a notional amount of $125.0 million and a fair value of $17.4 million at September 30, 2001. SFAS No. 133 further provides that for a derivative designated as a cash flow hedge, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the hedged exposure affects earnings. No ineffectiveness was recognized in the the quarter and six months ended September 30, 2001 related to the cross-currency interest rate swap. The fair value of this instrument has been classified as “Other Assets” in the accompanying balance sheet. We do not have any other significant derivatives as of September 30, 2001.

      In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations,” which eliminates the pooling method of accounting for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. We adopted this accounting standard for business combinations initiated after June 30, 2001.

      As of April 1, 2001, we adopted SFAS No. 142, “Goodwill and Other Intangible Assets,” which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be separately disclosed from other intangible assets in the statement of financial position, and no longer be amortized but tested for impairment on a periodic basis.

5

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

      In accordance with SFAS No. 142, we discontinued the amortization of goodwill effective April 1, 2001. A reconciliation of previously reported net income and earnings per share to the amounts adjusted for the exclusion of goodwill amortization net of the related income tax effect follows:

		Three Months
		Ended				Six Months Ended
		September 30,				September 30,
		2001		2000		2001		2000
		(In millions, except per share amounts)
Reported net income		$	79.0	$	61.9	$	184.4	$	125.5
Goodwill amortization, net of tax			—		11.6		—		22.0
Adjusted net income		$	79.0	$	73.5	$	184.4	$	147.5
Diluted earnings per common share
	Reported net income	$	0.27	$	0.22	$	0.63	$	0.44
	Goodwill amortization, net of tax		—		0.04		—		0.08
	Adjusted net income	$	0.27	$	0.26	$	0.63	$	0.52
Basic earnings per common share
	Reported net income	$	0.28	$	0.22	$	0.65	$	0.44
	Goodwill amortization, net of tax		—		0.04		—		0.08
	Adjusted net income	$	0.28	$	0.26	$	0.65	$	0.52

      The provisions of SFAS No. 142 also require the completion of a transitional impairment test within six months of adoption, with any impairments treated as a cumulative effect of a change in accounting principle. During the quarter ended September 30, 2001, we completed the transitional impairment test and did not record any impairments of goodwill.

      In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which addresses the financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of” and will be effective on April 1, 2002. We are assessing the impact, if any, SFAS No. 144 will have on our consolidated financial statements.

3.     Divestitures

      In June 2001, we sold the stock of an Information Solutions business which provided internet-based clinical applications for use by physician practices, pharmacy benefit managers, benefit payors, laboratories and pharmacies for a pre-tax gain of $0.2 million and a net tax benefit of $30.0 million, resulting in an after-tax gain of $30.2 million. For accounting purposes, the net assets of this business were written down in fiscal 2001 in connection with the restructuring of the former iMcKesson business segment. The tax benefit could not be recognized until fiscal 2002, when the sale of the stock was completed.

      In July 2001, we completed the sale of the net assets of another Information Solutions business that provided managed care systems for the payor market. We recognized a pre-tax loss of $18.6 million, or an after-tax loss of $11.8 million on this sale in the first quarter.

6

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

4.     Marketable Securities

      The September 30, 2001 marketable securities balance includes $4.0 million held in trust as exchange property for our outstanding $6.5 million principal amount of 4.5% exchangeable subordinated debentures.

5.     Goodwill and Other Intangible Assets

      Changes in the carrying amount of goodwill for the six months ended September 30, 2001, by operating segment, are as follows:

	Supply		Information
	Solutions		Solutions			Total
	(In millions)
Balance, March 31, 2001	$	934.5	$	28.8		$	963.3
Goodwill acquired during the period		2.9		—			2.9
Translation adjustments and other		2.8		(0.2	)		2.6
Balance, September 30, 2001	$	940.2	$	28.6		$	968.8

      Information regarding our other intangible assets follows:

		September 30, 2001							March 31, 2001
		Carrying		Accumulated					Carrying		Accumulated
		Amount		Amortization			Net		Amount		Amortization			Net
							(In millions)
Customer lists		$	83.9	$	(35.7	)	$	48.2	$	80.8	$	(31.1	)	$	49.7
Technology			43.0		(13.2	)		29.8		48.0		(12.9	)		35.1
Trademarks			13.3		(1.0	)		12.3		13.3		(0.8	)		12.5
Other			8.4		(4.0	)		4.4		7.8		(4.0	)		3.8
	Total	$	148.6	$	(53.9	)	$	94.7	$	149.9	$	(48.8	)	$	101.1

      Amortization expense of other intangible assets was $3.6 million and $4.2 million in the three months and $7.1 million and $8.3 million in the six months ended September 30, 2001 and 2000.

6.     Current Liabilities

      Drafts and accounts payable includes drafts outstanding of $667.0 million as of September 30, 2001 and $758.6 million as of March 31, 2001.

      Our other current liabilities are as follows:

		September 30,		March 31,
		2001		2001
		(In millions)
Salaries and wages		$	115.0	$	142.2
Taxes			51.0		79.8
Interest and dividends			30.7		31.0
Other			377.4		362.2
	Total	$	574.1	$	615.2

7

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

7.     Convertible Preferred Securities

      In February 1997, a wholly-owned subsidiary trust of McKesson Corporation issued 4 million shares of preferred securities to the public and 123,720 common securities to McKesson Corporation, which are convertible at the holder’s option into our common stock. The proceeds of such issuances were invested by the trust in $206,186,000 aggregate principal amount of our 5% Convertible Junior Subordinated Debentures due in 2027 (the “Debentures”). The Debentures represent the sole assets of the trust. The Debentures mature on June 1, 2027, bear interest at the rate of 5%, payable quarterly, and are redeemable beginning in March 2001 at 103.0% of the principal amount thereof.

      Holders of the securities are entitled to cumulative cash distributions at an annual rate of 5% of the liquidation amount of $50 per security. Each preferred security is convertible at the rate of 1.3418 shares of McKesson Corporation common stock, subject to adjustment in certain circumstances. If not converted, the preferred securities will be redeemed upon repayment of the Debentures, and are callable at 103.0% of the liquidation amount.

      We have guaranteed, on a subordinated basis, distributions and other payments due on the preferred securities (the “Guarantee”). The Guarantee, when taken together with our obligations under the Debentures, and in the indenture pursuant to which the Debentures were issued, and our obligations under the Amended and Restated Declaration of Trust governing the subsidiary trust, provides a full and unconditional guarantee of amounts due on the preferred securities.

      The Debentures and related trust investment in the Debentures have been eliminated in consolidation and the preferred securities are reflected as outstanding in the accompanying consolidated financial statements.

8.     Gains, Losses and Charges To Net Income

      During the quarter ended September 30, 2001, our Supply Solutions segment recorded asset impairment charges of $4.8 million for product rationalizations in the medical-surgical business, partially offset by proceeds of $2.8 million from the settlements of claims with third parties in the medical-surgical and medical management businesses. Also, during the current quarter, our Information Solutions segment recorded proceeds of $1.0 million from the settlement of a claim related to purchased software for which we had recorded an impairment charge of $3.2 million in the quarter ended June 30, 2001. In the six months ended September 30, 2001, we sold two Information Solutions businesses for a pre-tax loss of $18.4 million, or an after-tax gain of $18.4 million. In the Corporate segment, we recorded a loss on equity investments of $3.4 million in the quarter and $5.7 million in the six months and costs associated with the pending securities litigation of $0.9 million in the quarter and $1.5 million in the six months ended September 30, 2001. These charges were partially offset in the quarter by the receipt of $0.9 million in settlement proceeds from an investment that was written off in prior years.

      During the quarter and six months ended September 30, 2000, our Supply Solutions segment recorded a $7.8 million gain on the liquidation of an investment. This was partially offset by a charge of $2.1 million for the write-off of purchased in-process technology related to the July 2000 acquisition of an Information Solutions business. We also incurred $0.7 million in legal fees related to the Accounting Litigation (see Financial Note 12) in the Corporate segment.

8

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

9.     Restructuring and Related Asset Impairments

      We recorded the following charges and adjustments for restructuring and related asset impairments in the quarter and six months ended September 30, 2001 and 2000:

	Three Months				Six Months
	Ended				Ended
	September 30,				September 30,
	2001		2000		2001		2000
	(In millions)
Asset impairments	$	0.5	$	—	$	3.4	$	—
Severance		6.7		2.6		5.2		2.6
Exit-related		14.0		0.2		11.7		0.2
	$	21.2	$	2.8	$	20.3	$	2.8

      A reconciliation of the reserves for the restructuring plans from March 31, 2001 to September 30, 2001, by operating segment follows:

							Information
	Supply Solutions						Solutions						Corporate
				Exit-						Exit-						Exit-
	Severance			Related			Severance			Related			Severance			Related			Total
	(In millions)
Balance, March 31, 2001	$	10.0		$	7.5		$	3.5		$	9.0		$	24.7		$	0.3		$	55.0
Charges incurred during the period		10.0			14.0			—			—			—			—			24.0
Severance amounts paid during the period		(3.3	)		—			(1.0	)		—			(4.6	)		—			(8.9	)
Adjustments		(2.0	)		(2.3	)		—			—			(2.8	)		—			(7.1	)
Other costs paid during the period		—			(1.9	)		—			(0.9	)		—			(0.2	)		(3.0	)
Balance, September 30, 2001	$	14.7		$	17.3		$	2.5		$	8.1		$	17.3		$	0.1		$	60.0

      The remaining balances at September 30, 2001 relate primarily to charges recorded in fiscal 2002 and fiscal 2001. The reserves for other exit-related items consist of costs for preparing facilities for disposal, lease costs and property taxes required subsequent to termination of operations.

      During the quarter ended September 30, 2001, we reviewed the operations and cost structure of, and developed and communicated a plan to close 23 distribution centers in, the medical-surgical business. In connection with this plan, we recorded asset impairment charges of $0.3 million, severance charges of $10.0 million relating to the termination of approximately 650 employees primarily in distribution center, delivery and associated back-office functions and exit-related charges of $14.0 million for costs to prepare facilities for disposal, lease costs and property taxes required subsequent to termination of operations. We paid $0.4 million in severance to 12 of these employees and $0.5 million in exit-related costs during the quarter.

      In conjunction with restructuring plans provided for in prior fiscal years, during the six months ended September 30, 2001, our Supply Solutions segment paid severance of $1.3 million to approximately 100 employees in the medical-surgical business, $0.7 million to 23 call center employees, and $0.4 million to 72 customer service and administrative employees in the medical management business, $0.4 million to approximately 38 customer service and administrative employees in the pharmaceutical services business and $0.1 million to terminated employees in the pharmacy management business. During the six months ended September 30, 2001, we paid $0.5 million of exit costs in connection with the distribution center closures in the medical-surgical business, $0.3 million of exit costs in connection with the call center and foreign office

9

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

closures in the medical management business and $0.6 million of exit costs in connection with closure of an office in the pharmaceutical services business. In connection with a reassessment of prior year restructuring plans, we reversed previously recorded severance reserves of $0.5 million in the quarter and $1.7 million in the six months in the pharmaceutical distribution business and $0.3 million in the six months ended September 30, 2001 medical-surgical business. We also reversed $2.7 million in the medical-surgical business and recorded $0.4 million in the pharmaceutical distribution business in exit-related reserves in the six months ended September 30, 2001. Also, in connection with a reassessment of prior year restructuring plans of the pharmaceutical and medical-surgical businesses, we recorded asset impairment charges of $0.2 million in the quarter and $3.1 million in the six months. We plan to continue the previously announced back-office reductions in the pharmaceutical distribution business and workforce reductions in the medical-surgical distribution business throughout fiscal 2002.

      In the Information Solutions segment, $1.0 million of severance was paid in the six-month period ended September 30, 2001, to approximately 100 employees who were terminated in fiscal 2000 and 2001 under extended payment arrangements. In addition, $0.9 million of exit costs were paid during the six months ended September 30, 2001 in this segment.

      In the Corporate segment, $2.8 million of previously recorded severance reserves for executives of the former iMcKesson business segment were reversed in the quarter ended September 30, 2001. Also, severance of $4.6 million was paid to 8 employees and exit-related costs of $0.2 million were paid during the six months ended September 30, 2001 in connection with restructuring plans provided for in fiscal 2001.

      In the quarter ended September 30, 2000, our Supply Solutions segment recorded a severance charge of $0.5 million related to a workforce reduction in the pharmacy management business and charges of $2.1 million for severance and $0.2 million for facility closing costs related to a planned call center closure and workforce reduction in the medical management business.

10.     Comprehensive Income

      Comprehensive income is defined as all changes in stockholders’ equity from non-owner sources. It includes net income and amounts arising from unrecognized pension costs, unrealized gains or losses on marketable securities and investments classified as available for sale which are recorded directly to stockholders’ equity, net gains or losses on effectively hedged derivative instruments and foreign currency translation adjustments. Total comprehensive income for the three and six months ended September 30, 2001 and 2000 is as follows:

	Three Months
	Ended						Six Months Ended
	September 30,						September 30,
	2001			2000			2001			2000
				(In millions)
Net income	$	79.0		$	61.9		$	184.4		$	125.5
Unrealized gain (loss) on marketable securities and investments		(2.6	)		4.4			(5.2	)		(9.1	)
Net gain (loss) on derivative instruments		(0.9	)		—			1.3			—
Foreign currency translation adjustments		(5.9	)		(2.9	)		(3.9	)		(8.2	)
	$	69.6		$	63.4		$	176.6		$	108.2

10

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

11.     Earnings Per Share

      The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per common share computations for net income:

		Three Months Ended
		September 30, 2001						September 30, 2000
		Income		Shares		Per Share		Income		Shares		Per Share
		(In millions, except per share amounts)
Basic EPS
	Net Income	$	79.0		285.0	$	0.28	$	61.9		283.0	$	0.22
Effect of Dilutive Securities
	Options to purchase common stock		—		8.2				—		3.3
	Trust convertible preferred securities		1.6		5.4				1.6		5.4
	Restricted stock		—		0.4				—		0.3
Diluted EPS
	Net income available to common stockholders plus assumed conversions	$	80.6		299.0	$	0.27	$	63.5		292.0	$	0.22

		Six Months Ended
		September 30, 2001						September 30, 2000
		Income		Shares		Per Share		Income		Shares		Per Share
		(In millions, except per share amounts)
Basic EPS
	Net Income	$	184.4		284.5	$	0.65	$	125.5		282.8	$	0.44
Effect of Dilutive Securities
	Options to purchase common stock		—		7.3				—		2.3
	Trust convertible preferred securities		3.1		5.4				3.1		5.4
	Restricted stock		—		0.3				—		0.2
Diluted EPS
	Net income available to common stockholders plus assumed conversions	$	187.5		297.5	$	0.63	$	128.6		290.7	$	0.44

12.     Litigation

Accounting Litigation

      In our annual report on Form 10-K for the fiscal year ended March 31, 2001, and our quarterly report on Form 10-Q for the quarter ending June 30, 2001, we reported on numerous legal proceedings arising out of our announcement on April 28, 1999 regarding accounting improprieties at our subsidiary, HBO & Company (“HBOC”).

      On July 25, 2001, the Georgia state court stayed all claims relating to the accounting litigation in the previously reported action, Powell v. McKesson HBOC, Inc. et al. (Case No. 1999CV-15443), pending completion of trial in the consolidated federal class actions pending in the United States District Court for the Northern District of California entitled In Re McKesson HBOC, Inc. Securities Litigation (Case No. C-99-20743-RMW) (the “Consolidated Action”), and the only claims proceeding in Powell are plaintiff’s claims for unpaid sales commissions. On August 22, 2001, the Georgia state court also stayed the

11

McKESSON CORPORATION

FINANCIAL NOTES — (Continued)

(Unaudited)

previously reported action Curran Partners, L.P. v. McKesson HBOC, Inc., et al., (Case No. 00 VS-010801) in favor of the Consolidated Action.

      On July 27, 2001, an action was filed in the United States District Court for the Northern District of California captioned Pacha et al., v. McKesson HBOC, Inc. et al., (No. C01-20713 PVT) (“Pacha”). The Pacha plaintiffs allege that they were individual shareholders of our stock on November 27, 1998, and assert that we violated Section 14(a) of the Exchange Act and SEC Rule 14a-9, and that we, aided by HBOC, breached our fiduciary duties to plaintiffs by issuing a joint proxy statement in connection with the McKesson-HBOC merger which allegedly contained false and misleading statements or omissions. Plaintiffs name as defendants us, HBOC, certain current or former officers or directors of our company or HBOC, Arthur Andersen and Bear Stearns. The complaint seeks unspecified compensatory and punitive damages, attorneys fees and costs. The action has been assigned to the Honorable Ronald M. Whyte, the judge overseeing the Consolidated Action. On September 25, 2001, the Pacha plaintiffs filed an application with the Court requesting that their action not be consolidated with the Consolidated Action. We filed an opposition to that application on October 3, 2001, and the matter has not yet been decided.

      On July 31, 2001, our demurrer to the Second Amended Complaint was overruled and our alternative motion to strike denied in the previously reported California state court action, Yurick v. McKesson HBOC, Inc., et al.,(Case No. 303857).

      On October 12, 2001, we filed a motion to dismiss the First Amended Complaint in the previously reported action, Chang v. McKesson HBOC, Inc., et al., (N.D. Cal No. C00-20030-RMW), and that motion is presently set for hearing on February 15, 2002.

      Our demurrers, alternative motions to strike and motions to stay or modify an existing stay, in the previously reported California Superior Court actions, The State of Oregon by and Through the Oregon Public Employees Retirement Board v. McKesson HBOC, Inc., et al., (Case No. 307619), Minnesota State Board of Investment v. McKesson HBOC, Inc., et al., (Case No. 311747) and Utah State Retirement Board v. McKesson HBOC, Inc., et al., (Case No. 311269), are all currently set for hearing on November 15, 2001.

      The previously reported American Healthcare Fund II L.P., et al., v. McKesson HBOC, Inc., et al., (Case No. 00-CV-1762) pending in Colorado state court and involving contract and interference with contract claims brought against us and HBOC by certain former shareholders of Access Health Inc., a company acquired by HBOC in December of 1998, has been settled and was dismissed with prejudice on October 24, 2001, and that resolution had no material impact on the Company.

      The previously reported investigations by the United States Attorney’s Office and the Securities and Exchange Commission are continuing. On September 27, 2001, the Securities and Exchange Commission filed securities fraud charges against six former HBOC officers and employees. Simultaneous with the filing of the Commission’s civil complaints, four of the six defendants settled the claims brought against them by, among other things, consenting, without admitting or denying the allegations of the complaints, to entry of permanent injunctions against all of the alleged violations, and agreeing to pay civil penalties in various amounts.

      We do not believe it is feasible to predict or determine the outcome or resolution of, or to estimate the amounts of, or potential range of, loss with respect to the above mentioned proceedings. In addition, the timing of the final resolution of these proceedings is uncertain. The range of possible resolutions could include judgments against us or settlements that could require substantial payments by us, which could have a material adverse impact on our financial position, results of operations and cash flows.

12

McKESSON CORPORATION

FINANCIAL NOTES — (Concluded)

(Unaudited)

Other Litigation

      On August 29, 2001, we filed motions for summary judgment in the previously reported matter FoxMeyer Health Corporation v. McKesson, et al., (Case No. 97 00311), pending in Texas state court. The FoxMeyer court has heard one of those motions and will hear the remaining motions on November 2, 2001. Trial is presently set in FoxMeyer for January 14, 2002.

13.     Segment Information

      Our operating segments include Supply Solutions and Information Solutions. In evaluating financial performance, we focus on operating profit as a segment’s measure of profit or loss. Operating profit is income before interest expense, taxes on income and allocation of certain corporate revenues and expenses. Corporate interest income has been reclassified from Interest-net to the Corporate segment for all periods presented. Financial information relating to our reportable segments for the three and six months ended September 30, 2001 and 2000, and as of September 30, 2001 and March 31, 2001, is presented below:

			Three Months Ended						Six Months Ended
			September 30,						September 30,
			2001			2000			2001			2000
			(In millions)
Revenues
	Supply Solutions		$	11,922.8		$	9,644.6		$	23,332.9		$	19,136.5
	Information Solutions			235.9			220.2			479.1			445.2
	Corporate			0.6			0.7			1.2			1.4
		Total	$	12,159.3		$	9,865.5		$	23,813.2		$	19,583.1
Operating profit (loss)
	Supply Solutions		$	176.0		$	159.2		$	372.8		$	309.6
	Information Solutions			14.5			(0.6	)		3.5			2.6
		Total		190.5			158.6			376.3			312.2
	Interest Expense			(27.0	)		(28.7	)		(54.0	)		(56.1	)
	Corporate			(36.6	)		(24.5	)		(74.3	)		(43.9	)
		Income before income taxes and dividends on preferred securities of subsidiary trust	$	126.9		$	105.4		$	248.0		$	212.2

			September 30,		March 31,
			2001		2001
			(In millions)
Segment assets
	Supply Solutions		$	10,977.0	$	10,067.4
	Information Solutions			519.1		558.9
	Corporate			702.0		903.6
		Total	$	12,198.1	$	11,529.9

13

McKESSON CORPORATION

FINANCIAL REVIEW

(Unaudited)

Segment Results

      The revenues and operating profits by business segment are as follows:

				Three Months Ended									Six Months Ended
				September 30,									September 30,
				2001			2000			Chg.			2001			2000			Chg.
				(Dollars in millions)
REVENUES
Supply Solutions
	Pharmaceutical Distribution & Services
		U.S. Health Care(1)		$	10,456.6		$	8,301.7			26	%	$	20,421.5		$	16,426.7			24	%
		International			714.5			648.2			10			1,427.0			1,275.8			12
			Total Pharmaceutical Distribution & Services		11,171.1			8,949.9			25			21,848.5			17,702.5			23
	Medical-Surgical Distribution & Services				751.7			694.7			8			1,484.4			1,434.0			4
			Total Supply Solutions		11,922.8			9,644.6			24			23,332.9			19,136.5			22
Information Solutions
	Software				42.2			28.1			50			87.6			59.8			46
	Services				178.6			174.4			2			358.6			350.6			2
	Hardware				15.1			17.7			(15	)		32.9			34.8			(5	)
			Total Information Solutions		235.9			220.2			7			479.1			445.2			8
Corporate					0.6			0.7						1.2			1.4
Total				$	12,159.3		$	9,865.5			23		$	23,813.2		$	19,583.1			22
OPERATING PROFIT (LOSS)
Supply Solutions				$	176.0	(3)	$	159.2	(6)		11		$	372.8	(3)	$	309.6	(6)		20
Information Solutions					14.5	(4)		(0.6	)(7)					3.5	(4)		2.6	(7)		35
Total					190.5			158.6			20			376.3			312.2			21
Interest Expense(2)					(27.0	)		(28.7	)		(6	)		(54.0	)		(56.1	)		(4	)
Corporate(2)					(36.6	)(5)		(24.5	)(8)		49			(74.3	)(5)		(43.9	)(8)		69
Income before income taxes and dividends on preferred securities of subsidiary trust				$	126.9		$	105.4			20		$	248.0		$	212.2			17

(1)	Includes warehouse sales of $3,241.5 million and $2,375.3 million in the three months ended September 30, 2001 and 2000, and $6,348.0 million and $4,700.6 million in the six months ended September 30, 2001 and 2000.
(2)	Corporate interest income has been reclassified from Interest — net to the Corporate segment for all periods presented.
(3)	Includes pre-tax charges of $5.1 million for asset impairments and $24.0  million for severance and exit-related activities related to product rationalizations and distribution center closures in the medical-

14

McKESSON CORPORATION

FINANCIAL REVIEW — (Continued)

(Unaudited)

	surgical business, partially offset by proceeds of $2.8 million in settlements from third parties in the medical-surgical and medical management businesses. Also includes charges for asset impairments of $0.2   million in the quarter and $3.1 million in the six months, and net reductions in severance and exit-related reserves of $0.5 million in the quarter and $4.3 million in the six months associated with prior year restructuring plans of the pharmaceutical and medical-surgical businesses.
(4)	Includes settlement proceeds of $1.0 million related to purchased software. A charge of $3.2 million was recorded to write off this asset in the quarter ended June 30, 2001. The six months ended September 30, 2001 also include pre-tax losses of $18.4 million on the sales of two businesses.
(5)	Includes a pre-tax loss on equity investments of $3.4 million and $5.7 million and costs associated with the Accounting Litigation of $0.9 million and $1.5 million in the quarter and six months ended September 30, 2001. The six months also includes a $2.8 million reduction in prior year severance reserves and the receipt of $0.9 million in settlement proceeds from an investment that was previously written off.
(6)	Includes a $7.8 million pre-tax gain on the liquidation of an investment partially offset by charges of $0.5  million for severance in the pharmacy management business and $2.3  million for severance and exit-related activities in the medication management business.
(7)	Includes a $2.1 million charge for the write-off of purchased in-process technology related to an acquisition.
(8)	Includes costs associated with the Accounting Litigation of $0.7 million.

Factors Affecting Forward-Looking Statements

      In addition to historical information, our financial review includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the forward-looking statements can be identified by the use of forward-looking words such as “believes”, “expects”, “anticipates”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected.

      These and other risks and uncertainties are described herein or in our Forms 10-K, 10-Q, 8-K and other public documents filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

Overview of Results

      Net income for the quarter ended September 30, 2001 increased to $79.0 million, $0.27 per diluted share, from $61.9 million, $0.22 per diluted share, in the prior year. For the six-month period, net income increased to $184.4 million, $0.63 per diluted share, from $125.5 million, $0.44 per diluted share. We elected to adopt SFAS No. 142, and accordingly discontinued the amortization of goodwill effective April 1, 2001. On a comparable basis, excluding goodwill amortization of $12.4 million and a tax benefit on goodwill amortization of $0.8 million, net income as adjusted would have been $73.5 million and earnings per diluted share would have been $0.26 in the prior year second quarter. Excluding goodwill amortization of $23.5 million and a tax benefit on goodwill amortization of $1.5 million, net income as adjusted would have been $147.5 million and earnings per diluted share would have been $0.52 in the six months ended September 30, 2000.

15

McKESSON CORPORATION

FINANCIAL REVIEW — (Continued)

(Unaudited)

      The results include the following:

			Three Months Ended September 30,
			2001						2000
			Pre-tax			After-tax			Pre-tax			After-tax
						(In millions)
Net Income
	Before unusual items and dividends on convertible preferred securities of subsidiary trust		$	152.5		$	96.9		$	103.2		$	63.0
	Dividends on convertible preferred securities of subsidiary trust			—			(1.6	)		—			(1.6	)
	Before unusual items			152.5			95.3			103.2			61.4
	Unusual items
		Supply Solutions		(26.0	)		(16.6	)		5.0			3.0
		Information Solutions		1.0			0.7			(2.1	)		(2.1	)
		Corporate		(0.6	)		(0.4	)		(0.7	)		(0.4	)
	Net income		$	126.9		$	79.0		$	105.4		$	61.9

			Six Months Ended September 30,
			2001						2000
			Pre-tax			After-tax			Pre-tax			After-tax
			(In millions)
Net Income
	Before unusual items and dividends on convertible preferred securities of subsidiary trust		$	297.2		$	188.7		$	210.0		$	128.1
	Dividends on convertible preferred securities of subsidiary trust			—			(3.1	)		—			(3.1	)
	Before unusual items			297.2			185.6			210.0			125.0
	Unusual items
		Supply Solutions		(25.1	)		(16.0	)		5.0			3.0
		Information Solutions		(20.6	)		17.0			(2.1	)		(2.1	)
		Corporate		(3.5	)		(2.2	)		(0.7	)		(0.4	)
	Net income		$	248.0		$	184.4		$	212.2		$	125.5

      The results for the quarter and six months ended September 30, 2001 include unusual items that decreased after-tax income by $16.3 million and $1.2 million. These unusual items included charges of $3.3 million for asset impairments and $15.2 million for severance and exit-related costs related to product rationalizations and distribution center closures in the medical-surgical business of the Supply Solutions segment. These charges were partially offset by proceeds of $1.7 million from the settlement of claims with third parties in the medical-surgical and medical management businesses. The results also include charges of $0.1 million in the quarter and $2.0 million in the six months for asset impairments, and net reductions of $0.3 million in the quarter and $2.8 million in the six months in costs associated with prior year restructuring reserves in the pharmaceutical and medical-surgical businesses. During the quarter ended September 30, 2001, the Information Solutions segment recorded proceeds of $0.7 million from the settlement of a claim related to purchased software. During the six months ended September 30, 2001, this segment also recorded a charge of $2.1 million to write off this asset and sold two businesses for an after-tax gain of $18.4 million. In the Corporate segment, we recorded after-tax losses on equity investments of $2.2 million in the quarter and $3.6 million in the six months and costs associated with the Accounting Litigation of $0.6 million in the

16

McKESSON CORPORATION

FINANCIAL REVIEW — (Continued)

(Unaudited)

quarter and $1.0 million in the six months. These charges were offset in the quarter and six months by a reduction in prior year severance reserves of $1.8 million for executives of the former iMcKesson business segment and the receipt of $0.6 million in settlement proceeds representing a partial recovery from an investment that was written off in prior years.

      The results for the quarter and six months ended September 30, 2000 include unusual items that increased after-tax income by $0.5 million. These unusual items consisted of a $4.8 million gain on the liquidation of an investment partially offset by severance and exit-related costs of $1.8 million in the Supply Solutions segment, a $2.1 million write-off of purchased in-process technology related to an acquisition in the Information Solutions segment and $0.4 million in costs associated with the pending securities litigation.

      Net income before unusual items increased to $95.3 million from $61.4 million in the second quarter and to $185.6 million from $125.0 million in the six months ended September 30, 2001 and 2000, reflecting revenue growth and operating margin expansion in both the Supply Solutions and Information Solutions segments.

      The effective income tax rate before unusual items for the three and six months ended September 30, 2001 declined from the effective income tax rate for the comparable prior year periods due to the discontinuance of goodwill amortization, which is primarily non-tax-deductible, and tax planning initiatives. Unusual items included a $30.0 million tax benefit on the sale of the stock of an Information Solutions business.

      The discussion of the financial results that follows focuses on the results excluding unusual items, as we believe such discussion is the most informative representation of recurring, non-transactional related operating results.

     Supply Solutions

      The Supply Solutions segment includes the operations of our U.S. pharmaceutical distribution and services businesses, international pharmaceutical operations (Canada and Mexico), and medical-surgical distribution and services business. This segment accounted for 98% of consolidated revenues for the three and six months ended September 30, 2001 and 2000.

      Pharmaceutical Distribution & Services revenues increased by 25% to $11.2 billion in the quarter and 23% to $21.8 billion in the six-month period. This increase reflects growth in the quarter and first half in the U.S. direct delivery business of 22% and 20%, an increase in U.S. sales to customers’ warehouses of 36% and 35% and an increase in international revenues of 10% and 12%. The revenue growth in the quarter and first half of fiscal 2002 primarily reflects improved growth rates from a number of the Company’s largest U.S. retail drug chain customers and the impact of the implementation of certain distribution agreements which took full effect in the second quarter.

      Medical-Surgical Distribution & Services revenues increased 8% to $751.7 million in the quarter and 4% to $1,484.4 million in the six-month period. The six months ended September 30, 2000 contained five more selling days than the current year’s six-month period as a result of that business’ fiscal calendar. Excluding the additional selling days in the prior year, six-month period revenues increased by 6%.

      Supply Solutions operating profit increased $47.8 million or 31% to $202.0 million in the quarter and $93.3 million or 31% to $397.9 million in the six months. Operating profit as a percent of revenues (calculated excluding warehouse sales) increased 21 basis points to 2.33% in the second quarter and 23 basis points to 2.34% for the six months compared to prior year margins. Excluding goodwill amortization in the quarter and six months ended September 30, 2000, operating profit increased 25% and the operating margin increased

17

McKESSON CORPORATION

FINANCIAL REVIEW — (Continued)

(Unaudited)

12 basis points and 14 basis points in the respective periods. The increase in the operating margin reflects productivity improvements in both back-office and field operations and expanded product sourcing activities.

     Information Solutions

      The Information Solutions segment includes revenues from software sales, services and hardware sales. This segment accounted for 2% of consolidated revenues for the three and six months ended September 30, 2001 and 2000. Information Solutions revenues increased 7% to $235.9 million compared to $220.2 million in the prior year second quarter and 8% to $479.1 million from $445.2 million in the prior year six-month period. Software revenues increased 50% to $42.2 million from $28.1 million in the prior year second quarter and increased 46% to $87.6 million from $59.8 million in the prior year six-month period, reflecting the recognition of previously deferred revenue as a result of our adoption of a new contracting methodology in the prior year that led to an increase in the deferral of software revenues as a result of the use of the percentage of completion accounting method on such revenues. Services revenues of $178.6 million in the quarter and $358.6 million in the six months increased 2% from the prior year’s second quarter of $174.4 million and six months of $350.6 million. Hardware revenues decreased 15% in the quarter to $15.1 million from $17.7 million in the prior year second quarter and 5% in the first half to $32.9 million from $34.8 million in the prior year first half.

      Operating profit increased to $13.5 million in the quarter ended September 30, 2001 from $1.5 million in the prior year quarter and to $24.1 million in the current year six-month period from $4.7 million in the prior year six-month period. The operating profit margin increased to 5.72% in the quarter ended September 30, 2001 compared to 0.68% for the prior year second quarter and increased to 5.03% in the first half compared to 1.06% in the prior year comparable period. Excluding goodwill amortization in the prior year periods, operating profit increased 90% and the operating margin increased 250 basis points in the quarter and operating profit increased 63% and the operating margin increased 171 basis points in the six months compared to the respective prior year periods. The increase is primarily the result of the increase in higher margin software revenue and operating expense management.

     Interest Expense

      Interest expense decreased to $27.0 million from $28.7 million in the prior year second quarter and to $54.0 million from $56.1 million in the prior year first half. The decrease is due to lower interest rates partially offset by an increase in average borrowings to support revenue growth in the current year.

     Corporate

      Corporate expenses increased to $36.0 million from $23.8 million in the prior year second quarter and to $70.8 million from $43.2 million in the prior year first half. The increase in Corporate expenses reflects expenses for the sale of receivables associated with an increase in working capital, higher benefit costs and our share in the losses of HealthNexis, an Internet-based company we formed with other health care companies in fiscal 2001. The Corporate segment also includes the reclassification of Corporate interest income of $0.7 million and $1.7 million from Interest-net in the current and prior year second quarter and $1.3 million and 4.3 million in the current and prior year six-month periods.

Liquidity and Capital Resources

      Cash and equivalents decreased by $147.3 million to $286.4 million at September 30, 2001 from $433.7 million at March 31, 2001. During the six months ended September 30, 2001, operating activities provided $3.6 million of cash. The improvement in cash flows from operating activities during the quarter

18

McKESSON CORPORATION

FINANCIAL REVIEW — (Concluded)

(Unaudited)

ended September 30, 2001, reflects a decline in net financial inventory (inventory less payables) from June 30, 2001 to September 30, 2001.

      Cash and marketable securities available for sale were $293.1 million at September 30, 2001 compared to $445.6 million at March 31, 2001. The September 30, 2001 marketable securities balance includes $4.0 million that is currently restricted and held in trust as exchange property in connection with our outstanding exchangeable debentures.

      Inventories increased $538 million to $5.7 billion at September 30, 2001 from $5.1 billion at March 31, 2001. The increase in inventories reflects the build up associated with the implementation of new pharmaceutical distribution agreements.

      Stockholders’ equity was $3.7 billion at September 30, 2001, and the net debt-to-capital ratio was 19%, up slightly from 18% at March 31, 2001. The net debt-to-capital ratio for both periods was computed by reducing the outstanding debt amount by the cash and marketable securities balances. We had no sales of trade accounts receivable and no short-term borrowings outstanding at September 30, 2001.

      Return on average committed capital improved to 19.4% as of September 30, 2001 from 17.9% as of September 30, 2000. This improvement reflects a growth in the our operating profit in excess of the growth in the working capital required to fund the increase in revenues resulting from new pharmaceutical distribution agreements.

      Common shares outstanding increased to 286.0 million at September 30, 2001 from 284.0 million at March 31, 2001 due primarily to shares issued under employee benefit plans, partially offset by the 0.4 million shares repurchased as part of our previously announced $250 million share repurchase program. Average diluted shares increased to 299.0 million in the second quarter of fiscal 2002 from 292.0 million in the comparable prior year period due to an increased effect of dilutive securities as a result of an increase in our stock price and an increase in common shares outstanding.

      In October 2001, we renewed a 364-day revolving credit agreement that allows for borrowings of up to $1.075 billion under terms substantially similar to those previously in place. This credit facility is primarily intended to support our commercial paper borrowings.

Additional Factors That May Affect Future Results

      Reference is made to the additional factors that may affect the future results described in our most recent Annual Report on Form 10-K for the fiscal year ended March 31, 2001.

19

Item 3.      Quantitative and Qualitative Disclosures about Market Risk

      We believe there has been no material change in our exposure to risks associated with fluctuations in interest and foreign currency exchange rates discussed in our 2001 Annual Report on Form 10-K.

PART II.     OTHER INFORMATION

Item 1.      Legal Proceedings

      See Financial Note 12 to our unaudited condensed consolidated financial statements contained in Part I of this Quarterly Report on Form 10-Q.

Item 4.      Submission of Matters to a Vote of Security Holders

      Our Annual Meeting of Stockholders was held on July 25, 2001. The following matters were voted upon at the meeting and the stockholder votes on each such matter are briefly described below:

      The Board of Directors’ nominees for directors as listed in the proxy statement were each elected to serve for a three-year term. The vote was as follows:

	Votes For		Votes Withheld
John H. Hammergren		252,646,769		6,348,781
M. Christine Jacobs		251,908,591		7,086,959
Martin M. Koffel		252,395,187		6,600,363

      The proposal to amend the 1997 Non-Employee Directors’ Equity Compensation and Deferral Plan received the following vote:

Votes For		Votes Against		Votes Abstained
	192,692,929		63,888,328		2,414,293

      The proposal to approve the Amendment to the Company’s Restated Certificate of Incorporation to change our name to McKesson Corporation received the following vote:

Votes For		Votes Against		Votes Abstained
	255,666,985		2,253,621		1,074,944

      The proposal to ratify the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending March 31, 2002 received the following vote:

Votes For		Votes Against		Votes Abstained
	254,293,104		3,164,131		1,538,315

      The stockholder proposal regarding performance-based options received the following vote:

Votes For		Votes Against		Votes Abstained
	55,711,172		139,667,310		13,224,895

      The stockholder proposal regarding severance payments received the following vote:

Votes For		Votes Against		Votes Abstained
	35,918,555		157,087,896		15,596,526

      The stockholder proposal regarding the sale of the Company received the following vote:

Votes For		Votes Against		Votes Abstained
	6,583,730		198,713,051		3,306,596

20

Item 6.      Exhibits and Reports on Form 8-K

      (a)  Exhibits

      Exhibits identified below are incorporated herein by reference as exhibits to this report.

Exhibit
Number		Description
	3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Registrant as filed with the office of the Delaware Secretary of State on July 30, 2001.
	3.3	Amended and Restated By-Laws of the Company dated as of July 25, 2001.
	10.1	Fourth Amendment to June 25, 1999 Receivables Purchase Agreement, dated as of June 15, 2001.

      (b)  Reports on Form 8-K

      There were no reports on Form 8-K filed during the three months ended September 30, 2001.

21

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MCKESSON CORPORATION

Dated: November 2, 2001	/s/ WILLIAM R. GRABER William R. Graber Senior Vice President and Chief Financial Officer
	/s/ NIGEL A. REES Nigel A. Rees Vice President and Controller

22 EX-3.2 3 f76619ex3-2.txt CERT. OF AMEND. - CERT. OF INCORP. MCKESSON HBOC Exhibit 3.2 CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF McKESSON HBOC, INC. -------------------------------------------------------------------------------- Pursuant to Sections 222 and 242 of the General Corporation Law of the State of Delaware -------------------------------------------------------------------------------- McKesson HBOC, Inc., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the "Corporation"), does hereby certify as follows: FIRST: That Article I and Article II of the Corporation's Restated Certificate of Incorporation are hereby amended to read in their entirety as set forth below: ARTICLE I The name of the Corporation is McKesson Corporation. ARTICLE II The address of the registered office of the Corporation within the State of Delaware is 2711 Centerville Road, Suite 400, City of Wilmington, 19808, County of New Castle. The name its registered agent at such address is The Prentice-Hall Corporation System, Inc. SECOND: That the foregoing amendments were duly adopted in accordance with the provisions of Section 222 and 242 of the General Corporation Law of the State of Delaware. 1 IN WITNESS WHEREOF, McKesson HBOC, Inc. has caused this Certificate to be executed in its corporate name this 25th day of July, 2001. McKESSON HBOC, INC. By: /s/ Ivan D. Meyerson -------------------------------------- Name: Ivan D. Meyerson Title: Senior Vice President, General Counsel and Corporate Secretary 2 EX-3.3 4 f76619ex3-3.txt AMENDED RESTATED BY-LAWS DATED 7/25/2001 Exhibit 3.3 AMENDED AND RESTATED BY-LAWS OF McKESSON CORPORATION A DELAWARE CORPORATION AS AMENDED THROUGH JULY 30, 2001 -------------------------------------------------------------------------------- TABLE OF CONTENTS

Page ---- ARTICLE I Offices........................................................1 Section 1 Registered Office..............................................1 Section 2 Other Offices..................................................1 ARTICLE II Stockholders' Meetings.........................................1 Section 1 Place of Meetings..............................................1 Section 2 Annual Meetings................................................1 Section 3 Special Meetings...............................................1 Section 4 Notice of Meetings.............................................2 Section 5 Quorum.........................................................2 Section 6 Voting Rights..................................................3 Section 7 Voting Procedures and Inspectors of Elections.................................................3 Section 8 List of Stockholders...........................................4 Section 9 Stockholder Proposals at Annual Meetings..............................................4 Section 10 Nominations of Persons for Election to the Board of Directors....................................5 ARTICLE III Directors......................................................6 Section 1 General Powers.................................................6 Section 2 Number and Term of Office; Removal.............................6 Section 3 Election of Directors..........................................7 Section 4 Vacancies......................................................7 Section 5 Resignations...................................................7 Section 6 Annual Meetings................................................7 Section 7 Regular Meetings...............................................7 Section 8 Special Meetings; Notice.......................................7 Section 9 Quorum and Manner of Acting....................................8 Section 10 Consent in Writing.............................................8 Section 11 Committees.....................................................8 Section 12 Telephone Meetings.............................................9 Section 13 Compensation...................................................9 Section 14 Interested Directors...........................................9 Section 15 Directors Elected by Special Class or Series..................10 ARTICLE IV Officers......................................................10 Section 1 Designation of Officers.......................................10 Section 2 Term of Office; Resignation; Removal..........................10 Section 3 Vacancies.....................................................10 Section 4 Authority of Officers.........................................10 Section 5 Divisional Titles.............................................11 Section 6 Salaries......................................................11 ARTICLE V Execution of Corporate Instruments and Voting of Securities Owned by the Corporation......................11 Section 1 Execution of Instruments......................................11 Section 2 Voting of Securities Owned by the Corporation.................11

i ARTICLE VI Shares of Stock and Other Securities..........................11 Section 1 Form and Execution of Certificates............................11 Section 2 Lost Certificates.............................................12 Section 3 Transfers.....................................................12 Section 4 Fixing Record Dates...........................................12 Section 5 Registered Stockholders.......................................12 Section 6 Regulations...................................................12 Section 7 Other Securities of the Corporation...........................13 ARTICLE VII Corporate Seal................................................13 ARTICLE VIII Indemnification of Officers, Directors, Employees and Agents..................................................13 Section 1 Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation...........14 Section 2 Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation .........................14 Section 3 Authorization of Indemnification .............................14 Section 4 Good Faith Defined ...........................................14 Section 5 Indemnification by a Court ...................................14 Section 6 Expenses Payable in Advance ..................................15 Section 7 Nonexclusivity of Indemnification and Advancement of Expenses ................................................15 Section 8 Insurance.....................................................15 Section 9 Certain Definitions...........................................15 Section 10 Survival of Indemnification and Advancement of Expenses ......16 Section 11 Limitation on Indemnification ................................16 Section 12 Indemnification of Employees and Agents.......................16 Section 13 Effect of Amendment ..........................................16 Section 14 Authority to Enter into Indemnification Agreements ...........16 ARTICLE IX Notices.......................................................16 ARTICLE X Amendments....................................................17 ii AMENDED AND RESTATED BY-LAWS OF McKESSON CORPORATION A DELAWARE CORPORATION ARTICLE I OFFICES SECTION 1. REGISTERED OFFICE. The address of the registered office of Corporation within the State of Delaware is 2711 Centerville Road, City of Wilmington, 19808, County of New Castle. The name of the registered agent of the Corporation at such address is The Prentice-Hall Corporation System, Inc. SECTION 2. OTHER OFFICES. The Corporation shall also have and maintain an office or principal place of business at One Post Street, San Francisco, California and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS' MEETINGS SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders of the Corporation shall be held at such place, either within or without the State of Delaware, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the Corporation required to be maintained pursuant to Section 2 of ARTICLE I hereof. SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders of the Corporation for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors, or, if not so designated, then at 10:00 a.m. on the last Wednesday in July in each year if not a legal holiday, and, if a legal holiday, at the same hour and place on the next succeeding day not a holiday. SECTION 3. SPECIAL MEETINGS. Special Meetings of the stockholders of the Corporation may be called, for any purpose or purposes, by the Chairman of the Board or the President or the Board of Directors at any time. Stockholders may not call Special Meetings of the stockholders of the Corporation. 1 SECTION 4. NOTICE OF MEETINGS. (a) Except as otherwise provided by law or the Certificate of Incorporation, written notice of each meeting of stockholders, specifying the place, date and hour and purpose or purposes of the meeting, shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote thereat, directed to his address as it appears upon the books of the Corporation; except that where the matter to be acted on is a merger or consolidation of the Corporation or a sale, lease or exchange of all or substantially all of its assets, such notice shall be given not less than 20 nor more than 60 days prior to such meeting. (b) If at any meeting action is proposed to be taken which, if taken, would entitle stockholders fulfilling the requirements of Section 262(d) of the Delaware General Corporation Law to an appraisal of the fair value of their shares, the notice of such meeting shall contain a statement of that purpose and to that effect and shall be accompanied by a copy of that statutory section. (c) When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken unless the adjournment is for more than thirty days, or unless after the adjournment a new record date is fixed for the adjourned meeting, in which event a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (d) Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, either before or after such meeting, and to the extent permitted by law, will be waived by any stockholder by his attendance thereat, in person or by proxy. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. (e) Unless and until voted, every proxy shall be revocable at the pleasure of the person who executed it or of his legal representatives or assigns, except in those cases where an irrevocable proxy permitted by statute has been given. SECTION 5. QUORUM. At all meetings of stockholders, except where otherwise provided by law, the Certificate of Incorporation, or these By-Laws, the presence, in person or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. Shares, the voting of which at said meeting has been enjoined, or which for any reason cannot be lawfully voted at such meeting, shall not be counted to determine a quorum at said meeting. In the absence of a quorum any meeting of stockholders may be adjourned, from time to time, by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. At such adjourned meeting at which a quorum is present or represented any business may be transacted which might have been transacted at the original meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by law, the Certificate of Incorporation or these By-Laws, all action taken by the holders of a majority of the voting power represented at any meeting at which a quorum is present shall be valid and binding upon the Corporation. In the event that at any meeting at which the holders of more than one class or series of the Corporation's capital stock are entitled to vote as a class, a quorum of any such class or series is lacking, the holders of any class or series represented by a quorum may proceed with the transaction of the business to be 2 transacted by that class or series, and if such business is the election of directors, the director whose successors shall not have been elected shall continue in office until their successors shall have been duly elected and shall have qualified. SECTION 6. VOTING RIGHTS. (a) Except as otherwise provided by law, only persons in whose names shares entitled to vote stand on the stock records of the Corporation on the record date for determining the stockholders entitled to vote at said meeting shall be entitled to vote at such meeting. Shares standing in the names of two or more persons shall be voted or represented in accordance with the determination of the majority of such persons, or, if only one of such persons is present in person or represented by proxy, such person shall have the right to vote such shares and such shares shall be deemed to be represented for the purpose of determining a quorum. (b) Every person entitled to vote or execute consents shall have the right to do so either in person or by an agent or agents authorized by a written proxy executed by such person or his duly authorized agent, which proxy shall be filed with the Secretary of the Corporation at or before the meeting at which it is to be used. Said proxy so appointed need not be a stockholder. No proxy shall be voted on after three years from its date unless the proxy provides for a longer period. (c) Without limiting the manner in which a stockholder may authorize another person or persons to act for him as proxy pursuant to subsection (b) of this Section, the following shall constitute a valid means by which a stockholder may grant such authority: (1) A stockholder may execute a writing authorizing another person or persons to act for him as proxy. Execution may be accomplished by the stockholder or his authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature. (2) A stockholder may authorize another person or persons to act for him as proxy by transmitting or authorizing the transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information upon which they relied. (d) Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to subsection (c) of this Section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. SECTION 7. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS. (a) The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is 3 able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his ability. (b) The inspectors shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at a meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. (c) The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise. (d) In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in accordance with Section 212(c)(2) of the Delaware General Corporation Law, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification pursuant to subsection (b)(v) of this Section shall specify the precise information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable. (e) The provisions of this Section 7 shall not apply to any annual meeting of stockholders held prior to the annual meeting of stockholders to be held in 1995. SECTION 8. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held and which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of meeting during the whole time thereof, and may be inspected by any stockholder who is present. SECTION 9. STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS. At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, otherwise properly brought before the meeting by or at the direction of the Board of Directors or otherwise properly 4 brought before the meeting by a stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 9 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 9. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting, (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the stockholder, (iv) a description of all arrangements or understandings between the stockholder and any other person or persons (including their names) in connection with the proposal of such business by the stockholder and any material interest of the stockholder in such business, and (v) a representation that the stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. Notwithstanding anything in the By-Laws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section 9, provided, however, that nothing in this Section 9 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedure. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 9, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. SECTION 10. NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS. In addition to any other applicable requirements, only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors, by any nominating committee or person appointed by the Board of Directors or by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 10 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 10. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. Such stockholder's notice shall set forth (a) 5 as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of the Corporation which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, (i) the name and record address of the stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the stockholder, (iii) a description of all arrangements or understandings between the stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by the stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in such notice and (v) any other information relating to the stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee being named as a nominee and to serve as a director if elected. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. These provisions shall not apply to nomination of any persons entitled to be separately elected by holders of preferred stock. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE III DIRECTORS SECTION 1. GENERAL POWERS. The property, affairs and business of the Corporation shall be managed under the direction of its Board of Directors, which may exercise all of the powers of the Corporation, except such as are by law or by the Certificate of Incorporation or by these By-Laws expressly conferred upon or reserved to the stockholders. SECTION 2. NUMBER AND TERM OF OFFICE; REMOVAL. The number of directors of the Corporation shall be fixed from time to time by these By-Laws but in no event shall be less than three (3). Until these By-Laws are further amended, the number of directors shall be eleven (11). The directors shall be divided into three classes. Each such class shall consist, as nearly as may be possible, of one-third of the total number of directors, and any remaining directors shall be included within such group or groups as the Board of Directors shall designate. At the initial annual meeting of stockholders in 1994, a class of directors shall be elected for a one-year term, a class of directors for a two-year term and a class of directors for a three-year term. At each succeeding annual meeting of stockholders, beginning in 1995, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, but in no case shall a decrease in the number of directors shorten the term of any incumbent director. A director may be removed from office for cause only and, subject to such removal, death, resignation, 6 retirement or disqualification, shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and qualify. No alteration, amendment or repeal of these By-Laws shall be effective to shorten the term of any director holding office at the time of such alteration, amendment or repeal, to permit any such director to be removed without cause, or to increase the number of directors in any class or in the aggregate from that existing at the time of such alteration, amendment or repeal until the expiration of the terms of office of all directors then holding office, unless such alteration, amendment or repeal has been approved by either the holders of all shares of stock entitled to vote thereon or by a vote of a majority of the entire Board of Directors. The provisions of this Section 2 shall not apply to directors governed by Section 15 of this ARTICLE III. SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for the election of directors, the directors to be elected at such meeting shall be elected by a plurality of votes given at such election. SECTION 4. VACANCIES. Any vacancy occurring in the Board of Directors for any cause other than by reason of an increase in the number of directors may be filled by a majority of the remaining members of the Board of Directors, although such majority is less than a quorum, or by the stockholders. Any vacancy occurring by reason of an increase in the number of directors may be filled by action of a majority of the entire Board of Directors or by the stockholders. A director elected by the Board of Directors to fill a vacancy shall be elected to hold office until the expiration of the term for which he was elected and until his successor shall have been elected and shall have qualified. A director elected by the stockholders to fill a vacancy shall be elected to hold office until the expiration of the term for which he was elected and until his successor shall have been elected and shall have qualified. The provisions of this Section 4 shall not apply to directors governed by Section 15 of this ARTICLE III. SECTION 5. RESIGNATIONS. A director may resign at any time by giving written notice to the Board of Directors or to the Secretary. Such resignation shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6. ANNUAL MEETINGS. The Board of Directors, as constituted following the vote of stockholders at any meeting of the stockholders for the election of directors, may hold its first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after such meeting and at the same place, and notice of such meeting need not be given. Such first meeting may be held at any other time and place specified in a notice given as hereinafter provided for special meetings of the Board of Directors or in a consent and waiver of notice thereof signed by all the directors. SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors may be held without notice at such places and times as may be fixed from time to time by resolution of the Board. SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President and shall be called by the Secretary upon the written request of any three directors and each special meeting shall be held at such place and time as shall be specified in the notice thereof. At least twenty-four (24) hours' notice of each such special meeting shall be given to each director personally or sent to him addressed to his residence or usual place 7 of business by telephone, telegram or facsimile transmission, or at least 120 hours' notice of each such special meeting shall be given to each director by letter sent to him addressed as aforesaid or on such shorter notice and by such means as the person or persons calling such meeting may deem reasonably necessary or appropriate in light of the circumstances. Any notice by letter or telegram shall be deemed to be given when deposited in the United States mail so addressed or when duly deposited at an appropriate office for transmission by telegram, as the case may be. Such notice need not state the business to be transacted at or the purpose or purposes of such special meeting. No notice of any such special meeting of the Board of Directors need be given to any director who attends in person or who, in writing executed and filed with the records of the meeting, either before or after the holding thereof, waives such notice. No notice need be given of an adjourned meeting of the Board of Directors. SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of directors, but in no event less than two directors, shall constitute a quorum for the transaction of business at any annual, regular or special meeting of the Board of Directors. Except as otherwise provided by law, by the Certificate of Incorporation or by these By-Laws, the act of a majority of the directors present at any meeting, at which a quorum is present, shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present may adjourn the meeting from time to time until a quorum be had. SECTION 10. CONSENT IN WRITING. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board or such committee. SECTION 11. COMMITTEES. (a) Executive Committee. The Board of Directors may, by resolution passed by a majority of a quorum of the Board, appoint an Executive Committee of not less than three members, each of whom shall be a director. The Executive Committee, to the extent permitted by law, shall have and may exercise when the Board of Directors is not in session all powers of the Board in the management of the business and affairs of the Corporation, including, without limitation, the power and authority to declare a dividend or to authorize the issuance of stock, except such Committee shall not have the power or authority (i) to approve, adopt, or recommend to stockholders any action or matter required by the Delaware General Corporation Law to be submitted for stockholder approval; or (ii) to adopt, amend, or repeal any By-Law of the Corporation. (b) Other Committees. The Board of Directors may, by resolution passed by a majority of a quorum of the Board, from time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committee, but in no event shall any such committee have the powers denied to the Executive Committee in these By-Laws. (c) Term. The members of all committees of the Board of Directors shall serve a term coexistent with that of the Board of Directors which shall have appointed such committee. The Board, subject to the provisions of subsections (a) or (b) of this Section 11, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee; provided, that no committee shall consist of less than one member. The membership of a committee member shall terminate on the date of his death or voluntary resignation, but the Board may at any time for any reason remove any individual 8 committee member and the Board may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 11 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter; special meetings of any such committee may be held at the principal office of the Corporation required to be maintained pursuant to Section 2 of ARTICLE I hereof; or at any place which has been designated from time to time by resolution of such committee or by written consent of all members thereof, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time after the meeting and will be waived by any director by attendance thereat. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. SECTION 12. TELEPHONE MEETINGS. The Board of Directors or any committee thereof may participate in a meeting by means of a conference telephone or similar communications equipment if all members of the Board or of such committee, as the case may be, participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. SECTION 13. COMPENSATION. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors and/or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 9 SECTION 15. DIRECTORS ELECTED BY SPECIAL CLASS OR SERIES. To the extent that any holders of any class or series of stock other than Common Stock issued by the Corporation shall have the separate right, voting as a class or series, to elect directors, the directors elected by such class or series shall be deemed to constitute an additional class of directors and shall have a term of office for one year or such other period as may be designated by the provisions of such class or series providing such separate voting right to the holders of such class or series of stock, and any such class of directors shall be in addition to the classes referred to in Section 2 of this ARTICLE III. Any directors so elected shall be subject to removal in such manner as may be provided by law or by the Certificate of Incorporation of this Corporation. The provisions of Sections 2 and 4 of this ARTICLE III do not apply to directors governed by this Section 15. ARTICLE IV OFFICERS SECTION 1. DESIGNATION OF OFFICERS. The officers of the Corporation, who shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders, shall be a Chairman of the Board, a President, one or more Vice Presidents, a Treasurer, a Secretary and a Controller. The Board of Directors from time to time may choose such other officers as it shall deem appropriate. Any one person may hold any number of offices of the Corporation at any one time unless specifically prohibited therefrom by law. The Chairman of the Board and the President shall be chosen from among the directors; the other officers need not be directors. SECTION 2. TERM OF OFFICE; RESIGNATION; REMOVAL. The term of office of each officer shall be until the first meeting of the Board of Directors following the next annual meeting of stockholders and until his successor is elected and shall have qualified, or until his death, resignation or removal, whichever is sooner. Any officer may resign at any time by giving written notice to the Board of Directors or to the Secretary. Such resignation shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any officer may be removed at any time either with or without cause by the Board of Directors. SECTION 3. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause, may be filled for the unexpired portion of the term by the Board of Directors. SECTION 4. AUTHORITY OF OFFICERS. Subject to the power of the Board of Directors in its discretion to change and redefine the duties of the officers of the Corporation by resolution in such manner as it may from time to time determine, the duties of the officers of the Corporation shall be as follows: (a) Chairman of the Board. The Chairman of the Board shall preside at meetings of the stockholders and the Board of Directors. Subject to the direction of the Board of Directors, he shall generally manage the affairs of the Board and perform such other duties as are assigned by the Board. (b) President. The President shall be the Chief Executive Officer of the Corporation, and shall execute all the powers and perform all the duties usual to such office. Subject to the direction of the Board of Directors, he shall have the responsibility for the general management of the affairs of the Corporation. The President shall perform such other duties as may be prescribed or assigned to him from time to time by the Board of Directors. 10 (c) Other Officers. The other officers of the Corporation shall have such powers and shall perform such duties as generally pertain to their respective offices, as well as such powers and duties as the Board of Directors, the Executive Committee or the Chief Executive Officer may prescribe. SECTION 5. DIVISIONAL TITLES. Any one of the Chief Executive Officer, President, or Vice President Human Resources and Administration (each one an "Appointing Person"), may from time to time confer upon any employee of a division of the Corporation the title of President, Vice President, Treasurer or Secretary of such division or any other divisional title or titles deemed appropriate. Any such titles so conferred may be discontinued and withdrawn at any time by any one Appointing Person. Any employee of a division designated by such a divisional title shall have the powers and duties with respect to such division as shall be prescribed by the Appointing Person. The conferring, withdrawal or discontinuance of divisional titles shall be in writing and shall be filed with the Secretary of the Corporation. SECTION 6. SALARIES. The salaries and other compensation of the principal officers of the Corporation shall be fixed from time to time by the Board of Directors. ARTICLE V EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION SECTION 1. EXECUTION OF INSTRUMENTS. The Board of Directors may in its discretion determine the method and designate the signatory officer or officers or other person or persons, to execute any corporate instrument or document, or to sign the corporate name without limitation, except where otherwise provided by law, and such execution or signature shall be binding upon the Corporation. All checks and drafts drawn on banks or other depositories on funds to the credit of the Corporation or in special accounts of the Corporation, shall be signed by such person or persons as the Treasurer or such other person designated by the Board of Directors for that purpose shall authorize so to do. SECTION 2. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and other securities of other corporations and business entities owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized to do so by resolution of the Board of Directors. ARTICLE VI SHARES OF STOCK AND OTHER SECURITIES SECTION 1. FORM AND EXECUTION OF CERTIFICATES. Certificates for the shares of stock of the Corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board (if there be such an officer appointed), or by the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he 11 were such officer, transfer agent, or registrar at the date of issue. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to indemnify the Corporation in such manner as it shall require and/or to give the Corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. SECTION 3. TRANSFERS. Transfers of record of shares of stock of the Corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a certificate or certificates for a like number of shares, properly endorsed. SECTION 4. FIXING RECORD DATES. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the day on which the first written consent is expressed; (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. 12 SECTION 6. REGULATIONS. The Board of Directors may make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of the stock and other securities of the Corporation, and may appoint transfer agents and registrars of any class of stock or other securities of the Corporation. SECTION 7. OTHER SECURITIES OF THE CORPORATION. All bonds, debentures and other corporate securities of the Corporation, other than stock certificates, may be signed by the Chairman of the Board (if there be such an officer appointed), or the President or any Vice President or such other person as may be authorized by the Board of Directors and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signature of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the Corporation, or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security or whose facsimile signature shall appear thereon shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the Corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the Corporation. ARTICLE VII CORPORATE SEAL The corporate seal shall consist of a die bearing the name of the Corporation and the state and date of its incorporation. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or 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 Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a 13 manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. The right to indemnification conferred in this ARTICLE VIII shall be a contract right. SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit 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 Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this ARTICLE VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or Section 2 of this ARTICLE VIII, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent, however, that a director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith, without the necessity of authorization in the specific case. SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under Section 3 of this ARTICLE VIII, a person shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe his conduct was unlawful, if his action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to him by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The term "another enterprise" as used in this Section 4 shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Sections 1 or 2 of this ARTICLE VIII, as the case may be. SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary determination in the specific case under Section 3 of this ARTICLE VIII, and notwithstanding the absence of any determination 14 thereunder, any director or officer may apply to any court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this ARTICLE VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because he has met the applicable standards of conduct set forth in Sections 1 or 2 of this ARTICLE VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this ARTICLE VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this ARTICLE VIII. SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The indemnification and advancement of expenses provided by or granted pursuant to this ARTICLE VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this ARTICLE VIII shall be made to the fullest extent permitted by law. The provisions of this ARTICLE VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this ARTICLE VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power or the obligation to indemnify him against such liability under the provisions of this ARTICLE VIII. SECTION 9. CERTAIN DEFINITIONS. For purposes of this ARTICLE VIII, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this ARTICLE VIII with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. For purposes of this ARTICLE VIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with 15 respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this ARTICLE VIII. SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The indemnification and advancement of expenses provided by, or granted pursuant to, this ARTICLE VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything contained in this ARTICLE VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 hereof), the Corporation shall not be obligated to indemnify any director or officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation. SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this ARTICLE VIII to directors and officers of the Corporation. SECTION 13. EFFECT OF AMENDMENT. Any amendment, repeal or modification of this ARTICLE VIII shall not (a) adversely affect any right or protection of any director or officer existing at the time of such amendment, repeal or modification, or (b) apply to the indemnification of any such person for liability, expense, or loss stemming from actions or omissions occurring prior to such amendment, repeal, or modification. SECTION 14. AUTHORITY TO ENTER INTO INDEMNIFICATION AGREEMENTS. The Corporation may enter into indemnification agreements with the directors and officers of the Corporation, including, without limitation, any indemnification agreement in substantially the form set forth in Exhibit 1 attached to these By-Laws. ARTICLE IX NOTICES Whenever, under any provisions of these By-Laws, notice is required to be given to any stockholder, the same shall be given in writing, timely and duly deposited in the United States Mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the Corporation or its transfer agent. Any notice required to be given to any director may be given by any of the methods stated in Section 8 of ARTICLE III hereof, except that such notice other than one which is delivered personally, shall be sent to such address or (in the case of facsimile telecommunication) facsimile telephone number as such director shall have disclosed in writing to the Secretary of the Corporation, or, in the absence of such filing, to the last known post office address of such director. If no address of a stockholder or director be known, such notice may be sent to the office of the Corporation required to be maintained pursuant to Section 2 of ARTICLE I hereof. An affidavit of mailing, executed by a duly authorized and competent employee of the Corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall be conclusive evidence of the statements therein contained. All 16 notices given by mail, as above provided, shall be deemed to have been given as at the time of mailing and all notices given by telegram or other means of electronic transmission shall be deemed to have been given as at the sending time recorded by the telegraph company or other electronic transmission equipment operator transmitting the same. It shall not be necessary that the same method of giving be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him in the manner above provided, shall not be affected or extended in any manner by the failure of such a stockholder or such director to receive such notice. Whenever any notice is required to be given under the provisions of this statutes or of the Certificate of Incorporation, or of these By-Laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or By-Laws of the Corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any provision of the Delaware General Corporation Law, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. ARTICLE X AMENDMENTS The Board of Directors is expressly authorized to adopt, alter and repeal the By-Laws of the Corporation in whole or in part at any regular or special meeting of the Board of Directors, by vote of a majority of the entire Board of Directors. Except where ARTICLE V of the Certificate of Incorporation of the Corporation requires a higher vote, the By-Laws may also be adopted, altered or repealed in whole or in part at any annual or special meeting of the stockholders by the affirmative vote of three fourths of the shares of the Corporation outstanding and entitled to vote thereon. CERTIFICATE OF SECRETARY The undersigned, Senior Vice President, General Counsel and Secretary of McKesson Corporation a Delaware corporation, hereby certifies that the foregoing is a full, true and correct copy of the By-Laws of said Corporation, with all amendments to date of this Certificate. WITNESS the signature of the undersigned and the seal of the Corporation this 30th day of July, 2001. /s/ Ivan D. Meyerson ----------------------------------------- Ivan D. Meyerson Senior Vice President, General Counsel and Secretary 17 EXHIBIT 1 INDEMNIFICATION AGREEMENT AGREEMENT, effective as of ______, 2001__, between McKesson Corporation, a Delaware corporation (the "Company"), and ______________ (the "Indemnitee"). WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available. WHEREAS, Indemnitee is a director/officer of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims being asserted against directors of public companies in today's environment; WHEREAS, the Certificate of Incorporation and the By-laws of the Company require the Company to indemnify and advance expenses to its directors to the fullest extent permitted by law and the Indemnitee has been serving and continues to serve as a director or officer of the Company in part in reliance on such Certificate of Incorporation and By-laws; WHEREAS, in recognition of Indemnitee's need for substantial protection against personal liability in order to enhance Indemnitee's continued service to the Company in an effective manner and Indemnitee's reliance on the aforesaid Certificate of Incorporation and By-laws, and in part to provide Indemnitee with specific contractual assurance that the protection promised by such Certificate of Incorporation and By-laws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of such Certificate of Incorporation and By-laws or any change in the composition of the Company's Board of Directors or acquisition transaction relating to the Company), and in order to induce Indemnitee to continue to provide services to the Company as a director or officer thereof, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Indemnitee under the Company's directors' and officers' liability insurance policies. NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. (a) Change in Control: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the 1 Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company's assets. (b) Expense: include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Proceeding relating to any Indemnifiable Event. (c) Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or an officer of the Company, or while a director or officer is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Indemnitee in any such capacity. (d) Potential Change in Control: shall be deemed to have occurred if (i) the Company enters into an agreement or arrangement, the consummation of which would result in the occurrence of Change in Control; (ii) any person (including the Company) publicly announces an intention to take or to consider taking actions which if consummated would constitute Change in Control; (iii) any person, other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, who is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding Voting Securities, increases his beneficial ownership of such securities by 5% or more over the percentage so owned by such person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (e) Proceeding: any threatened, pending or completed action, suit or proceeding, or any inquiry, hearing or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or other. (f) Reviewing Party: any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board (including the special, independent counsel referred to in Section 3) who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification. (g) Voting Securities: any securities of the Company which vote generally in the election of directors. 2 2. AGREEMENT TO INDEMNIFY. (a) In the event Indemnitee was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest extent permitted by law, as soon as practicable but in any event no later than thirty days after written demand is presented to the Company, against any and all Expenses, judgments, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines, penalties or amounts paid in settlement) of such Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement (including the creation of the Trust). Notwithstanding anything in this Agreement to the contrary and except as provided in Section 5, prior to a Change in Control Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless the Company has joined in or consented to the initiation of such Proceeding. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an "Expense Advance"). (b) Notwithstanding the foregoing, (i) the obligations of the Company under Section 2(a) shall be subject to the condition that the Reviewing Party shall not have determined (in a written opinion, in any case in which the special, independent counsel referred to in Section 3 hereof is involved) that Indemnitee would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 2(a) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Indemnitee has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon. If there has not been a Change in Control the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), the Reviewing Party shall be the special, independent counsel referred to in Section 3 hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Indemnitee substantively would not be permitted to be indemnified in whole or in part under applicable law, Indemnitee shall have the right to commence litigation in any court in the States of California or Delaware having subject matter jurisdiction thereof and in which venue is proper seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Indemnitee. 3. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control) then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnity payments and Expense Advances under this Agreement or any other agreement or under applicable law or the Company's Certificate of Incorporation or By-Laws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from special, independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with such 3 matters) within the last five years. Such independent counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or the engagement of special, independent counsel pursuant hereto. 4. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control, the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for and defending any Proceeding relating to an Indemnifiable event, and any and all judgments, fines, penalties and settlement amounts of any and all Proceedings relating to an Indemnifiable Event from time to time actually paid or claimed, reasonably anticipated or proposed to be paid. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Reviewing Party, in any case in which the special, independent counsel referred to above is involved. The terms of the Trust shall provide that upon a Change in Control (i) the Trust shall not be revoked or the principal thereof invaded, without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the circumstances under which the Indemnitee would be required to reimburse the Company under Section 2(b) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in such Trust shall revert to the Company upon a final determination by the Reviewing Party or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 4 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by the Company for federal, state, local and foreign tax purposes. 5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING THIS AGREEMENT. The Company shall indemnify Indemnitee against any and all expenses (including attorneys' fees), and, if requested by Indemnitee, shall (within ten business days of such request) advance such expenses to Indemnitee, which are incurred by Indemnitee in connection with any claim asserted against or action brought by Indemnitee for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company's Certificate of Incorporation or By-laws now or hereafter in effect relating to indemnification for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 4 6. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines, penalties and amounts paid in settlement of a Proceeding but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all Proceedings relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses incurred in connection therewith. 7. DEFENSE TO INDEMNIFICATION, BURDEN OF PROOF AND PRESUMPTIONS. It shall be a defense to any action brought by the Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Company) that the Indemnitee has not met the standards of conduct that make it permissible under the Delaware General Corporation Law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any determination by the Reviewing Party or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense shall be on the Company. Neither the failure of the Company (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by the Indemnitee that indemnification of the claimant is proper under the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Company (including its Board of Directors, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 8. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company's Certificate of Incorporation or By-laws or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) permits greater indemnification by agreement than would be afforded currently under the Company's Certificate of Incorporation and By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. 9. LIABILITY INSURANCE. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. 10. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances, and any claim or cause of action of the Company or its affiliate shall be 5 extinguished and deemed released unless asserted by the timely filing of a legal action within such period; provided, 6 however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern. 11. AMENDMENT OF THIS AGREEMENT. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 12. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise actually received payment (under any insurance policy, By-law or otherwise) of the amounts otherwise indemnifiable hereunder. 14. SETTLEMENT OF CLAIMS. The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any action or claim effected without the Company's written consent. The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Company nor the Indemnitee will unreasonably withhold their consent to any proposed settlement. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action. 15. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as a director or officer of the Company or of any other enterprise at the Company's request. 16. SEVERABILITY. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void or otherwise unenforceable, that is not itself invalid, void or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. 7 17. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such State without giving effect to the principles of conflicts of laws. IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the _______________ day of __________________, 20___. McKESSON CORPORATION By: -------------------------------------- Name: Title: -------------------------------------- [Indemnitee] 8 EX-10.1 5 f76619ex10-1.txt FOURTH AMENDMENT TO 6/25/1999 RECEIVABLES Exhibit 10.1 EXECUTION COPY FOURTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT THIS FOURTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT ("Amendment"), dated as of June 15, 2001, is among CGSF Funding Corporation, a Delaware corporation ("Seller"), McKesson HBOC, Inc., a Delaware corporation (the "Servicer"; the Servicer together with the Seller, the "Seller Parties" and each a "Seller Party"), the funding entities parties hereto (the "Financial Institutions"), Preferred Receivables Funding Corporation ("PREFCO"), Falcon Asset Securitization Corporation ("Falcon"), Blue Ridge Asset Funding Corporation ("Blue Ridge") and Liberty Street Funding Corp. ("Liberty Street") (PREFCO, Falcon, Blue Ridge and Liberty Street being referred to collectively as the "Conduits", and together with the Financial Institutions, the "Purchasers"), Bank One, NA (formerly known as The First National Bank of Chicago, "Bank One"), Wachovia Bank, N.A. and The Bank of Nova Scotia (collectively, the "Managing Agents") and Bank One, as the collateral agent (the "Collateral Agent"). Defined terms used herein and not otherwise defined herein shall have the meaning given to them in the "Receivables Purchase Agreement" (as hereinafter defined). WHEREAS, the Seller, the Servicer, the Financial Institutions, the Conduits, the Managing Agents and the Collateral Agent are parties to the Receivables Purchase Agreement dated as of June 25, 1999, as amended by the First Amendment thereto dated as of September 29, 1999, the Second Amendment thereto dated as of December 6, 1999 and the Third Amendment and Waiver thereto dated as of June 16, 2000 (the "Receivables Purchase Agreement"); and WHEREAS, the parties hereto have agreed to amend the Receivables Purchase Agreement on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises set forth above, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendment to the Receivables Purchase Agreement. Effective as of the date first above written and subject to the execution of this Amendment by the parties hereto and the satisfaction of the conditions precedent set forth in Section 2 below, the Receivables Purchase Agreement shall be and hereby is amended as follows: a. Exhibit I of the Receivables Purchase Agreement is hereby amended to add the following new definition thereto: "Fourth Amendment Effective Date" means June 15, 2001. b. The definition of "Liquidity Termination Date" in Exhibit I of the Receivables Purchase Agreement is hereby amended to delete the words "June 15, 2001" and to substitute therefor the words "June 14, 2002". c. The definition of "Loss Reserve" in Exhibit I of the Receivables Purchase Agreement is hereby deleted in its entirety and the following definition is substituted therefor: "Loss Reserve" means, on any date, an amount equal to (x) the greater of (i) 14% and (ii) the Loss Reserve Ratio then in effect times (y) the aggregate Outstanding Balance of Eligible Receivables (net of Earned Discounts and quarterly volume rebates) as of the close of business on the immediately preceding Business Day. d. The definition of "Special Concentration Limit" in Exhibit I of the Receivables Purchase Agreement is hereby deleted in its entirety and the following definition is substituted therefor: "Special Concentration Limit" means, at any time, with respect to any Special Obligor (together with its Affiliates or subsidiaries), the lesser of (i) the applicable percentage set forth below multiplied by the aggregate Outstanding Balance of Eligible Receivables (net of all Earned Discounts and quarterly volume rebates) at such time and (ii) the maximum dollar amounts set forth below, in each case corresponding to the Moody's and S&P short-term debt ratings for such Special Obligor at such time or such percentage as may be otherwise set forth below such Special Obligor's name below: Special Obligors with ratings at or above:

Maximum Dollar S&P Rating Moody's Rating Percentage Amount ---------- --------------- ---------- -------------- A-1+ and P-1 11% $165,000,000 A-1 and P-1 9% $135,000,000 A-2 and P-2 6% $90,000,000 lower than lower than A-2 or P-2 or unrated and unrated 3% $45,000,000

provided, that either Managing Agent or the Required Financial Institutions may, upon not less than thirty (30) Business Days' notice to Seller, cancel or reduce any Special Concentration Limit; provided, further, that notwithstanding the foregoing, for so long as Albertson's, Inc. maintains its short-term debt ratings from Moody's and S&P as in effect on the Fourth Amendment Effective Date, the Special Concentration Limit for such Special Obligor shall be the lesser of (i) 10% multiplied by the aggregate Outstanding Balance of Eligible Receivables (net of all Earned Discounts and quarterly volume rebates) at such time and (ii) $200,000,000, it being understood that if Albertson's, Inc. 2 is downgraded by either S&P or Moody's, the Standard Concentration Limit shall apply to such Obligor. e. The definition of "Special Obligor" in Exhibit I of the Receivables Purchase Agreement is hereby deleted in its entirety and the following definition is substituted therefor: "Special Obligor" means Albertson's, Inc. (but only for so long as it maintains its short-term debt ratings from Moody's and S&P as in effect on the Fourth Amendment Effective Date), CVS Corporation, JC Penney Company, Inc., Omnicare, Inc., Target Corp, Safeway Inc., Wal-Mart Stores, Inc. and such other Special Obligors as may be designated by the managing Agents from time to time. 2. Conditions Precedent. This Amendment shall become effective as of the date above written if and only if the Managing Agents have received: a. duly executed originals of this Amendment from each of the parties listed on the signature pages hereto; and b. a duly executed Second Amended and Restated Fee Letter providing an increase to the fees set forth therein. 3. Representations and Warranties of the Seller Parties. Each of the Seller Parties hereby represents and warrants as follows: a. This Amendment and the Receivables Purchase Agreement, as amended hereby, constitute legal, valid and binding obligations of such Seller Party and are enforceable against such Seller Party in accordance with their terms. b. Upon the effectiveness of this Amendment, each Seller Party hereby reaffirms all representations and warranties made in the Receivables Purchase Agreement, and to the extent the same are not amended hereby, agrees that all such representations and warranties shall be deemed to have been remade as of the date of delivery of this Amendment, unless and to the extent that any such representation and warranty is stated to relate solely to an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date. 4. Reference to and Effect on the Receivables Purchase Agreement. a. Upon the effectiveness of Section 1 hereof, on and after the date hereof, each reference in the Receivables Purchase Agreement to "this Receivables Purchase Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Receivables Purchase Agreement as amended hereby. b. The Receivables Purchase Agreement, as amended hereby, and all other documents, instruments and agreements executed and/or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed. c. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Managing 3 Agents, the Financial Institutions or the Collateral Agent, nor constitute a waiver of any provision of the Receivables Purchase Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith. 5. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws (as opposed to the conflict of law provisions) of the State of New York. 6. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. 7. Counterparts. This Amendment may be executed by one or more of the parties to the Amendment on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 4 IN WITNESS WHEREOF, this Amendment has been duly executed and delivered on the date first above written. CGSF FUNDING CORPORATION, as the Seller By: -------------------------------------- Name: Nicholas A. Loiacono Title: Vice President and Treasurer McKESSON HBOC, INC., as the Servicer By: -------------------------------------- Name: Nicholas A. Loiacono Title: Vice President and Treasurer PREFERRED RECEIVABLES FUNDING CORPORATION, as a Conduit By: -------------------------------------- Authorized Signatory FALCON ASSET SECURITIZATION CORPORATION, as a Conduit By: -------------------------------------- Authorized Signatory BLUE RIDGE ASSET FUNDING CORPORATION, as a Conduit By: Wachovia Bank, N.A., as Attorney-In-Fact By: -------------------------------------- Name: Title: SIGNATURE PAGE TO FOURTH AMENDMENT TO McKESSON RPA LIBERTY STREET FUNDING CORP., as a Conduit By: -------------------------------------- Name: Title: BANK ONE, NA (Main Office Chicago) (formerly known as The First National Bank of Chicago), as a Committed Purchaser for PREFCO and Falcon, a Financial Institution, a Managing Agent and as Collateral Agent By: -------------------------------------- Name: Elizabeth Cohen Title: Vice President WACHOVIA BANK, N.A., as a Committed Purchaser for Blue Ridge, a Financial Institution and a Managing Agent By: -------------------------------------- Name: Title: THE BANK OF NOVA SCOTIA, as a Committed Purchaser for Liberty Street, a Financial Institution and a Managing Agent By: -------------------------------------- Name: Title: SIGNATURE PAGE TO FOURTH AMENDMENT TO McKESSON RPA

EX-3.2

                                                                     Exhibit 3.2

                            CERTIFICATE OF AMENDMENT
                                       OF
                                    RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                               McKESSON HBOC, INC.

--------------------------------------------------------------------------------

                             Pursuant to Sections 222 and 242 of
                              the General Corporation Law of the
                                      State of Delaware

--------------------------------------------------------------------------------

                McKesson HBOC, Inc., a corporation organized and existing under
and by virtue of the provisions of the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify as follows:

                FIRST: That Article I and Article II of the Corporation's
Restated Certificate of Incorporation are hereby amended to read in their
entirety as set forth below:

                                    ARTICLE I

                The name of the Corporation is McKesson Corporation.

                                   ARTICLE II

                The address of the registered office of the Corporation within
        the State of Delaware is 2711 Centerville Road, Suite 400, City of
        Wilmington, 19808, County of New Castle. The name its registered agent
        at such address is The Prentice-Hall Corporation System, Inc.

                SECOND: That the foregoing amendments were duly adopted in
accordance with the provisions of Section 222 and 242 of the General Corporation
Law of the State of Delaware.



                                       1



                IN WITNESS WHEREOF, McKesson HBOC, Inc. has caused this
Certificate to be executed in its corporate name this 25th day of July, 2001.



                                      McKESSON HBOC, INC.

                                      By: /s/ Ivan D. Meyerson
                                          --------------------------------------
                                          Name:  Ivan D. Meyerson
                                          Title: Senior Vice President, General
                                                 Counsel and Corporate Secretary



                                       2

EX-3.3

                                                                     Exhibit 3.3


                                  AMENDED AND

                                    RESTATED

                                     BY-LAWS

                                       OF

                              McKESSON CORPORATION

                             A DELAWARE CORPORATION






                        AS AMENDED THROUGH JULY 30, 2001

--------------------------------------------------------------------------------





                                TABLE OF CONTENTS



                                                                                 Page
                                                                                 ----
                                                                              
ARTICLE I           Offices........................................................1
        Section 1   Registered Office..............................................1
        Section 2   Other Offices..................................................1

ARTICLE II          Stockholders' Meetings.........................................1
        Section 1   Place of Meetings..............................................1
        Section 2   Annual Meetings................................................1
        Section 3   Special Meetings...............................................1
        Section 4   Notice of Meetings.............................................2
        Section 5   Quorum.........................................................2
        Section 6   Voting Rights..................................................3
        Section 7   Voting Procedures and Inspectors
                      of Elections.................................................3
        Section 8   List of Stockholders...........................................4
        Section 9   Stockholder Proposals at
                      Annual Meetings..............................................4
        Section 10  Nominations of Persons for Election
                      to the Board of Directors....................................5

ARTICLE III         Directors......................................................6
        Section 1   General Powers.................................................6
        Section 2   Number and Term of Office; Removal.............................6
        Section 3   Election of Directors..........................................7
        Section 4   Vacancies......................................................7
        Section 5   Resignations...................................................7
        Section 6   Annual Meetings................................................7
        Section 7   Regular Meetings...............................................7
        Section 8   Special Meetings; Notice.......................................7
        Section 9   Quorum and Manner of Acting....................................8
        Section 10  Consent in Writing.............................................8
        Section 11  Committees.....................................................8
        Section 12  Telephone Meetings.............................................9
        Section 13  Compensation...................................................9
        Section 14  Interested Directors...........................................9
        Section 15  Directors Elected by Special Class or Series..................10

ARTICLE IV          Officers......................................................10
        Section 1   Designation of Officers.......................................10
        Section 2   Term of Office; Resignation; Removal..........................10
        Section 3   Vacancies.....................................................10
        Section 4   Authority of Officers.........................................10
        Section 5   Divisional Titles.............................................11
        Section 6   Salaries......................................................11

ARTICLE V           Execution of Corporate Instruments and Voting
                      of Securities Owned by the Corporation......................11
        Section 1   Execution of Instruments......................................11
        Section 2   Voting of Securities Owned by the Corporation.................11




                                        i



                                                                              
ARTICLE VI          Shares of Stock and Other Securities..........................11
        Section 1   Form and Execution of Certificates............................11
        Section 2   Lost Certificates.............................................12
        Section 3   Transfers.....................................................12
        Section 4   Fixing Record Dates...........................................12
        Section 5   Registered Stockholders.......................................12
        Section 6   Regulations...................................................12
        Section 7   Other Securities of the Corporation...........................13

ARTICLE VII         Corporate Seal................................................13

ARTICLE VIII        Indemnification of Officers, Directors, Employees
                      and Agents..................................................13
        Section 1   Power to Indemnify in Actions, Suits or Proceedings other
                       Than Those by or in the Right of the Corporation...........14
        Section 2   Power to Indemnify in Actions, Suits or Proceedings by
                      or in the Right of the Corporation .........................14
        Section 3   Authorization of Indemnification .............................14
        Section 4   Good Faith Defined ...........................................14
        Section 5   Indemnification by a Court ...................................14
        Section 6   Expenses Payable in Advance ..................................15
        Section 7   Nonexclusivity of Indemnification and Advancement
                      of Expenses ................................................15
        Section 8   Insurance.....................................................15
        Section 9   Certain Definitions...........................................15
        Section 10  Survival of Indemnification and Advancement of Expenses ......16
        Section 11  Limitation on Indemnification ................................16
        Section 12  Indemnification of Employees and Agents.......................16
        Section 13  Effect of Amendment ..........................................16
        Section 14  Authority to Enter into Indemnification Agreements ...........16

ARTICLE IX          Notices.......................................................16

ARTICLE X           Amendments....................................................17





                                       ii



                                   AMENDED AND

                                    RESTATED

                                     BY-LAWS

                                       OF

                              McKESSON CORPORATION

                             A DELAWARE CORPORATION


                                    ARTICLE I

                                     OFFICES

SECTION 1. REGISTERED OFFICE. The address of the registered office of
Corporation within the State of Delaware is 2711 Centerville Road, City of
Wilmington, 19808, County of New Castle. The name of the registered agent of the
Corporation at such address is The Prentice-Hall Corporation System, Inc.

SECTION 2. OTHER OFFICES. The Corporation shall also have and maintain an office
or principal place of business at One Post Street, San Francisco, California and
may also have offices at such other places, both within and without the State of
Delaware, as the Board of Directors may from time to time determine or the
business of the Corporation may require.

                                   ARTICLE II

                             STOCKHOLDERS' MEETINGS

SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders of the Corporation
shall be held at such place, either within or without the State of Delaware, as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at the office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof.

SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders of the
Corporation for the purpose of election of directors and for such other business
as may lawfully come before it, shall be held on such date and at such time as
may be designated from time to time by the Board of Directors, or, if not so
designated, then at 10:00 a.m. on the last Wednesday in July in each year if not
a legal holiday, and, if a legal holiday, at the same hour and place on the next
succeeding day not a holiday.

SECTION 3. SPECIAL MEETINGS. Special Meetings of the stockholders of the
Corporation may be called, for any purpose or purposes, by the Chairman of the
Board or the President or the Board of Directors at any time. Stockholders may
not call Special Meetings of the stockholders of the Corporation.



                                       1


SECTION 4. NOTICE OF MEETINGS.

(a) Except as otherwise provided by law or the Certificate of Incorporation,
written notice of each meeting of stockholders, specifying the place, date and
hour and purpose or purposes of the meeting, shall be given not less than 10 nor
more than 60 days before the date of the meeting to each stockholder entitled to
vote thereat, directed to his address as it appears upon the books of the
Corporation; except that where the matter to be acted on is a merger or
consolidation of the Corporation or a sale, lease or exchange of all or
substantially all of its assets, such notice shall be given not less than 20 nor
more than 60 days prior to such meeting.

(b) If at any meeting action is proposed to be taken which, if taken, would
entitle stockholders fulfilling the requirements of Section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.

(c) When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place thereof are announced at
the meeting at which the adjournment is taken unless the adjournment is for more
than thirty days, or unless after the adjournment a new record date is fixed for
the adjourned meeting, in which event a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.

(d) Notice of the time, place and purpose of any meeting of stockholders may be
waived in writing, either before or after such meeting, and to the extent
permitted by law, will be waived by any stockholder by his attendance thereat,
in person or by proxy. Any stockholder so waiving notice of such meeting shall
be bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.

(e) Unless and until voted, every proxy shall be revocable at the pleasure of
the person who executed it or of his legal representatives or assigns, except in
those cases where an irrevocable proxy permitted by statute has been given.

SECTION 5. QUORUM. At all meetings of stockholders, except where otherwise
provided by law, the Certificate of Incorporation, or these By-Laws, the
presence, in person or by proxy duly authorized, of the holders of a majority of
the outstanding shares of stock entitled to vote shall constitute a quorum for
the transaction of business. Shares, the voting of which at said meeting has
been enjoined, or which for any reason cannot be lawfully voted at such meeting,
shall not be counted to determine a quorum at said meeting.

In the absence of a quorum any meeting of stockholders may be adjourned, from
time to time, by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. At such
adjourned meeting at which a quorum is present or represented any business may
be transacted which might have been transacted at the original meeting. The
stockholders present at a duly called or convened meeting, at which a quorum is
present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these By-Laws,
all action taken by the holders of a majority of the voting power represented at
any meeting at which a quorum is present shall be valid and binding upon the
Corporation.

In the event that at any meeting at which the holders of more than one class or
series of the Corporation's capital stock are entitled to vote as a class, a
quorum of any such class or series is lacking, the holders of any class or
series represented by a quorum may proceed with the transaction of the business
to be



                                       2


transacted by that class or series, and if such business is the election of
directors, the director whose successors shall not have been elected shall
continue in office until their successors shall have been duly elected and shall
have qualified.

SECTION 6. VOTING RIGHTS.

(a) Except as otherwise provided by law, only persons in whose names shares
entitled to vote stand on the stock records of the Corporation on the record
date for determining the stockholders entitled to vote at said meeting shall be
entitled to vote at such meeting. Shares standing in the names of two or more
persons shall be voted or represented in accordance with the determination of
the majority of such persons, or, if only one of such persons is present in
person or represented by proxy, such person shall have the right to vote such
shares and such shares shall be deemed to be represented for the purpose of
determining a quorum.

(b) Every person entitled to vote or execute consents shall have the right to do
so either in person or by an agent or agents authorized by a written proxy
executed by such person or his duly authorized agent, which proxy shall be filed
with the Secretary of the Corporation at or before the meeting at which it is to
be used. Said proxy so appointed need not be a stockholder. No proxy shall be
voted on after three years from its date unless the proxy provides for a longer
period.

(c) Without limiting the manner in which a stockholder may authorize another
person or persons to act for him as proxy pursuant to subsection (b) of this
Section, the following shall constitute a valid means by which a stockholder may
grant such authority:

        (1) A stockholder may execute a writing authorizing another person or
        persons to act for him as proxy. Execution may be accomplished by the
        stockholder or his authorized officer, director, employee or agent
        signing such writing or causing his or her signature to be affixed to
        such writing by any reasonable means including, but not limited to, by
        facsimile signature.

        (2) A stockholder may authorize another person or persons to act for him
        as proxy by transmitting or authorizing the transmission of a telegram,
        cablegram, or other means of electronic transmission to the person who
        will be the holder of the proxy or to a proxy solicitation firm, proxy
        support service organization or like agent duly authorized by the person
        who will be the holder of the proxy to receive such transmission,
        provided that any such telegram, cablegram or other means of electronic
        transmission must either set forth or be submitted with information from
        which it can be determined that the telegram, cablegram or other
        electronic transmission was authorized by the stockholder. If it is
        determined that such telegrams, cablegrams or other electronic
        transmissions are valid, the inspectors or, if there are no inspectors,
        such other persons making that determination shall specify the
        information upon which they relied.

(d) Any copy, facsimile telecommunication or other reliable reproduction of the
writing or transmission created pursuant to subsection (c) of this Section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall
be a complete reproduction of the entire original writing or transmission.

SECTION 7.  VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.

(a) The Corporation shall, in advance of any meeting of stockholders, appoint
one or more inspectors to act at the meeting and make a written report thereof.
The Corporation may designate one or more persons as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate is



                                       3


able to act at a meeting of stockholders, the person presiding at the meeting
shall appoint one or more inspectors to act at the meeting. Each inspector,
before entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.

(b) The inspectors shall (i) ascertain the number of shares outstanding and the
voting power of each, (ii) determine the shares represented at a meeting and the
validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.

(c) The date and time of the opening and the closing of the polls for each
matter upon which the stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or changes
thereto, shall be accepted by the inspectors after the closing of the polls
unless the Court of Chancery upon application by a stockholder shall determine
otherwise.

(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the Corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this Section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.

(e) The provisions of this Section 7 shall not apply to any annual meeting of
stockholders held prior to the annual meeting of stockholders to be held in
1995.

SECTION 8. LIST OF STOCKHOLDERS. The officer who has charge of the stock ledger
of the Corporation shall prepare and make, at least 10 days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held and
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where said meeting is to be held, and the list shall be
produced and kept at the time and place of meeting during the whole time
thereof, and may be inspected by any stockholder who is present.

SECTION 9. STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS. At an annual meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, otherwise properly
brought before the meeting by or at the direction of the Board of Directors or
otherwise properly



                                       4


brought before the meeting by a stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 9 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 9. In addition to any other applicable
requirements, for business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice to the
Secretary must be delivered to or mailed and received at the principal executive
offices of the Corporation, not less than 90 days nor more than 120 days prior
to the anniversary date of the immediately preceding annual meeting of
stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure of
the date of the annual meeting was made, whichever first occurs. A stockholder's
notice to the Secretary shall set forth as to each matter the stockholder
proposes to bring before the annual meeting, (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record address
of the stockholder proposing such business, (iii) the class or series and number
of shares of capital stock of the Corporation which are owned beneficially or of
record by the stockholder, (iv) a description of all arrangements or
understandings between the stockholder and any other person or persons
(including their names) in connection with the proposal of such business by the
stockholder and any material interest of the stockholder in such business, and
(v) a representation that the stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at the annual meeting except in accordance with the procedures set
forth in this Section 9, provided, however, that nothing in this Section 9 shall
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.

The Chairman of an annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 9, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.

SECTION 10. NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS. In
addition to any other applicable requirements, only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors, by any nominating committee or person appointed by the
Board of Directors or by any stockholder of the Corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for in
this Section 10 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the notice
procedures set forth in this Section 10. Such nominations, other than those made
by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice to the Secretary must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than 90
days nor more than 120 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders; provided, however, that in the event
that the annual meeting is called for a date that is not within 30 days before
or after such anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure of the date of the annual meeting was made,
whichever first occurs. Such stockholder's notice shall set forth (a)



                                       5


as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by the person and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Section 14 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the stockholder giving the notice, (i) the name and
record address of the stockholder, (ii) the class or series and number of shares
of capital stock of the Corporation which are owned beneficially or of record by
the stockholder, (iii) a description of all arrangements or understandings
between the stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by the stockholder, (iv) a representation that such stockholder intends to
appear in person or by proxy at the meeting to nominate the persons named in
such notice and (v) any other information relating to the stockholder that would
be required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for the election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee being named as a nominee and to serve as a director if
elected. The Corporation may require any proposed nominee to furnish such other
information as may reasonably be required by the Corporation to determine the
eligibility of such proposed nominee to serve as a director of the Corporation.
No person shall be eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth herein. These provisions
shall not apply to nomination of any persons entitled to be separately elected
by holders of preferred stock.

The Chairman of the meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the foregoing
procedure, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.

                                   ARTICLE III

                                    DIRECTORS

SECTION 1. GENERAL POWERS. The property, affairs and business of the Corporation
shall be managed under the direction of its Board of Directors, which may
exercise all of the powers of the Corporation, except such as are by law or by
the Certificate of Incorporation or by these By-Laws expressly conferred upon or
reserved to the stockholders.

SECTION 2. NUMBER AND TERM OF OFFICE; REMOVAL. The number of directors of the
Corporation shall be fixed from time to time by these By-Laws but in no event
shall be less than three (3). Until these By-Laws are further amended, the
number of directors shall be eleven (11). The directors shall be divided into
three classes. Each such class shall consist, as nearly as may be possible, of
one-third of the total number of directors, and any remaining directors shall be
included within such group or groups as the Board of Directors shall designate.
At the initial annual meeting of stockholders in 1994, a class of directors
shall be elected for a one-year term, a class of directors for a two-year term
and a class of directors for a three-year term. At each succeeding annual
meeting of stockholders, beginning in 1995, successors to the class of directors
whose term expires at that annual meeting shall be elected for a three-year
term. If the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, but in no case shall a decrease in the number
of directors shorten the term of any incumbent director. A director may be
removed from office for cause only and, subject to such removal, death,
resignation,



                                       6


retirement or disqualification, shall hold office until the annual meeting for
the year in which his term expires and until his successor shall be elected and
qualify. No alteration, amendment or repeal of these By-Laws shall be effective
to shorten the term of any director holding office at the time of such
alteration, amendment or repeal, to permit any such director to be removed
without cause, or to increase the number of directors in any class or in the
aggregate from that existing at the time of such alteration, amendment or repeal
until the expiration of the terms of office of all directors then holding
office, unless such alteration, amendment or repeal has been approved by either
the holders of all shares of stock entitled to vote thereon or by a vote of a
majority of the entire Board of Directors. The provisions of this Section 2
shall not apply to directors governed by Section 15 of this ARTICLE III.

SECTION 3. ELECTION OF DIRECTORS. At each meeting of the stockholders for the
election of directors, the directors to be elected at such meeting shall be
elected by a plurality of votes given at such election.

SECTION 4. VACANCIES. Any vacancy occurring in the Board of Directors for any
cause other than by reason of an increase in the number of directors may be
filled by a majority of the remaining members of the Board of Directors,
although such majority is less than a quorum, or by the stockholders. Any
vacancy occurring by reason of an increase in the number of directors may be
filled by action of a majority of the entire Board of Directors or by the
stockholders. A director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the expiration of the term for which he
was elected and until his successor shall have been elected and shall have
qualified. A director elected by the stockholders to fill a vacancy shall be
elected to hold office until the expiration of the term for which he was elected
and until his successor shall have been elected and shall have qualified. The
provisions of this Section 4 shall not apply to directors governed by Section 15
of this ARTICLE III.

SECTION 5. RESIGNATIONS. A director may resign at any time by giving written
notice to the Board of Directors or to the Secretary. Such resignation shall
take effect at the time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.

SECTION 6. ANNUAL MEETINGS. The Board of Directors, as constituted following the
vote of stockholders at any meeting of the stockholders for the election of
directors, may hold its first meeting for the purpose of organization and the
transaction of business, if a quorum be present, immediately after such meeting
and at the same place, and notice of such meeting need not be given. Such first
meeting may be held at any other time and place specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or in a
consent and waiver of notice thereof signed by all the directors.

SECTION 7. REGULAR MEETINGS. Regular meetings of the Board of Directors may be
held without notice at such places and times as may be fixed from time to time
by resolution of the Board.

SECTION 8. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of Directors
may be called at any time by the Chairman of the Board or the President and
shall be called by the Secretary upon the written request of any three directors
and each special meeting shall be held at such place and time as shall be
specified in the notice thereof. At least twenty-four (24) hours' notice of each
such special meeting shall be given to each director personally or sent to him
addressed to his residence or usual place



                                       7


of business by telephone, telegram or facsimile transmission, or at least 120
hours' notice of each such special meeting shall be given to each director by
letter sent to him addressed as aforesaid or on such shorter notice and by such
means as the person or persons calling such meeting may deem reasonably
necessary or appropriate in light of the circumstances. Any notice by letter or
telegram shall be deemed to be given when deposited in the United States mail so
addressed or when duly deposited at an appropriate office for transmission by
telegram, as the case may be. Such notice need not state the business to be
transacted at or the purpose or purposes of such special meeting. No notice of
any such special meeting of the Board of Directors need be given to any director
who attends in person or who, in writing executed and filed with the records of
the meeting, either before or after the holding thereof, waives such notice. No
notice need be given of an adjourned meeting of the Board of Directors.

SECTION 9. QUORUM AND MANNER OF ACTING. A majority of the total number of
directors, but in no event less than two directors, shall constitute a quorum
for the transaction of business at any annual, regular or special meeting of the
Board of Directors. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, the act of a majority of the directors
present at any meeting, at which a quorum is present, shall be the act of the
Board of Directors. In the absence of a quorum, a majority of the directors
present may adjourn the meeting from time to time until a quorum be had.

SECTION 10. CONSENT IN WRITING. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting, if a written consent to such action is signed by all members
of the Board or of such committee, as the case may be, and such written consent
is filed with the minutes of proceedings of the Board or such committee.

SECTION 11. COMMITTEES.

(a) Executive Committee. The Board of Directors may, by resolution passed by a
majority of a quorum of the Board, appoint an Executive Committee of not less
than three members, each of whom shall be a director. The Executive Committee,
to the extent permitted by law, shall have and may exercise when the Board of
Directors is not in session all powers of the Board in the management of the
business and affairs of the Corporation, including, without limitation, the
power and authority to declare a dividend or to authorize the issuance of stock,
except such Committee shall not have the power or authority (i) to approve,
adopt, or recommend to stockholders any action or matter required by the
Delaware General Corporation Law to be submitted for stockholder approval; or
(ii) to adopt, amend, or repeal any By-Law of the Corporation.

(b) Other Committees. The Board of Directors may, by resolution passed by a
majority of a quorum of the Board, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committee, but in no
event shall any such committee have the powers denied to the Executive Committee
in these By-Laws.

(c) Term. The members of all committees of the Board of Directors shall serve a
term coexistent with that of the Board of Directors which shall have appointed
such committee. The Board, subject to the provisions of subsections (a) or (b)
of this Section 11, may at any time increase or decrease the number of members
of a committee or terminate the existence of a committee; provided, that no
committee shall consist of less than one member. The membership of a committee
member shall terminate on the date of his death or voluntary resignation, but
the Board may at any time for any reason remove any individual



                                       8


committee member and the Board may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

(d) Meetings. Unless the Board of Directors shall otherwise provide, regular
meetings of the Executive Committee or any other committee appointed pursuant to
this Section 11 shall be held at such times and places as are determined by the
Board of Directors, or by any such committee, and when notice thereof has been
given to each member of such committee, no further notice of such regular
meetings need be given thereafter; special meetings of any such committee may be
held at the principal office of the Corporation required to be maintained
pursuant to Section 2 of ARTICLE I hereof; or at any place which has been
designated from time to time by resolution of such committee or by written
consent of all members thereof, and may be called by any director who is a
member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time after the meeting
and will be waived by any director by attendance thereat. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.

SECTION 12. TELEPHONE MEETINGS. The Board of Directors or any committee thereof
may participate in a meeting by means of a conference telephone or similar
communications equipment if all members of the Board or of such committee, as
the case may be, participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.

SECTION 13. COMPENSATION. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors and/or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

SECTION 14. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof or the stockholders. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee which authorizes the contract or
transaction.



                                       9


SECTION 15. DIRECTORS ELECTED BY SPECIAL CLASS OR SERIES. To the extent that any
holders of any class or series of stock other than Common Stock issued by the
Corporation shall have the separate right, voting as a class or series, to elect
directors, the directors elected by such class or series shall be deemed to
constitute an additional class of directors and shall have a term of office for
one year or such other period as may be designated by the provisions of such
class or series providing such separate voting right to the holders of such
class or series of stock, and any such class of directors shall be in addition
to the classes referred to in Section 2 of this ARTICLE III. Any directors so
elected shall be subject to removal in such manner as may be provided by law or
by the Certificate of Incorporation of this Corporation. The provisions of
Sections 2 and 4 of this ARTICLE III do not apply to directors governed by this
Section 15.

                                   ARTICLE IV

                                    OFFICERS

SECTION 1. DESIGNATION OF OFFICERS. The officers of the Corporation, who shall
be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a Chairman of the Board, a President, one or
more Vice Presidents, a Treasurer, a Secretary and a Controller. The Board of
Directors from time to time may choose such other officers as it shall deem
appropriate. Any one person may hold any number of offices of the Corporation at
any one time unless specifically prohibited therefrom by law. The Chairman of
the Board and the President shall be chosen from among the directors; the other
officers need not be directors.

SECTION 2. TERM OF OFFICE; RESIGNATION; REMOVAL. The term of office of each
officer shall be until the first meeting of the Board of Directors following the
next annual meeting of stockholders and until his successor is elected and shall
have qualified, or until his death, resignation or removal, whichever is sooner.
Any officer may resign at any time by giving written notice to the Board of
Directors or to the Secretary. Such resignation shall take effect at the time
specified therein and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective. Any officer may be
removed at any time either with or without cause by the Board of Directors.

SECTION 3. VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause, may be filled for the unexpired
portion of the term by the Board of Directors.

SECTION 4. AUTHORITY OF OFFICERS. Subject to the power of the Board of Directors
in its discretion to change and redefine the duties of the officers of the
Corporation by resolution in such manner as it may from time to time determine,
the duties of the officers of the Corporation shall be as follows:

(a) Chairman of the Board. The Chairman of the Board shall preside at meetings
of the stockholders and the Board of Directors. Subject to the direction of the
Board of Directors, he shall generally manage the affairs of the Board and
perform such other duties as are assigned by the Board.

(b) President. The President shall be the Chief Executive Officer of the
Corporation, and shall execute all the powers and perform all the duties usual
to such office. Subject to the direction of the Board of Directors, he shall
have the responsibility for the general management of the affairs of the
Corporation. The President shall perform such other duties as may be prescribed
or assigned to him from time to time by the Board of Directors.



                                       10


(c) Other Officers. The other officers of the Corporation shall have such powers
and shall perform such duties as generally pertain to their respective offices,
as well as such powers and duties as the Board of Directors, the Executive
Committee or the Chief Executive Officer may prescribe.

SECTION 5. DIVISIONAL TITLES. Any one of the Chief Executive Officer, President,
or Vice President Human Resources and Administration (each one an "Appointing
Person"), may from time to time confer upon any employee of a division of the
Corporation the title of President, Vice President, Treasurer or Secretary of
such division or any other divisional title or titles deemed appropriate. Any
such titles so conferred may be discontinued and withdrawn at any time by any
one Appointing Person. Any employee of a division designated by such a
divisional title shall have the powers and duties with respect to such division
as shall be prescribed by the Appointing Person. The conferring, withdrawal or
discontinuance of divisional titles shall be in writing and shall be filed with
the Secretary of the Corporation.

SECTION 6. SALARIES. The salaries and other compensation of the principal
officers of the Corporation shall be fixed from time to time by the Board of
Directors.

                                    ARTICLE V

                       EXECUTION OF CORPORATE INSTRUMENTS

                AND VOTING OF SECURITIES OWNED BY THE CORPORATION

SECTION 1. EXECUTION OF INSTRUMENTS. The Board of Directors may in its
discretion determine the method and designate the signatory officer or officers
or other person or persons, to execute any corporate instrument or document, or
to sign the corporate name without limitation, except where otherwise provided
by law, and such execution or signature shall be binding upon the Corporation.
All checks and drafts drawn on banks or other depositories on funds to the
credit of the Corporation or in special accounts of the Corporation, shall be
signed by such person or persons as the Treasurer or such other person
designated by the Board of Directors for that purpose shall authorize so to do.

SECTION 2. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and other
securities of other corporations and business entities owned or held by the
Corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person authorized
to do so by resolution of the Board of Directors.

                                   ARTICLE VI

                      SHARES OF STOCK AND OTHER SECURITIES

SECTION 1. FORM AND EXECUTION OF CERTIFICATES. Certificates for the shares of
stock of the Corporation shall be in such form as is consistent with the
Certificate of Incorporation and applicable law. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by, the Chairman of the Board (if there be such an officer
appointed), or by the President or any Vice President and by the Treasurer or
Assistant Treasurer or the Secretary or Assistant Secretary, certifying the
number of shares owned by him in the Corporation. Any or all of the signatures
on the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he



                                       11


were such officer, transfer agent, or registrar at the date of issue. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in Section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.

SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
indemnify the Corporation in such manner as it shall require and/or to give the
Corporation a surety bond in such form and amount as it may direct as indemnity
against any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.

SECTION 3. TRANSFERS. Transfers of record of shares of stock of the Corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a certificate or
certificates for a like number of shares, properly endorsed.

SECTION 4. FIXING RECORD DATES. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than 60 nor less than 10 days before the date of such
meeting, nor more than 60 days prior to any other action. If no record date is
fixed: (1) the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held; (2) the record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is necessary, shall be the day on which the first
written consent is expressed; (3) the record date for determining stockholders
for any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.

SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.



                                       12


SECTION 6. REGULATIONS. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of the stock and other securities of the
Corporation, and may appoint transfer agents and registrars of any class of
stock or other securities of the Corporation.

SECTION 7. OTHER SECURITIES OF THE CORPORATION. All bonds, debentures and other
corporate securities of the Corporation, other than stock certificates, may be
signed by the Chairman of the Board (if there be such an officer appointed), or
the President or any Vice President or such other person as may be authorized by
the Board of Directors and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided,
however, that where any such bond, debenture or other corporate security shall
be authenticated by the manual signature of a trustee under an indenture
pursuant to which such bond, debenture or other corporate security shall be
issued, the signature of the persons signing and attesting the corporate seal on
such bond, debenture or other corporate security may be the imprinted facsimile
of the signatures of such persons. Interest coupons appertaining to any such
bond, debenture or other corporate security, authenticated by a trustee as
aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the
Corporation, or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person. In
case any officer who shall have signed or attested any bond, debenture or other
corporate security or whose facsimile signature shall appear thereon shall have
ceased to be such officer before the bond, debenture or other corporate security
so signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the Corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
Corporation.

                                   ARTICLE VII

                                 CORPORATE SEAL

        The corporate seal shall consist of a die bearing the name of the
Corporation and the state and date of its incorporation. Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.

                                  ARTICLE VIII

          INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS

SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN THOSE
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director or officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or 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
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a



                                       13


manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful. The
right to indemnification conferred in this ARTICLE VIII shall be a contract
right.

SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN THE
RIGHT OF THE CORPORATION. Subject to Section 3 of this ARTICLE VIII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the Corporation serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit 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 Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under this
ARTICLE VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 or Section 2 of this
ARTICLE VIII, as the case may be. Such determination shall be made (i) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith, without
the necessity of authorization in the specific case.

SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under Section 3
of this ARTICLE VIII, a person shall be deemed to have acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Corporation, or, with respect to any criminal action or proceeding, to
have had no reasonable cause to believe his conduct was unlawful, if his action
is based on the records or books of account of the Corporation or another
enterprise, or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used in this Section 4 shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise of
which such person is or was serving at the request of the Corporation as a
director, officer, employee or agent. The provisions of this Section 4 shall not
be deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth in
Sections 1 or 2 of this ARTICLE VIII, as the case may be.

SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this ARTICLE VIII, and
notwithstanding the absence of any determination



                                       14



thereunder, any director or officer may apply to any court of competent
jurisdiction in the State of Delaware for indemnification to the extent
otherwise permissible under Sections 1 and 2 of this ARTICLE VIII. The basis of
such indemnification by a court shall be a determination by such court that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standards of conduct set forth in Sections 1
or 2 of this ARTICLE VIII, as the case may be. Neither a contrary determination
in the specific case under Section 3 of this ARTICLE VIII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director or officer seeking indemnification has not met any
applicable standard of conduct. Notice of any application for indemnification
pursuant to this Section 5 shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.

SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or
officer in defending or investigating a threatened or pending action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this ARTICLE VIII.

SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by or granted pursuant to
this ARTICLE VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract, vote of stockholders or disinterested directors
or pursuant to the direction (howsoever embodied) of any court of competent
jurisdiction or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Sections 1 and 2 of
this ARTICLE VIII shall be made to the fullest extent permitted by law. The
provisions of this ARTICLE VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Sections 1 or 2 of this
ARTICLE VIII but whom the Corporation has the power or obligation to indemnify
under the provisions of the General Corporation Law of the State of Delaware, or
otherwise.

SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power or the obligation to indemnify him against such liability
under the provisions of this ARTICLE VIII.

SECTION 9. CERTAIN DEFINITIONS. For purposes of this ARTICLE VIII, references to
"the Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors or officers, so that any
person who is or was a director or officer of such constituent corporation, or
is or was a director or officer of such constituent corporation serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, shall stand in the same position under the
provisions of this ARTICLE VIII with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this ARTICLE VIII, references
to "fines" shall include any excise taxes assessed on a person with respect to
an employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director or officer with



                                       15


respect to an employee benefit plan, its participants or beneficiaries; and a
person who acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best interests of
the Corporation" as referred to in this ARTICLE VIII.

SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this ARTICLE VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.

SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything contained in
this ARTICLE VIII to the contrary, except for proceedings to enforce rights to
indemnification (which shall be governed by Section 5 hereof), the Corporation
shall not be obligated to indemnify any director or officer in connection with a
proceeding (or part thereof) initiated by such person unless such proceeding (or
part thereof) was authorized or consented to by the Board of Directors of the
Corporation.

SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may, to the
extent authorized from time to time by the Board of Directors, provide rights to
indemnification and to the advancement of expenses to employees and agents of
the Corporation similar to those conferred in this ARTICLE VIII to directors and
officers of the Corporation.

SECTION 13. EFFECT OF AMENDMENT. Any amendment, repeal or modification of this
ARTICLE VIII shall not (a) adversely affect any right or protection of any
director or officer existing at the time of such amendment, repeal or
modification, or (b) apply to the indemnification of any such person for
liability, expense, or loss stemming from actions or omissions occurring prior
to such amendment, repeal, or modification.

SECTION 14. AUTHORITY TO ENTER INTO INDEMNIFICATION AGREEMENTS. The Corporation
may enter into indemnification agreements with the directors and officers of the
Corporation, including, without limitation, any indemnification agreement in
substantially the form set forth in Exhibit 1 attached to these By-Laws.

                                   ARTICLE IX

                                     NOTICES

Whenever, under any provisions of these By-Laws, notice is required to be given
to any stockholder, the same shall be given in writing, timely and duly
deposited in the United States Mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the Corporation or its
transfer agent. Any notice required to be given to any director may be given by
any of the methods stated in Section 8 of ARTICLE III hereof, except that such
notice other than one which is delivered personally, shall be sent to such
address or (in the case of facsimile telecommunication) facsimile telephone
number as such director shall have disclosed in writing to the Secretary of the
Corporation, or, in the absence of such filing, to the last known post office
address of such director. If no address of a stockholder or director be known,
such notice may be sent to the office of the Corporation required to be
maintained pursuant to Section 2 of ARTICLE I hereof. An affidavit of mailing,
executed by a duly authorized and competent employee of the Corporation or its
transfer agent appointed with respect to the class of stock affected, specifying
the name and address or the names and addresses of the stockholder or
stockholders, director or directors, to whom any such notice or notices was or
were given, and the time and method of giving the same, shall be conclusive
evidence of the statements therein contained. All



                                       16


notices given by mail, as above provided, shall be deemed to have been given as
at the time of mailing and all notices given by telegram or other means of
electronic transmission shall be deemed to have been given as at the sending
time recorded by the telegraph company or other electronic transmission
equipment operator transmitting the same. It shall not be necessary that the
same method of giving be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
The period or limitation of time within which any stockholder may exercise any
option or right, or enjoy any privilege or benefit, or be required to act, or
within which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent him in the manner above provided, shall
not be affected or extended in any manner by the failure of such a stockholder
or such director to receive such notice. Whenever any notice is required to be
given under the provisions of this statutes or of the Certificate of
Incorporation, or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Whenever notice is required
to be given, under any provision of law or of the Certificate of Incorporation
or By-Laws of the Corporation, to any person with whom communication is
unlawful, the giving of such notice to such person shall not be required and
there shall be no duty to apply to any governmental authority or agency for a
license or permit to give such notice to such person. Any action or meeting
which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the Corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.

                                    ARTICLE X

                                   AMENDMENTS

The Board of Directors is expressly authorized to adopt, alter and repeal the
By-Laws of the Corporation in whole or in part at any regular or special meeting
of the Board of Directors, by vote of a majority of the entire Board of
Directors. Except where ARTICLE V of the Certificate of Incorporation of the
Corporation requires a higher vote, the By-Laws may also be adopted, altered or
repealed in whole or in part at any annual or special meeting of the
stockholders by the affirmative vote of three fourths of the shares of the
Corporation outstanding and entitled to vote thereon.

CERTIFICATE OF SECRETARY

The undersigned, Senior Vice President, General Counsel and Secretary of
McKesson Corporation a Delaware corporation, hereby certifies that the foregoing
is a full, true and correct copy of the By-Laws of said Corporation, with all
amendments to date of this Certificate.

WITNESS the signature of the undersigned and the seal of the Corporation this
30th day of July, 2001.



                                       /s/ Ivan D. Meyerson
                                       -----------------------------------------
                                       Ivan D. Meyerson
                                       Senior Vice President,
                                       General Counsel and Secretary



                                       17


                                                                       EXHIBIT 1

                            INDEMNIFICATION AGREEMENT

AGREEMENT, effective as of ______, 2001__, between McKesson Corporation, a
Delaware corporation (the "Company"), and ______________ (the "Indemnitee").

WHEREAS, it is essential to the Company to retain and attract as directors and
officers the most capable persons available.

WHEREAS, Indemnitee is a director/officer of the Company;

WHEREAS, both the Company and Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors of public companies
in today's environment;

WHEREAS, the Certificate of Incorporation and the By-laws of the Company require
the Company to indemnify and advance expenses to its directors to the fullest
extent permitted by law and the Indemnitee has been serving and continues to
serve as a director or officer of the Company in part in reliance on such
Certificate of Incorporation and By-laws;

WHEREAS, in recognition of Indemnitee's need for substantial protection against
personal liability in order to enhance Indemnitee's continued service to the
Company in an effective manner and Indemnitee's reliance on the aforesaid
Certificate of Incorporation and By-laws, and in part to provide Indemnitee with
specific contractual assurance that the protection promised by such Certificate
of Incorporation and By-laws will be available to Indemnitee (regardless of,
among other things, any amendment to or revocation of such Certificate of
Incorporation and By-laws or any change in the composition of the Company's
Board of Directors or acquisition transaction relating to the Company), and in
order to induce Indemnitee to continue to provide services to the Company as a
director or officer thereof, the Company wishes to provide in this Agreement for
the indemnification of and the advancing of expenses to Indemnitee to the
fullest extent (whether partial or complete) permitted by law and as set forth
in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of Indemnitee under the Company's directors' and officers' liability
insurance policies.

NOW, THEREFORE, in consideration of the premises and of Indemnitee continuing to
serve the Company directly or, at its request, with another enterprise, and
intending to be legally bound hereby, the parties hereto agree as follows:

1. CERTAIN DEFINITIONS.

        (a) Change in Control: shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 20% or more of
the total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
and any new director whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority thereof,
or (iii) the stockholders of the Company approve a merger or consolidation of
the



                                       1


Company with any other corporation, other than a merger or consolidation which
would result in the Voting Securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity) at least 80% of
the total voting power represented by the Voting Securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or substantially
all of the Company's assets.

        (b) Expense: include attorneys' fees and all other costs, expenses and
obligations paid or incurred in connection with investigating, defending, being
a witness in or participating in (including on appeal), or preparing to defend,
be a witness in or participate in any Proceeding relating to any Indemnifiable
Event.

        (c) Indemnifiable Event: any event or occurrence that takes place either
prior to or after the execution of this Agreement, related to the fact that
Indemnitee is or was a director or an officer of the Company, or while a
director or officer is or was serving at the request of the Company as a
director, officer, employee, trustee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or
by reason of anything done or not done by Indemnitee in any such capacity.

        (d) Potential Change in Control: shall be deemed to have occurred if (i)
the Company enters into an agreement or arrangement, the consummation of which
would result in the occurrence of Change in Control; (ii) any person (including
the Company) publicly announces an intention to take or to consider taking
actions which if consummated would constitute Change in Control; (iii) any
person, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company acting in such capacity or a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
who is or becomes the beneficial owner, directly or indirectly, of securities of
the Company representing 10% or more of the combined voting power of the
Company's then outstanding Voting Securities, increases his beneficial ownership
of such securities by 5% or more over the percentage so owned by such person on
the date hereof; or (iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has occurred.

        (e) Proceeding: any threatened, pending or completed action, suit or
proceeding, or any inquiry, hearing or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit or proceeding, whether civil, criminal,
administrative, investigative or other.

        (f) Reviewing Party: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other person or
body appointed by the Board (including the special, independent counsel referred
to in Section 3) who is not a party to the particular Proceeding with respect to
which Indemnitee is seeking indemnification.

        (g) Voting Securities: any securities of the Company which vote
generally in the election of directors.




                                       2


2. AGREEMENT TO INDEMNIFY.

        (a) In the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other
participant in, a Proceeding by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law, as soon as practicable but in any event no later than
thirty days after written demand is presented to the Company, against any and
all Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties or
amounts paid in settlement) of such Proceeding and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the creation of the
Trust). Notwithstanding anything in this Agreement to the contrary and except as
provided in Section 5, prior to a Change in Control Indemnitee shall not be
entitled to indemnification pursuant to this Agreement in connection with any
Proceeding initiated by Indemnitee against the Company or any director or
officer of the Company unless the Company has joined in or consented to the
initiation of such Proceeding. If so requested by Indemnitee, the Company shall
advance (within ten business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance").

        (b) Notwithstanding the foregoing, (i) the obligations of the Company
under Section 2(a) shall be subject to the condition that the Reviewing Party
shall not have determined (in a written opinion, in any case in which the
special, independent counsel referred to in Section 3 hereof is involved) that
Indemnitee would not be permitted to be indemnified under applicable law, and
(ii) the obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to the extent
that the Reviewing Party determines that Indemnitee would not be permitted to be
so indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to
reimburse the Company for Expense Advances shall be unsecured and no interest
shall be charged thereon. If there has not been a Change in Control the
Reviewing Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which has been
approved by a majority of the Company's Board of Directors who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
special, independent counsel referred to in Section 3 hereof. If there has been
no determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in whole
or in part under applicable law, Indemnitee shall have the right to commence
litigation in any court in the States of California or Delaware having subject
matter jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any such determination by the
Reviewing Party or any aspect thereof, and the Company hereby consents to
service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.

3. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control of
the Company (other than a Change in Control which has been approved by a
majority of the Company's Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments and Expense
Advances under this Agreement or any other agreement or under applicable law or
the Company's Certificate of Incorporation or By-Laws now or hereafter in effect
relating to indemnification for Indemnifiable Events, the Company shall seek
legal advice only from special, independent counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably withheld), and
who has not otherwise performed services for the Company or the Indemnitee
(other than in connection with such



                                       3


matters) within the last five years. Such independent counsel shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement. Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the Indemnitee would
be permitted to be indemnified under applicable law. The Company agrees to pay
the reasonable fees of the special, independent counsel referred to above and to
indemnify fully such counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or the engagement of special, independent counsel pursuant hereto.

4. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control, the
Company shall, upon written request by Indemnitee, create a Trust for the
benefit of the Indemnitee and from time to time upon written request of
Indemnitee shall fund such Trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any Proceeding
relating to an Indemnifiable event, and any and all judgments, fines, penalties
and settlement amounts of any and all Proceedings relating to an Indemnifiable
Event from time to time actually paid or claimed, reasonably anticipated or
proposed to be paid. The amount or amounts to be deposited in the Trust pursuant
to the foregoing funding obligation shall be determined by the Reviewing Party,
in any case in which the special, independent counsel referred to above is
involved. The terms of the Trust shall provide that upon a Change in Control (i)
the Trust shall not be revoked or the principal thereof invaded, without the
written consent of the Indemnitee, (ii) the Trustee shall advance, within ten
business days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which the Indemnitee would be required to reimburse the
Company under Section 2(b) of this Agreement), (iii) the Trust shall continue to
be funded by the Company in accordance with the funding obligation set forth
above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for
which the Indemnitee shall be entitled to indemnification pursuant to this
Agreement or otherwise, and (v) all unexpended funds in such Trust shall revert
to the Company upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified under the terms of this Agreement. The Trustee shall be chosen by
the Indemnitee. Nothing in this Section 4 shall relieve the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust shall be reported as income by the Company for federal, state, local
and foreign tax purposes.

5. INDEMNIFICATION FOR EXPENSES INCURRED IN ENFORCING THIS AGREEMENT. The
Company shall indemnify Indemnitee against any and all expenses (including
attorneys' fees), and, if requested by Indemnitee, shall (within ten business
days of such request) advance such expenses to Indemnitee, which are incurred by
Indemnitee in connection with any claim asserted against or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement or under applicable law or the
Company's Certificate of Incorporation or By-laws now or hereafter in effect
relating to indemnification for Indemnifiable Events and/or (ii) recovery under
any directors' and officers' liability insurance policies maintained by the
Company, regardless of whether Indemnitee ultimately is determined to be
entitled to such indemnification, advance expense payment or insurance recovery,
as the case may be.



                                       4


6. PARTIAL INDEMNITY. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the
Expenses, judgments, fines, penalties and amounts paid in settlement of a
Proceeding but not, however, for all of the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of this
Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Proceedings relating in whole or in part to
an Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.

7. DEFENSE TO INDEMNIFICATION, BURDEN OF PROOF AND PRESUMPTIONS. It shall be a
defense to any action brought by the Indemnitee against the Company to enforce
this Agreement (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the Company) that the Indemnitee has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the Company to indemnify the Indemnitee for the
amount claimed. In connection with any determination by the Reviewing Party or
otherwise as to whether the Indemnitee is entitled to be indemnified hereunder,
the burden of proving such a defense shall be on the Company. Neither the
failure of the Company (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action by the Indemnitee that indemnification of the
claimant is proper under the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the Indemnitee
had not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the Indemnitee has not met the applicable
standard of conduct. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with
or without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.

8. NON-EXCLUSIVITY. The rights of the Indemnitee hereunder shall be in addition
to any other rights Indemnitee may have under the Company's Certificate of
Incorporation or By-laws or the Delaware General Corporation Law or otherwise.
To the extent that a change in the Delaware General Corporation Law (whether by
statute or judicial decision) permits greater indemnification by agreement than
would be afforded currently under the Company's Certificate of Incorporation and
By-laws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change.

9. LIABILITY INSURANCE. To the extent the Company maintains an insurance policy
or policies providing directors' and officers' liability insurance, Indemnitee
shall be covered by such policy or policies, in accordance with its or their
terms, to the maximum extent of the coverage available for any Company director
or officer.

10. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or on behalf of the Company or any affiliate of the
Company against Indemnitee, Indemnitee's spouse, heirs, executors or personal or
legal representatives after the expiration of two years from the date of accrual
of such cause of action, or such longer period as may be required by state law
under the circumstances, and any claim or cause of action of the Company or its
affiliate shall be



                                       5


extinguished and deemed released unless asserted by the timely filing of a legal
action within such period; provided,



                                       6


however, that if any shorter period of limitations is otherwise applicable to
any such cause of action such shorter period shall govern.

11. AMENDMENT OF THIS AGREEMENT. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

12. SUBROGATION. In the event of payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.

13. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, By-law or otherwise) of the amounts otherwise
indemnifiable hereunder.

14. SETTLEMENT OF CLAIMS. The Company shall not be liable to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any action
or claim effected without the Company's written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent to any
proposed settlement. The Company shall not be liable to indemnify the Indemnitee
under this Agreement with regard to any judicial award if the Company was not
given a reasonable and timely opportunity, at its expense, to participate in the
defense of such action.

15. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to the
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director or officer of
the Company or of any other enterprise at the Company's request.

16. SEVERABILITY. The provisions of this Agreement shall be severable in the
event that any of the provisions hereof (including any provision within a single
section, paragraph or sentence) is held by a court of competent jurisdiction to
be invalid, void or otherwise unenforceable, and the remaining provisions shall
remain enforceable to the fullest extent permitted by law. Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.



                                       7


17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the _______________ day of __________________, 20___.


                                       McKESSON CORPORATION

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

                                          --------------------------------------
                                          [Indemnitee]



                                       8

EX-10.1

                                                                    Exhibit 10.1

                                                                  EXECUTION COPY

                                FOURTH AMENDMENT
                                       TO
                         RECEIVABLES PURCHASE AGREEMENT

                THIS FOURTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
("Amendment"), dated as of June 15, 2001, is among CGSF Funding Corporation, a
Delaware corporation ("Seller"), McKesson HBOC, Inc., a Delaware corporation
(the "Servicer"; the Servicer together with the Seller, the "Seller Parties" and
each a "Seller Party"), the funding entities parties hereto (the "Financial
Institutions"), Preferred Receivables Funding Corporation ("PREFCO"), Falcon
Asset Securitization Corporation ("Falcon"), Blue Ridge Asset Funding
Corporation ("Blue Ridge") and Liberty Street Funding Corp. ("Liberty Street")
(PREFCO, Falcon, Blue Ridge and Liberty Street being referred to collectively as
the "Conduits", and together with the Financial Institutions, the "Purchasers"),
Bank One, NA (formerly known as The First National Bank of Chicago, "Bank One"),
Wachovia Bank, N.A. and The Bank of Nova Scotia (collectively, the "Managing
Agents") and Bank One, as the collateral agent (the "Collateral Agent"). Defined
terms used herein and not otherwise defined herein shall have the meaning given
to them in the "Receivables Purchase Agreement" (as hereinafter defined).

                WHEREAS, the Seller, the Servicer, the Financial Institutions,
the Conduits, the Managing Agents and the Collateral Agent are parties to the
Receivables Purchase Agreement dated as of June 25, 1999, as amended by the
First Amendment thereto dated as of September 29, 1999, the Second Amendment
thereto dated as of December 6, 1999 and the Third Amendment and Waiver thereto
dated as of June 16, 2000 (the "Receivables Purchase Agreement"); and

                WHEREAS, the parties hereto have agreed to amend the Receivables
Purchase Agreement on the terms and conditions set forth herein;

                NOW, THEREFORE, in consideration of the premises set forth
above, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

                1. Amendment to the Receivables Purchase Agreement. Effective as
of the date first above written and subject to the execution of this Amendment
by the parties hereto and the satisfaction of the conditions precedent set forth
in Section 2 below, the Receivables Purchase Agreement shall be and hereby is
amended as follows:

                a. Exhibit I of the Receivables Purchase Agreement is hereby
amended to add the following new definition thereto:

                "Fourth Amendment Effective Date" means June 15, 2001.





                b. The definition of "Liquidity Termination Date" in Exhibit I
of the Receivables Purchase Agreement is hereby amended to delete the words
"June 15, 2001" and to substitute therefor the words "June 14, 2002".

                c. The definition of "Loss Reserve" in Exhibit I of the
Receivables Purchase Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:

                "Loss Reserve" means, on any date, an amount equal to (x) the
        greater of (i) 14% and (ii) the Loss Reserve Ratio then in effect times
        (y) the aggregate Outstanding Balance of Eligible Receivables (net of
        Earned Discounts and quarterly volume rebates) as of the close of
        business on the immediately preceding Business Day.

                d. The definition of "Special Concentration Limit" in Exhibit I
of the Receivables Purchase Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:

                "Special Concentration Limit" means, at any time, with respect
        to any Special Obligor (together with its Affiliates or subsidiaries),
        the lesser of (i) the applicable percentage set forth below multiplied
        by the aggregate Outstanding Balance of Eligible Receivables (net of all
        Earned Discounts and quarterly volume rebates) at such time and (ii) the
        maximum dollar amounts set forth below, in each case corresponding to
        the Moody's and S&P short-term debt ratings for such Special Obligor at
        such time or such percentage as may be otherwise set forth below such
        Special Obligor's name below:

Special Obligors with ratings at or above:



                                                                 Maximum Dollar
S&P Rating                   Moody's Rating       Percentage         Amount
----------                   ---------------      ----------     --------------
                                                        
A-1+           and           P-1                      11%         $165,000,000

A-1            and           P-1                      9%          $135,000,000

A-2            and           P-2                      6%          $90,000,000

lower than                   lower than
A-2 or                       P-2 or
unrated and                  unrated                  3%          $45,000,000


        provided, that either Managing Agent or the Required Financial
        Institutions may, upon not less than thirty (30) Business Days' notice
        to Seller, cancel or reduce any Special Concentration Limit; provided,
        further, that notwithstanding the foregoing, for so long as Albertson's,
        Inc. maintains its short-term debt ratings from Moody's and S&P as in
        effect on the Fourth Amendment Effective Date, the Special Concentration
        Limit for such Special Obligor shall be the lesser of (i) 10% multiplied
        by the aggregate Outstanding Balance of Eligible Receivables (net of all
        Earned Discounts and quarterly volume rebates) at such time and (ii)
        $200,000,000, it being understood that if Albertson's, Inc.



                                       2


        is downgraded by either S&P or Moody's, the Standard Concentration Limit
        shall apply to such Obligor.

                e. The definition of "Special Obligor" in Exhibit I of the
Receivables Purchase Agreement is hereby deleted in its entirety and the
following definition is substituted therefor:

                "Special Obligor" means Albertson's, Inc. (but only for so long
        as it maintains its short-term debt ratings from Moody's and S&P as in
        effect on the Fourth Amendment Effective Date), CVS Corporation, JC
        Penney Company, Inc., Omnicare, Inc., Target Corp, Safeway Inc.,
        Wal-Mart Stores, Inc. and such other Special Obligors as may be
        designated by the managing Agents from time to time.

                2. Conditions Precedent. This Amendment shall become effective
as of the date above written if and only if the Managing Agents have received:

                a. duly executed originals of this Amendment from each of the
        parties listed on the signature pages hereto; and

                b. a duly executed Second Amended and Restated Fee Letter
        providing an increase to the fees set forth therein.

                3. Representations and Warranties of the Seller Parties. Each of
the Seller Parties hereby represents and warrants as follows:

                a. This Amendment and the Receivables Purchase Agreement, as
amended hereby, constitute legal, valid and binding obligations of such Seller
Party and are enforceable against such Seller Party in accordance with their
terms.

                b. Upon the effectiveness of this Amendment, each Seller Party
hereby reaffirms all representations and warranties made in the Receivables
Purchase Agreement, and to the extent the same are not amended hereby, agrees
that all such representations and warranties shall be deemed to have been remade
as of the date of delivery of this Amendment, unless and to the extent that any
such representation and warranty is stated to relate solely to an earlier date,
in which case such representation and warranty shall be true and correct as of
such earlier date.

                4. Reference to and Effect on the Receivables Purchase
Agreement.

                a. Upon the effectiveness of Section 1 hereof, on and after the
date hereof, each reference in the Receivables Purchase Agreement to "this
Receivables Purchase Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Receivables Purchase Agreement
as amended hereby.

                b. The Receivables Purchase Agreement, as amended hereby, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.

                c. Except as expressly provided herein, the execution, delivery
and effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Managing



                                       3


Agents, the Financial Institutions or the Collateral Agent, nor constitute a
waiver of any provision of the Receivables Purchase Agreement or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.

                5. Governing Law. This Amendment shall be governed by and
construed in accordance with the internal laws (as opposed to the conflict of
law provisions) of the State of New York.

                6. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

                7. Counterparts. This Amendment may be executed by one or more
of the parties to the Amendment on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.



                                       4


                IN WITNESS WHEREOF, this Amendment has been duly executed and
delivered on the date first above written.


                                       CGSF FUNDING CORPORATION, as the Seller


                                       By:
                                          --------------------------------------
                                       Name:  Nicholas A. Loiacono
                                       Title: Vice President and Treasurer


                                       McKESSON HBOC, INC., as the Servicer


                                       By:
                                          --------------------------------------
                                       Name:  Nicholas A. Loiacono
                                       Title: Vice President and Treasurer


                                       PREFERRED RECEIVABLES FUNDING
                                       CORPORATION, as a Conduit


                                       By:
                                          --------------------------------------
                                                   Authorized Signatory


                                       FALCON ASSET SECURITIZATION
                                       CORPORATION, as a Conduit


                                       By:
                                          --------------------------------------
                                                   Authorized Signatory


                                       BLUE RIDGE ASSET FUNDING CORPORATION,
                                       as a Conduit

                                       By:  Wachovia Bank, N.A.,
                                       as Attorney-In-Fact


                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:



                                              SIGNATURE PAGE TO FOURTH AMENDMENT
                                                                 TO McKESSON RPA



                                        LIBERTY STREET FUNDING CORP.,
                                        as a Conduit


                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:


                                       BANK ONE, NA (Main Office Chicago)
                                       (formerly known as The First National
                                       Bank of Chicago), as a Committed
                                       Purchaser for PREFCO and Falcon, a
                                       Financial Institution, a Managing Agent
                                       and as Collateral Agent

                                       By:
                                          --------------------------------------
                                       Name:  Elizabeth Cohen
                                       Title: Vice President

                                       WACHOVIA BANK, N.A., as a Committed
                                       Purchaser for Blue Ridge, a Financial
                                       Institution and a Managing Agent


                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:


                                       THE BANK OF NOVA SCOTIA, as a Committed
                                       Purchaser for Liberty Street, a Financial
                                       Institution and a Managing Agent

                                       By:
                                          --------------------------------------
                                       Name:
                                       Title:



                                              SIGNATURE PAGE TO FOURTH AMENDMENT
                                                                 TO McKESSON RPA